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Canada has gone... Keynesian?

Fenton said:
I posted evidence, it was in the link

How much Stimulus did Japan blow through in the 1990's ?

They spent 100 trillion yen via 10 seperate Stimulus initiatives and invested heavily on infrastructure.

Their economy remained stagnant while their debt shot up exponentially.

Under Abenomics they had four more Stimulus packages and their economy actually contracted.

Obama's stimulus failed to meet his OWN standards and we've spent Trillions more since 2009 and our economy is still on life support.

How is any of that not evidence ??
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Because what Japan experienced was a liquidity trap on the back of a massive asset bubble.

A sudden collapse in asset values and the stock market plummet created a condition where too many of their financial organizations held assets worth less than their liabilities against them. Stimulus, nor Keynesian economics, caused their lost decade. Japan literally had organizations living off government infusions of capital who were by effect zombie banks, with net worth's less than zero but still holding assets. Their stagnant economy was not based in improper economic theory, but rather crony capitalism where organization that should have failed did not. Toxic debt never left and eventually over a very long time banks all consolidated at the hands of government interference. Credit never did stabilize and that caused the their economic troubles to take a very long time to navigate through, in some cases they still have underline problems as their aging population is about to make matters worse. They never did have a good application of QE and their aggregate demand problems suffered set back after set back because of the underline asset valuation collapse.

Your link is a political attempt to brand all of Japan's problems as Keynesian caused, but there is no real data to support that conclusion.

And not a bit of this is applicable to Canada anyway, their economic concerns are entirely different as is their present fiscal condition and monetary policy controls. You have failed to derail another thread bashing on economic theory you seemingly know little to nothing about.
 
Exquisitor said:
They can use short term deficits to boost the economy.

It will work if they don't keep running deficits perpetually.

They will have to pay it back.

Just like you with your credit cards; you borrow when you need to and then pay it back when the cash flow is there.
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Leveraging does not always produce cash flow, and having higher rates, for short term, means that whatever growth that may come of it, is shorted as well. Policy changes will work better than playing games with money in my view.
 
OrphanSlug said:
Because what Japan experienced was a liquidity trap on the back of a massive asset bubble.

A sudden collapse in asset values and the stock market plummet created a condition where too many of their financial organizations held assets worth less than their liabilities against them. Stimulus, nor Keynesian economics, caused their lost decade. Japan literally had organizations living off government infusions of capital who were by effect zombie banks, with net worth's less than zero but still holding assets. Their stagnant economy was not based in improper economic theory, but rather crony capitalism where organization that should have failed did not. Toxic debt never left and eventually over a very long time banks all consolidated at the hands of government interference. Credit never did stabilize and that caused the their economic troubles to take a very long time to navigate through, in some cases they still have underline problems as their aging population is about to make matters worse. They never did have a good application of QE and their aggregate demand problems suffered set back after set back because of the underline asset valuation collapse.

Your link is a political attempt to brand all of Japan's problems as Keynesian caused, but there is no real data to support that conclusion.

And not a bit of this is applicable to Canada anyway, their economic concerns are entirely different as is their present fiscal condition and monetary policy controls. You have failed to derail another thread bashing on economic theory you seemingly know little to nothing about.
Click to expand...

So they, the Japanese Govt, the best economic minds Japan had to offer, did it all wrong ? But you, a guy on a internet debate site could have done it properly ?

Lol...

And their asset bubble is irrelevant.
What's relevant was their decision to attempt to spend their way back to prosperity by applying a purely ideological solution.

It doesn't matter were Stimulus is tried. Here, China, Japan, it always fails because it papers over the REAL reasons why the economy is stagnant.

So the economy remains stagnant and debt piles up. When the money runs out the problems that were ignored still exist so, nothing improves especially if there's a Progressive in the WH

No, you cant cattle prod a market economy back into production via backwards initiatives that focus on increasing demand through Govt debt.

