CBO estimates 2013 deficit at $642 billion [W:383]

[OpportunityCost]

Re: CBO estimates 2013 deficit at $642 billion

Hell, we didn't need to triple the debt for that.

We had 35% GDP growth and 5% unemployment rate and a 300% increase in the stocket market; but unlike Reagan who increased the debt by 180%, Clinton raised it by only 37%.

So what did we get for Reagan tripling the debt that we could get with raising only 37%?

Oh, and by the way, your numbers on Reagan are waaaaay off ...

Average unemployment rate under Reagan: 7.5% (not under 5%, as you wronly claimed)

increase in stock market value:

DJIA (+131%):
1/20/1981: 971
1/20/1989: 2,239

NASDAQ (+97%):
1/20/1981: 199
1/20/1989: 391

S&P500 (+114%):
1/20/1981: 134
1/20/1989: 287

No index was anywhere near your claim of a 300% increase.

Any other bull**** you care to try to pass off as relevant?

Clinton got the dividends of the end of the Cold War and the expansion of the internet into an economy that grew US revenue by the billions. Clinton's largest talent was staying out of the way of the market.

What was the unemployment rate when Reagan went in? What was it when he left.
Inflation?
GDP growth?

Sheik, you know as well as I do that ecnomic growth was much greater under Reagan than under Obama---and he faced economic conditions that were also pretty horrible. So if I were you, I would stick to Obama because if we start comparing Reagan and Obama, Obama will look like even more of a stumbling clown than he already does.

 

[Sheik Yerbuti]

Re: CBO estimates 2013 deficit at $642 billion

First and foremost, you made up complete BS. You posted Clinton's stellar record and tried to pass it off as Reagan's. Now that you're caught, rather than simply acknowledge what you did and move on, you're attempting to dig your heels in even deeper and try to spin your way out of it, which you can't. :roll:

Clinton got the dividends of the end of the Cold War and the expansion of the internet into an economy that grew US revenue by the billions. Clinton's largest talent was staying out of the way of the market.

Complete nonsense. Those benefits must have bypassed Bush41, who had nominal gains in the stock market and GDP and nothing but rising unemployment.

What was the unemployment rate when Reagan went in? What was it when he left.
Inflation?
GDP growth?

Who cares? It has nothing to do with how much debt he accumulated. Your strawman aside ...

You [wrongly] claimed that the stock market quadrupled under Reagan, when in fact, it barely doubled. And you [wrongly] claimed that the unemployment rate was under 5% under Reagan and it never was.

Sheik, you know as well as I do that ecnomic growth was much greater under Reagan than under Obama---and he faced economic conditions that were also pretty horrible. So if I were you, I would stick to Obama because if we start comparing Reagan and Obama, Obama will look like even more of a stumbling clown than he already does.

Here's what I said ...

Hell, we didn't need to triple the debt for that.

We had 35% GDP growth and 5% unemployment rate and a 300% increase in the stocket market; but unlike Reagan who increased the debt by 180%, Clinton raised it by only 37%.

Do you think Obama's name is spelled, C-L-I-N-T-O-N? :roll:

 

[OpportunityCost]

Re: CBO estimates 2013 deficit at $642 billion

First and foremost, you made up complete BS. You posted Clinton's stellar record and tried to pass it off as Reagan's. Now that you're caught, rather than simply acknowledge what you did and move on, you're attempting to dig your heels in even deeper and try to spin your way out of it, which you can't. :roll:


Complete nonsense. Those benefits must have bypassed Bush41, who had nominal gains in the stock market and GDP and nothing but rising unemployment.


Who cares? It has nothing to do with how much debt he accumulated. Your strawman aside ...

You [wrongly] claimed that the stock market quadrupled under Reagan, when in fact, it barely doubled. And you [wrongly] claimed that the unemployment rate was under 5% under Reagan and it never was.



Here's what I said ...


Do you think Obama's name is spelled, C-L-I-N-T-O-N? :roll:

What I quoted did not mention Clinton....at all.

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

Not according to me -- according to the nationally recognized organization which tracks recessions -- the National Bureau of Economic Research.

