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

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  • Agree, you can't (generally)

    42 44.68%
  • Disagree, you can (generally)

    52 55.32%
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Thread: You can't spend your way out of a recession

  1. #191
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by misterman View Post
    You've strayed into ridiculous territory. I'll give you a pass and let you take that one back.
    I'm not taking it back. Some roads simply are a waste of money. The profit motive works just as well for private roads. Read the quote in this thread.

    http://www.debatepolitics.com/econom...-benefits.html

    Private companies can get loans.
    Then what are you complaining about?

    Do I have to be that precise with my words with you?

    There is a less than optimal level of production.
    Yes you do. So then we need more capital to get production moving, right? Let's let people save more money so we'll have more capital to distribute.

    To sit there, nice and safe, until the recession is gone. Which is why the government needs to do something - private capital isn't going to take the first step. Same with consumers who won't spend because they have no job or fear future job loss, even if they have the cash. Someone who can take the risk needs to make the first move.
    You already admitted that saved money is used as capital though.

    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

  2. #192
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by phattonez View Post
    I'm not taking it back. Some roads simply are a waste of money.
    Some are, most aren't. Some products made by private enterprise are a waste of money too. Your point?

  3. #193
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by misterman View Post
    Crowding out is only an issue when there's competition for the capital. The problem in a recession is capital isn't being used enough.
    Well.... To a point. The manner in which the US obtains much of its current funding is via the offset of the current account. Due to the rather large trade imbalance, Japan, China, Germany, etc... are going to be holding quite a bit of dollars. We can only speculate whether or not they would be purchasing other forms of assets in the absence of $200 billion treasury auctions.

    However, if i was cheer leading the "hands off" section, the first thing i would bring up is crowding out
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  4. #194
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by misterman View Post
    Some are, most aren't. Some products made by private enterprise are a waste of money too. Your point?
    Those who make worthless products in private industry go bankrupt. Those who do so in government get more government money. It's a perverse incentive.

    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

  5. #195
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by phattonez View Post
    Those who make worthless products in private industry go bankrupt. Those who do so in government get more government money. It's a perverse incentive.
    That doesn't mean the government doesn't produce things of value. The fact that you had to declare that roads have no value shows how silly this line of thought is.

  6. #196
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by misterman View Post
    That doesn't mean the government doesn't produce things of value. The fact that you had to declare that roads have no value shows how silly this line of thought is.
    I said that roads aren't inherently good. Maybe you don't know what inherent means. What I was trying to say what that a road isn't necessarily a good thing. Sure, some roads are good, I'm not going to debate that. However, I'm not going to say that all of them are either. We need a profit and loss mechanism to decide which roads are good and which are a waste of money.

    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

  7. #197
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by phattonez View Post
    I said that roads aren't inherently good. Maybe you don't know what inherent means. What I was trying to say what that a road isn't necessarily a good thing. Sure, some roads are good, I'm not going to debate that. However, I'm not going to say that all of them are either. We need a profit and loss mechanism to decide which roads are good and which are a waste of money.
    Nothing is inherently good. But I submit that most roads are good.

    It would be nice to have a profit and loss mechanism to decide which roads are good, but unless you want to have a toll both on every corner, that's a bit impractical.

  8. #198
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    Re: You can't spend your way out of a recession

    A review if the Keynesian theory helps explain why spending is necessary during a recession.

    "When the Great Depression hit worldwide, it fell on economists to explain it and devise a cure. Most economists were convinced that something as large and intractable as the Great Depression must have complicated causes. Keynes, however, came up with an explanation of economic slumps that was surprisingly simple. In fact, when he shared his theory and proposed solution with Franklin Roosevelt, the President is said to have dismissed them with the words: "Too easy."

