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What makes people think cuts in government spending boost the economy?

humbolt said:
19 trillion in debt suggests rather strongly that current levels of deficit spending are not just right. If the private sector is dysfunctional, as you say, you might ask yourself exactly what has changed recently that has made it dysfunctional. It isn't greed, because there's far more money to be made in an expanding economy than there is in one stuck in neutral, as we are now.
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Greetings, humbolt. :2wave:

Along the same line, I actually understand why so many people working at low-paying jobs believe that $15 an hour minimum wage will be a godsend for them - that is until they realize that the cost of everything else has also gone up - so they remain in the same boat they've always been in - IF they're fortunate enough to still have a job in the private sector! We read about the college in California who laid hundreds of people off after they had to pay the increased cost, but what about the hundreds of employers we haven't been told about who have also been forced to comply! Is there no one in government who understands even basic economics?

No wonder Trump's message is resonating with millions of people - he's giving them hope that their lives will change for the better. FDR used the same approach during the Great Depression, and he was adored by the masses because it looked like he cared about them! I'm not going to get into the after-affects of his decision, other than the fact that it took a war to get us out of the debt that resulted. The Country did benefit long term in new infrastructure and national parks we still use today, but most people tend to care more about their "now" than any future that might be promised - human nature I guess. "I'll gladly pay you next Tuesday for the hamburger you give me today" said Wimpy from the Popeye cartoon. :mrgreen:
 
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humbolt said:
19 trillion in debt suggests rather strongly that current levels of deficit spending are not just right. If the private sector is dysfunctional, as you say, you might ask yourself exactly what has changed recently that has made it dysfunctional. It isn't greed, because there's far more money to be made in an expanding economy than there is in one stuck in neutral, as we are now.
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I see increasing disparity as the primary cause. The fewer lower and middle class people making and spending money means less demand for business.
 
polgara said:
Greetings, humbolt. :2wave:

Along the same line, I actually understand why so many people working at low-paying jobs believe that $15 an hour minimum wage will be a godsend for them - that is until they realize that the cost of everything else has also gone up - so they remain in the same boat they've always been in - IF they're fortunate enough to still have a job in the private sector! We read about the college in California who laid hundreds of people off after they had to pay the increased cost, but what about the hundreds of employers we haven't been told about who have also been forced to comply! Is there no one in government who understands even basic economics?
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Why will the price of everything go up?
 
David_N said:
And for the record: Tax cuts for individuals who spend most of their income will indeed lead to a boost in consumption...
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Those who spend most of their income probably don't pay much tax. The increase would be tiny.
 
pdog said:
Still waiting for #15.
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Waiting for what ? I responded to Iggy's ridiculous post where he blamed Spain ghost towns on investors having too much stagnant currency
 
David_N said:
Question for discussion. Where has this idea come from?
C+I+G+(E-I)
How does cutting G when the economy is experiencing slow growth help anything?
For example, here is Australia:
Australia enters the deflation league of sorry nations | Bill Mitchell – billy blog

View attachment 67200707
Pathetic.

Meanwhile, in Spain:
Spanish government discretionary fiscal deficit rises and real GDP growth returns | Bill Mitchell – billy blog

I don't even need to discuss the failure of Austerity and the horrific actions of the IMF.
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It is always a question of the state if the economy, the level of all the economic parameters, the recent and present monetary policy, the amounts of public and private debt ....
 
Fenton said:
Spain already has entire ghost towns with infrustructure and a few airports that were built during the height of Spains property bubble.

All empty, never used.

Its a example of the Keynesian " build it and they will come '' mentallity run amok.

Spain's Ciudad Real airport sold at auction for €10,000 - BBC News
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Um, it was a PRIVATE airport, it was built with PRIVATE INVESTORS monies, I can find little public investment. The PRIVATE INVESTORS went with a plan to place it near a high speed rail line...that had no station/stop. It is over 200 miles from Madrid and was envisioned as a regional competitor to Madrid airports.
 
Fenton said:
Japan blew through 10 fiscal stimulus's in the 90s and blew through 4 more during its " Abenomics " initaive.

Japan stuck by the Keynesian play book to the letter, it is a GREAT example of the failures of Fiscal stimulus.

Its Monetary initaives are there to save it from defaulting on its debt......PERIOD.

