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IMF warns on U.S. economy

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Infohawk

Lifer
Jan 12, 2002
17,844
1
0
Keynesian vs. classical? Largely irrelevant when you consider the elephant in the room: globalization and a shift of capital from the US and other developed economies to the third world. This is the fundamental problem with the Western economies (including Japan). Arguing about Keynesian vs. Classical economics is like arguing about the arrangement of deck chairs on the Titanic after it hit the iceberg. To the extent it is relevant, I would say that at least most stimulus seems to be more likely to be kept in the US economy, but I'm not sure the effect is worth arguing over. Even a lot of infrastructure projects are using foreign labor.
 

Franz316

Senior member
Sep 12, 2000
890
236
116
The IMF doesn't even try and hide its intentions anymore, lol.

Can we all stop pretending like the deficit is ever going to be repaid? Because it's not. There is not enough growth left on Earth to get the world out of debt. The system can only take so much before there is no capital left to do anything productive with. This is because practically all of it goes towards servicing debts.

The only possible solution for government is to print more money and it is a short term fix with long term ramifications. It's a problem with no good solution. The house of cards is already coming down in Europe and the US is on the same path.

We basically borrowed from the future and when we finally arrived there, there wasn't much left.
 
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wirednuts

Diamond Member
Jan 26, 2007
7,121
2
0
student loans have been bubbling too.. and they havent collapsed yet. yet, because unlike the housing market people cannot simply walk away. but people cannot afford their loans on their brand new $30k job that has 50 cent raises every year. so their paychecks are currently being garnished and it wont be long until they start gnawing faces.
 

Fern

Elite Member
Super Moderator
Sep 30, 2003
26,907
173
106
Yeah, that 15 Trillion dollar deficit we're looking at is one of those "actual outcomes". $15 trillion in the hole is not enough for some, lets double down and go $30 trillion in the hole.
Oh I think it's inevitable that we'll reach $30T. It's only a matter of when.

Fern
 

fskimospy

Elite Member
Mar 10, 2006
73,108
24,650
136
Translation: Well, we've blown all our money and are out of credit, so we need the USA to do likewise to hopefully get us out of this hole.

(Germany has already refused.)

Fern
Where did you get this idea from?
 

fskimospy

Elite Member
Mar 10, 2006
73,108
24,650
136
Reading the article.

Fern
What part of the article made you think the IMF was out of money and was depending on the US to bail it out? The United States is the largest economy in the world, a major contraction here would obviously have spillover effects.
 

Balt

Lifer
Mar 12, 2000
12,674
482
126
Deficit spending during tougher economic times isn't the only problem here. Demand for government services will logically increase during these periods as more people have lost their jobs, and government revenue will logically decrease.

The bigger problem is that during periods of economic prosperity we just find ways to spend all of the extra revenue on unnecessary things that we could instead use to prepare for the next inevitable recession. It becomes much harder to reduce all of those additional liabilities under the threat of a recession.
 

Cerb

Elite Member
Aug 26, 2000
17,484
33
86
First of all, the states cutting their budgets was a horrible idea.
What other good options do they have? They can either cut their budgets, or offer bonds. But those bonds require repayment higher than the cost, and I'm not sure how many the states most in need would be able to sell at reasonable interest rates.

Serious entitlement reform will not work for the same reasons austerity will not work. Both require that stuff be taken away from politically significant demographics who don't want it taken away. At least if we're talking deficit reduction.

The economy may fix itself, but our political structure is currently incapable of taking much action. Barring another bubble or magical political changes, austerity will come sooner or later, either forced or willingly. The later it comes, the worse it will be.
QFT! Our government officials cannot sit down in the same room and agree on any single direction for policies, and that is the basic problem, supported by a closed-minded partisan political infrastructure, where pigeon-holed niches of voters matter more than the general population and economy.
 

Jhhnn

No Lifer
Nov 11, 1999
62,293
14,490
136
Budget cutting is the only thing that works, increasing spending will only make the situation worse
Cut spending to force layoffs to create jobs, right?

What passes for knowledge in the Rightwing-o-verse is merely faith, faith in what their leadership tells them, which is what they want to hear in the first place. It's a seamless feedback mechanism of denial.
 

RbSX

Diamond Member
Jan 18, 2002
8,351
1
76
Stimulus is fine when you have the money to spend it - but the reality is that Europe and the USA have been fielding deficit budgets for so long everyone is in debt into their eyeballs.

As someone said earlier, stimulus is fine so long as you tax to recoup the expenditures, but on one ever does that.. and all you get is endless amounts of debt.
 

Matt1970

Lifer
Mar 19, 2007
12,320
2
0
First of all, the states cutting their budgets was a horrible idea. Second of all, attempting to compare state budgets within an economy and separate national budgets is silliness.