They are the ones to point out there was a recession in 1920, 1923, and 1927. You don't have to like it.

National Bureau of Economic Research

Hard to hit a moving target. You keep changing the subject. You said it was the cuts that hurt, I pointed out that we had cuts every year from 1920 to 1927, you change the subject and point out 3 recessions in the '20s. That doesn't address your claim that it's the cuts that hurt. If that were the case, every year between 1920-1927 would have been recessionary years since each year had less spending than the previous year. The economy cycles. It's not a straight line so there's nothing unusual about slowdowns. Since this discussion was all about the depression of 1920 and why it recovered much more quickly than 1929, the recessions of 1923 and 1927 are irrelevant. They were normal cyclical slowdowns.

You're right, my mistake. It was 7 years. I was thinking of just the FDR years when I said 4 years.

As far as why it took longer, again, it was a much deeper depression.

In the first year of the 1920 depression, real GDP fell less than 1%; compared to the Great Depression where it fell 8½%.

Two years after the 1920 depression started, GDP was down 3%. Two years after the Gret Depression started, it was down 16%.

There is simply no rational way to compare them.

You persist in avoiding the question that is the basis for all our discussions. Why? Why did GDP drop less after 1920? Why did GDP drop more after 1929? Why after 3 years was the 1920 depression virtually over? Why after 3 years was the 1929 depression getting deeper? There IS a rational way to to compare recovery rates and why one was over quickly and the other dragged on for over a decade. My "why" is that government tried to fix the crash in 1929, but let the one in 1920 run its course with little interference.

I'm still waiting for your "why"...

 

[DA60]

Re: CBO estimates 2013 deficit at $642 billion

Hard to hit a moving target. You keep changing the subject. You said it was the cuts that hurt, I pointed out that we had cuts every year from 1920 to 1927, you change the subject and point out 3 recessions in the '20s. That doesn't address your claim that it's the cuts that hurt. If that were the case, every year between 1920-1927 would have been recessionary years since each year had less spending than the previous year. The economy cycles. It's not a straight line so there's nothing unusual about slowdowns. Since this discussion was all about the depression of 1920 and why it recovered much more quickly than 1929, the recessions of 1923 and 1927 are irrelevant. They were normal cyclical slowdowns.





You persist in avoiding the question that is the basis for all our discussions. Why? Why did GDP drop less after 1920? Why did GDP drop more after 1929? Why after 3 years was the 1920 depression virtually over? Why after 3 years was the 1929 depression getting deeper? There IS a rational way to to compare recovery rates and why one was over quickly and the other dragged on for over a decade. My "why" is that government tried to fix the crash in 1929, but let the one in 1920 run its course with little interference.

I'm still waiting for your "why"...

Good questions.

1920/21 Depression is a real thorn in the side of neo-Keynesians.

Their whole notion of the best way to 'fix' a depression/recession is with extensive government intervention goes out the window (IMO) when comparing the 1920/21 Depression's rapid recovery with balanced budgets and lower tax rates; and the Great Depression-era's FAR slower 'recovery' with massive government intervention/deficits (right from Hoover on).

In short - Hoover/FDR handling of Great Depression roughly ten years after the crash...national debt triples, DOW barely reaches 1/2 of it's pre-crash level and unemployment is 5 times worse (in 1939) then it's pre-crash level.

Wilson/Harding handling of 1920/21 Depression...national debt is cut by roughly 20%, the unemployment rate is back to near pre-crash levels in 3 1/2 years and the DOW surpasses it's pre-crash level within 5 years.

 

[DA60]

Re: CBO estimates 2013 deficit at $642 billion

Good questions.

1920/21 Depression is a real thorn in the side of neo-Keynesians.

Their whole notion of the best way to 'fix' a depression/recession is with extensive government intervention goes out the window (IMO) when comparing the 1920/21 Depression's rapid recovery with balanced budgets and lower tax rates; and the Great Depression-era's FAR slower 'recovery' with massive government intervention/deficits (right from Hoover on).

In short - Hoover/FDR handling of Great Depression roughly ten years after the crash...national debt triples, DOW barely reaches 1/2 of it's pre-crash level and unemployment is 5 times worse (in 1939) then it's pre-crash level.

