Keynesian stimlulus spending in recessions: does it really work?

ataraxia · Nov 29, 2016

Fenton said:
GOOD ! Fiscal stimulus doesn't work

Funny, because that only seems to hold if a Democrat is in the whitehouse. When a Republican is in the whitehouse, then all of a sudden it's "strong leadership for a change". Now those same Tea Partiers can't wait to spend on infrastructure spending "To make America great again". Now, the headlines say: "Trump Tax and Spending Plans Will Boost Global Economy", LOL:

OECD Says Trump Tax and Spending Plans Will Boost Global Economy

JohnfrmClevelan · Nov 29, 2016

faithful_servant said:
I honestly don't think that anyone who thinks that Keynesian concepts can work are capable of understanding real economic terms. It is a simple concept that money doesn't simply show up from nothing that most liberals fail to understand. Gov'ts do not create growth, they can only move it around and with every move that's made the money loses value within the economy. Putting money in consumer's hands to increase demand while strangling the abilities of the suppliers of that demand through taxation just pushes the suppliers out of the country. Adding more debt to the nation, just creates more debt with no benefit, since you didn't do anything to create more wealth, you just moved money from producers to consumers, which stops production. These are simple concepts that most 5th graders can understand and few liberals will ever choose to accept. So I can show you all the facts, science, truth, reality in the world and you will still choose to ignore all of it. You've been told by people who start with flawed assumptions and goal-based research that something is true and you will deny the truth until the bitter end because to do otherwise means you have to admit that you are wrong.

Well, while you did attempt to put your argument in economic terms, you didn't back it up with any data, plus you got pretty much everything wrong. Kudos to you.

If you believe that most 5th graders can understand money creation, federal financing, and reserve banking, well, that explains a lot about your own beliefs. It's not a simple subject at all. Of course, I'm sure you think that, with zero effort put into learning about how these things work, you can just apply your amazing street smarts and understand what takes others years to fully grasp.

There have been a number of threads, and some very good explanations, about how money is actually created, both by banks and by governments. These explanations have been backed up by scholarly sources, and those scholarly sources do not in any way agree with your claims (which, as always, are not backed up). You haven't shown one shred of "facts, science, truth, or reality." I'd love for you to change that, but I'm not holding my breath.

KLATTU · Nov 29, 2016

ataraxia said:
But since the economy has been out of a recession, Obama has actually been the smallest government spender in decades. It still isn't enough to keep conservatives from blaming him for "doubling the debt".

Forbes Welcome

That thing's been sent to the birdcage twenty times over.

It's all about how 2009 was deceptively used a benchmark. Smart people understand it-it's basic math.
https://cei.org/blog/no-obama-not-smallest-government-spender-eisenhower

And had it not been fro the Republican GOP ( you know the obstructionist party of no) it would have been worse than it was.

If Obama had his way, spending would have been even bigger than it is, since the Congress has not approved as much spending as Obama sought in his budget proposals, as Nutting himself has conceded. As the Congressional Budget Office has noted, “The President’s proposals would add $4.8 trillion to the national debt,” increasing “the cumulative deficit from 2010 to 2019 to $9.3 trillion

Fenton · Nov 29, 2016

ataraxia said:
Funny, because that only seems to hold if a Democrat is in the whitehouse. When a Republican is in the whitehouse, then all of a sudden it's "strong leadership for a change". Now those same Tea Partiers can't wait to spend on infrastructure spending "To make America great again". Now, the headlines say: "Trump Tax and Spending Plans Will Boost Global Economy", LOL:

OECD Says Trump Tax and Spending Plans Will Boost Global Economy

When did I say I was a fan of Trumps stimulus initiative ?

His tax polices and getting rid of ObamaCare will do far more to turn this economy around than his stimulus initiative

KLATTU · Nov 29, 2016

ataraxia said:
That kind of thinking is probably why conservatives want to slash educational loans and grants to college students as well.

