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

Joe Steel said:

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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It sound silly, but Keynes is simply discussing a way to get money into the hands of the poor. No one is actually suggesting we dig holes everywhere.

David_N said:

I wouldn't be to worried Polgara. People have been screaming we're doomed and that we're going bankrupt for decades. Did you know that every single country on earth is in debt? Even if the dollar isn't the favored currency, so what? Other countries like Australia aren't the worlds favored currency and they're doing just fine, their problems don't come from their debt either. Private sector debt is the real issue. And we all seem to ignore it. Private sector liabilities.. We can't all live off of bank created money forever. This is why governments run a net deficit, whether they choose to or not. "Lower standard of living." What will cause this?
"Out of control" What makes you think this?
"19 trillion debt." This number represents cumulative annual deficits, bonds are a net financial asset. Without the national debt, we'd collapse. "Half a trillion." Keystrokes to the accounts of bond holders. Political decision to make it a big deal.

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Greetings, David_N. :2wave:

We've been fortunate the past 50 years or so by having our dollar as the world's "favored nation" currency. Why does the IMF now agree with so many nations that this should be changed to a basket of currencies? I believe it might be because they are losing faith in our dollar, should we actually have to compete with other countries. How are we going to do that when so much of our manufacturing of the things we use has left our shores? Why have GM, Ford, and even other American icons like Levi jeans decided to move abroad instead of staying here, which means lost jobs for our workers in America? Why are so many millions of people on food stamps and other government aid just to survive?

A few keystrokes on computers doesn't fix the problem - at best it just masks the underlying mess, because people without money don't buy government bonds, and they are a majority these days. How can seven out of every ten people who make less than $30,000 a year benefit this country when they're living paycheck to paycheck now? Why are so many school districts sending backpacks of food home with the children on Friday, so they have something to eat over the weekend? Something has gone very wrong, IMO. You state that without our national debt, we'd collapse. That may be because we are still managing to pay the billions in interest every year to our debtors so far, but they appear to be getting nervous about our ability to continue doing so, or they would not be uniting to change things. What if our debt turns out to be the cause of a major change in the way we have been accustomed to living, which a currency collapse would accomplish? Since Trump has stated he has a plan to bring our businesses back here, why hasn't someone in government found a way, too? Is he lying?

If I'm wrong, please explain my error in thinking that our being in debt in excess of our GDP at 103 percent - and that may have climbed higher since I read that - will not be a problem sooner than we might imagine. :shock:

Gimmesometruth said:

Hey FENTON, WHEN ARE YOU GOING TO ACKNOWLEDGE THE AIRPORT WAS A PRIVATELY BUILT AIRPORT

YOUR PREMISE IS BOGUS

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The roads and infrastructure in those ghost cities and airports ( there's more than one ) all private investors ?

Gimmesometruth said:

Please....just stop already.

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Tell that to the guy who thinks he needs to post a thread on defcit spending twice a day every day

As I've said before, you make it easy when you repeat the same nonsense over and over. I just go to my "Fenton lies" text file and C & P.

Fenton said:

Millions of Americans [are] … voting with their feet and moving here, to the GREAT state of Texas prove that Supply side works.

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Millions are moving out as well. Net domestic migration for Texas was up by 1.2 million 2000-2013. How far back do you wanna go to get to "millions"? And how do ya like those Texass-sized property taxes? Is that a supply-side policy?

"Texas property taxes among the nation's highest," Houston Chronicle, Apr 5, 2015

Then there's this:


How did SSE work for the US? See the $19 trillion dollar national debt for the answer to that.

Fenton said:

California has Nations highest Child poverty rates
California Has Highest Child Poverty Rate In Nation | KPBS

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That's under an alternative method used by Census that takes into account things like the cost of housing. Housing is cheap in TX.

David_N said:

It sound silly, but Keynes is simply discussing a way to get money into the hands of the poor. No one is actually suggesting we dig holes everywhere.

