5 ms·

Isn't investing in bonds putting money to work in the economy? And how does the government really stimulate demand? Nobody demanded an IPhone before it existed.

Isn't investing in bonds putting money to work in the economy? And how does the government really stimulate demand? Nobody demanded an IPhone before it existed. Good products stimulate demand.

jstalin 11y ago
Politicians spending your money for you is better than you deciding how to spend it.
- alttab 11y ago
  Can't tell if this is sarcasm or not. Sign of the times I guess.
  - hodwik 11y ago
    Has to be sarcasm. People who actually believe that wouldn't say "politicians", they'd use some other euphemism, because they believe in some abstract trustworthy organization that's always being hampered by those damn politicians. Statists love their euphemisms: “investment” instead of “government spending” “shared sacrifices” instead of "wealth redistribution" "government officials" instead of "un-elected bureaucrat" and lastly, "public sector" instead of "The State".
    - ubernostrum 11y ago
      Statists love their euphemisms My irony detector has just exploded. Can you direct me to a completely-unregulated minarchist free-for-all market where I can buy one that merely poisons me and everyone in a hundred-mile radius? Because at least it would actually work.
      - hodwik 11y ago
        You have to pay extra for the poison. This is libertarian land, dude. NOTHING is free, even poison.
        jabgrabdthrow 11y ago
        Nothing is free in reality, not even poison. What are you trying to say?
        ubernostrum 11y ago
        The poisonous version was cheaper to make than the non-poisonous one, last I heard. So the company decided to go with poisonous ones in order to meet Q4 financial goals.
    - mikeash 11y ago
      Yes, of course, all of your terminology is straightforward, and the terminology preferred by those who disagree with you is "euphemisms."
      - hodwik 11y ago
        I didn't claim my language was "straightforward", any term we use will carry bias. That's how political language works. "Investment" automatically biases you to think that said spending must have a net-good result. Calling it "Government spending" predisposes you to think about the price of said action. Biased language is always annoying to the other side. When I hear the liberal euphemisms I groan as strongly as I suspect most liberals groan to my dysphemisms. If you said libertarians love their dysphemisms I wouldn't hold it against you.
  - jgamman 11y ago
    jstalin? seriously wondering if this is serious"?
- mychael 11y ago
  Username checks out
- quadrangle 11y ago
  Hah. Someone should write a bot that evaluates trite simplistic aphorisms (regardless of sarcastic or whatever) and replies with something like "real life is more complex" or something of that ilk.
jazzyk 11y ago
If consumers don't have the money to purchase the goods/services they desire, nothing is going to happen.
roymurdock 11y ago
Bonds are government debt. When you buy a bond, you are giving the government your money now in order to receive a return on that money later, with the expectation that the government will do something useful with the money in the meantime. So if the government is allocating its budget well, then yes, purchasing bonds is a good thing. If it is not, you are making a bad loan to someone who may not be able to pay you back in the future. Government stimulates demand by investing in sectors that have huge up-front costs but large positive social externalities over time because the lifespan of a gov is much greater than that of an individual or corporation. It invests in infrastructure - the national grid, highways, roads, prisons, the post office, mortgage lending, insurance - most importantly though, wars, education, and healthcare. Many of these industries have become increasingly privatized over the past 30 years. This is not inherently bad, but it changes the profit time horizon and shifts incentives away from long-term investment towards short-term profit maximization. iPhone would not exist without the development of the internet during the cold war on gov grants, the affordability and draw of public UC Berkley where Jobs and Wozniaki met, people alive and well-fed enough to buy it, etc. You can't point to a single innovation without looking at the entire fabric of the society that produced it. Gov spending has huge impact on social fabric. iPhone is also only one half of equation. If no one has the disposable income to buy one, it doesn't matter how good it is.
- jrmurad 11y ago
  >> Isn't investing in bonds putting money to work in the economy? > Bonds are government debt ... Could be referring to corporate bonds.
  - PaulWillis 11y ago
    Either one. The money still gets into the economy.
- PaulWillis 11y ago
  Didn't Jobs quit college because it was too expensive?
  - 11y ago
jonknee 11y ago
> And how does the government really stimulate demand? Building things (roads, spaceships, bridges, etc), funding things (medical research, education, etc) and other obvious things. Low interest rates make longer term projects much more viable.
- drumdance 11y ago
  Don't forget war. $800 billion to $2.4 trillion spent on the Iraq War depending on who's counting. https://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War https://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War
  - PaulWillis 11y ago
    > Don't forget war. This is really the broken window fallacy.
brc 11y ago
production creates demand. Not because people want to buy it, but because the act of production gives you something to trade. The people who build iPhones (Apple employees) produce something valuable (iPhones). Everyone else has to produce something to trade for an iPhone - a bushel of wheat, a written work, a clean window, a haircut, a night of entertainment. The act of production and trade is what creates wealth and economic growth. People get lost and separated from this basic understanding because if you create and give everyone money, then everyone can go and trade the money with Apple employees for an iPhone. But this is not long term sustainable, and you actually cheated the Apple employees because the money they are getting is worth slightly less than when they set out to build phones. And it's clear that the extra money has not made the world as rich as it would have been from people actually producing something else to trade. This is patently true even though the mythical gdp number went up, giving the illusion of an increase in wealth.
- millstone 11y ago
  > production creates demand. Not because people want to buy it, but because the act of production gives you something to trade What are you describing is called Say's Law. There's various ways it can be false, and the US economy experienced lots of them. An example of how production does not create demand: people can save money for the future. A person who wants to save more will produce more (work harder) and reduce their spending. If everyone does this simultaneously, we get a glut: supply exceeds demand, and real production will fall. Note the simple remedy: give everyone money, everyone can increase their savings, and resume their old level of demand. Here money did increase real output. And (even in your example) everyone got money, so the Apple employees were not cheated. Lost real income from iPhone sales is compensated by the additional money they received. https://en.wikipedia.org/wiki/Say%27s_law https://en.wikipedia.org/wiki/Say%27s_law
  - brc 11y ago
    Of course I know it is Say's Law. My purpose here is to post it for people to understand the principle. Giving everyone money does not work. You can only increase the size of the economy and wealth of the people within by producing more. That much is self evident, yet people have been bamboozled by muddied thinking that aggregate demand is all. I don't try and convince the hardened Keynesian thinker with Krugman in their favourites, but merely to explain to people who instinctively know that current macro thinking is broken, but haven't worked out why.

