Keynesian policies at work! Shrinking deficit

[sMiLeYz]

http://www.salon.com/technology/how...3/the_incredible_shrinking_deficit/index.html

The deficit isn't just a function of increased government spending. When workers lose their jobs and households cut back spending, the consequent constriction of demand ripples through the greater economy and tax revenue plummets. If the government takes steps to boost demand, the opposite happens. It's an age-old story -- you gotta spend money to make money. Rising tax revenues aren't an accident -- they are in part a direct consequence of stimulus spending.

The stimulus worked! How about them apples?

 

[Ozoned]

Great. I expect our chinese overlords will be happy they got a bang for their buck.

 

[Patranus]

So the government borrows money, spends it, and then counts a raise in tax revenue?

Even a 2nd grader could see the flaw in the logic.

 

[Genx87]

Is this supposed to be a joke? We drop 3 trillion in two budget cycles to pick up some extra tax revenue? Awesome!

I bet you love Reaganomics then!

 

[fallout man]

I bet you love Reaganomics then!

 

[StageLeft]

And we add Andrew to one of the many who know what the inside of Washington's asshole tastes like.

Minutiae in the article aside its basic premise, particularly its title in light of what the deficit is actually doing is a criminal case of missing the forest for the trees. Ludicrous. Also very shallow, like we haven't heard this a million times. I think the author just used some news aggregator and sh*t the thing together in 3 minutes.

 

[StageLeft]

lol

 

[Throckmorton]

So the government borrows money, spends it, and then counts a raise in tax revenue?

Even a 2nd grader could see the flaw in the logic.

Uhh yeah... that's what stimulating the economy does. Of course Republicans claim that stimulating the economy is done by spending less...

 

[Patranus]

Uhh yeah... that's what stimulating the economy does. Of course Republicans claim that stimulating the economy is done by spending less...

Um. I am pretty sure that money has to be paid back with interest.
Pile onto the national debt to shrink the deficit.

Right....

 

[StageLeft]

Uhh yeah... that's what stimulating the economy does. Of course Republicans claim that stimulating the economy is done by spending less...

Ideally, but in practice a lot of stimulating the economy seems to be nothing more than trying to charge a battery via a solar cell and the light to charge that cell is from a light bulb drawing energy from the battery you're trying to charge. I always get a huge kick out of politicians talking about how some new job that is paid for with public funds will create a new tax payer. It's a monumental face palm.

 

[soccerballtux]

http://www.salon.com/technology/how...3/the_incredible_shrinking_deficit/index.html



The stimulus worked! How about them apples?

Keynes had an idea for his day, but conservatives don't like any deficit spending.

Unfortunately, we cannot have currency without debt.

 

[Throckmorton]

Um. I am pretty sure that money has to be paid back with interest.
Pile onto the national debt to shrink the deficit.

Right....

Well no, of course you're increasing the deficit in the short term, but in the long term the economy and therefore the deficit is better off.

 

[Patranus]

I hate to break it to you but Keynesian policies call for SAVING during times of growth so that deficit spending can occur in down times.

So no, Keynesian policies are not working because they are not being used.

 

[soccerballtux]

I hate to break it to you but Keynesian policies call for SAVING during times of growth so that deficit spending can occur in down times.

So no, Keynesian policies are not working because they are not being used.

Yeah that would be a great start.
Although Keynes also says you can keep spending because as long as GDP grows with debt there's no problem...

Fundamentally though even with savings, debt is always more than cash in existence (nature of our interest backed debt), and the chasm between the two grows exponentially with time. If we paid everything off, there would be no more dollars in existence, but we would all still hold debt that we have to pay off.
So we need non-debt-backed currency, or at least ways of adding hard cash to the system to _everyone_ so the ratio of debt::cash in existence isn't so large.

None of any of this will work if you're trying to govern a flawed people, though. If people wouldn't spend past what they could afford, and everyone would save x% of their income, then growth would be self-regulating and recessions wouldn't slaughter our spending power.

 

[JS80]

Keynesian only works in economic dictatorships. In a free democracy the government will spend during good times and spend more during bad times and when the ponzi comes home to roost kaboom.

 

[Leon]

I'd hit it

Wait, wat?

 

[xj0hnx]

http://www.salon.com/technology/how...3/the_incredible_shrinking_deficit/index.html



The stimulus worked! How about them apples?

So we can expect to hear you singing Bush's praise?

 

[sandorski]

So we can expect to hear you singing Bush's praise?

..except Bush broke the whole Surplus/Pay Down the Debt during Growth part, but ya, he made the whole <%/GDP Growth argument. So did all his Supporters, who simultaneously claim Keynesian Economics don't Work.

 

[her209]

What's the difference between these two?

1. Stimulating the economy by borrowing money to start and fight a war.
2. Stimulating the economy by borrowing money to build and improve infrastructure.

 

[totalnoob]

What's the difference between these two?

1. Stimulating the economy by borrowing money to start and fight a war.
2. Stimulating the economy by borrowing money to build and improve infrastructure.

Considering both are net wealth drains, I don't see a difference.

 

[Siddhartha]

Uhh yeah... that's what stimulating the economy does. Of course Republicans claim that stimulating the economy is done by spending less...

If the GOP was in power and responsible for the economy, they would have said and done everything differently. An example of this, they voted for TARP while Mr Bush was in power. Would they have voted for it if Mr Obama had proposed the same bill?

 

[rudder]

So the government borrows money, spends it, and then counts a raise in tax revenue?

Even a 2nd grader could see the flaw in the logic.

Along with all the people's whose jobs were funded by stimulus money... which will shortly run out and they will be unemployed again.

http://msbusiness.com/blog/2010/04/federal-deficit-plummeted-in-march/

The deficit through the first six months of this budget year totals $716.99 billion, a drop of 8.2 percent from the same period a year ago. However, the administration is projecting that the deficit for all of 2010 will hit an all-time high of $1.56 trillion, up from last year’s record of $1.4 trillion.


When the deficit gets down under a trillion can we all do the happy dance again?

 

[xj0hnx]

Uhh yeah... that's what stimulating the economy does. Of course Republicans claim that stimulating the economy is done by spending less...

Less government spending, less taxes, more money in business/consumers pockets so they can stimulate the economy by having more money to spend in the actual economy, instead of magically producing more debt instead. The loony left doesn't like that because the welfare state, and entitlement crowd still don't have money to spend, and less people are indebted to the state.

 

[MovingTarget]

Considering both are net wealth drains, I don't see a difference.

I'll bite. Adding infrastructure provides opportunity for wealth creation by facilitating commerce. Roads, rail lines, canals, schools, ports, bridges, etc. all facilitate current and future economic activity.
Blowing shit up has the opposite effect. Although you do have to pay for the bombs and bomb-droppers, which does stimulate the economy a bit, those investments do not have positive long-term benefits.

 

[Siddhartha]

What's the difference between these two?

1. Stimulating the economy by borrowing money to start and fight a war.
2. Stimulating the economy by borrowing money to build and improve infrastructure.

You get a bigger return for your money with building and improving infrastructure. Better roads, bridges, schools, etc improve the overall efficiency of the country and continue to give these benefits for decades. Consider the Golden Gate Bridge, the Hoover Damn, State Universities, and the US interstate highway system, even after 50+ years these projects still contribute to economic health of the US.

War is a black hole for resources including people. Actually, considering the social and cultural costs of the Viet Nam War, we need a better metric for determining the economic cost\benefit analysis of war.