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You're right. Those are extremes for the sake of illustration. We could find better things to do with money. For instance, we could build housing for the poor or just upgrade the housing they have.

Or, how about a medical care program! We could expand Medicaid to cover many more persons. That would serve two ends. It would make them healthier and it would make their medical care providers wealthier.

polgara said:

Greetings, David_N. :2wave:

We've been fortunate the past 50 years or so by having our dollar as the world's "favored nation" currency. Why does the IMF agree with so many nations that this should be changed to a basket of currencies? I believe it might be because they are losing faith in our dollar, should we actually have to compete with other countries. How are we going to do that when so much of our manufacturing of the things we use has left our shores? Why have GM, Ford, and even other American icons like Levi jeans decided to move abroad instead of staying here, which means lost jobs for our workers in America? Why are so many millions of people on food stamps and other government aid just to survive?

A few keystrokes on computers doesn't fix the problem - at best it just masks the underlying mess, because people without money don't buy government bonds, and they are a majority these days. How can seven out of every ten people who make less than $30,000 a year benefit this country when they're living paycheck to paycheck now? Why are so many school districts sending backpacks of food home with the children on Friday, so they have something to eat over the weekend? Something has gone very wrong, IMO. You state that without our national debt, we'd collapse. That may be because we are still managing to pay the billions in interest every year to our debtors so far, but they appear to be getting nervous about our ability to continue doing so, or they would not be uniting to change things. What if our debt turns out to be the cause of a major change in the way we have been accustomed to living, which a currency collapse would accomplish? Since Trump has stated he has a plan to bring our businesses back here, why hasn't someone in government found a way, too? Is he lying?

If I'm wrong, please explain my error in thinking that our being in debt in excess of our GDP at 103 percent - and that may have climbed higher since I read that - will not be a problem sooner than we might imagine. :shock:

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Even if the dollar isn't the worlds favored currency, so what? Countries like Australia/Japan/Canada aren't the worlds favored currencies and their problems aren't stemming from their government bonds. The IMF is a horrible organization, I'd like to get that out there, pushing austerity and pushing down developing countries, destroying their ability to properly grow their economies using deficits, etc.. Even if the USD isn't the worlds favored currency, again, this isn't a big problem. Well, the US is a service economy, like other first world countries. Developing countries always focus on manufacturing, and that is why it moves there. Companies move abroad because we're a service economy now, and other countries will always be cheaper, especially developing countries. Jobs are indeed lost, but this isn't a problem, well, it won't be a problem if we pursue a goal of full employment with an increase in public sector employment. People are on food stamps because wages have been stagnant for decades, we need to get money into the hands of the poor and invest in our country. Deficit spending is what we need. A few keystrokes could "pay off" the debt. Should we do it? No, because government bonds are in demand by the private/foreign sector as a place to park dollars without risk. The people who live paycheck to paycheck are the people who drive this country. Sales create jobs, and the people who spend all of their income drive sales. That's why I and others propose getting more money into these people's hands. Of course, this requires government spending, but that's not a bad thing. We can always pay the interest, we weren't downgraded because of the size of the debt, we were downgraded because of the political nonsense over the debt. The currency isn't going to collapse. Trump is indeed lying, what we really need is a government funded job guarantee. I will go into more detail on this if you want. It won't be a problem because we have plenty of unused resources, we're a currency issuer, interest rates are controlled by the government, and the fact that Japan has a massive debt to gdp ratio, which isn't even the source of their problem.

Fenton said:

Tell that to the guy who thinks he needs to post a thread on defcit spending twice a day every day

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I don't post that much.

Joe Steel said:

You're right. Those are extremes for the sake of illustration. We could find better things to do with money. For instance, we could build housing for the poor or just upgrade the housing they have.

Or, how about a medical care program! We could expand Medicaid to cover many more persons. That would serve two ends. It would make them healthier and it would make their medical care providers wealthier.