It leads to massive debt, misallocation, massive corruption, waste and stagnation.

What did the American tax payer get for its Green Jobs investment ? A bunch of 5th amendment pleas from Chroney Capitalist and billions of dollars thrown down the drain.
 
Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!


Here are some details of the economic plan provided by CDCNews.


  • Deficit: $29.4 billion this year, $29 billion the next before falling - but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth - much lower than economists predict.
  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures: up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.
  • Tax credits: Children's arts and fitness tax credits phased out by end of 2017. But teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 billion of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to "modernize and revitalize CBC/Radio-Canada in the digital era."
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

Thoughts? Predictions?
Click to expand...

I think Trudeau is yet another, well intentioned, macroeconomic ignoramus who has not a clue how to run an economy.

Kinda like you...except you (unlike a couple others on here who peddle your economic theories) are not well intentioned (IMO).

It will fail, of course (it always does eventually - in one form or another)...and economically-smart Canadians will make huge returns when it does.

Bu bye.
 
Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!


Here are some details of the economic plan provided by CDCNews.


  • Deficit: $29.4 billion this year, $29 billion the next before falling - but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth - much lower than economists predict.
  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures: up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.
  • Tax credits: Children's arts and fitness tax credits phased out by end of 2017. But teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 billion of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to "modernize and revitalize CBC/Radio-Canada in the digital era."
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

Thoughts? Predictions?
Click to expand...

I think Trudeau is yet another, well intentioned, macroeconomic ignoramus who has not a clue how to run an economy.

It will fail, of course (it always does eventually - in one form or another)...and economically-smart Canadians will make huge returns when it does.

Bu bye.
 
Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!


Here are some details of the economic plan provided by CDCNews.


  • Deficit: $29.4 billion this year, $29 billion the next before falling - but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth - much lower than economists predict.
  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures: up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.
  • Tax credits: Children's arts and fitness tax credits phased out by end of 2017. But teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 billion of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to "modernize and revitalize CBC/Radio-Canada in the digital era."
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

Thoughts? Predictions?
Click to expand...

If I was Trudeau and we went over what I said in JfC MMT topic.. I would actually push all those other (outside of retired) spending into infrastructure and did a $300b package over 5 years. It's short and sweet.
 
Fenton said:
So they, the Japanese Govt, the best economic minds Japan had to offer, did it all wrong ? But you, a guy on a internet debate site could have done it properly ?

Lol...

And their asset bubble is irrelevant.
What's relevant was their decision to attempt to spend their way back to prosperity by applying a purely ideological solution.

It doesn't matter were Stimulus is tried. Here, China, Japan, it always fails because it papers over the REAL reasons why the economy is stagnant.

So the economy remains stagnant and debt piles up. When the money runs out the problems that were ignored still exist so, nothing improves especially if there's a Progressive in the WH

No, you cant cattle prod a market economy back into production via backwards initiatives that focus on increasing demand through Govt debt.

It leads to massive debt, misallocation, massive corruption, waste and stagnation.

What did the American tax payer get for its Green Jobs investment ? A bunch of 5th amendment pleas from Chroney Capitalist and billions of dollars thrown down the drain.
Click to expand...

Who said "the Japanese Govt, the best economic minds Japan had to offer" got it all wrong?

What I said was why Japan fell into a long term "lost decade," which is backed up by the actual results of having to deal with a huge asset bubble collapse. Why they stayed stagnant was all that toxic evaluations never left the equation.

Regardless, we have no empirical data to back up that their "Keynesian" policies (which were not entirely Keynesian anyway) caused stagnation.
 
OrphanSlug said:
Who said "the Japanese Govt, the best economic minds Japan had to offer" got it all wrong?

What I said was why Japan fell into a long term "lost decade," which is backed up by the actual results of having to deal with a huge asset bubble collapse. Why they stayed stagnant was all that toxic evaluations never left the equation.

