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Your view: Food Stamps and Unemployment

Do you believe Pelosi about Foodstamps and Unemployment?

  • Total voters
    23
cpwill said:
well it was hardly the fed tilting the market signals alone; but the government was altering the incentives pretty heavily there particularly in housing, was it not?
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Mortgage tax credit of course,
 
Lord Tammerlain said:
Total debt levels in the US during the Harding and Coolidge admins was far lower then it is now, it of course was building up strong during their admins and reached a high a few years previous high a few years before.
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debt was at unprecedented levels in both era's; comparing raw dollar amounts isn't rational and you know it.

Overall what we have here is a faluire to associate cause and effect

Cheap credit duriung the 20s leading to the great depression
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no. cheap credit during the 20's led to the stock market crash. the government's response to the stock market crash led to the great depression.

Cheap credit during the 80-00's leading to the current economic crisis

Supply side economics tends to encourage debt increases through easy credit and as such is stimulative in the short run.
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cheap-credit isn't supply-side. that's demand-side ;) that would be the "the way to keep the economy roaring is to keep everyone buying more and more and more and more and more stuff whether they can or no!" side.

Now what major event followed their administrations (
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the Hoover Administration
 
Lord Tammerlain said:
Mortgage tax credit of course,
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definitely a huge part of it.



so we are agreed that the government helped to artificially pump up demand for housing, which led to a bubble and subsequently a crash?
 
Your Star said:
Individual and corporate debt, and a lack of faith in the market for consumers.
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And lack of faith sprung up suddenly?

Individual and corporate debt were rising steadily for years. Why not a gradual decline in the economy?
 
Kal'Stang said:
:doh Of course! How could I forget? Anything that doesn't match what everyone else is saying is of course "anecdotal" evidence. :doh What oh what was I thinking? Silly me. :roll:
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Being willfully ignorant of the statistics?
 
cpwill said:
debt was at unprecedented levels in both era's; comparing raw dollar amounts isn't rational and you know it.
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Debt to gdp as a % dept is far higher now and in the early 30's. Roughly 360% now vs 300% at most in the GD

http://theeconomiccollapseblog.com/...0/07/Total-US-Debt-As-A-Percentage-Of-GDP.jpg

no. cheap credit during the 20's led to the stock market crash. the government's response to the stock market crash led to the great depression.
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Cheap credit fueled the stock market bubble, all bubbles eventually pop. The bigger the bubble the bigger the pop the bigger the collapse
cheap-credit isn't supply-side. that's demand-side ;) that would be the "the way to keep the economy roaring is to keep everyone buying more and more and more and more and more stuff whether they can or no!" side.
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Then harding, Collidge, and Reagan all followed demand side economics despite claims to the contrary
the Hoover Administration
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The Great depression is more like it
 
cpwill said:
definitely a huge part of it.



so we are agreed that the government helped to artificially pump up demand for housing, which led to a bubble and subsequently a crash?
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Certainly

10 characters
 
Lord Tammerlain said:
Debt to gdp as a % dept is far higher now and in the early 30's. Roughly 360% now vs 300% at most in the GD
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Far higher? That's about a 20% difference. It's noticeable, but I wouldn't call it far higher.

Cheap credit fueled the stock market bubble, all bubbles eventually pop. The bigger the bubble the bigger the pop the bigger the collapse
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Let's remember that if you try to make the claim that Coolidge should have done something about the impending bust.

Then harding, Collidge, and Reagan all followed demand side economics despite claims to the contrary
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Reagan never cut spending. What do you have against Coolidge?

The Great depression is more like it
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Caused by inane policies of the Hoover and Roosevelt administrations.
 
Lord Tammerlain said:
Debt to gdp as a % dept is far higher now and in the early 30's.
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that is definitely true. odd, isn't it, that periods of high government deficit spending and debt seem so tied to periods of economic morass?

Cheap credit fueled the stock market bubble, all bubbles eventually pop. The bigger the bubble the bigger the pop the bigger the collapse
Then harding, Collidge, and Reagan all followed demand side economics despite claims to the contrary

The Great depression is more like it
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No, that was first Harding and then Roosevelt's gift to us.
 
phattonez said:
As I said, debt had been rising steadily for years. Why not a gradual crash? Why did it happen so suddenly?
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Why not?

When things become unstable (as excessive debt levels usually are) events can happen extremely quickly. The World Trade center took years to build, but collapsed in a matter of seconds when just a small portion of its structure collapsed.

