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It's interesting to consider how much we all now simply assume that there will be no financial stimulus. 50 years ago, in similar circumstances, we could simply

It's interesting to consider how much we all now simply assume that there will be no financial stimulus. 50 years ago, in similar circumstances, we could simply assume that a spending bill could be passed to offset any risk of recession. Nowadays we assume there is no hope of that. President Kennedy, and President Nixon, and President Carter and President Reagan, all of them pushed for more military spending at certain key moments, not always because they saw the need for more military spending, but because it was an easy way to get some extra stimulus to offset the risk of recession. But there is no way, nowadays, to put together a coalition that will vote for any kind of stimulus, even if that stimulus were given some non-obvious name such as "Modernize the Navy".

megous 7y ago
Where will you get money for a "stimulus" without reducing people's ability to spend elsewhere, or reducing spending elsewhere as a government?
- H8crilA 7y ago
  The point of a recession is that the economy is underutilized (unemployment for example). Therefore more overall spending is needed. If you overdo it you get inflation, that's why it's the typical central bank target.
  - megous 7y ago
    I don't think that's the point of recession, necessarily. Previous recession happened for other systemic reasons, like subprime mortages bubble bursting bringing down with it a lot of other things. Unemployment was more like a temporary consequence of that and necessary changes/realignment of expectations/allocation of money in the economy.
    - H8crilA 7y ago
      It is. There's only goods and services in the real world, and at some point people slow down on exchanging them. That's a recession. "How the Economic Machine Works" https://youtu.be/PHe0bXAIuk0 https://youtu.be/PHe0bXAIuk0
      - megous 7y ago
        There is also demand, and capital, and it's allocated somehow (inflexibly, because people tend to like ownership), and there are governments (agents with systemic effects, almost by definition), and there are various currencies and boundaries in the world, and million other things,... and slowdown in economic activity in any geographic area can come for all kinds of reasons, and it's generally a symptom and not a cause. Increased (or trying to artificially increase) economic activity (as measured by GDP) is also not good by itself, but only in relation to meaningful demand. Otherwise, digging and filling holes (like in a war, basically) would be an overally good thing, which it is not. There's no need to increase spending via a central bank currency manipulation, just because it's lower than before, nor is it the only way to achieve that.
        H8crilA 7y ago
        I'm merely stating that a recession is, by definition, less stuff and services being exchanged between people and institutions. Money is just an abstract concept by which people do such exchanges. And money printing (lowering interest rates, QE, helicopter money, fiscal stimulus like New Deals or the likes of building the Hoover's Dam) is a generally acknowledged consensus on how to at least try to fix it. That is how to at least try to make people transact more.
- wavefunction 7y ago
  You borrow it which is what successive GOP administrations have done, including the current one.
  - megous 7y ago
    That just increases the demand for borrowing, and makes it harder/more expensive for other market participants to borrow. And thus they'll be less likey to borrow and spend/invest that money.
- deleted 7y ago
  [deleted]
prewett 7y ago
Assuming what you say is true (I’m not convinced, though), it didn’t work. There were recessions in 1958, 1960-61, 1969-70, 1973-75, 1980, 1981-1982 [0]. And actually, yes there is broad support for stimulus. Bush #2 gave out helicopter money, and we had Quantitative Easing where the Fed bought treasuries for a few years after 2008. And, in fact, the current Fed chair just lowered interest rates on recession fears. [0] https://en.m.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.m.wikipedia.org/wiki/List_of_recessions_in_the_Un...
- piker 7y ago
  > and we had Quantitative Easing where the Fed bought treasuries for a few years after 2008. And, in fact, the current Fed chair just lowered interest rates on recession fears. Not to necessarily disagree with your first points, but these latter two examples are "monetary policy" which is supposed to be independent of political processes and distinguishable from "fiscal policy" which is the spending of the US govt and necessarily political.
- lkrubner 7y ago
  A comment on Hacker News is not the right place to get into a conversation about the evolution of thought regarding the effectiveness of monetary policy, versus fiscal policy, but our current understanding did not exist before 1980 and Presidents did engage in stimulus spending, which they often assumed could at least party overcome the actions of the central bank. Also, as piker said, some of your examples confuse monetary and fiscal stimulus. But about fiscal stimulus: There was widespread fear of a recession in the early 1960s, which was part of Kennedy's motivation for more spending on Nasa and the military. Also, there were 2 tax cuts. The expansion from 1961 to 1969 became the longest in USA history, up till that time. Reagan ran absolutely massive budget deficits, which lead a very long expansion, from 1982 to 1990.
javagram 7y ago
The administration just agreed to a budget-busting compromise bill that breaks through the Budget Control Act limits. Stimulus is already happening.

megous 7y ago

Where will you get money for a "stimulus" without reducing people's ability to spend elsewhere, or reducing spending elsewhere as a government?