    Keynes explanations of slumps ran something like this: in a normal economy, there is a high level of employment, and everyone is spending their earnings as usual. This means there is a circular flow of money in the economy, as my spending becomes part of your earnings, and your spending becomes part of my earnings. But suppose something happens to shake consumer confidence in the economy. (There are many possible reasons for this, which we'll cover in a moment.) Worried consumers may then try to weather the coming economic hardship by saving their money. But because my spending is part of your earnings, my decision to hoard money makes things worse for you. And you, responding to your own difficult times, will start hoarding money too, making things even worse for me. So there's a vicious circle at work here: people hoard money in difficult times, but times become more difficult when people hoard money.

    The cure for this, Keynes said, was for the central bank to expand the money supply. By putting more bills in people's hands, consumer confidence would return, people would spend, and the circular flow of money would be reestablished. Just that simple! Too simple, in fact, for the policy-makers of that time.

    If this is the proposed definition and cure for recessions, then what about depressions? Keynes believed that depressions were recessions that had fallen into a "liquidity trap." A liquidity trap is when people hoard money and refuse to spend no matter how much the government tries to expand the money supply. In these dire circumstances, Keynes believed that the government should do what individuals were not, namely, spend. In his memorable phrase, Keynes called this "priming the pump" of the economy, a final government effort to reestablish the circular flow of money."

    A Review of Keynesian Theory
    Treat the earth well: it was not given to you by your parents, it was loaned to you by your children. We do not inherit the Earth from our Ancestors, we borrow it from our Children. ~ Ancient American Indian Proverb

  9. #199
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by Catawba View Post
    A review if the Keynesian theory helps explain why spending is necessary during a recession.

    "When the Great Depression hit worldwide, it fell on economists to explain it and devise a cure. Most economists were convinced that something as large and intractable as the Great Depression must have complicated causes. Keynes, however, came up with an explanation of economic slumps that was surprisingly simple. In fact, when he shared his theory and proposed solution with Franklin Roosevelt, the President is said to have dismissed them with the words: "Too easy."

    Keynes explanations of slumps ran something like this: in a normal economy, there is a high level of employment, and everyone is spending their earnings as usual. This means there is a circular flow of money in the economy, as my spending becomes part of your earnings, and your spending becomes part of my earnings. But suppose something happens to shake consumer confidence in the economy. (There are many possible reasons for this, which we'll cover in a moment.) Worried consumers may then try to weather the coming economic hardship by saving their money. But because my spending is part of your earnings, my decision to hoard money makes things worse for you. And you, responding to your own difficult times, will start hoarding money too, making things even worse for me. So there's a vicious circle at work here: people hoard money in difficult times, but times become more difficult when people hoard money.

    The cure for this, Keynes said, was for the central bank to expand the money supply. By putting more bills in people's hands, consumer confidence would return, people would spend, and the circular flow of money would be reestablished. Just that simple! Too simple, in fact, for the policy-makers of that time.

    If this is the proposed definition and cure for recessions, then what about depressions? Keynes believed that depressions were recessions that had fallen into a "liquidity trap." A liquidity trap is when people hoard money and refuse to spend no matter how much the government tries to expand the money supply. In these dire circumstances, Keynes believed that the government should do what individuals were not, namely, spend. In his memorable phrase, Keynes called this "priming the pump" of the economy, a final government effort to reestablish the circular flow of money."

    A Review of Keynesian Theory
    Thanks. That's a great explanation.

    Some people disagree with this, and that's fine. But too many simply don't understand Keynes' theory in the first place, and argue out of ignorance.

  10. #200
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    Re: You can't spend your way out of a recession

    Quote Originally Posted by misterman View Post
    It would be nice to have a profit and loss mechanism to decide which roads are good, but unless you want to have a toll both on every corner, that's a bit impractical.
    And your argument against it is a bit deceiving. First off, we don't even know if streets would be owned or grids (like areas owned instead of strips). Secondly, with the technology we have in electronic transponders, we don't need toll booths. You can drive right by a "booth" without even having to slow down.

    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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