If the structure was more stable ( less leverage) unexpected events would cause less instability, lowering the risk for catastrophic events. You also can not forget the human factor when it comes to economics. Mass panics do occur in many areas of human interaction. ( See bridge stampede in Cambodia a week or so ago). A mass panic when it comes to economic events can lead to the instability as people forget rational decision making. They can make the same errors on the upside as well
 
cpwill said:
right. so. government alterations to market incentives caused demand to grow far beyond savings. yes?
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Not caused, encouraged

It was the individual decisions that caused it. Those decisions were influence by government alterations
 
Lord Tammerlain said:
Not caused, encouraged

It was the individual decisions that caused it. Those decisions were influence by government alterations
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right so.

explain to me again how if we are in trouble because we have allowed demand to outstrip savings, that the solution is to continue to artificially prop up demand?
 
cpwill said:
that is definitely true. odd, isn't it, that periods of high government deficit spending and debt seem so tied to periods of economic morass?



No, that was first Harding and then Roosevelt's gift to us.
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Only if you ignore the years previous to the economic crisis ( ie the proximate cause of the crisis in the first place

Things just dont happen

An economic crisis, just does not happen out of the blue. It has causes that lead up to the crisis. In Japan it was the massive bubble in the stock market, the propery market, that when bursting caused a massive economic slowdown as wealth was destroyed and debt to assets increased. The boom times during a bubble make those times seem good (1920's, Japan in the 80s, the US in the 90s etc). Those economic periods are not examples of economic strenght, but of economic folly. Give a 15 year old girl a credit card and she will live the high life, and all will seem good untill the bills come due. To state the problems started when the bill comes due is idiotic, the problems started when the bill was being rung up, not after

The 20s, Japan in the 80s the US, UK, Ireland, Iceland, the Baltics etc all rung up high credit card bills during the 2000's and life seemed good, Now the bill comes due, and life sucks. The problem is not that the bill came due, but that it was rung up in the first place
 
cpwill said:
right so.

explain to me again how if we are in trouble because we have allowed demand to outstrip savings, that the solution is to continue to artificially prop up demand?
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And this is the disconnect

It is not a solution of course. It is a way to minimize the pain, instead of making the pain a massive shock to the system causing the entire system to be bed ridden for a short period of time, it allows for the system to function, albit at a reduced rate for an extended period of time

The choices being a massive collapse with untold suffering, that is relatively short lived

Or a moderate collapse with managable suffering that lasts for an extended period of time

In any case untill the debt is worked through, economic growth will be stunted
 
Lord Tammerlain said:
Why not?

When things become unstable (as excessive debt levels usually are) events can happen extremely quickly. The World Trade center took years to build, but collapsed in a matter of seconds when just a small portion of its structure collapsed.
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Economies are not mechanical objects.

If the structure was more stable ( less leverage) unexpected events would cause less instability, lowering the risk for catastrophic events. You also can not forget the human factor when it comes to economics. Mass panics do occur in many areas of human interaction. ( See bridge stampede in Cambodia a week or so ago). A mass panic when it comes to economic events can lead to the instability as people forget rational decision making. They can make the same errors on the upside as well
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But this cycle is something we've seen for years. Presumably people would have become better at predicting them.

The point of speculators is to smooth out price fluctuations, right? That way, instead of $0.50 tomatoes one month and $25 tomatoes another month, we'll average at about $1 tomatoes all year. Why hasn't this occurred in predicting business cycles?
 
Lord Tammerlain said:
Only if you ignore the years previous to the economic crisis ( ie the proximate cause of the crisis in the first place

Things just dont happen

An economic crisis, just does not happen out of the blue. It has causes that lead up to the crisis. In Japan it was the massive bubble in the stock market, the propery market, that when bursting caused a massive economic slowdown as wealth was destroyed and debt to assets increased. The boom times during a bubble make those times seem good (1920's, Japan in the 80s, the US in the 90s etc). Those economic periods are not examples of economic strenght, but of economic folly. Give a 15 year old girl a credit card and she will live the high life, and all will seem good untill the bills come due. To state the problems started when the bill comes due is idiotic, the problems started when the bill was being rung up, not after

The 20s, Japan in the 80s the US, UK, Ireland, Iceland, the Baltics etc all rung up high credit card bills during the 2000's and life seemed good, Now the bill comes due, and life sucks. The problem is not that the bill came due, but that it was rung up in the first place
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But nothing before had lasted so long. Propping up demand fixed nothing. In fact, with all of these measures we haven't seen significant improvement. At least according to Christina Romer.
 
Lord Tammerlain said:
And this is the disconnect

It is not a solution of course. It is a way to minimize the pain, instead of making the pain a massive shock to the system causing the entire system to be bed ridden for a short period of time, it allows for the system to function, albit at a reduced rate for an extended period of time

The choices being a massive collapse with untold suffering, that is relatively short lived

Or a moderate collapse with managable suffering that lasts for an extended period of time

In any case untill the debt is worked through, economic growth will be stunted
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http://emlab.berkeley.edu/users/cromer/JEP_Spring99.pdf

"Major real macroeconomic indicators have not become dramatically more stable between the pre-World War I and post-World War II eras, and recessions have become only slightly less severe on average." - Christina Romer
 
phattonez said:
Economies are not mechanical objects.



