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You can't spend your way out of a recession

You can't spend your way out of a recession


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Wow. Have you ever read anything from that school? Seriously, anything?

You mean the non applicable theory of the firm? Oh boy did i, and i was quite unimpressed.
 
Agree or disagree?

Agree generally.. as far as simple economic cycles.

But you HAVE to Spend/Bail/Borrow-and-steal your way out of the Depression we almost had just a year+ ago.

Of course the 1930's spending after the 1929 Depression was successful to some extent and got some people working again...

But it wasn't until the Huge Public spending of World War II that we actually DID spend our way back to prosperity.
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Completely disagree. In fact, spending is the ONLY way to get out of a recession. A recession is pretty much defined by the lack of spending.

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. Cutting government, tightening belts, and allowing the private sector to build is the only way to get out of a recession.

A year after the stimulous packages, the states are back to being out of money, they didnt do anything to fix their problem, and we have another few trillion tacked onto the back end of our national debt...
 
for what it is worth...

the only people clamoring for more government spending are the ones that have proven they simply havent a clue how to be successful.
 
for what it is worth...

the only people clamoring for more government spending are the ones that have proven they simply havent a clue how to be successful.

Wrong.....

Unless of course the markets are wrong?
 
Everyone fails at the same time?

Absolutely. Why is that so unthinkable? Why is it the default assumption that markets would always be perfectly rational and efficient? Lots of people do the same stupid things under the same circumstances.

phattonez said:
How is that even possible? What is the cause of systemic failures in the marketplace?

Predictably irrational behavior on the part of individuals. We see this in other forms of human behavior, so why would economics be an exception?

If the government was the only variable here, then there wouldn't have been a crash in the housing market. Government policies changed very little until AFTER the bubble had burst.
 
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Artificially propping up an economy doesnt stimulate growth.

Then how does spending artificially prop up the economy, if not by stimulating growth?

VanceMack said:
Cutting government, tightening belts, and allowing the private sector to build is the only way to get out of a recession.

We have gotten out of recessions before without doing those things.

VanceMack said:
A year after the stimulous packages, the states are back to being out of money, they didnt do anything to fix their problem,

Sounds like a good case for another dose of stimulus.

VanceMack said:
and we have another few trillion tacked onto the back end of our national debt...

The short-term debt we're incurring as a cost of fighting the recession is not very worrisome. What is much more concerning is the long-term component of our deficit, especially entitlements.
 
Agree or disagree?
If you mean government spending, then no. All this does is run up debt, leading to bigger problems down the road.

If you mean spendng in the private sector, then yes. The idea is to properly stuimulate that spending, which is best done by people being allowed to keep, and then spend, more of their own money.

What a silly thought, 'allowing' people to keep ther own money.
 
Wrong.....

Unless of course the markets are wrong?

How is that unemployment rate doing? How is the housing market coming? Booming right?

This MAY be lost on you...but the markets are basically run by investors...people that already HAVE money. Wealthy people tend to do OK...and in fact often thrive...in down markets.

id be much more impressed if the 'real' unemployment rates werent around 19%. Id feel more comforted if cities like detroit werent facing 35% unemployment (real unemployment...you know...the rates that include people no longer eligible for jobless benefits).
 
Then how does spending artificially prop up the economy, if not by stimulating growth?



We have gotten out of recessions before without doing those things.



Sounds like a good case for another dose of stimulus.



The short-term debt we're incurring as a cost of fighting the recession is not very worrisome. What is much more concerning is the long-term component of our deficit, especially entitlements.

Good lord...really???

Lets see...California was on the verge of bankruptcy...we debt loaned them a chunk in stimulus dollars. That money is gone and they are back to facing the original layoffs...

We temporarily staved off a bottoming housing market by artificially bouying up the housing market and banks. Now foreclosures are once again on the rise, homes arent being built, housing costs are still artificially inflated depressing the markets...

The stimulous dollars havent 'created' a single job. They HAVE allowed state and locals that were already failing to tax and spend appropriately to keep people employed (the 'saved' part of created or saved jobs) and when those dollars are gone all we have left is a hole.

