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We should be paying down the national debt during the upper-side of the business cycle so that we have stimulus funds for slumps. The tax-cuts are reverse Keyne
by tabtab 8y ago
We should be paying down the national debt during the upper-side of the business cycle so that we have stimulus funds for slumps. The tax-cuts are reverse Keynesian economics. They are "doing it wrong".
- squirrelicus 8y agoNot to mention failure to raise interest rates to bleed the artificially cheap money out of the economy after quantitative easing. But you can't find a political party these days that supports doing a Keynesian strategy. Everyone wants to have their cake and eat it too, as it were.
- optimuspaul 8y agoMaybe democracy isn't the ideal we should be looking towards
- jayd16 8y agoThis is pretty dismissive. The Obama admin was very cognizant of keeping ACA deficit neutral, for example. Far cry from the current spend and don't tax policies.
- deleted 8y ago[deleted]
- squirrelicus 8y agoYou are confusing fiscal policy with monetary policy.
- jayd16 8y agoAh. The comment you replied to was about tax cuts. I misunderstood your point.
- yellowstuff 8y agoThe US Fed is raising interest rates. Gradually, but arguably fairly aggressively considering inflation is so low.
- zeroname 8y agoOh, they did do the whole spending part of the Keynesian "strategy", it's just that if they now raise rates too high there will be bankruptcies across the board, causing another crisis. Keynesianism just doesn't work exactly because no politician ever finds themselves in a position where they can apply the savings side of it.
- frgtpsswrdlame 8y ago>We should be paying down the national debt during the upper-side of the business cycle so that we have stimulus funds for slumps. The problem is that the political cycle is shorter than the business cycle. Every politician, no matter where they exist in the business cycle, wants to milk economic performance as much as possible. There's no incentive to act counter-cyclically in boom times.
- vertline3 8y agoThe tax-cuts are reverse Keynesian economics. They are "doing it wrong". This is the big flaw i see against Keynes, that the political discipline and foresight it takes to pay forward is very hard. Instead it becomes another round of the too much debt cycle. Unfortunately I don't have any alternative. (many would put their pet economic hobby horse here) Edit: I noticed a problem with my comment, I said pay forward but Keynes has a pay back what you borrowed earlier.
- koube 8y agoCalifornia is doing great in this regard[0]. In my opinion we're lucky to have Jerry Brown at the helm. If you have nice, boring elections, then you can get nice, boring people in leadership positions. [0]: https://www.wsj.com/articles/jerry-browns-legacy-a-6-1-billion-budget-surplus-in-california-1515624022 https://www.wsj.com/articles/jerry-browns-legacy-a-6-1-billi...
- tormeh 8y ago>If you have nice, boring elections, then you can get nice, boring people in leadership positions The key argument for approval voting - right here.
- merpnderp 8y agoI'm not so sure we have the same definition of doing great. http://www.latimes.com/opinion/op-ed/la-oe-jackson-california-poverty-20180114-story.html http://www.latimes.com/opinion/op-ed/la-oe-jackson-californi...
- tabtab 8y agoMost of that is because of demand for real-estate here, and because the weather brings homeless from states with crappy weather. It's not bad governing. It's not Brown's fault TX is humid.
- verbify 8y agoCached version for those under GDPR (the LA Times has seen it fit to block all GDPR countries from their website): http://webcache.googleusercontent.com/search?q=cache:nQgta5-m2YEJ:www.latimes.com/opinion/op-ed/la-oe-jackson-california-poverty-20180114-story.html+&cd=1&hl=en&ct=clnk&gl=uk http://webcache.googleusercontent.com/search?q=cache:nQgta5-...
- ergothus 8y agoMy comments are all US-based: Alternatively we (govt) should be taking advantage of historically low interest rates to spend money on infrastructure maintenance that we KNOW needs to be fixed. This provides stimulus (or wealth transfer, depending on your perspective) through creating jobs and fixes a looming problem before it stops looming. We'll have to pay the price one way or another, and right now the price is at a discount. I read a report claiming that the tax-cuts are in effect demonstrating short-term stimulus spending. Based on my anecdotal observations from trying to read/hear viewpoints from across the political spectrum, lower-income conservatives ARE seeing a difference in their paychecks, and they like it. So the not-fiscally-conservative conservatives are proving the point the fiscally-conservative conservatives don't believe in, at the risk of proving the fiscally-conservative conservatives right about the longer-term costs because of the methods chosen. I do feel bad for those that are truly fiscally-conservative: They've not really had anyone to vote for in a long time.