Growing the GDP isn't the same thing as growing economies. If that were the case every Nation would simply borrow and print its way to positive GDP.
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Without Japan's stimuluses in the 90s, the country would have completely collapsed. The abenomics stimuluses aren't going to do much since people aren't spending more and inflation isn't occurring. Besides, the "lost decade" was caused by a massive asset price bubble. Claiming Japan is an example of a failure of fiscal stimulus is a laughable claim. The fiscal stimuluses made sure Japan didn't sink further, and you have to keep in mind all of the other factors, such as the savings rate, attitudes toward employment, etc..
Japan can't default on its debt, much of which his owned domestically.
Every nation in history has printed its own currency and used that to use resources for itself.
 
joG said:
Why do you want to see countries destroyed? OR is it just too much work to differentiate more? So you just tell an over simplified story that describes a dysfunctional economic model.
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What countries do I want to be destroyed? Which model is dysfunctional?
 
David_N said:
Question for discussion. Where has this idea come from?
C+I+G+(E-I)
How does cutting G when the economy is experiencing slow growth help anything?..
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It doesn't.

When the private sector stops spending, the public sector must increase. It's the only way to keep the economy moving.
 
humbolt said:
It seems to be a political decision now, and of course you see nothing wrong with that at all. The government may never run out of dollars, but those dollars could easily become wall paper or kindling. It's not the number you have that counts. It's the value of them.
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Yes, they could indeed become wall paper if there isn't enough supply for the dollars to purchase. Taxes create value.
 
pdog said:
Can we get past the fact that our entire infrastructure is in dire NEED of overhaul before we talk about hyperbole like this? Further isnt' a bubble exactly that? A bubble? I suppose you could partly blame the government in the creation of that bubble, but the bubble wasn't caused by deficit spending.
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" Our entire infrastructure is in need of DIRE repair " and your'e accusing me of " hyperbole " ??

I have no problem with spending on infrastructure. I have a problem with " investment in infrastructure " being the Lefts sole strategy for growing a economy they do not understand

I have a problem with it being a strategy for economic growth thats pushed by people who refuse to acknowledge the importance of incentivizing private sector investment.

Its this progressive vow to never acknowedge the HUGE part that investors and incentives play in a market economy thats led to this shallow, one dimensional cart before the horse strategy where demand can be manipulated directly with Govt spending

Its all you people have and you talk bout incessently because your ideology forces you not to acknowledge the successes of incentivizing private sector investment. Your politically motivated to back this pidgeon holed idea that jjst so happens to grow Govt and Govt spending

Dave wont stop creating threads that talk about the same damn thing over and over and over. Its gotten to the point to where hes basically trolling.
 
Joe Steel said:
The article didn't prove your point. Got anything else?
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Please expand on why it didn't, IF YOUR'E CAPABLE.

Im betting your'e not. Im betting your'e trolling was just an attenpt to sound knowledgable.

So go ahead, Ill wait
 
fmw said:
I'm not sure people think reduced government spending helps the economy. What they fear is that the temporary advantages of government overspending...
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"Overspending" is a value laden term. Maybe government spending is too low and it's being adjusted upwards to the proper level. In fact, that's the more likely situation. When private sector spending decreases, public sector spending must increase to keep the level of economic activity at the proper level, the level necessary to maintain full employment.
 
Fenton said:
Please expand on why it didn't, IF YOUR'E CAPABLE.

Im betting your'e not. Im betting your'e trolling was just an attenpt to sound knowledgable.

So go ahead, Ill wait
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Nothing in the article said it was built to maintain some level of economic activity. As far as we know it could have been built to launder mob money or take advantage of tax laws.

And by-the-way, had the airport been built as the implementation of Keynesian theory, it's failure wouldn't have disproved the theory. The essential idea of Keynesian theory is putting money into the economy. The construction did that. The test of the theory was the effect of the spending on the economy not the success of the airport.
 
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Fenton said:
Please expand on why it didn't, IF YOUR'E CAPABLE.

Im betting your'e not. Im betting your'e trolling was just an attenpt to sound knowledgable.

So go ahead, Ill wait
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Actually, the burden of proof that the airport is a publicly built facility....is on you. I have already looked into it, it has been described as a private facility, built with private investment monies. It has been described as Spain's first private commercial airport.

If anyone was trolling, it was you by creating a post that supposedly showed a public "Keynesian" infrastructure project....that failed.
 