Right from the liberal handbook. Any time Republicans /conservatives want to ge a handle on spending ,ALWAYS use the word 'slash" .It sounds better, even if it's almost never true.LOL

JohnfrmClevelan · Nov 29, 2016

Fishking said:
1. The underlying problem varies per country and they are innumerable. The obvious thing to point out is the fact that something broke to cause the recession or economic draw-down to begin with. In the U.S. there are many things wrong. One of the bigger problems is the gutting and off-shoring of our industries, which has gutted the middle class. Our economy is moving more and more to service industry jobs, which just don't pay well. There are also the matter that there is too much reliance by the private sector on public spending, which is money that has to come from the private sector to begin with...

Deficit spending doesn't come from the private sector, nor does the government spend bank-created dollars. So this claim is clearly incorrect. Deficit spending is a clear addition to both demand and income. If you want to make the case that the debt and/or the interest the govt. pays on bonds is somehow harmful, show me some data that backs you up.

Fishking said:
2. Eventually the debt to GDP ration will become too much to support and will result in economic collapse. Right now we are spending $229.15 billion just on the interest of our debt, let alone actually paying any of it off. For the sake of simplicity (I'll even err on the low side), I'll round down to $200 billion and multiply it by 13 (the years since the Iraq invasion). People complain about all the spending we did in Iraq but just what equates to the minimum payment on our credit card equals $2.6 trillion. That's about the total costs of the Iraq and Afghanistan war combined.

I see people whinge about how expensive the wars were but don't seem to care when an equal or greater amount has been spent solely on interest for our debt. There is literally nothing to show for that. It's just gone. Hell, if I wanted to be callous I could at least say the spending on the wars has stimulated our economy with good paying jobs in the defense industry. I can't even say that for interest payments.

The debt-to-GDP ratio theory has been debunked, first of all. And interest on the debt is a very small % of our GDP.

Incisor · Nov 29, 2016

Fenton said:
GOOD ! Fiscal stimulus doesn't work

How so? Cutting taxes as fiscal stimulus doesn't work, that we know. But infrastructure spending? That does work to jump-start an economy, but no one is proposing that will sustain an economy.

Fenton · Nov 29, 2016

Incisor said:
How so? Cutting taxes as fiscal stimulus doesn't work, that we know. But infrastructure spending? That does work to jump-start an economy, but no one is proposing that will sustain an economy.

Lol....

Sure it does. Texas has been doing this very thing to incentivize private sector growth for years.....
California lost 9,000 business HQs and expansions, mostly to Texas, seven-year study says - Dallas Business Journal

We even have a budget Surplus to show for it...
https://www.comptroller.texas.gov/economy/fiscal-notes/2016/september/rainy-day.php

You people clearly have no idea what you're talking aboyt when it comes to growing healthy market based economies

You would think this election would have taught you people something

ataraxia · Nov 29, 2016

I was responding to the claim that government spending is never an investment, but only taking from one hand to give to the other. Do you disagree with this?

ataraxia · Nov 29, 2016

Texas' "surplus" has a lot to do with oil revenue, rather than any sound economic policy. Looking to Texas to see what it's doing right is not much different than looking to Saudi Arabia to see what they're doing right to be so well-off. It's artificial and not necessarily reflective of any sound economic or fiscal policies. Mississippi and Louisiana right next-door are doing the same kind of stuff, and you can see what those policies lead to when not buoyed up by a lot of oil money.

Fishking · Nov 29, 2016

JohnfrmClevelan said:
Deficit spending doesn't come from the private sector, nor does the government spend bank-created dollars. So this claim is clearly incorrect. Deficit spending is a clear addition to both demand and income. If you want to make the case that the debt and/or the interest the govt. pays on bonds is somehow harmful, show me some data that backs you up.

Really? I remember buying a candy bar for .25 cents when I was a kid and now the same one is .99 cents or more. It always comes out of the private sector, whether it's through inflation or taxation.