But this cycle is something we've seen for years. Presumably people would have become better at predicting them.

The point of speculators is to smooth out price fluctuations, right? That way, instead of $0.50 tomatoes one month and $25 tomatoes another month, we'll average at about $1 tomatoes all year. Why hasn't this occurred in predicting business cycles?
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People are idiots

Why did so many people all of sudden believe that homes were going to appreciate in value at 15 % or more a year when realistically they should only increase over time at a rate similar to income growth and inflation. At the heart of economics is individual behaviour, and individuals are not always rational, nor are they always well informed. The majority of the time people are rational and so are markets, but sometimes a panic or mania over powers those who remain rational
 
Lord Tammerlain said:
People are idiots

Why did so many people all of sudden believe that homes were going to appreciate in value at 15 % or more a year when realistically they should only increase over time at a rate similar to income growth and inflation. At the heart of economics is individual behaviour, and individuals are not always rational, nor are they always well informed. The majority of the time people are rational and so are markets, but sometimes a panic or mania over powers those who remain rational
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But people aren't idiots. People don't just go and buy a computer and expect to make a profit from selling it 2 years later. Frankly, I find this explanation sorely lacking. What caused people to get this belief?
 
Ockham said:
Then all 330 million of us should go on unemployment and foodstamps and within a few months, our economy would be booming again. :lamo

Listening to this stuff is like someone telling a child if they jump up and down outside they'll make diamonds by packing down the dirt outside. It's truly hilarious, the amount of delusion people have an then try to convince others.
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It's like someone standing in a bucket trying to lift themselves by the handle.
 
I have absolutely no problem with unemployment or food stamps. They're a necessary safety net.

What I do have a problem with is the abuse of food stamps and unemployment.

As fast as government sets up a program to help people, people find a way to abuse it. That's human nature. And government is notoriously poor at policing abuse. In fact, it almost seems as if government doesn't care if its safety nets are abused.

If a neighborhood church hears of a family who's fallen on hard times, they get help directly to that family. It's a beautiful thing. The people on the receiving end are grateful and the people giving feel good about themselves and their generosity. In government entitlements, the people on the receiving end aren't grateful, and the taxpayers don't feel good about the way their tax dollars are spent because there's so much cheating going on.

  • I know of people in my own life who've abused unemployment comp -- using it as a paid vacation 'til it runs out.
  • I know of people who regularly visit food banks and, because it's come-one-come-all, they are neither needy nor deserving.
  • I know of an anesthesiologist who, thirty years ago in his 20's, had a heart attack during surgery. He's been on SSDisbility all this time. Owns sailboats, races, travels. Lives in a McMansion on the lake. Because he couldn't get malpractice insurance, and he got himself a good lawyer, he's been collecting all these years.
  • I know a woman who gave up her child to the foster care system so her mother could collect on the child through the foster care program from the state. She's not supposed to live in the same house with her child, but, of course, she does.
  • I know of another couple who gave up their parental rights so that his mother could adopt their daughter. His dad had passed away, and, when his mom adopted the little girl, she began collecting Social Security for the little girl -- for the next fifteen years.
I live in a lovely middle-class neighborhood in suburban Chicago. So we're not talking about a circle of acquaintences from the inner city. If it's so prevalent that I know that many people abusing the system, just imagine where our tax dollars are going.

I know this isn't the subject of this thread, but at least I'm not talking about zuccini.
 
I would really like to see a creditable study that food stamps or unemployment checks drive up demand. We have the same amount of people, what changed is the form of payment. Govt paid (food stamps, unemployment check) or earned cash. IMO, you do cut back on things as your income drops or goes away. The "increase" demand is so slight.
 
phattonez said:
But people aren't idiots. People don't just go and buy a computer and expect to make a profit from selling it 2 years later. Frankly, I find this explanation sorely lacking. What caused people to get this belief?
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People sometimes get caught up in the hype. The tech bubble was a bunch of hype on how some internet stocks were doubling or tripling in peoples investments in a very short period of time. People like that idea, they become obsessed with doing what their neighbor Joe did when he bought into Scamsareus.com and tripled his invesment in 5 months. In this obsession they stop performing rational analysis of the companies and state "it is different this time". The media often reinforces this obbession by bringing on cheerleaders saying it is different this time. This obbession fuels the growth in the stock market causing this believe that it is different this time to appear to be correct, causing even some rational people who know differently to join in as a means to gain quick profits. Then some stocks start to fail. The obbsession starts to fade, the companies start to go broke, and the whole system comes crashing down. Untill rationallity comes back into the market. In the ,time massive amounts of capital has been poorly allocated,

It is a pattern that repeats itself over time in many different countries in many different markets. A small scale one would be Beanie Babies.
 
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