Things have to get worse before they get better. sad reality. Cuts have to be made. Private industry needs to be encouraged to build and grow. We need cooperative efforts between labor, business and yes, government to bring back the industrial base skilled jobs. The housing prices need to be allowed to correct (and yes...that means people will temporarily lose property value) so that people can afford to buy again.

Deficit spending isnt creating jobs. It is 'saving' governments from having to be responsible.
 
The short-term debt we're incurring as a cost of fighting the recession is not very worrisome. What is much more concerning is the long-term component of our deficit, especially entitlements.

BTW...there IS no "short term deficit". They keep raising the debt ceiling and all this deficit spending is being tacked onto the national debt. Its the equivalent of rolling your car and credit card payments into a homeloan...instead of hurting for a few years you now are stuck paying on them for 30 years.
 
Then how does spending artificially prop up the economy, if not by stimulating growth?



We have gotten out of recessions before without doing those things.



Sounds like a good case for another dose of stimulus.



The short-term debt we're incurring as a cost of fighting the recession is not very worrisome. What is much more concerning is the long-term component of our deficit, especially entitlements.

BTW...I dont know you so I wont ASSUME you are unemployed, underemployed, or yet another crippled and dependent pet waiting for the government to bail them out. But the tragic reality is that it is the have nots...the failures...those that havent prepared for the present let alone the future, those that wouldnt have a clue as to how to create income that are leading the charge for higher taxes on the wealthy to pay for the crippled and dependent pets. Thats a little scary. Nah...scratch that..its downright idiotic.
 
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. Cutting government, tightening belts, and allowing the private sector to build is the only way to get out of a recession.

A year after the stimulous packages, the states are back to being out of money, they didnt do anything to fix their problem, and we have another few trillion tacked onto the back end of our national debt...

You can, but only on an individual consumer level. The only way out of a recession is for more people to have jobs so they can spend money on products that others are making, etc. Throwing money mindlessly at companies that certainly don't deserve it and tacking on billions in porkbarrel projects will do nothing but create long-term debt, like you said. Of course, in the modern liberalized America, nobody cares if their children or grandchildren will be paying for the debt of today, everyone is shortsighted, they want instant gratification.

But isn't that how we got into this mess in the first place?
 
You can, but only on an individual consumer level. The only way out of a recession is for more people to have jobs so they can spend money on products that others are making, etc. Throwing money mindlessly at companies that certainly don't deserve it and tacking on billions in porkbarrel projects will do nothing but create long-term debt, like you said. Of course, in the modern liberalized America, nobody cares if their children or grandchildren will be paying for the debt of today, everyone is shortsighted, they want instant gratification.

But isn't that how we got into this mess in the first place?

In fairness...no...we speculated ourselves into this position. OK...thats IS like your last line...but we the people have to take MOST of the responsibility for the problem AND the solution.

The problem is...they arent trying to work towards resolving the problem...they are using the problem as an excuse to shoehorn in their social spending agenda. Like Rahm says...never let a disaster go to waste...
 
It can get you out of a recession, but government spending will just lead to another bubble. In this sense, you're not really spending your way out of a recession. You're just delaying the inevitable.

But given how modern economies work and how consumers actually behave, we're always just delaying the inevitable.
 
Of course the government can't spend it's way out of recession. Never has, never will.

China suggests you are dead wrong. They went from a significant GDP decline and high unemployment to projected 11% growth largely due to massive infrastructure spending. While this is likely creating a valuation bubble, that's another topic.
 
If you mean government spending, then no. All this does is run up debt, leading to bigger problems down the road.

Okay genius, tell me, you are stating that government spending for WWII had no impact upon the economy. Furthermore, you are also stating that the rebirth of the German economy prior to WWII was not based on government spending. Furthermore, you are explicitly arguing that China's emergence from its recession had nothing to do with the large stimulus China's government passed.

You can run away now.
 
Okay genius, tell me, you are stating that government spending for WWII had no impact upon the economy. Furthermore, you are also stating that the rebirth of the German economy prior to WWII was not based on government spending. Furthermore, you are explicitly arguing that China's emergence from its recession had nothing to do with the large stimulus China's government passed.

You can run away now.

Created or saved 2 million jobs. Created or SAVED 2 million jobs. Created or ...SAVED...2 million jobs.