The debt-to-GDP ratio theory has been debunked, first of all. And interest on the debt is a very small % of our GDP.

Errr...huh? No it hasn't. That's quite silly to even say.

Fenton · Nov 29, 2016

ataraxia said:
Texas' "surplus" has a lot to do with oil revenue, rather than any sound economic policy. Looking to Texas to see what it's doing right is not much different than looking to Saudi Arabia to see what they're doing right to be so well-off. It's artificial and not necessarily reflective of any sound economic or fiscal policies. Mississippi and Louisiana right next-door are doing the same kind of stuff, and you can see what those policies lead to when not buoyed up by a lot of oil money.

Wrong.........Such nonsense, Texas Surplus has to do with the application of Conservative economic principles. WE ( Im a PROUD Texas Conservative ) incetivize private sector Capital investment and that leads to job creation and increased revenues.

For example, Texas offered Toyota a 40 million dollar tax break to move their headquarters from Torrance, California to Plano, Tx so they could spend 300 million building their new headquarters and so they could hire thousands of Texans. Its called a " investment "

Back when Oil was actually worth something the Oil and Gas sector represented only 10 % of Texas's GDP. You see Texas has a very diverse economy and since 2008 every economic sector in Texas has grown substantially.

As a comparison, California's silicon valley also represents roughly 10 % of that States GDP but California has NO surplus. On the contrary, California has the highest level of unfunded pension liabilities in the nation....
O.C. Watchdog: Unfunded pension debt approaching $1 trillion?- OC Watchdog Blog: Orange County Register

California's a basket case fiscally and economically but their Governor still thinks raising taxes on producers is the way to grow their economy. Of-course, Jerry Browns a nutter Progressive ideologue
California lost 9,000 business HQs and expansions, mostly to Texas, seven-year study says - Dallas Business Journal

Incisor · Nov 29, 2016

Sure it does. Texas has been doing this very thing to incentivize private sector growth for years.....

LOL! I love when you post that link saying 9,000 businesses left California over a 7 year period. Which amounts to under 1,300 businesses a year. In 2013 alone, California created 75,000 businesses, more than Texas. In total, there are 3,320,977 businesses in CA. Some of them don't employ people, but most do. 9,000 businesses out of 3.3M is 0.2% of all businesses. Hardly a trend worth noting. Wondering why anyone would think that study is valid or relevant. There's also this from 2016 (your link is a bit outdated since it's from 2015):

California has spawned new businesses at one of the fastest rates in the nation over the last decade, and faster than the U.S. economy overall, the report found. The state is also a leader in job creation tied to those new businesses: In 2013, California added jobs from newly established businesses faster than all but four other states.

Oh, and guess what else? CA has a better business climate than your state of Texas:

We even have a budget Surplus to show for it...

No, you actually don't.

You people clearly have no idea what you're talking aboyt when it comes to growing healthy market based economies

This year, Texas entered a recession (the only state in the country to do so), because it is so heavily dependent on the price of oil and oil prices are low. It also lost 50,000 oil jobs.

Kushinator · Nov 29, 2016

Fishking said:
Really? I remember buying a candy bar for .25 cents when I was a kid and now the same one is .99 cents or more. It always comes out of the private sector, whether it's through inflation or taxation.

When you were a kid, people probably earned less than 1/4 of what they earn today.

Errr...huh? No it hasn't. That's quite silly to even say.

The Reinhart–Rogoff paper that sought to convince people that growth declines in nations with high debt-to-GDP ratio's was found to be rife with errors, and hence debunked. But by the time the excel errors were identified, the damage was done, as policy makers across the developed world ushered in (to a disastrous result) period of austerity.

Incisor · Nov 29, 2016

Kushinator said:
The Reinhart–Rogoff paper that sought to convince people that growth declines in nations with high debt-to-GDP ratio's was found to be rife with errors, and hence debunked. But by the time the excel errors were identified, the damage was done, as policy makers across the developed world ushered in (to a disastrous result) period of austerity.