Regardless, we have no empirical data to back up that their "Keynesian" policies (which were not entirely Keynesian anyway) caused stagnation.
Click to expand...

Yes, I agree, stimulus doesn't address the structural and substantive economic issues that lead to stagnation so why do it ?

Debt for debts sake ??
 
Fenton said:
Yes, I agree, stimulus doesn't address the structural and substantive economic issues that lead to stagnation so why do it ?

Debt for debts sake ??
Click to expand...

In an attempt to deal with aggregate demand fault, the problem was there was to much toxicity that it was impossible to recover. Monetary policy cannot alone handle that, nor can economic policy. They have to be on concert but the core problem is Japan did not really deal with banks holding so much debt that was practically worthless.

The data suggests Japan made a mistake handling what the disposition of the banks was, and they ended up consolidating in a major way because of it.

No matter what your take on Japan's lost decade, there is nothing in the economic condition for Canada that suggests they will face a similar problem. Canada's economic and monetary policies should be reasonable enough to see an impact to GDP growth over the target time frame (assuming no major new problems, like international concerns or new energy concerns.)
 
OrphanSlug said:
In an attempt to deal with aggregate demand fault, the problem was there was to much toxicity that it was impossible to recover. Monetary policy cannot alone handle that, nor can economic policy. They have to be on concert but the core problem is Japan did not really deal with banks holding so much debt that was practically worthless.

The data suggests Japan made a mistake handling what the disposition of the banks was, and they ended up consolidating in a major way because of it.

No matter what your take on Japan's lost decade, there is nothing in the economic condition for Canada that suggests they will face a similar problem. Canada's economic and monetary policies should be reasonable enough to see an impact to GDP growth over the target time frame (assuming no major new problems, like international concerns or new energy concerns.)
Click to expand...

Fiscal stimulus is not monetary policy, its fiscal policy and its supposed to increase demand regardless of the existence of toxity.

It's a one dimensional and inept way of kickstarting market economies pushed by people that don't comprehend market economies and or oppose market based fundamentals on principle.

What Japan did recently was Monetary policy mixed in with Fiscal stimulus. ' Abenomics ". It failed miserably too.

And yes, Canadian stimulus will turn out like all other stimulus inititiaves before it. It will fail at everything exept creating new debt.


Keynesians think consumers are mindless spending machines. That individuals aren't sophisticated enough to take into account the consequences of their actions. That they don't consider the health of the economy or the future when making their purchases

This is one of the primary reasons why Stimulus fails. It doesn't change anything fundamental. It doesn't inspire consumer confidence, it doesn't give investors confidence to invest back into the private sector.

Investors simply sit on the sidelines and wait until the Govt wasted stimulus runs out.

It's a clumsy and thoughtless approach that puts the cart ( demand ) before the horse ( production )
 
Kushinator said:
With Canada in the midst of a recession, Prime Minister Trudeau is push for the prototypical Keynesian solution to help encourage economic growth... running deficits!


Here are some details of the economic plan provided by CDCNews.


  • Deficit: $29.4 billion this year, $29 billion the next before falling - but no surplus forecast before the next election.
  • Debt: Expected to grow by $113 billion by 2020-21, but debt-to-GDP ratio to stay mostly flat at around 32 per cent.
  • Growth: Deficit based on 0.4% annual growth - much lower than economists predict.
  • Canada Child Benefit: New monthly tax-free payments starts July 1 to replace UCCB and other tax measures: up to $6,400 a year per child under 6, and $5,400 those aged 6 to 18. But this amount begins to claw back for households with an income over $30,000 and is eliminated entirely for incomes over $190,000.
  • Tax credits: Children's arts and fitness tax credits phased out by end of 2017. But teachers get a $150 credit for teaching materials.
  • EI: Changes make it easier to qualify for benefits, and extends benefits for workers in 12 hard-hit regions. Plus: a bigger-than-expected cut in EI premiums next January.
  • Infrastructure: $120 billion over 10 years, focusing first on public transit, water, waste management and housing infrastructure.
  • Indigenous Peoples: $8.4 billion over five years, with $2.6 billion of that to improve primary and secondary education on reserves. Other funding for drinking water and housing, as well as family and child services.
  • Student grants: Increased 50%, to $3,000 for low-income and $1,200 for middle-income students.
  • Arts: $1.9 billion over five years for arts and culture organizations, including the Canada Council, Telefilm Canada and the National Arts Centre. $675 million to "modernize and revitalize CBC/Radio-Canada in the digital era."
  • Seniors: Guaranteed Income Supplement increased by up to $947 annually.
  • Veterans: Reopens nine service offices, increases amounts payable to injured veterans and indexes some benefits to inflation.