No new job creation. temporarily avoided layoffs with creating a change in the failed tax and spend policies of local, state and federal governments. Shovel ready projects for businesses with people already employed.

No new job creation. Governments now deeper in debt. Another trillion or two dumped into the national debt.

Private sector creates economic growth...NOT the federal government.
 
And oh by the way...

In order for a 'stimulus plan' to work or job creation to be viable, there has to be some form of income generation. Businesses need to be created that can hire new employees and generate additional business opportunites. Revenue...not deficit.

What our current 'stimulus' plan did was create an additional trillion dollar plus hole.
 
VanceMack said:
In fairness...no...we speculated ourselves into this position. OK...thats IS like your last line...but we the people have to take MOST of the responsibility for the problem AND the solution.

I don't think necessarily "we" speculated ourselves into it. Clinton deregulated the financial sector and let the crooks run the show. It isn't like nobody saw this coming, I posted about it regularly a decade ago or so, but people get greedy and when it looks like someone is giving something away for nothing, they buy into it no matter how shady it looks. Lots of people in the financial sector made lots of money and are now living the good life on a beach somewhere. The bottom had to fall out because it was utterly unsustainable. You can't be giving things to people who demonstrably can't afford it, just because they want it.

The problem is...they arent trying to work towards resolving the problem...they are using the problem as an excuse to shoehorn in their social spending agenda. Like Rahm says...never let a disaster go to waste...

The problem is, the American people don't want to resolve the problem, they just want to go back to the way it was before the bottom fell out and the politicians know that actually trying to solve the problem would get them thrown out of office. Bush knew it, Obama knows it. The American people don't want financial stability, they want to go back to being able to buy things they don't need and can't afford with money they don't have. Americans have lived in a financial fantasy land for a long, long time, anyone who suggests we need to live within our means is going to get the boot.
 
China suggests you are dead wrong. They went from a significant GDP decline and high unemployment to projected 11% growth largely due to massive infrastructure spending. While this is likely creating a valuation bubble, that's another topic.

That's mostly because China had the surplus to do exactly that. They had savings. The U.S. didn't. That's the problem.
 
Okay genius, tell me, you are stating that government spending for WWII had no impact upon the economy...
This is a reading comprehension failure on your part -- I said no such thing.

-You- can run away now.
 
Okay genius, tell me, you are stating that government spending for WWII had no impact upon the economy. Furthermore, you are also stating that the rebirth of the German economy prior to WWII was not based on government spending. Furthermore, you are explicitly arguing that China's emergence from its recession had nothing to do with the large stimulus China's government passed.

You can run away now.

Germany was a boom economy that would have succumbed to a bust had it had enough time to run its course. China will be the same way. The US during WWII did not have a growing economy. Sure, you may see GDP growing and economic indicators being great for the period, but it sucked to live through that. People were dying and goods were rationed. I wouldn't exactly point out war as a good example of how to grow your economy.
 
BTW...there IS no "short term deficit". They keep raising the debt ceiling and all this deficit spending is being tacked onto the national debt. Its the equivalent of rolling your car and credit card payments into a homeloan...instead of hurting for a few years you now are stuck paying on them for 30 years.

By "short-term deficit," I was referring to the components of the deficit that are necessary to address the recession. Those aren't really so worrisome, because they're short-term problems. The "long-term deficit" - the expenses that we'll incur every single year (e.g. entitlement spending) is much more worrisome, and we need to take action to get that spending under control.
 
BTW...I dont know you so I wont ASSUME you are unemployed, underemployed, or yet another crippled and dependent pet waiting for the government to bail them out.

Swell. And I won't ASSUME that you're a teabagging, buck-tooth redneck who molests your underage sister. :mrgreen:

VanceMack said:
But the tragic reality is that it is the have nots...the failures...those that havent prepared for the present let alone the future, those that wouldnt have a clue as to how to create income that are leading the charge for higher taxes on the wealthy to pay for the crippled and dependent pets. Thats a little scary. Nah...scratch that..its downright idiotic.

Your assessment of the people who advocate for such ideas is completely irrelevant to whether or not they are good policy.
 
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