It wasn't peer reviewed, and was trying to justify a conclusion they knew was invalid to start. That's the thing about Conservative policy; they know it doesn't work as promised, but they don't care. The goal is always to undermine the effectiveness of government programs in order to sell them off to private interests.

Fishking · Nov 29, 2016

Kushinator said:
When you were a kid, people probably earned less than 1/4 of what they earn today.

Nope. Wages haven't increased on the same rate as inflation. This is doubly true for certain things that are either a necessity (healthcare) or things highly sought after/borderline necessity (college). I'm only 38, so it wasn't that long ago.

The Reinhart–Rogoff paper that sought to convince people that growth declines in nations with high debt-to-GDP ratio's was found to be rife with errors, and hence debunked. But by the time the excel errors were identified, the damage was done, as policy makers across the developed world ushered in (to a disastrous result) period of austerity.

Sorry, no. I don't need any paper to tell me it's economically detrimental to have a poor debt to GDP ratio. Our payment on only our interest rates have cost the same as the Iraq and Afghanistan wars combined, during the same time periods. That's significant. This would only grow to be more problematic as the debt increased in proportion to our GDP.

Further, it's not even inherently viable, and that previous point still stands. The only reason we are floating is because we have forced adherence the petro-dollar and international trade currency. We lose out on either of those and our house of cards comes tumbling down.

Fishking · Nov 29, 2016

Incisor said:
It wasn't peer reviewed, and was trying to justify a conclusion they knew was invalid to start. That's the thing about Conservative policy; they know it doesn't work as promised, but they don't care. The goal is always to undermine the effectiveness of government programs in order to sell them off to private interests.

Lol...that's laughable. To think that debt doesn't matter is the height of ignorance.

Fenton · Nov 29, 2016

Incisor said:
LOL! I love when you post that link saying 9,000 businesses left California over a 7 year period. Which amounts to under 1,300 businesses a year. In 2013 alone, California created 75,000 businesses, more than Texas. In total, there are 3,320,977 businesses in CA. Some of them don't employ people, but most do. 9,000 businesses out of 3.3M is 0.2% of all businesses. Hardly a trend worth noting. Wondering why anyone would think that study is valid or relevant. There's also this from 2016 (your link is a bit outdated since it's from 2015):

Oh, and guess what else? CA has a better business climate than your state of Texas:

:lamo :lamo

America's Top States for Business 2016
http://www.cnbc.com/2016/07/12/americas-top-states-for-business-2016-the-list-and-ranking.html

Texas is ranked # 2
California is ranked # 32

Incisor said:
No, you actually don't have a surplus.

YES, we " actually do....

https://www.comptroller.texas.gov/economy/fiscal-notes/2016/september/rainy-day.php

" The state's ESF balance at the close of fiscal 2016 was about $9.7 billion. According to a recent study by the National Association of State Budget Officers (NASBO), that's equivalent to nearly 20 percent of Texas' annual general revenue expenditures (and compared to an average of 6 percent among states with similar funds).

If the next legislative session doesn't tap the rainy day fund, it should contain about $10 billion by the end of fiscal 2017."

Incisor said:
This year Texas entered a recession......

:lamo

Your'e literally making up stats as you go along. WTH man ?? Do you LIKE being humiliated ?

Texas Is Still Booming, Despite the Oil Bust
https://www.bloomberg.com/news/articles/2016-03-24/texas-is-still-booming-despite-the-oil-bust

Incisor · Nov 29, 2016

Fishking said:
Lol...that's laughable. To think that debt doesn't matter is the height of ignorance.

Debt doesn't matter, and that was the whole scandal behind the Rogoff-Reinhart paper that was used by Conservatives to justify austerity, which was their ultimate goal. The only thing government debt affects is the government's ability to borrow...and right now, even with high-ish debt, borrowing rates for the government are still very low. Now is the time to borrow in order to jump start the economy, but Conservatives don't want that. They want us to sink deeper into debt, which is why all they do is propose tax cuts.