Fenton said:
" Our entire infrastructure is in need of DIRE repair " and your'e accusing me of " hyperbole " ??

I have no problem with spending on infrastructure. I have a problem with " investment in infrastructure " being the Lefts sole strategy for growing a economy they do not understand

I have a problem with it being a strategy for economic growth thats pushed by people who refuse to acknowledge the importance of incentivizing private sector investment.

Its this progressive vow to never acknowedge the HUGE part that investors and incentives play in a market economy thats led to this shallow, one dimensional cart before the horse strategy where demand can be manipulated directly with Govt spending

Its all you people have and you talk bout incessently because your ideology forces you not to acknowledge the successes of incentivizing private sector investment. Your politically motivated to back this pidgeon holed idea that jjst so happens to grow Govt and Govt spending

Dave wont stop creating threads that talk about the same damn thing over and over and over. Its gotten to the point to where hes basically trolling.
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Claiming the left doesn't "understand the economy" is silly. Every nation on earth responds to recessions by slipping back into deficit, automatic stabilizers cause this. Every nation on earth invests in infrastructure, if any, or they have at one point. Dude, private sector investment is indeed important, after all, investment creates savings. But we need to look at what's happening right now: Profits are through the roof, wages are stagnant, plenty of excess capital/supply, and, you seem to ignore that private investment occurs irregardless of the current budget deficit.
 
Joe Steel said:
Nothing in the article said it was built to maintain some level of economic activity. As far as we know it could have been built to launder mob money or take advantage of tax laws.

And by-the-way, had the airport been built as the implementation of Keynesian theory, it's failure wouldn't have disproved the theory. The essential idea of Keynesian theory is putting money into the economy. The construction did that. The test of the theory was the effect of the spending on the economy not the success of the airport.
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Lol !!

So building roads to nowhere, airports that never see a passenger or a plane for that matter, building infrastructure thats never used is how you think market economies are grown ?
 
Fenton said:
Lol !!

So building roads to nowhere, airports that never see a passenger or a plane for that matter, building infrastructure thats never used is how you think market economies are grown ?
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Hey FENTON, WHEN ARE YOU GOING TO ACKNOWLEDGE THE AIRPORT WAS A PRIVATELY BUILT AIRPORT

YOUR PREMISE IS BOGUS
 
David_N said:
Claiming the left doesn't "understand the economy" is silly. Every nation on earth responds to recessions by slipping back into deficit, automatic stabilizers cause this. Every nation on earth invests in infrastructure, if any, or they have at one point. Dude, private sector investment is indeed important, after all, investment creates savings. But we need to look at what's happening right now: Profits are through the roof, wages are stagnant, plenty of excess capital/supply, and, you seem to ignore that private investment occurs irregardless of the current budget deficit.
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You obviously dont understand how our economy works or how to grow market economies effectively.

You more than once have referenced GDP out of context as proof that Govt deficit spending works.

Stimulus doesn't address the underlying issues of why wealth is stagnant, or why investors are chosing to save rather than invest in the economy.

Your refusal to acknowledge WHY investors react the way they do is why your MULTIPLE threads on deficit spending actually belong in the partisan section of the forum, not in Govt spending.

Your are pushing a Political strategy, ( over and over ) not economic proposals.
 
Fenton said:
You obviously dont understand how our economy works or how to grow market economies effectively.

You more than once have referenced GDP out of context as proof that Govt deficit spending works.

Stimulus doesn't address the underlying issues of why wealth is stagnant, or why investors are chosing to save rather than invest in the economy.

Your refusal to acknowledge WHY investors react the way they do is why your MULTIPLE threads on deficit spending actually belong in the partisan section of the forum, not in Govt spending.

Your are pushing a Political strategy, ( over and over ) not economic proposals.
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How do you "reference GDP out of context?"
I never said stimulus addressed the root causes of alarming income inequality. Investors have no reason to invest when they already have large amounts of money saved. Why take the risk?
 
Fenton said:
Lol !!

So building roads to nowhere, airports that never see a passenger or a plane for that matter, building infrastructure thats never used is how you think market economies are grown ?
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Could be.

Keynes suggested digging holes and refilling them. Krugman suggesting shoveling money out of helicopters over a poor part of town. The idea is to put money into the hands of those who will spend it.
 
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