Wilson/Harding handling of 1920/21 Depression...national debt is cut by roughly 20%, the unemployment rate is back to near pre-crash levels in 3 1/2 years and the DOW surpasses it's pre-crash level within 5 years.

And for those that say I am 'cherry picking' numbers for Hoover/FDR?

At NO TIME between 1931 and 1940 was the unemployment rate less then 4 times worse OR the DOW more then 51% of the pre-1929 pre-crash levels.

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

Good questions.

1920/21 Depression is a real thorn in the side of neo-Keynesians.

Their whole notion of the best way to 'fix' a depression/recession is with extensive government intervention goes out the window (IMO) when comparing the 1920/21 Depression's rapid recovery with balanced budgets and lower tax rates; and the Great Depression-era's FAR slower 'recovery' with massive government intervention/deficits (right from Hoover on).

In short - Hoover/FDR handling of Great Depression roughly ten years after the crash...national debt triples, DOW barely reaches 1/2 of it's pre-crash level and unemployment is 5 times worse (in 1939) then it's pre-crash level.

Wilson/Harding handling of 1920/21 Depression...national debt is cut by roughly 20%, the unemployment rate is back to near pre-crash levels in 3 1/2 years and the DOW surpasses it's pre-crash level within 5 years.

Every depression prior to 1929 is a thorn in the side of the Keynesians because each ended quickly with very little government intervention. The usual course for them is to point out the "long depression" from 1873-1879 that lasted an unprecedented (at the time) 6 years. The political hack who claims to be an economist Paul Krugman frequently uses it as an example. He never gets into the details, though, which show that it wasn't a depression at all. Keynesian theory should have been dismissed when we had inflationary recessions, something that simply could not exist if Keynesian theory were valid.

 

[sangha]

Re: CBO estimates 2013 deficit at $642 billion

Every depression prior to 1929 is a thorn in the side of the Keynesians because each ended quickly with very little government intervention. The usual course for them is to point out the "long depression" from 1873-1879 that lasted an unprecedented (at the time) 6 years. The political hack who claims to be an economist Paul Krugman frequently uses it as an example. He never gets into the details, though, which show that it wasn't a depression at all. Keynesian theory should have been dismissed when we had inflationary recessions, something that simply could not exist if Keynesian theory were valid.

As the late 19th century and the early 20th century shows, without govt regulation and intervention the economy will experience a series of booms and busts. The "rapid recovery" you speak of is nothing more than the beginning of a boom which followed a bust.

 

[Sheik Yerbuti]

Re: CBO estimates 2013 deficit at $642 billion

What I quoted did not mention Clinton....at all.

You quoted Clinton's numbers. You didn't have to mention him by name.

"25% GDP growth, unemployemnt under 5% and a 300% increase in stock market value?" ~ OpportunityCost

Those weren't Reagan's numbers -- they were Clinton's.

 

[Sheik Yerbuti]

Re: CBO estimates 2013 deficit at $642 billion

Hard to hit a moving target. You keep changing the subject. You said it was the cuts that hurt, I pointed out that we had cuts every year from 1920 to 1927, you change the subject and point out 3 recessions in the '20s. That doesn't address your claim that it's the cuts that hurt. If that were the case, every year between 1920-1927 would have been recessionary years since each year had less spending than the previous year. The economy cycles. It's not a straight line so there's nothing unusual about slowdowns. Since this discussion was all about the depression of 1920 and why it recovered much more quickly than 1929, the recessions of 1923 and 1927 are irrelevant. They were normal cyclical slowdowns.





You persist in avoiding the question that is the basis for all our discussions. Why? Why did GDP drop less after 1920? Why did GDP drop more after 1929? Why after 3 years was the 1920 depression virtually over? Why after 3 years was the 1929 depression getting deeper? There IS a rational way to to compare recovery rates and why one was over quickly and the other dragged on for over a decade. My "why" is that government tried to fix the crash in 1929, but let the one in 1920 run its course with little interference.

I'm still waiting for your "why"...

Who knows why you're waiting when I've already answered it twice ... and now thrice ...

