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WOW! As per this guys logic, US should be focused on reducing the deficit right now rather than growth and jobs. With one of the deepest recession we ever faced

by sunjain 16y ago

WOW! As per this guys logic, US should be focused on reducing the deficit right now rather than growth and jobs. With one of the deepest recession we ever faced hardly over and unemployment still so high, not sure how more jobs could have been created without help from govt stimulus(since consumer spending is down and so is pvt sector profits as well as hiring). With the kind of hole we were in and still are in, the biggest worry should be jobs and growth which are not going to come back just simply by waiting on consumer spending to pick up by itself(consumers are not going to spend, if there are no jobs).

frognibble 16y ago
Your analysis of the situation is incomplete because it does not consider the source of the resources used in the government stimulus. The resources need to come from someplace in economy. For the stimulus to be a net positive, the government's allocation of resources must be more efficient than where the resources were taken from.
- cma 16y ago
  http://www.cepr.net/index.php/blogs/beat-the-press/how-large-a-debt-level-is-qworrisomeq http://www.cepr.net/index.php/blogs/beat-the-press/how-large...
  - frognibble 16y ago
    The resources used in the stimulus come from someplace in the economy. The resources do not magically appear out of thin air when the Fed buys government debt.
    - cma 16y ago
      With an idled worker population it is obvious where the bulk of the resources can come from.
      - frognibble 16y ago
        It is not obvious that the bulk of the resources come from the idled workers. Resources are needed to pay the workers. Resources are needed to buy the steel, concreate and other materials used in the projects.
        cma 16y ago
        >It is not obvious that the bulk of the resources come from the idled workers. Resources are needed to pay the workers. The resources are the idled workers. Yes, commodity-type resources are used as well, but there is for example a lot of idled equipment out there as well.
jeffreymcmanus 16y ago
Yep. One of the causes of the global depression of the late 1920s is that governments did not intervene sufficiently forcefully when money supply seized up, and by the time they figured out what was going on it was too late. The Bush/Obama stimulus prevented a collapse of the global banking system although reasonable people are arguing that the stimulus didn't go far enough (since we still have 12% unemployment in many parts of the country). If your opinion is that the deficit is the root of all evil, you probably feel that way because you have a bunch of cash in the bank. Regardless, the time to fight deficits is when you have money to fight it with (as happened under the Clinton administration).

by sunjain 16y ago

frognibble 16y ago

Your analysis of the situation is incomplete because it does not consider the source of the resources used in the government stimulus. The resources need to come from someplace in economy. For the stimulus to be a net positive, the government's allocation of resources must be more efficient than where the resources were taken from.

cma 16y ago
http://www.cepr.net/index.php/blogs/beat-the-press/how-large-a-debt-level-is-qworrisomeq http://www.cepr.net/index.php/blogs/beat-the-press/how-large...
- frognibble 16y ago
  The resources used in the stimulus come from someplace in the economy. The resources do not magically appear out of thin air when the Fed buys government debt.
  - cma 16y ago
    With an idled worker population it is obvious where the bulk of the resources can come from.
    - frognibble 16y ago
      It is not obvious that the bulk of the resources come from the idled workers. Resources are needed to pay the workers. Resources are needed to buy the steel, concreate and other materials used in the projects.
      - cma 16y ago
        >It is not obvious that the bulk of the resources come from the idled workers. Resources are needed to pay the workers. The resources are the idled workers. Yes, commodity-type resources are used as well, but there is for example a lot of idled equipment out there as well.

jeffreymcmanus 16y ago

Yep. One of the causes of the global depression of the late 1920s is that governments did not intervene sufficiently forcefully when money supply seized up, and by the time they figured out what was going on it was too late. The Bush/Obama stimulus prevented a collapse of the global banking system although reasonable people are arguing that the stimulus didn't go far enough (since we still have 12% unemployment in many parts of the country). If your opinion is that the deficit is the root of all evil, you probably feel that way because you have a bunch of cash in the bank. Regardless, the time to fight deficits is when you have money to fight it with (as happened under the Clinton administration).