Thoughts? Predictions?
Click to expand...

Your opening statement is false - Canada is not in the midst of a recession - growth is slow, but there is growth, regardless of the downward pressure on the resource sector, particularly oil.

This budget and the projected $110 billion plus deficits this idiotic Liberal government has planned, will do nothing to change the dynamics of a world economy that Canada relies on. All it will do is more greatly indebt future generations and make it harder for the government to fund those things necessary for the populace at large as it ages.

What it may do, I'll grant, is create a situation where the Liberal government gets reelected by those it will further support with government handouts and employment. Under the Harper Conservatives, unlike in the US, the equity gap between the middle class and the top 1% had narrowed, consistently. With increasing taxation, increasing upward pressure on energy costs through carbon pricing/taxation and other environment nonsense, that gap will begin to grow again as the middle class is disproportionately saddled with paying for the fool in the Prime Minister's office largesse.
 
Van Basten said:
What kind of household would let itself sink into so much debt?!
Click to expand...

A 32% Debt:GDP ratio isn't so much debt. The real question is what is Canada spending the debt on? In the U.S., we added a great deal of debt to essentially give rich people tax cuts. Perhaps the Canadians are taking advantage of historic low interest rates to fund capital improvements?
 
Fenton said:
Multiple historic and rather glaring examples of the failures of Keynesian strategies NOT growing economies and you cant see how someone can disagree with this ?

One of the many problems with " stimulus " is the Keynesian view of the average comsumer. They think pouring debt into a economy will kick start spending and increase demand because as far as theyre concerned consumers are unsophisticated spending machines.

Truth is consumers are considerate and thoughtful when it comes to their spending and that's why stimulus only stimulates debt as the economy remains stagnant.

Stimulus means the Govt isn't addressing the REAL reasons why the economy is stagnant and that means when Stimulus runs out you're still left with economic stagnation, and now a big pile of debt.

So no, I cant see why anyone would think that this was a good idea
Click to expand...

Actually it is the opposite. When private spending craters, govt. spends more to compensate. Govt. is directly addressing the immediate problem which is depressed private spending which has a self re-enforcing effect of causing layoffs which further depress spending. That's why I can't see how anybody could disagree with it or that it works in a recession. It stops the bleeding allowing time to heal the wound before the patient is comatose, to use a medical analogy. You prefer the more risky approach of appealing to a higher power?
 
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Fenton said:
Yea, tax cuts....

Welfare spending jumps 32% during Obama's presidency - Washington Times
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Did you happen to check the date of your linked article? Thursday, October 18, 2012. In other words, at the end of the worst recession since the Great Depression welfare spending increased. Shocking. What has happened since?

usgs_line.php
 
Fenton said:
I posted evidence, it was in the link

How much Stimulus did Japan blow through in the 1990's ?

They spent 100 trillion yen via 10 seperate Stimulus initiatives and invested heavily on infrastructure.

Their economy remained stagnant while their debt shot up exponentially.

Under Abenomics they had four more Stimulus packages and their economy actually contracted.

Obama's stimulus failed to meet his OWN standards and we've spent Trillions more since 2009 and our economy is still on life support.

