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Does governnent spending produce economic growth?

Does governnent spending produce economic growth?


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Bull, their economy is on life support and their trapped in a unsustainable debt spiral.

Maybe you should look past your talking points and do a little objective analysis. But then again if you did that you wouldn't be able to call yourself a Liberal anymore.

What is bull is that crap you are talking. The facts are that the spending has lower unemployment. And it was expected that the national sales tax increase would cause a contraction. Those are facts. But you don't care about that. All you care about is your partisan bulls***.

And you think if Greece had their own currency that the would have been able to pull their way out of their mess ?

That's right. If they had exited the Euro back in 2009, they would have experienced quite a bit of pain, but they would be over it now and well on the road to recovery. But people like you advocated this stupid austerity which meant nothing more than Greece borrowing money to pay creditors. It did nothing for the economy which is why unemployment remains very high and is why they have a more confrontational government now.
 
The problem with the counter you are offering is that dollars do not have intrinsic value - they are representative stores of value for which demand fluctuates. When you print a dollar, you reduce the value of all other dollars, meaning that creating dollars is simply a tax on current dollar holders.

The problem is not with the counter. Although what you have said with respect to the dollar representing value, your implication that an increase in supply will reduce demand ignores the fact that demand does not decrease on an increase in supply if the supply has not reached quantity demanded.
 
In a localized, short term view, yes, it does. In a national, long term view, no, it doesn't. In the short term, there is localized spending and growth, but over the long term, there is national loss of critical capital for investment into growth.

Not necessarily. For example people and corporations can simply hoard the money. In that case the capital is there but it is not being distributed properly.

This is one the things that so perfectly illustrates one of the biggest differences between liberals and conservatives. Liberals tend towards short term thinking and conservatives tend towards long term thinking. Both have their advantages and even necessities, but short term thinking always leads to more problems than it solves.

No what it illustrates is that some people think they know what they are talking about, but in reality they just spew regurgitated partisan rhetoric.
 
Yes, in my progressive world, government does provide a safety net and protection (police/fire/EMT/health & disease control and navies) as well as certain services to the common, such as roads, bridges, airports (and air traffic control), high speed rail, ports, parks, dams & flood control, wildlife preserves, seashores, schools & universities.

You forgot that progressives are all about Federal power, and a lot of the stuff you listed isn't built or controlled by that. The other thing is you want too much federal power, it's like a crutch for insecure people who couldn't fight their way out of a wet paper bag. Well this country wasn't built by sissies, but it is being torn down by them. I'm sick of the build up of federal power that doesn't do this country a bit of good, except for those progressives that can't make it on their own.
 
It depends. First in your example of tax refunds, the idea is not that they are getting more money to spend, it is that they are getting more money in a lump sum to spend. To do a simplified example, if you are making 50k a year, and your effective tax rate is cut by 1 %, then you are going to be getting about an extra 10 bucks a week to spend. This is not going to really change your spending habits. But if instead of getting 10 bucks a week, you get a lump sum 500 bucks, then you are probably going to splurge and buy something. New TV, new furniture, or in my case a bunch of books and DVDs. If a lot of people get that extra lump sum at once, then it will create a short boost to revenue if your company sells something people want.

Now to the meat of your question: does government spending produce economic growth. And as others have mentioned, the answer is that it depends. Up to the level of government revenue, the effect is probably a small reductionto a very small increase in growth(it more than likely varies by year and how the money is spent). However, the government does not spend to the level of revenue, it spends beyond that level. And that deficit spending also goes into the economy, creating more growth. So the end effect is an increase in growth.

We can even measure the effect of government spending on particular items to growth. Here is an example(first google return, not commenting on the actual accuracy of the numbers themselves, just using link to illustrate concept): Infrastructure Economic Multiplier - Business Insider. The article states that the normal multiplier for government spending is 0.5 to 1.5, meaning that for each dollar spent, it grows the economy between 0.50 dollars to 1.5 dollars. The article also states that infrastructure spending(roads and such) reach a multiplier of about 2, or 2 dollars growth for each dollar spent. While I do not endorse the actual numbers(though they could very well be right, I simply do not have enough knowledge to say they are right or wrong), the concept is pretty solid.

