4 ms·

It's clear actually, that the US must increase spending, increase taxes. You spend to get out of recession, or you cut and make it worse, as has been demonstrat

It's clear actually, that the US must increase spending, increase taxes. You spend to get out of recession, or you cut and make it worse, as has been demonstrated in every recession since records began. The failure to spend has brought us to a double-dip. For some grounding in economics, try the following: http://www.amazon.com/Macroeconomics-N-Gregory-Mankiw/dp/0716752379 http://www.amazon.com/Macroeconomics-N-Gregory-Mankiw/dp/071.... Update: For a more specific analysis of an analogous situation - the Japanese "lost decade", try: http://www.amazon.com/Holy-Grail-Macroeconomics-Revised-Recession/dp/0470824948/ref=sr_1_16?s=books&ie=UTF8&qid=1315770747&sr=1-16 http://www.amazon.com/Holy-Grail-Macroeconomics-Revised-Rece...

_delirium 15y ago
It is a pretty strange situation, where a bunch of people are somehow fixated on "hyperinflation" and deficits for political reasons, but economists on both sides of the political spectrum are surprisingly in agreement that that's crap. Perhaps they're wrong, but I'm more confident in the predictions of a moderate conservative with solid macroeconomic understanding, like Greg Mankiw, than I am in the predictions of people like Lew Rockwell, who have been consistently wrong for 25 years now with the same, self-serving predictions (http://hyperinflatingyet.com/shame.html http://hyperinflatingyet.com/shame.html). Maybe this time they're right, even though they were wrong in 1985, 1988, 1993, 1998, 2003, ...; but I doubt it.
TomOfTTB 15y ago
The problem here is you rely too much on models. I'm not saying you're wrong but you're certainly too sure of yourself. Economic Models, by definition, have to make assumptions on psychology. Those assumptions can often be wrong and that invalidates the model. To put this in real terms lets look at the construction worker. Say the government, as the spender of last resort, starts a bunch of construction projects. The economic theory here is the construction worker will get a job which will put money in his pocket. He will then go out and spend that money which will cause the places where he spends his money to hire more people. That starts a virtuous cycle that gets the economy out of trouble. The problem with that is, in my experience, the construction worker doesn't think that way. He's been unemployed for a year or more already so instead of spending he takes every spare cent and saves it for a rainy day. Because the construction job is finite. Since he was already getting government subsidized aide as an unemployed person the money he spends on food and other essentials is negligible. So if he saves his extra money then the government spending has no impact on the economy (until he's forced to use that money by a crisis) Again there are valid arguments on both sides but your certainty that your side is right seems naive (and that's being polite to you)

_delirium 15y ago

It is a pretty strange situation, where a bunch of people are somehow fixated on "hyperinflation" and deficits for political reasons, but economists on both sides of the political spectrum are surprisingly in agreement that that's crap. Perhaps they're wrong, but I'm more confident in the predictions of a moderate conservative with solid macroeconomic understanding, like Greg Mankiw, than I am in the predictions of people like Lew Rockwell, who have been consistently wrong for 25 years now with the same, self-serving predictions (http://hyperinflatingyet.com/shame.html http://hyperinflatingyet.com/shame.html). Maybe this time they're right, even though they were wrong in 1985, 1988, 1993, 1998, 2003, ...; but I doubt it.

TomOfTTB 15y ago

The problem here is you rely too much on models. I'm not saying you're wrong but you're certainly too sure of yourself. Economic Models, by definition, have to make assumptions on psychology. Those assumptions can often be wrong and that invalidates the model. To put this in real terms lets look at the construction worker. Say the government, as the spender of last resort, starts a bunch of construction projects. The economic theory here is the construction worker will get a job which will put money in his pocket. He will then go out and spend that money which will cause the places where he spends his money to hire more people. That starts a virtuous cycle that gets the economy out of trouble. The problem with that is, in my experience, the construction worker doesn't think that way. He's been unemployed for a year or more already so instead of spending he takes every spare cent and saves it for a rainy day. Because the construction job is finite. Since he was already getting government subsidized aide as an unemployed person the money he spends on food and other essentials is negligible. So if he saves his extra money then the government spending has no impact on the economy (until he's forced to use that money by a crisis) Again there are valid arguments on both sides but your certainty that your side is right seems naive (and that's being polite to you)