There is no comparison between the two. Again, that's like comparing Hurricane Andrew with Hurricane Isaac. Yes, they were both hurricanes but Andrew was far, far worse than Isaac. Same thing with the two depressions you're trying to compare. Yes, they were both depressions, but the Great Depression was far, far worse. So you cannot compare them or their recoveries.

And again, the loss of real GDP one year after the 1920 depression compared to the 1929 depression:

1920: 1%
1930: 8½%

... after two years ...

1921: 3%
1931: 16%

I don't understand why you can't fathom how much worst the Greadt Depression was.

:shrug:

 

[Sheik Yerbuti]

Re: CBO estimates 2013 deficit at $642 billion

Good questions.

1920/21 Depression is a real thorn in the side of neo-Keynesians.

Their whole notion of the best way to 'fix' a depression/recession is with extensive government intervention goes out the window (IMO) when comparing the 1920/21 Depression's rapid recovery with balanced budgets and lower tax rates; and the Great Depression-era's FAR slower 'recovery' with massive government intervention/deficits (right from Hoover on).

In short - Hoover/FDR handling of Great Depression roughly ten years after the crash...national debt triples, DOW barely reaches 1/2 of it's pre-crash level and unemployment is 5 times worse (in 1939) then it's pre-crash level.

Wilson/Harding handling of 1920/21 Depression...national debt is cut by roughly 20%, the unemployment rate is back to near pre-crash levels in 3 1/2 years and the DOW surpasses it's pre-crash level within 5 years.

As far as national debt being cut, now you're dishonestly comparing the period where highly inflated spending to fight WWI was cut; against the loss of revenue during one of the worst, if not thee worst, global economic periods in this country's history.

And then insanely castigating Keynesian policies as though that was the reason. :naughty

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

As the late 19th century and the early 20th century shows, without govt regulation and intervention the economy will experience a series of booms and busts. The "rapid recovery" you speak of is nothing more than the beginning of a boom which followed a bust.

History shows that our economy has been in a state of flux since the beginning. Ups and down are nothing unusual. Before government decided they could reverse the downs, the market quickly got rid of bad investment and reallocated resources where they could be productive. Only after intervention because the rule of the day did some of our downs become long and drawn out. Even after the crash of 1929, the economy was beginning to show signs of recovery. Then, the interventions kicked in and sent us in the other direction.

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

And then insanely castigating Keynesian policies as though that was the reason. :naughty

Here's something for you to chew on. Keynesian theory is simple at its core. Recessions are caused by underspending, inflation by overspending. According to Mr. Keynes, during recessions the government is supposed to floor the spending accelerator. In inflationary times, hit the brakes and slow spending. So, what do Keynesians have to say when we have inflationary recessions like the one in 1973-1974 followed by even worse ones in 1979-1980 and 1981-1982? Step on the brake and accelerator at the same time? The very existence of inflationary recessions should have put Keynesian theory in its grave.

 

[Sheik Yerbuti]

Re: CBO estimates 2013 deficit at $642 billion

Here's something for you to chew on. Keynesian theory is simple at its core. Recessions are caused by underspending, inflation by overspending. According to Mr. Keynes, during recessions the government is supposed to floor the spending accelerator. In inflationary times, hit the brakes and slow spending. So, what do Keynesians have to say when we have inflationary recessions like the one in 1973-1974 followed by even worse ones in 1979-1980 and 1981-1982? Step on the brake and accelerator at the same time? The very existence of inflationary recessions should have put Keynesian theory in its grave.

That has absolutely nothing to do with DA60's s dishonest blaming of Keynesian policies by comparing a decrease in debt during a period following massive spending to fight a world war; with a period of massive loss of government revenue due to the Great Depression.

 

[Gimmesometruth]

Re: CBO estimates 2013 deficit at $642 billion

Here's something for you to chew on. Keynesian theory is simple at its core. Recessions are caused by underspending, inflation by overspending. According to Mr. Keynes, during recessions the government is supposed to floor the spending accelerator. In inflationary times, hit the brakes and slow spending. So, what do Keynesians have to say when we have inflationary recessions like the one in 1973-1974 followed by even worse ones in 1979-1980 and 1981-1982? Step on the brake and accelerator at the same time? The very existence of inflationary recessions should have put Keynesian theory in its grave.