Austerity has not caused a 'slight bump in the road', it has been an economic catastrophe.
Well States can't just borrow money like the US can. They have to actually pay it back and can't just print bonds and money whenever they feel like it.
 

Darwin333

Lifer
Dec 11, 2006
19,946
2,325
126
You know that it isn't, we've been over this a lot. More and more institutions worldwide are recognizing the failure of budget cutting in a recession. It's sad that it took this long for countries to realize that they were making a catastrophic mistake with austerity because it gave the world several years of unnecessary economic trouble, but at least now it seems that people are coming around.
Borrow your way out of a debt problem huh......
 

Jhhnn

No Lifer
Nov 11, 1999
62,293
14,490
136
It's obvious to the rather dim perceptions of the usual Righties that govt finances are *exactly like* household finances. Nevermind that they aren't, because the act of believing makes it true in their own minds. Nevermind that liquidity traps are self reinforcing & that we all depend on the other guy to spend money so that we too can have some of it pass through our hands.

Obviously, the proper reaction to a constricted circulation of liquidity is to constrict it even further. The answer to an extremely lopsided distribution of income facilitating that constriction is to give the beneficiaries of that a tax cut, so they can keep & save even more of their incomes, facilitating even greater reductions in total flow.

Wash, rinse, repeat until we fall below stall speed for the economy. Once that's achieved, why, it'll merely justify more of the same. If we can just create actual deflation, those of us who have money will find that it gains value stuffed into our mattresses, the ultimate safe investment, while those of us who are debtors will find that the more we pay, the more we owe in terms of value. We can make it like 1931 all over again if we just believe, if we're the kind of chumps that America's wealthiest have every reason to think that we are...
 

fskimospy

Elite Member
Mar 10, 2006
73,108
24,650
136
Well we are the largest contributor to the IMF providing approx. 20% of the its funding.
Yes, but nothing in that article has anything about IMF funding in it.

But as for your question of using government debt in this current situation the answer is yes. That's been clear for a number of years now. I am admittedly in a tough situation here. On one level it is intellectually gratifying to see the utter failure of austerity policies and foolish deficit cutting in a depression, but on the other hand it comes at the cost of a great deal of real human suffering. That's a pretty grim victory.
 

Jaskalas

Lifer
Jun 23, 2004
30,240
3,778
126
I like the Democrat's plan, always wanted to pay $10 per item at Walmart. Makes me feel rich.
 

OrByte

Diamond Member
Jul 21, 2000
9,299
137
106
It's obvious to the rather dim perceptions of the usual Righties that govt finances are *exactly like* household finances. Nevermind that they aren't, because the act of believing makes it true in their own minds. Nevermind that liquidity traps are self reinforcing & that we all depend on the other guy to spend money so that we too can have some of it pass through our hands.

Obviously, the proper reaction to a constricted circulation of liquidity is to constrict it even further. The answer to an extremely lopsided distribution of income facilitating that constriction is to give the beneficiaries of that a tax cut, so they can keep & save even more of their incomes, facilitating even greater reductions in total flow.

Wash, rinse, repeat until we fall below stall speed for the economy. Once that's achieved, why, it'll merely justify more of the same. If we can just create actual deflation, those of us who have money will find that it gains value stuffed into our mattresses, the ultimate safe investment, while those of us who are debtors will find that the more we pay, the more we owe in terms of value. We can make it like 1931 all over again if we just believe, if we're the kind of chumps that America's wealthiest have every reason to think that we are...
excellent post.
 

OrByte

Diamond Member
Jul 21, 2000
9,299
137
106
You realize that your 'reality' is directly contrary to easily available historical evidence, right? The important part of any debt is the debt/GDP ratio and the US reduced that from a far higher level after WW2 along with another significant reduction in the 90's. That is reality, brencat.

The shifting explanations betray the actual motivations here. The first argument was just that Keynesian economics were total bullshit, that they were just wrong. The last several years have provided some pretty powerful evidence that they are in fact correct. Now the argument becomes 'well even if they are right we still can't do it'. I believe this is an ideological and psychological opposition to policy that is not based on actual outcomes.
another excellent post.

/thread.
 

Darwin333

Lifer
Dec 11, 2006
19,946
2,325
126
You realize that your 'reality' is directly contrary to easily available historical evidence, right? The important part of any debt is the debt/GDP ratio and the US reduced that from a far higher level after WW2 along with another significant reduction in the 90's. That is reality, brencat.
Do you foresee a huge growth boom like we had post WWII in our near future that will enable us to "grow out" of our debt? And if that happens, do you reckon investors will be willing to continue loaning us money at a near zero return?
 
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