Fenton · Nov 29, 2016

Incisor said:
It wasn't peer reviewed, and was trying to justify a conclusion they knew was invalid to start. That's the thing about Conservative policy; they know it doesn't work as promised, but they don't care. The goal is always to undermine the effectiveness of government programs in order to sell them off to private interests.

Nonsense. Japans Debt to GDP ratio leaves that Nation with very limited options including raising taxes, which caused their economy to contract, devaluing their currency through QE which pick pockets their consumers and running zero interest rates which hurts their savers. So debt isn't inconsequential after all

Venezuela has its own sovereign currency, ( which is all but worthless ) so why didn't Venezuela simply spend their way out of this disastrous mess via Fiscal stimulus initiatives ?

Fenton · Nov 29, 2016

Incisor said:
Debt doesn't matter, and that was the whole scandal behind the Rogoff-Reinhart paper that was used by Conservatives to justify austerity, which was their ultimate goal. The only thing government debt affects is the government's ability to borrow...and right now, even with high-ish debt, borrowing rates for the government are still very low. Now is the time to borrow in order to jump start the economy, but Conservatives don't want that. They want us to sink deeper into debt, which is why all they do is propose tax cuts.

Sure it matters....

Greek Debt Crisis
https://en.wikipedia.org/wiki/Greek_government-debt_crisis

Venezuelan debt crisis
http://www.nytimes.com/2016/05/28/world/americas/venezuela-crisis-what-next.html?_r=0

Incisor · Nov 29, 2016

Fenton said:
Texas Is Still Booming, Despite the Oil Bust

From an October 16th, 2016 article from the Wall Street Journal:

Texas, Once a Star, Becomes a Drag on the U.S. Economy
Since the collapse in oil prices, jobs are lost and growth stagnant; leaving Houston for Atlanta

So again, we have an issue with you and out-of-date links. You use links that are old, then ignore new links that counter your claims. It's a troubling pattern.

Incisor · Nov 29, 2016

Fenton said:
Nonsense. Japans Debt to GDP ratio leaves that Nation with very limited options including raising taxes

Japan's debt-to-GDP ratio was 1000%. We are nowhere near that, nor will we ever be. Right now, our debt-to-GDP ratio is about 90%. That's come down as taxes have been raised and the economy recovers.

Venezuela has its own sovereign currency, why didn't Venezuela simply spend their way out of this disastrous mess via Fiscal stimulus initiatives ?

Because the price per barrel of oil is low.

Incisor · Nov 29, 2016

Fenton said:
Sure it matters....

Greek Debt Crisis
https://en.wikipedia.org/wiki/Greek_government-debt_crisis

Venezuelan debt crisis
http://www.nytimes.com/2016/05/28/world/americas/venezuela-crisis-what-next.html?_r=0

Again, you are comparing apples to oranges. Greece's debt problems came from austerity, not spending. Greece had debt, then the ECB said they had to cut spending in order to get their bailout, under the promise that doing so would turn Greece around. Unfortunately, the exact opposite occurred. Greece is worse off now after austerity than it was before.

Fenton · Nov 29, 2016

Incisor said:
From an October 16th, 2016 article from the Wall Street Journal:

Texas, Once a Star, Becomes a Drag on the U.S. Economy
Since the collapse in oil prices, jobs are lost and growth stagnant; leaving Houston for Atlanta

So again, we have an issue with you and out-of-date links. You use links that are old, then ignore new links that counter your claims. It's a troubling pattern.

You wrote this.....

" This year Texas entered a recession......"

Remember ?? That was a lie. The Texas economy isn't dependent on a single volatile commodity and that means we continue to grow, to add jobs despite the Oil crash

Keynesian stimlulus spending in recessions: does it really work?

I'm not-low all the time