Not only is your "simplified" description incorrect (the focus in Keynesian economics is aggregate demand, not "spending") but it fails to understand that the triangle model was theorized to account for the supply shocks (oil crises), stagflation.

 

[sangha]

Re: CBO estimates 2013 deficit at $642 billion

History shows that our economy has been in a state of flux since the beginning. Ups and down are nothing unusual. Before government decided they could reverse the downs, the market quickly got rid of bad investment and reallocated resources where they could be productive. Only after intervention because the rule of the day did some of our downs become long and drawn out. Even after the crash of 1929, the economy was beginning to show signs of recovery. Then, the interventions kicked in and sent us in the other direction.

Yes, before then the economy went up and down, and after then the economy goes up and down. Well, duh!

But now, we don't have a constant and frequent cycle of booms and busts. IOW, your post completely failed to address the point I made

 

[Gimmesometruth]

Re: CBO estimates 2013 deficit at $642 billion

Good questions.

1920/21 Depression is a real thorn in the side of neo-Keynesians.

Their whole notion of the best way to 'fix' a depression/recession is with extensive government intervention goes out the window (IMO) when comparing the 1920/21 Depression's rapid recovery with balanced budgets and lower tax rates; and the Great Depression-era's FAR slower 'recovery' with massive government intervention/deficits (right from Hoover on).

In short - Hoover/FDR handling of Great Depression roughly ten years after the crash...national debt triples, DOW barely reaches 1/2 of it's pre-crash level and unemployment is 5 times worse (in 1939) then it's pre-crash level.

Wilson/Harding handling of 1920/21 Depression...national debt is cut by roughly 20%, the unemployment rate is back to near pre-crash levels in 3 1/2 years and the DOW surpasses it's pre-crash level within 5 years.

April 1, 2011, 5:25 pm50 Comments
1921 and All That
Every once in a while I get comments and correspondence indicating that the right has found an unlikely economic hero: Warren Harding. The recovery from the 1920-21 recession supposedly demonstrates that deflation and hands-off monetary policy is the way to go.

But have the people making these arguments really looked at what happened back then? Or are they relying on vague impressions about a distant episode, with bad data, that has been spun as a confirmation of their beliefs?

OK, I’m not going to invest a lot in this. But even a cursory examination of the available data suggests that 1921 has few useful lessons for the kind of slump we’re facing now.


Brad DeLong has recently written up a clearer version of a story I’ve been telling for a while (actually since before the 2008 crisis) — namely, that there’s a big difference between inflation-fighting recessions, in which the Fed squeezes to bring inflation down, then relaxes — and recessions brought on by overstretch in debt and investment. The former tend to be V-shaped, with a rapid recovery once the Fed relents; the latter tend to be slow, because it’s much harder to push private spending higher than to stop holding it down.

And the 1920-21 recession was basically an inflation-fighting recession — although the Fed was trying to bring the level of prices, rather than the rate of change, down. What you had was a postwar bulge in prices, which was then reversed:

The deflation may have helped by increasing the real money supply — at least Meltzer thinks so (pdf) — but if so, the key point was that the economy was nowhere near the zero lower bound, so there was plenty of room for the conventional monetary channel to work.

All of this has zero relevance to an economy in our current situation, in which the recession was brought on by private overstretch, not tight money, and in which the zero lower bound is all too binding.

So do we have anything to learn from the macroeconomics of Warren Harding? No

http://krugman.blogs.nytimes.com/2011/04/01/1921-and-all-that/?_r=0

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

That has absolutely nothing to do with DA60's s dishonest blaming of Keynesian policies by comparing a decrease in debt during a period following massive spending to fight a world war; with a period of massive loss of government revenue due to the Great Depression.

Never said it did. Since it appears you believe in Keynesian theory, cuts are what hurts and all, I was just giving you something to think about if you choose to do so.

 

[Sheik Yerbuti]

Re: CBO estimates 2013 deficit at $642 billion

Never said it did. Since it appears you believe in Keynesian theory, cuts are what hurts and all, I was just giving you something to think about if you choose to do so.