That's pretty good. That said, I thought about it a little bit and I think that even if the government does not deficit spend, it's spending can still cause economic growth as a result of the system of fractional reserve banking.
 
demand increased more rapidly than supply as the world sought out security over return.

That's right which goes to show you that printing money does not necessarily result in a decline in value. There are other factors involved.
 
never mind. I guess two possible drivers is too complicated for some

Actually there are a number of factors which have contributed to the dollar's strength despite the QE and TARP. These include:

1. Banks hoarding the money
2. The yen carry trade. Big investors borrow yen at a low rate. They convert it to dollars to buy U.S. Treasuries and profit from the spread. The result is an increase in demand for dollars.
3. The China carry trade (for lack of a better term). What I mean is that big investors borrow dollars at a low rate and invest in Chinese infrastructure projects and property and profit on the spread. The result is an increase in demand for dollars. The same happens with other emerging markets as well.
 
:3oops: The principal funds collected from bond purchases are used in order to fund deficit spending, whilst simultaneously guaranteeing the investor his money back in its entirety. Thus, economic growth can and does occur without the theft of another's capital or detrimental effect on an unrelated sector of the economy.

Yes, essentially when the U.S. government needs money it prints up some treasuries, takes them to the Federal Reserve who buys them and credits the government's account. However, that process can have a detrimental effect IF the money that banks use to buy the bonds from the Fed would have been used for something else.
 
:shrug: demand increased more rapidly than supply as the world sought out security over return. It's the same reason our public debts' interest rates went down even as issuance skyrocketed.

The World did not seek security. The Fed bought most of those treasuries. The point was that $7 Trillion is a huge increase in supply. I think you should do some homework on the Exchange Stabilization Fund and the Plunge Protection Team and then get back to me. It will not take you long to become aware that huge manipulation is occuring in US markets. All ETFs are bogus and naked short sales control those markets. Very large naked short sales.. The Justice Dept is investigationg it as we speak, but they will not find anything because it is all a part of Full Spectrum Dominance on the economic front. I'm not talking conspiracy but facts you can check. Anybody doing business is conspiring to make a profit and that is business in the USA. When you are done with your homework you will realize that supply and demand fundamentals have become a sham.
 
LOL @ naked shorts! First they came out with BOOTY shorts. Now they got NAKED shorts!!! :lamo

Lawdy!!!! What is the world coming to!!!! :lamo
 
Yep, dem thar Wall Street slickers be trying to get into dem naked shorts! Shame!!! :lamo
 
You forgot that progressives are all about Federal power, and a lot of the stuff you listed isn't built or controlled by that. The other thing is you want too much federal power, it's like a crutch for insecure people who couldn't fight their way out of a wet paper bag. Well this country wasn't built by sissies, but it is being torn down by them. I'm sick of the build up of federal power that doesn't do this country a bit of good, except for those progressives that can't make it on their own.

The power of the government needs to be only sufficient to ensure free enterprise and free elections. Government needs to be big enough and powerful enough to keep the corporations and the corporatists in check.....
 
You forgot that progressives are all about Federal power, and a lot of the stuff you listed isn't built or controlled by that. The other thing is you want too much federal power, it's like a crutch for insecure people who couldn't fight their way out of a wet paper bag. Well this country wasn't built by sissies, but it is being torn down by them. I'm sick of the build up of federal power that doesn't do this country a bit of good, except for those progressives that can't make it on their own.

That response sounds like a sissy. What's the matter, you can't make it with a government that doesn't allow people to cheat, steal, rob, and abuse others. Are you and your buddies such big sissies that the only way that they can make it is to cheat, rob, steal and abuse others? What's the matter, you can't make it the right way through honesty and justice? What a pathetic response.
 
What some really want to do is that in the guise of limiting government power, they want to make it such that they can continue to cheat, rob, steal, and abuse others. Yep, that crowd doesn't want the government to regulate banks so that they can be free to take people's money, invest it in ways that enrich themselves personally and then burn the people whose money that they have invested in their crooked schemes. Yep, that crowd does not want the government to regulate how much they can pollute the environment such that they can be free to enrich themselves by totally disregarding the environmental destruction that their pollution produces. Yep, that crowd doesn't want the government to say you have to pay workers a living wage so that they can be free to exploit workers to the maximum extent possible so that they can enrich themselves by the labor of others. Yep, that crowd does not want the government to say you cannot abuse employees so that they can be free to do things like taking advantage of women by demanding sexual favors in return for career advancement.

