Who believes Keynesians would EVER carry out austerity/cutbacks in good times?

[berzerker60]

I'm not willing to completely ignore history and pretend that anyone would actually reduce spending in prosperous time. Debt as a percentage of gdp occasionally goes down, but that's not because of a reduction in spending, it's the result of gdp going up. Spending simply never actually gets reduced, no matter what the economy is doing. Plenty of excuses and justification will always be available as to why.

Spending will always increase, as will government control over citizens. That's just the natural order of things, with an occasional reset when things get out of hand to the point of inciting revolution.

Spending should always increase in absolute terms, just reduce relative to GDP and size of the population. The country continues to grow in population, requiring more services but providing more tax dollars too, and also there's inflation.

An obese 10-year old will still wear smaller clothes than a 30-year-old who's in great shape and has shed most of his fat. That's not a bad thing.

 

[theeedude]

Clinton did. He raised taxes.

 

[OverVolt]

..

 

[alcoholbob]

So are you saying who believes Keynesians are actually accurately practicing the economic principals of John Maynard Keynes? I think most people realized a long time ago they were just Pro-Statist shills pretending to be Keynesians.

It's just like pro-immigration activists who keep putting Cesar Chavez up as their hero even though he was ardently in favor of stronger controls on immigration.

 

[OverVolt]

..

 

[ivwshane]

The problem isn't Keynesian ideology it's with congress, neither are willing to make the right cuts and raise the right taxes.

Republicans always want to cut taxes and never raise them on the rich.
Democrats rarely want to cut social welfare programs.
And neither never want to cut military spending.
Neither want to cut subsidies either.


The problem is that the people on the right (like those on this board), are so stuck in their ideology that they wouldn't vote for someone who would spend during the bad times and those on the left would never vote for someone who only wants to cut programs and taxes.

So nothing that needs to happen ever gets done.

 

[Matt1970]

The problem isn't Keynesian ideology it's with congress, neither are willing to make the right cuts and raise the right taxes.

Republicans always want to cut taxes and never raise them on the rich.
Democrats rarely want to cut social welfare programs.
And neither never want to cut military spending.
Neither want to cut subsidies either.


The problem is that the people on the right (like those on this board), are so stuck in their ideology that they wouldn't vote for someone who would spend during the bad times and those on the left would never vote for someone who only wants to cut programs and taxes.

So nothing that needs to happen ever gets done.

That has to be the most unbiased answer I have ever heard from you. I'll drink to that.

 

[Jhhnn]

Current stand out problem with current Keynesian monetary policy is the explosive wealth inequality resulting from it.

Blind desperation, huh? Massive inequality is the result of supply side trickle down Reaganomics of Capitalism.

It's laughable that you'd suggest otherwise.

 

[Bitek]

Are you talking about economists or politicians?

You know only one can actually do it right?

 

[Matt1970]

Blind desperation, huh? Massive inequality is the result of supply side trickle down Reaganomics of Capitalism.

It's laughable that you'd suggest otherwise.

Good job comrade. We all know you hate every thing there is to do with capitalism but reap ever benefit it has to offer.

 

[shira]

Keynesians both on this board and IRL always say they'll cut back spending once good times come back, do you believe them?

Keynesians will cut back on various economic stimuli (which isn't limited to just increased deficit spending) when an economy recovers. The Fed ended QE3 in October based on strong evidence that the American economy was getting stronger, and has now signaled that 0% interest rates will probably end mid-year 2015.

So your poll is already irrelevant, as the Fed has clearly demonstrated that stimuli are being significantly reduced.

 

[michal1980]

Who cares how it happens so long as debt/GDP goes down?

Seriously, why would it matter how it happened?

so the answer is no.

 

[OverVolt]

Yea they boost rates 0.25% during the good times and cut them like 3% during the bad times and so by my calculations we'll be stuck at ZIRP forever by 2008. Oh wait.

Cause there is no way in hell they could afford like 10% interest on 18 Trillion or whatever it is these days, as the debt was much smaller during the interest rate shock of the 70's. It might have been 15% interest on the house, but the house was $50k and pretty much guaranteed to quadruple in price. Not so much anymore.

 

[Meghan54]

Keynesians both on this board and IRL always say they'll cut back spending once good times come back, do you believe them?

As much as one should believe Republican promises of spending cuts, reduced deficits, and smaller government, none of which has been done by any Republican administration since Eisenhower.

 

[Jhhnn]

As much as one should believe Republican promises of spending cuts, reduced deficits, and smaller government, none of which has been done by any Republican administration since Eisenhower.

It's worse than that. Reagan/GHWB quadrupled the debt. GWB doubled it again. Clinton was the only modern Prez who succeeded in controlling debt accumulation at all. GWB rushed to reverse that trajectory with tax cuts & rebates, not to mention a couple of misbegotten wars of adventure. Letting Wall St run wild, looting & crashing the economy which necessitated bailout didn't improve the picture. That & winding down the wars necessitated a lot of spending since that time, also necessitated QE from the FRB as well.