H8crilA 7y ago
The point of a recession is that the economy is underutilized (unemployment for example). Therefore more overall spending is needed. If you overdo it you get inflation, that's why it's the typical central bank target.
- megous 7y ago
  I don't think that's the point of recession, necessarily. Previous recession happened for other systemic reasons, like subprime mortages bubble bursting bringing down with it a lot of other things. Unemployment was more like a temporary consequence of that and necessary changes/realignment of expectations/allocation of money in the economy.
  - H8crilA 7y ago
    It is. There's only goods and services in the real world, and at some point people slow down on exchanging them. That's a recession. "How the Economic Machine Works" https://youtu.be/PHe0bXAIuk0 https://youtu.be/PHe0bXAIuk0
    - megous 7y ago
      There is also demand, and capital, and it's allocated somehow (inflexibly, because people tend to like ownership), and there are governments (agents with systemic effects, almost by definition), and there are various currencies and boundaries in the world, and million other things,... and slowdown in economic activity in any geographic area can come for all kinds of reasons, and it's generally a symptom and not a cause. Increased (or trying to artificially increase) economic activity (as measured by GDP) is also not good by itself, but only in relation to meaningful demand. Otherwise, digging and filling holes (like in a war, basically) would be an overally good thing, which it is not. There's no need to increase spending via a central bank currency manipulation, just because it's lower than before, nor is it the only way to achieve that.
      - H8crilA 7y ago
        I'm merely stating that a recession is, by definition, less stuff and services being exchanged between people and institutions. Money is just an abstract concept by which people do such exchanges. And money printing (lowering interest rates, QE, helicopter money, fiscal stimulus like New Deals or the likes of building the Hoover's Dam) is a generally acknowledged consensus on how to at least try to fix it. That is how to at least try to make people transact more.
wavefunction 7y ago
You borrow it which is what successive GOP administrations have done, including the current one.
- megous 7y ago
  That just increases the demand for borrowing, and makes it harder/more expensive for other market participants to borrow. And thus they'll be less likey to borrow and spend/invest that money.
deleted 7y ago
[deleted]

prewett 7y ago

Assuming what you say is true (I’m not convinced, though), it didn’t work. There were recessions in 1958, 1960-61, 1969-70, 1973-75, 1980, 1981-1982 [0]. And actually, yes there is broad support for stimulus. Bush #2 gave out helicopter money, and we had Quantitative Easing where the Fed bought treasuries for a few years after 2008. And, in fact, the current Fed chair just lowered interest rates on recession fears. [0] https://en.m.wikipedia.org/wiki/List_of_recessions_in_the_United_States https://en.m.wikipedia.org/wiki/List_of_recessions_in_the_Un...

piker 7y ago
> and we had Quantitative Easing where the Fed bought treasuries for a few years after 2008. And, in fact, the current Fed chair just lowered interest rates on recession fears. Not to necessarily disagree with your first points, but these latter two examples are "monetary policy" which is supposed to be independent of political processes and distinguishable from "fiscal policy" which is the spending of the US govt and necessarily political.
lkrubner 7y ago
A comment on Hacker News is not the right place to get into a conversation about the evolution of thought regarding the effectiveness of monetary policy, versus fiscal policy, but our current understanding did not exist before 1980 and Presidents did engage in stimulus spending, which they often assumed could at least party overcome the actions of the central bank. Also, as piker said, some of your examples confuse monetary and fiscal stimulus. But about fiscal stimulus: There was widespread fear of a recession in the early 1960s, which was part of Kennedy's motivation for more spending on Nasa and the military. Also, there were 2 tax cuts. The expansion from 1961 to 1969 became the longest in USA history, up till that time. Reagan ran absolutely massive budget deficits, which lead a very long expansion, from 1982 to 1990.

javagram 7y ago

The administration just agreed to a budget-busting compromise bill that breaks through the Budget Control Act limits. Stimulus is already happening.