Think about what? How government spending increased under Carter to pull us out of the 1980 recession and how it incresed even more under Reagan to pull us out of the '81-'82 recession?

Was that your pount?

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

Not only is your "simplified" description incorrect (the focus in Keynesian economics is aggregate demand, not "spending") but it fails to understand that the triangle model was theorized to account for the supply shocks (oil crises), stagflation.

What does Mr. Keynes say is the cure for insufficient aggregate demand? More spending. The cure for inflation? Less spending. Aggregate demand is a factor in determining whether to spend more or less. The focus is the "fix", not the cause. The very foundation of Keynesian theory is whether the government needs to spend more or less with aggregate demand being one of the determining factors. My simplified description is correct.

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

Think about what? How government spending increased under Carter to pull us out of the 1980 recession and how it incresed even more under Reagan to pull us out of the '81-'82 recession?

Was that your pount?

Did the point stir a breeze at all when it flew over your head? Keynesian theory clearly indicates that spending is the correct course of action in a recession. It also clearly indicates that less spending is the course of action when there is inflation. There is nothing --- nothing --- in Keynesian theory that even deals with an inflationary recession because it can't exist in Mr. Keynes world. You either missed that very important fact or chose to ignore it. Maybe I'm missing something here, so I'll ask you for an answer. What is the correct course of action in the Keynesian world for an inflationary recession?

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

Yes, before then the economy went up and down, and after then the economy goes up and down. Well, duh!

But now, we don't have a constant and frequent cycle of booms and busts. IOW, your post completely failed to address the point I made

You said:

As the late 19th century and the early 20th century shows, without govt regulation and intervention the economy will experience a series of booms and busts. The "rapid recovery" you speak of is nothing more than the beginning of a boom which followed a bust.

Perhaps you just worded it wrong, but you implied, if not stated directly, that it takes government regulation and intervention to prevent boom/bust cycles. Even with government trying to control the economy, we still have the same old cycles at different levels of intensity, and more severe busts last longer today than before 1929. Yet, you completely disregard the main difference between pre-1929 and post-1929 busts. Government intervention.

 

[sangha]

Re: CBO estimates 2013 deficit at $642 billion

You said:

As the late 19th century and the early 20th century shows, without govt regulation and intervention the economy will experience a series of booms and busts. The "rapid recovery" you speak of is nothing more than the beginning of a boom which followed a bust.

Perhaps you just worded it wrong, but you implied, if not stated directly, that it takes government regulation and intervention to prevent boom/bust cycles. Even with government trying to control the economy, we still have the same old cycles at different levels of intensity, and more severe busts last longer today than before 1929. Yet, you completely disregard the main difference between pre-1929 and post-1929 busts. Government intervention.

Basically, you're saying that we have the same cycles, but different cycles. That does not compute.

And by comparing the most recent crisis to those before 1929, you are cherry-picking.

 

[OpportunityCost]

Re: CBO estimates 2013 deficit at $642 billion

You quoted Clinton's numbers. You didn't have to mention him by name.

"25% GDP growth, unemployemnt under 5% and a 300% increase in stock market value?" ~ OpportunityCost

Those weren't Reagan's numbers -- they were Clinton's.

Dude. Your dishonesty is breath taking and deliberate.

You know damn good and well that I am not representing those numbers as Clintons, further, Clinton didnt face any economic issues during his Presidency he inherited very solid metrics. We are comparing bad economic conditions. Your misrepresentation of what Im saying is just annoying trollish bull****. Stop it.

 

[froggigger]

Re: CBO estimates 2013 deficit at $642 billion

Basically, you're saying that we have the same cycles, but different cycles. That does not compute.

And by comparing the most recent crisis to those before 1929, you are cherry-picking.

I'm saying the economy has always been cyclical, and the cycles have always been of different intensities, meaning that one cycle isn't necessarily like the last. This holds true for our entire history. I don't know how to make it any clearer.

Cherry picking? Our downturns, recessions, depressions, busts, whatever you prefer to call them, ended much quicker pre-1929. If pointing out a period that spans over a century and comparing it to a period of over 80 years is cherry-picking, then guilty.