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I like the idea of a job guarantee.

Fenton said:

" Our entire infrastructure is in need of DIRE repair " and your'e accusing me of " hyperbole " ??

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So, "entire" may be a bit of a stretch, but show me a city that doesn't have 50 mile of road riddled with potholes, and I'll show you 20 that do.

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

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"Investment in infrastructure" is the same thing as "spending on infrastructure". You're arguing a distinction without a difference. And it isn't the "sole strategy", but it's a large piece of potential spending, so it is (rightfully) emphasized.

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.

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Let me know when Chevron is going to "invest" in repaving I-75 from Michigan to Florida.

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

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It can, and is. I'm not sure how you can even begin to imagine that gov't spending doesn't affect demand with the amount of money that is spent at the federal, state and local levels.

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

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We've been incentivizing private sector investment since the 80s. We've reached the end of it's effectiveness and it's time the pendulum began swinging in the other direction. We can't suddenly stop being business-friendly, but we need to incorporate Average Joe Citizen into the economic model that allows him to prosper. Stagnant wages are a real problem. I'd like us to come up with a way to incentivize business to increase wages.

Fenton said:

The roads and infrastructure in those ghost cities and airports ( there's more than one ) all private investors ?

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LoL...so now the the argument shifts from "the privately funded/built airport was a Keynesian failure"...to...."the public roads built to teh privately built airport that failed is an example of Keynesian fail".

Yeah, here in Tucson we have public roads built right in front of lots of failed retail spaces, obviously those are failed Keynesian projects. Like the roads to the airport in Spain, those roads were built to nowhere.

Gawd, you produce REALLY stupid argument....and then you double down on a bet that no one would dig a little deeper.

mmi said:

As I've said before, you make it easy when you repeat the same nonsense over and over. I just go to my "Fenton lies" text file and C & P.



Millions are moving out as well. Net domestic migration for Texas was up by 1.2 million 2000-2013. How far back do you wanna go to get to "millions"? And how do ya like those Texass-sized property taxes? Is that a supply-side policy?

"Texas property taxes among the nation's highest," Houston Chronicle, Apr 5, 2015

Then there's this:

Texas needs to address its chronically underfunded public pensions or face rising costs that could negatively impact retirees and the state's financial outlook in the future, according to a new report from Moody's Investors Service. — "Moody's warns Texas to take care of pension funds," San Antonio Express-News, Jan 22, 2015​

How did SSE work for the US? See the $19 trillion dollar national debt for the answer to that.



That's under an alternative method used by Census that takes into account things like the cost of housing. Housing is cheap in TX.

While more than a dozen states had a larger share of poor people than California did under the official rate, the alternate rate put California at the top of the list, followed by the District of Columbia. Under the official rate, California was tied for 14th place, with Louisiana topping the list, followed by Mississippi. (source)​

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Roughly 5 million people left California in the last decade. See where they went | The Sacramento Bee


As of 2013 600k Californians had moved to Texas a d 5 Million total have left California.

Now that numbers gone up exponetially just in the last 2 years.

I live in Houston, and its the population is booming. And thats just Houston. Cities all accross Texas are seeing the same.

Millions of people have moved here from out of State and its starting to get a little crowded to be honest

As for factoring in cost of living in how poverty is defined, why wouldn't you ?

Fenton said:

Tell that to the guy who thinks he needs to post a thread on defcit spending twice a day every day

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Thats ironic, here you are posting, as you do very often...in opposition. Whats worse, is you often post bogus argument...as in a premise that certain Spanish airports were Keynesian govt fails.

David_N said:

I like the idea of a job guarantee.

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What did you have in mind? What jobs?

pdog said:

Why will the price of everything go up?