Isn't investing in bonds putting money to work in the economy? And how does the government really stimulate demand? Nobody demanded an IPhone before it existed. Good products stimulate demand.

jstalin 11y ago

Politicians spending your money for you is better than you deciding how to spend it.

alttab 11y ago
Can't tell if this is sarcasm or not. Sign of the times I guess.
- hodwik 11y ago
  Has to be sarcasm. People who actually believe that wouldn't say "politicians", they'd use some other euphemism, because they believe in some abstract trustworthy organization that's always being hampered by those damn politicians. Statists love their euphemisms: “investment” instead of “government spending” “shared sacrifices” instead of "wealth redistribution" "government officials" instead of "un-elected bureaucrat" and lastly, "public sector" instead of "The State".
  - ubernostrum 11y ago
    Statists love their euphemisms My irony detector has just exploded. Can you direct me to a completely-unregulated minarchist free-for-all market where I can buy one that merely poisons me and everyone in a hundred-mile radius? Because at least it would actually work.
    - hodwik 11y ago
      You have to pay extra for the poison. This is libertarian land, dude. NOTHING is free, even poison.
      - jabgrabdthrow 11y ago
        Nothing is free in reality, not even poison. What are you trying to say?
      - ubernostrum 11y ago
        The poisonous version was cheaper to make than the non-poisonous one, last I heard. So the company decided to go with poisonous ones in order to meet Q4 financial goals.
  - mikeash 11y ago
    Yes, of course, all of your terminology is straightforward, and the terminology preferred by those who disagree with you is "euphemisms."
    - hodwik 11y ago
      I didn't claim my language was "straightforward", any term we use will carry bias. That's how political language works. "Investment" automatically biases you to think that said spending must have a net-good result. Calling it "Government spending" predisposes you to think about the price of said action. Biased language is always annoying to the other side. When I hear the liberal euphemisms I groan as strongly as I suspect most liberals groan to my dysphemisms. If you said libertarians love their dysphemisms I wouldn't hold it against you.
- jgamman 11y ago
  jstalin? seriously wondering if this is serious"?
mychael 11y ago
Username checks out
quadrangle 11y ago
Hah. Someone should write a bot that evaluates trite simplistic aphorisms (regardless of sarcastic or whatever) and replies with something like "real life is more complex" or something of that ilk.