How is any of that not evidence ??
Click to expand...

Their economy actually grew at the same rate as the U.S. and the U.S experienced a massive tech boom. Not sure you understand what stagnant means.....
 
iguanaman said:
Actually it is the opposite. When private spending craters, govt. spends more to compensate. Govt. is directly addressing the immediate problem which is depressed private spending which has a self re-enforcing effect of causing layoffs which further depress spending. That's why I can't see how anybody could disagree with it or that it works in a recession. It stops the bleeding allowing time to heal the wound before the patient is comatose, to use a medical analogy. You prefer the more risky approach of appealing to a higher power?
Click to expand...

You might have a point if the average Canadian wasn't saddled with record levels of personal debt. The vast majority of Canadians who will receive any benefit from this budget will either spend it on the increased costs of energy, set to rise with carbon pricing/taxes, or on reducing personal debt. This is particularly true of any increase in pension supplements to seniors. This budget does nothing to spur the economy. As for record interest rates, you're a fool if you think they are going to last forever. When they inevitably rise, that debt will become exponentially more expensive to service and other programs will suffer or the middle class will be saddled with even more tax increases.
 
Right now the US debt to GDP ratio is at all time highs, meanwhile the costs of that debt got cheaper and we always had access to dollars. Canada is structurally no different.
 
CanadaJohn said:
You might have a point if the average Canadian wasn't saddled with record levels of personal debt. The vast majority of Canadians who will receive any benefit from this budget will either spend it on the increased costs of energy, set to rise with carbon pricing/taxes, or on reducing personal debt. This is particularly true of any increase in pension supplements to seniors. This budget does nothing to spur the economy. As for record interest rates, you're a fool if you think they are going to last forever. When they inevitably rise, that debt will become exponentially more expensive to service and other programs will suffer or the middle class will be saddled with even more tax increases.
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You do understand that without GDP growth you risk recession spiraling out of control as more jobs are lost resulting in further reductions in spending. It has nothing to do with individuals level of debt it will keep more people off unemployment and that is what counts now.. Your last govt. put you into the mess by wagering your future on high oil prices any carbon tax pales in comparison to the billions wasted on the tar sands. Your fear of debt is unfounded too.
 
iguanaman said:
You do understand that without GDP growth you risk recession spiraling out of control as more jobs are lost resulting in further reductions in spending. It has nothing to do with individuals level of debt it will keep more people off unemployment and that is what counts now.. Your last govt. put you into the mess by wagering your future on high oil prices any carbon tax pales in comparison to the billions wasted on the tar sands. Your fear of debt is unfounded too.
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Well, we disagree and you have a profound lack of understanding of Canada and this budget.
 
JP Hochbaum said:
Right now the US debt to GDP ratio is at all time highs, meanwhile the costs of that debt got cheaper and we always had access to dollars. Canada is structurally no different.
Click to expand...

Thanks to unprecedented Monetary stimulus thats suppressed interest rates and led to more disparity and a terrible economy debts stayed cheap.

Why would you not mention QE ?
 
Fenton said:
http://www.cnbc.com/2014/08/21/japan-has-fallen-victim-to-the-keynsian-scamcommentary.html

I'm amazed I had to even post that link.

Japan stuck by the Keynesian play book to the letter throughout the 90's and even tried it again adding Monetary stimulus to suppress interest rates along with new fiscal stimulus.

Their economy remained stagnant in the 90's and even contracted under Abenomics.

Obama's stimulus even failed to live up to the standards Obama set for it when he was selling it as a way to grow the evonomy

We have people that literally think busineses DON'T respond to incentives supportimg fiscal stimulus also so I think its safe to assume Keynesians are not the most competent people when it comes to growing market economies.

Putting the cart before the horse, demand before production is a tell tale sign Progressives have no clue what they're talking about.
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Liberals just don't seem to have a clue. They want you to prove things to them that they should already know. It's not easy debating children.
 
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