Yep, such people are the real sissies because they can't make it the right way, rather all that they have are their crooked schemes and deceit.
 
That response sounds like a sissy. What's the matter, you can't make it with a government that doesn't allow people to cheat, steal, rob, and abuse others. Are you and your buddies such big sissies that the only way that they can make it is to cheat, rob, steal and abuse others? What's the matter, you can't make it the right way through honesty and justice? What a pathetic response.

No, I work for a living, you should try it. And stop feeling guilty.
 
No, I work for a living, you should try it. And stop feeling guilty.

You don't do a damn thing but whine about the government. What's the matter, you can't make it without trying to put other people down? The fact is that what you just said is a big bunch of BULLS*** that is designed to make yourself feel better because you simply don't have the strength and courage to admit that you have flaws and are no better than anyone else. That's a real sissy.
 
You don't do a damn thing but whine about the government. What's the matter, you can't make it without trying to put other people down? The fact is that what you just said is a big bunch of BULLS*** that is designed to make yourself feel better because you simply don't have the strength and courage to admit that you have flaws and are no better than anyone else. That's a real sissy.

Hahaha, silly.
 
In addition to my regular job, I have been trying to develop a business. I have noticed two years in a row now that I experience a great boost in sales after people get income tax refunds. Now I realize that in that case, mostly people are simply getting back their own money. But it makes me wonder, does government spending produce economic growth? If I understand them correctly, some say that this is never true. What do you think?
A government that spends a trillion dollars had to first confiscate that trillion dollars from the public. So you would have to explain how a government spending that money is more stimulative than simply leaving it in the hands of the people.
 
A government that spends a trillion dollars had to first confiscate that trillion dollars from the public. So you would have to explain how a government spending that money is more stimulative than simply leaving it in the hands of the people.

First of all they don't have to confiscate it from the public, the government has empowered the Federal Reserve which can create money out of thin air. Next of all the million dollar question is what exactly is the public? Is it simply banks and corporations who merely hoard wealth, or is it ordinary people who spend and who through their consumption create economic activity?
 
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First of all they don't have to confiscate it from the public, the government has empowered the Federal Reserve which can create money out of thin air. Next of all the million dollar question is what exactly is the public? Is it simply banks and corporations who merely hoard wealth, or is it ordinary people who spend and who through their consumption create economic activity?
So you were referring to deficit spending more than just government spending then. Well, sure. There is no way for a government to spend a trillion dollars of debt in a single year and not stimulate significant economic activity. The question is how long it can do that sort of thing before it starts to do more damage to the value of the currency and to future debt obligations than it does good. Right now, while interest rates on our debt are at historic lows, it makes short term sense to run up debt to fuel growth. The problem will come when those interest rates rise and payment on that debt sucks ever more money out of the economy. At that point you will be wishing we hadn't spent as much as we did.
 
A government that spends a trillion dollars had to first confiscate that trillion dollars from the public. So you would have to explain how a government spending that money is more stimulative than simply leaving it in the hands of the people.

Why do people keep claiming that lie?

Money can also be borrowed and printed.
 
So you were referring to deficit spending more than just government spending then. Well, sure. There is no way for a government to spend a trillion dollars of debt in a single year and not stimulate significant economic activity. The question is how long it can do that sort of thing before it starts to do more damage to the value of the currency and to future debt obligations than it does good. Right now, while interest rates on our debt are at historic lows, it makes short term sense to run up debt to fuel growth. The problem will come when those interest rates rise and payment on that debt sucks ever more money out of the economy. At that point you will be wishing we hadn't spent as much as we did.

Interest rates don't have to rise. The government has a lot to do with the control of wholesale interest rates.

Interest is the price of money. Things that are in plentiful supply and which can be produced inexpensively aren't expensive. Money can be produced in unlimited quantity at virtually no cost, there is no reason for it to be expensive.
 
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