jazzyk 11y ago

If consumers don't have the money to purchase the goods/services they desire, nothing is going to happen.

roymurdock 11y ago

Bonds are government debt. When you buy a bond, you are giving the government your money now in order to receive a return on that money later, with the expectation that the government will do something useful with the money in the meantime. So if the government is allocating its budget well, then yes, purchasing bonds is a good thing. If it is not, you are making a bad loan to someone who may not be able to pay you back in the future. Government stimulates demand by investing in sectors that have huge up-front costs but large positive social externalities over time because the lifespan of a gov is much greater than that of an individual or corporation. It invests in infrastructure - the national grid, highways, roads, prisons, the post office, mortgage lending, insurance - most importantly though, wars, education, and healthcare. Many of these industries have become increasingly privatized over the past 30 years. This is not inherently bad, but it changes the profit time horizon and shifts incentives away from long-term investment towards short-term profit maximization. iPhone would not exist without the development of the internet during the cold war on gov grants, the affordability and draw of public UC Berkley where Jobs and Wozniaki met, people alive and well-fed enough to buy it, etc. You can't point to a single innovation without looking at the entire fabric of the society that produced it. Gov spending has huge impact on social fabric. iPhone is also only one half of equation. If no one has the disposable income to buy one, it doesn't matter how good it is.

jrmurad 11y ago
>> Isn't investing in bonds putting money to work in the economy? > Bonds are government debt ... Could be referring to corporate bonds.
- PaulWillis 11y ago
  Either one. The money still gets into the economy.
PaulWillis 11y ago
Didn't Jobs quit college because it was too expensive?
- 11y ago

jonknee 11y ago

> And how does the government really stimulate demand? Building things (roads, spaceships, bridges, etc), funding things (medical research, education, etc) and other obvious things. Low interest rates make longer term projects much more viable.

drumdance 11y ago
Don't forget war. $800 billion to $2.4 trillion spent on the Iraq War depending on who's counting. https://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War https://en.wikipedia.org/wiki/Financial_cost_of_the_Iraq_War
- PaulWillis 11y ago
  > Don't forget war. This is really the broken window fallacy.

brc 11y ago

production creates demand. Not because people want to buy it, but because the act of production gives you something to trade. The people who build iPhones (Apple employees) produce something valuable (iPhones). Everyone else has to produce something to trade for an iPhone - a bushel of wheat, a written work, a clean window, a haircut, a night of entertainment. The act of production and trade is what creates wealth and economic growth. People get lost and separated from this basic understanding because if you create and give everyone money, then everyone can go and trade the money with Apple employees for an iPhone. But this is not long term sustainable, and you actually cheated the Apple employees because the money they are getting is worth slightly less than when they set out to build phones. And it's clear that the extra money has not made the world as rich as it would have been from people actually producing something else to trade. This is patently true even though the mythical gdp number went up, giving the illusion of an increase in wealth.

millstone 11y ago
> production creates demand. Not because people want to buy it, but because the act of production gives you something to trade What are you describing is called Say's Law. There's various ways it can be false, and the US economy experienced lots of them. An example of how production does not create demand: people can save money for the future. A person who wants to save more will produce more (work harder) and reduce their spending. If everyone does this simultaneously, we get a glut: supply exceeds demand, and real production will fall. Note the simple remedy: give everyone money, everyone can increase their savings, and resume their old level of demand. Here money did increase real output. And (even in your example) everyone got money, so the Apple employees were not cheated. Lost real income from iPhone sales is compensated by the additional money they received. https://en.wikipedia.org/wiki/Say%27s_law https://en.wikipedia.org/wiki/Say%27s_law
- brc 11y ago
  Of course I know it is Say's Law. My purpose here is to post it for people to understand the principle. Giving everyone money does not work. You can only increase the size of the economy and wealth of the people within by producing more. That much is self evident, yet people have been bamboozled by muddied thinking that aggregate demand is all. I don't try and convince the hardened Keynesian thinker with Krugman in their favourites, but merely to explain to people who instinctively know that current macro thinking is broken, but haven't worked out why.