View Poll Results: You can't spend your way out of a recession

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  • Agree, you can't (generally)

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Thread: You can't spend your way out of a recession

  1. #151
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by phattonez View Post
    Quit talking down to me. It really does you a disservice.



    Hmm, aggregate demand directly affects consumer demand? Demand affects demand?! Genius!

    What you do when you aggregate is ignore the fact that consumption is still up in certain areas and down in others during a recession. Just because aggregate demand has fallen does not mean that all demand has fallen. Maybe it's you who should do some reading on economics. It really is interesting stuff.

    Economics in One Lesson by Henry Hazlitt. You should read it. It's free online.
    Do you know anything about econ?

    Aggregate demand is the TOTAL DEMAND for all goods in service in an economy. It is all demand.

    Aggregate | Define Aggregate at Dictionary.com
    "All mankind is of one author, and is one volume; when one man dies, one chapter is not torn out of the book, but translated into a better language...No man is an island, entire of itself...any man's death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee." - John Donne

  2. #152
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by Sanitas View Post
    Do you know anything about econ?]
    What did I just tell you about talking down?

    Aggregate demand is the TOTAL DEMAND for all goods in service in an economy. It is all demand.

    Aggregate | Define Aggregate at Dictionary.com
    Yes, wise guy, I understand that. However, you can't analyze an economy just be looking at aggregate demand because demand for certain things is up or sustained and demand for other things has dropped. So you can't just conclude that lower aggregate demand will lead to lower production. In fact, the situation that I described would say that a shift in the economy is necessary. Trying to prop up demand will just create a bubble.

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

  3. #153
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by phattonez View Post
    What did I just tell you about talking down?



    Yes, wise guy, I understand that. However, you can't analyze an economy just be looking at aggregate demand because demand for certain things is up or sustained and demand for other things has dropped. So you can't just conclude that lower aggregate demand will lead to lower production. In fact, the situation that I described would say that a shift in the economy is necessary. Trying to prop up demand will just create a bubble.
    Have you seen a aggregate supply and demand model? I'll show you.



    Along the Y axis is price level and along the X axis is output (GDP) or total production.

    Where aggregate demand and short run aggregate supply come together, this defined price level and output (or production).

    When aggregate demand shifts to the left (recession), output falls. There is no way around it.



    I have to go for now, but I'll be back later.
    Last edited by Sanitas; 02-26-10 at 05:23 PM.
    "All mankind is of one author, and is one volume; when one man dies, one chapter is not torn out of the book, but translated into a better language...No man is an island, entire of itself...any man's death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee." - John Donne

  4. #154
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by VanceMack View Post
    Hogwash. You cant 'spend your way out of a recession'...you merely dig a deeper hole that someone else has to pay for.

    Artificially propping up an economy doesnt stimulate growth.
    Why not?

    .........

  5. #155
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by Sanitas View Post
    Along the Y axis is price level and along the X axis is output (GDP) or total production.
    The problem here is that GDP is not an accurate measure of production because it counts government spending as being as effective as private spending when it isn't because government doesn't know our demands like we do.

    Where aggregate demand and short run aggregate supply come together, this defined price level and output (or production).

    When aggregate demand shifts to the left (recession), output falls. There is no way around it.
    Sure, but who cares? Why would you want an economy that is not producing the things that people want? General production is not important. What we want our economy to do is to satisfy the demand of consumers.

    I have to go for now, but I'll be back later.
    Maybe with a little bit of humility when you do?

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

  6. #156
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by phattonez View Post
    The problem here is that GDP is not an accurate measure of production because it counts government spending as being as effective as private spending when it isn't because government doesn't know our demands like we do.
    If you really wanted you could take government spending out of the GDP formula. It would still be the same - that when aggregate demand falls, so does output.

    Sure, but who cares? Why would you want an economy that is not producing the things that people want? General production is not important. What we want our economy to do is to satisfy the demand of consumers.
    I understand. This is not a classical economy. Supply does not create its own demand.

    The market works in a way so that only successful businesses stay open. This is called creative destruction, and it happens in any basic free market.

    Who is producing goods that nobody wants? I really didn't know what you were getting at.

    Maybe with a little bit of humility when you do?
    Didn't you mention something about talking down? I stopped doing that.
    "All mankind is of one author, and is one volume; when one man dies, one chapter is not torn out of the book, but translated into a better language...No man is an island, entire of itself...any man's death diminishes me, because I am involved in mankind; and therefore never send to know for whom the bell tolls; it tolls for thee." - John Donne

  7. #157
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by Sanitas View Post
    Didn't you mention something about talking down? I stopped doing that.
    It seems like you finally have.

    Now, by what you're showing me, you're trying to argue that government needs to prop up demand in order to keep an economy going. Make work programs, inflation, it's all the same. Let me pose a situation to you.

    1. An economy where the government pays everyone to produce war goods. GDP will be good.

    2. An economy where private businesses are allowed to run and the government tries to interfere as little as possible. GDP is not as high as in situation 1.

    So, GDP is higher in situation 1 (simply because via inflation they can pay their workers much better than in situation 2 meaning government spending will be greater here than consumption and investment in situation 2), but which economy is better?

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

  8. #158
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by phattonez View Post
    Because all you care about is how much you can get for your goods now. Storing goods for until that money comes into circulation means you have to take into account the price of storage.


    Read again. There's no storing involved.

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    Re: You can't spend your way out of a recession

    Quote Originally Posted by phattonez View Post
    It seems like you finally have.

    Now, by what you're showing me, you're trying to argue that government needs to prop up demand in order to keep an economy going. Make work programs, inflation, it's all the same. Let me pose a situation to you.

    1. An economy where the government pays everyone to produce war goods. GDP will be good.

    2. An economy where private businesses are allowed to run and the government tries to interfere as little as possible. GDP is not as high as in situation 1.

    So, GDP is higher in situation 1 (simply because via inflation they can pay their workers much better than in situation 2 meaning government spending will be greater here than consumption and investment in situation 2), but which economy is better?
    Whichever one employs the most people with the highest wages so they can have the highest living standard possible. If the government can sell war goods to other countries for a premium and the import cheap everyday goods from China to satisfy everyone, the answer is 1. You should read more about Comparative Advantage if you're going to spend so much time in an Economics forum.

  10. #160
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by nonpareil View Post


    Read again. There's no storing involved.
    And that money isn't in the economy at the time. The money that people do have then will be worth more until that money gets back into the economy.

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

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