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Greetings, pdog. :2wave:

Because the Fed has printed trillions of dollars out of thin air for bailouts of banks, Freddy and Fanny, and many other debts with nothing except our word that those dollars are sound, since they are no longer backed by gold. As those dollars begin circulating in our economy, though, they will lower the value of the dollars we have in our wallets and purses, so everything is going to cost more. Other countries have tried the same thing, but none so far has succeeded. Zimbabwe is a recent example of what not to do, but other countries have tried it anyway. We are not immune to the law of basic economics any more than they were. Why does anyone think China has been buying tons of gold over the years - it's to keep their yuan valuable as a currency backed by golf which can be trusted on the world market.

Joe Steel said:

What did you have in mind? What jobs?

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What is a Job Guarantee? | Bill Mitchell – billy blog
In reference to Australia, but still relevant here.

my apologies. I meant #24.

polgara said:

Greetings, pdog. :2wave:

Because the Fed has printed trillions of dollars out of thin air for bailouts of banks, Freddy and Fanny, and many other debts with nothing except our word that those dollars are sound, since they are no longer backed by gold. As those dollars begin circulating in our economy, though, they will lower the value of the dollars we have in our wallets and purses, so everything is going to cost more. Other countries have tried the same thing, but none so far has succeeded. Zimbabwe is a recent example of what not to do, but other countries have tried it anyway. We are not immune to the law of basic economics any more than they were. Why does anyone think China has been buying tons of gold over the years - it's to keep their yuan valuable as a currency backed by golf which can be trusted on the world market.

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Because the Fed has printed trillions of dollars out of thin air for bailouts of banks, Freddy and Fanny, and many other debts with nothing except our word that those dollars are sound, since they are no longer backed by gold.

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Taxes create a demand for the dollar.
The "trillions" number is a bit silly, since we're not experiencing any relevant inflation. The "gold standard" was pretty useless, since banks operated without worrying about it.

As those dollars begin circulating in our economy, though, they will lower the value of the dollars we have in our wallets and purses, so everything is going to cost more.

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Not going to happen. Reserves can't enter the economy. That's why QE hasn't caused inflation.

Zimbabwe is a recent example of what not to do

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Zimbabwe was screwed either way. They ran out the people who knew how to farm, destroyed their supply, and demand was still there. The US has plenty of available supply.

Why does anyone think China has been buying tons of gold over the years - it's to keep their yuan valuable as a currency backed by golf to be trusted on the world market.

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We also have gold, for whatever reason..
https://en.wikipedia.org/wiki/Gold_reserve
More then any other country it seems, by a long shot. So I wouldn't worry.

polgara said:

Greetings, pdog. :2wave:

Because the Fed has printed trillions of dollars out of thin air for bailouts of banks, Freddy and Fanny, and many other debts with nothing except our word that those dollars are sound, since they are no longer backed by gold. As those dollars begin circulating in our economy, though, they will lower the value of the dollars we have in our wallets and purses, so everything is going to cost more. Other countries have tried the same thing, but none so far has succeeded. Zimbabwe is a recent example of what not to do, but other countries have tried it anyway. We are not immune to the law of basic economics any more than they were. Why does anyone think China has been buying tons of gold over the years - it's to keep their yuan valuable as a currency backed by golf which can be trusted on the world market.

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I'm sorry but this is the same oversimplified idea of inflation that we see repeated over and over. Prices don't simply go out because we increase the money supply, they go up when the demand that that new money supply can't be met. If at an aggregate level, spenders had 10% cash, would you instantly assume that prices go up 10%? I hope not. Because the answer should be "it depends". If our economy can supply 10% more goods without running into new resource constraints, than prices will not go up. This is what nearly any economist will tell you.

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

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I'll tell you what, you post all the links you can find describing all the ghost towns we have in America and I'll post all the links I can find about our aging infrastructure. By the way, make sure you can prove that those ghost towns were publically funded.

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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I can't respond to this until you respond to #24 (I do recognize your delay is in part to my error).

Gimmesometruth said:

LoL...so now the the argument shifts from "the privately funded/built airport was a Keynesian failure"...to...."the public roads built to teh privately built airport that failed is an example of Keynesian fail".