- deleted 8y ago[deleted]
- ghouse 8y agoUnfortunately, infrastructure maintenance doesn't get people (re)elected. Infrastructure expansion does. And infrastructure expansion increases the future burden of infrastructure maintenance. +1 on the lack of true fiscally conservative. The choice is between tax-and-spend and cut-tax-and-spend. Of those choices, the tax-and-spend is the fiscal conservative.
- 8y ago
- liftbigweights 8y agoThe problem is that our growth ( the good times ) is fueled by debt. If the debt stops, then growth stops. Then politicians get blamed and we can't have that. So back to debt we go. And it's not a partisan issues. Both democrats and republicans love debt, just like they love defense spending. It's politically expedient. Obama increased the debt tremendously. And now Trump is doing the same. Our debt went from around $10 trillion to $21 trillion in 10 years. https://fred.stlouisfed.org/series/GFDEBTN https://fred.stlouisfed.org/series/GFDEBTN Think interest rates are going to increase much anytime soon? Yeah me neither.
- NTDF9 8y agoWhat happens if there is too much debt (as assets) on the Fed's balance sheet? Can they just write them off?
- mpax 8y agoThey can just sit there in perpetuality, there’s no swat team going to bust in the door because one leg of government lent to the other.
- NTDF9 8y agoDoes that erode trust in currency and cause hyper inflation? I suspect no.
- tabtab 8y agoThe biggest downside is that if there is a big slump, the gov't doesn't have spending money for a stimulus. We could then get stuck in a protracted rut or deflationary spiral. In the longer term, GDP growth can make the debt moot (if more is not added), but if we have a big slump sooner, we are screwed.
- acct1771 8y agoCalling the Federal Reserve an arm of the government is misleading at best.
- mpax 8y agoThe national debt can wait, the private sector is more indebted than at any point in recorded history, and getting worse. In the US especially you can see the seeds of debt servitude being sown.
- FooHentai 8y ago>The national debt can wait Until it can't. It's an interesting gambit because while carrying high levels of debt is easier to do during periods of low interest, the second-order effect of taking on that debt is the pain it'll bring you to service it when interest rates rise. Unless you have certainty on future economic conditions (which nobody does), it's prudent to cap your debt level such that can be paid down within a relatively short time frame. That way when tough times inevitably arrive, you have an escape plan. But even then, enacting that escape plan (paying off the debt) causes a shockingly sudden lack of available funds to go anything else (i.e. austerity). This doesn't mean debt, well-applied, isn't a hugely valuable tool. Provided it's used for investment in suitable force multipliers (infrastructure) that help ensure your future ability to service the debt, and profit beyond. But infrastructure isn't well funded and there doesn't seem to be suitable proposals to make it happen, so if debt's not being increased towards that end....
- linuxftw 8y ago> Until it can't. It already couldn't, thus monetary easing (aka, inflation, aka increasing the money supply). Governments always default on their debts through inflation. In the US it was called "QE" Without QE, the treasury auctions would have yielded higher rates of borrowing for the feds. Instead, QE pushed the yields down and money rushed into risk assets (stock market). We're in uncharted economic territory. How do we unwind? Right now, they're slowly letting the balance sheet shrink, but not significantly.
- tabtab 8y agoInflation was sub-par during the QE era.
- mempko 8y agowhen national debt goes down , private debt goes up. Private debt is the issue. The federal government has no issue paying debts because those debts are dollar denominated. The private sector on the other hand can't. Government debt is not the same as household debt, unless of course the household can print their own money. Image you are the Joe family and all your debt is denominated in Joe dollars, do you anticipate you will have a problem paying that debt? Reducing government debt will result in bad times for the private sector. Ever wonder why Clinton's surplus resulted in large private sector debt and then a crash? This is why.
- merpnderp 8y agoI see this argument all the time and I don't understand how people don't see the flaw. The government can't just print dollars to service their debt without devaluing the dollar. If they devalue the dollar they'll make a lot of people upset and get their butts voted out of office. There is obviously some lee-way, but there is a tight upper limit on printing their way out of debt.
- tabtab 8y agoRe: "when national debt goes down, private debt goes up." - Why would that be the case?