Some people see it differently, usually because they're from Glenbeckistan.

 

[Spungo]

Keynesians both on this board and IRL always say they'll cut back spending once good times come back, do you believe them?

Economists don't deserve the blame. Politicians and voters deserve blame. It's not like economists hold guns to the heads of politicians and demand spending. It's voters who demand spending. The economy is great! Let's spend record amounts of money so we don't have a rainy day fund! Look at the current situation. The economy is absolutely booming, unemployment is down, retail is doing great, American businesses are not going bankrupt at a record pace, and Obama has fixed the economy, but we're still looking at trillion dollar budget shortfalls. This is insane. If this is the budget during prosperous times, imagine what it looks like during a recession. We'll have the same spending, but tax revenues will be down.

Economists are not the bad guys. Keynes could easily be described as intelligent and prudent. His theories make perfect sense, but nobody wants to try them. Save for a rainy day - we never do that. Only use your rainy day fund (or printing press) when it's actually raining - we don't do that. We're running the printing press at full blast even when unemployment is below 6%. Today, Keynes would be considered a hardcore right win tea party conservative.

The problem is that people are lemmings. I can't remember who said it, but someone said the memory of investors is about 2 years. Past 2 years, nobody remembers anything. Nobody remembers how the 1980s were almost exactly the same as the late 1990s. It was the new computer age, this was the new economy, earnings don't matter, clicks per dollar, leveraged buyouts funded by junk bonds. The stupidity of humans is so reliable that you can read almost any investing book written in the last 100 years and you can't tell when it was written. You could read a book written in 1920 and it would describe pretty much every bubble you've seen in your life time. It's always different this time, it's always a new age. We never need to save for a rainy day because rainy days will never happen in the future. The future will never have recessions again, stocks will always go up, real estate will always go up, it's always a good idea to spend record amounts of money during the boom times instead of savings it for the bust times.

Keynes assumed humans are not completely retarded, and that was his mistake.

 

[ivwshane]

Just an FYI, the actual budget for 2013 was 480 billion. That's quite a cut (it also helps explain why the economy isn't really booming).

 

[Spungo]

Just an FYI, the actual budget for 2013 was 480 billion. That's quite a cut (it also helps explain why the economy isn't really booming).

Straight for the US Treasury:
last year: 16.7 trillion
this year: 17.7 trillion.

You're not accusing the treasury of lying are you?

 

[fskimospy]

Straight for the US Treasury:
last year: 16.7 trillion
this year: 17.7 trillion.

You're not accusing the treasury of lying are you?

Nope.

See if you can figure out why those numbers are different. If you understand how government accounting works it will be extremely easy.

 

[ivwshane]

Straight for the US Treasury:
last year: 16.7 trillion
this year: 17.7 trillion.

You're not accusing the treasury of lying are you?

Forgive me, I was referring to the federal budget deficit. However you are referring to the total debt.

The point is that spending already is being reduced.

 

[Double Trouble]

Who cares how it happens so long as debt/GDP goes down?

Seriously, why would it matter how it happened?

Just because GDP went up doesn't mean we don't care anymore about how and how much we spend. Sorry, that's an absolutely ridiculous argument. The bottom line number reflects multiple components, each needs to be evaluated and handled separately. A boom in spending can still result in a lower ratio if there happened to be an even bigger boom in the GDP. Controlling spending and making sure what we do spend is spent on the right thing is a lot more important than the ratio.

Conversely, a higher ratio isn't itself a horrible thing either. What matters isn't the ratio, it's what created the ratio.

The natural order of things is for spending to always increase. The trick is to contain the increase and make it be effective spending as much as possible.

When people argue that we shouldn't cut spending during a downturn, I always kind of chuckle. On one hand they are right, that spending should not be cut at that point, but on the other is the simple reality that for some people there is never a good time to cut spending because they pray at the altar of bigger government and more spending.

 

[Double Trouble]

That ratio is basically the only relevant metric we should be looking at for the purposes of this discussion.

Absolutely not. The ratio is only a tool to compare a snapshot position over time, it tells us absolutely nothing about that point in time being good or bad, just how it compares to other points in time.

If GDP shoots up in a period, it doesn't mean congress should feel like they have a blank check to increase spending because the ratio will still be OK. The two are different components and need to be evaluated on their own merits.

 

[Double Trouble]

Economists don't deserve the blame. Politicians and voters deserve blame. It's not like economists hold guns to the heads of politicians and demand spending. It's voters who demand spending. The economy is great! Let's spend record amounts of money so we don't have a rainy day fund!

Absofuckinlutely correct. We the voters are to blame. We punish our representatives if they don't deliver lots of goodies and spending, yet act surprised when our children and future generations get saddled with ever growing debt and a bleaker outlook.