Yeah, here in Tucson we have public roads built right in front of lots of failed retail spaces, obviously those are failed Keynesian projects. Like the roads to the airport in Spain, those roads were built to nowhere.

Gawd, you produce REALLY stupid argument....and then you double down on a bet that no one would dig a little deeper.

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No, the argument hasnt shifted. " Stimulus to increase aggregate demand " is the lefts one trick pony simply because theyre ideologically opposed to any strategy thats associated with supply side economics

You know, strategies that work.

Gimmesometruth said:

Thats ironic, here you are posting, as you do very often...in opposition. Whats worse, is you often post bogus argument...as in a premise that certain Spanish airports were Keynesian govt fails.

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Someone needs to contradict this base propaganda.

And Spain, Italy and Greece deficit spent ( for years ) outside the confines of the limits set in the Maastricht Treaty.

It wasn't " austerity '' that led to the EUs soverign debt crisis, it was deficit spending that should have " increased aggregate demand ", right ?

A stupid argument is saying that any Nation could use MORE deficit spending to claw their way out of debt.

Or was Spain balancing their budget all the way up to 2008 ?

polgara said:

Greetings, pdog. :2wave:

Because the Fed has printed trillions of dollars out of thin air for bailouts of banks, Freddy and Fanny, and many other debts with nothing except our word that those dollars are sound, since they are no longer backed by gold. As those dollars begin circulating in our economy, though, they will lower the value of the dollars we have in our wallets and purses, so everything is going to cost more. Other countries have tried the same thing, but none so far has succeeded. Zimbabwe is a recent example of what not to do, but other countries have tried it anyway. We are not immune to the law of basic economics any more than they were. Why does anyone think China has been buying tons of gold over the years - it's to keep their yuan valuable as a currency backed by golf which can be trusted on the world market.

Click to expand...

Um, the Yuan is not a gold backed currency.....and tell us where inflation in the US has been since 2009. Hint: it has been very low in spite of all of the Federal Reserve attempts to keep it above 2%.

Gold based currencies are inherently inflationary because you cannot produce enough gold to keep up with population increases. Please, don't listen to outdated ideas on gold standards, they are silly.

Fenton said:

Someone needs to contradict this base propaganda.

And Spain, Italy and Greece deficit spent ( for years ) outside the confines of the limits set in the Maastricht Treaty.

It wasn't " austerity '' that led to the EUs soverign debt crisis, it was deficit spending that should have " increased aggregate demand ", right ?

A stupid argument is saying that any Nation could use MORE deficit spending to claw their way out of debt.

Or was Spain balancing their budget all the way up to 2008 ?

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You are just never going to acknowledge just how wrong you were on your Spanish airport example, are you?

Further, Spain from 00 to 04 had less than 2% of GDP deficits, 04 to 07 ran surpluses...until the collapse of private banks due to worldwide private malinvestment.

pdog said:

I'm sorry but this is the same oversimplified idea of inflation that we see repeated over and over. Prices don't simply go out because we increase the money supply, they go up when the demand that that new money supply can't be met. If at an aggregate level, spenders had 10% cash, would you instantly assume that prices go up 10%? I hope not. Because the answer should be "it depends". If our economy can supply 10% more goods without running into new resource constraints, than prices will not go up. This is what nearly any economist will tell you.

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I think we are already seeing it at the grocery store - when the price of ground beef today costs as much per pound as a T-bone steak did last year, something is happening, and it's not the cow's fault. And when a 4-pound bag of sugar today costs as much as a 5-pound bag - which was an industry standard weight for years - did last year, it means that inflation is creeping up on us. Companies have tried to mask the increase in price by giving us less for the same price as we were used to paying, which probably prevented screams of outrage from shoppers who would have been upset by paying a higher price for a product they use for lots of things, including baking treats for their family. :mrgreen: