Krugman: We are in a depression, and it could be a long one

[Kshartle]

Kshartle,

It doesn't create productive labor, it creates the nominal economic environment that will end this economic Mexcan Standoff we're in.

I've said it 100 times and it's like you don't even acknowledge it.  Unemployment (beyond seasonal and maybe some structural) wouldn't happen in a barter society.  It's a function of tying all our contracts to a single economic unit.  In a barter society, if I malinvested, I could pay it off simply by working harder or renegotiating the debt.  It wasn't a "free lunch."  People just had to work harder.

Leisure is preferable to labor. We only toil if we derive benefit from it. Non-productive labor or work we aren't compensated for could be called a hobby, although we still benefit from it.

I'm glad to see you agree that the government printing money doesn't result in productive labor. Why again do you advocate it? See labor or work that is not productive and not done for enjoyment like a hobby is called a waste. Inducing people to do things they wouldn't otherwise do by devaluing other people's money is a complete waste. It prevents the economy from recovering because it lowers the purchasing power of the people who are earning it doing legitimate market-driven productive work. If you left them alone and prices aren't driven up or God forbid prices fall.....the purchasing power of the people doing real good work will increase. They will bid for things they want and this will encourage the idle humans to engage in actual valuable work.

Moda the FED is up to like 4 trillion printed since this started. The government is running up more than 1 trillion in overt debt and the unfunded liabilities are growing by trillions every year. Labor participation continues to fall. How much more Keynsian intervention is needed to prove that these theories are rubbish? Is there a point where you ever think free market voluntary exchange and an end to the money printing should be tried instead?

[moda0306]

Kshartle,

It doesn't create productive labor, it creates the nominal economic environment that will end this economic Mexcan Standoff we're in.

I've said it 100 times and it's like you don't even acknowledge it.  Unemployment (beyond seasonal and maybe some structural) wouldn't happen in a barter society.  It's a function of tying all our contracts to a single economic unit.  In a barter society, if I malinvested, I could pay it off simply by working harder or renegotiating the debt.  It wasn't a "free lunch."  People just had to work harder.

Leisure is preferable to labor. We only toil if we derive benefit from it. Non-productive labor or work we aren't compensated for could be called a hobby, although we still benefit from it.

I'm glad to see you agree that the government printing money doesn't result in productive labor. Why again do you advocate it? See labor or work that is not productive and not done for enjoyment like a hobby is called a waste. Inducing people to do things they wouldn't otherwise do by devaluing other people's money is a complete waste. It prevents the economy from recovering because it lowers the purchasing power of the people who are earning it doing legitimate market-driven productive work. If you left them alone and prices aren't driven up or God forbid prices fall.....the purchasing power of the people doing real good work will increase. They will bid for things they want and this will encourage the idle humans to engage in actual valuable work.

Moda the FED is up to like 4 trillion printed since this started. The government is running up more than 1 trillion in overt debt and the unfunded liabilities are growing by trillions every year. Labor participation continues to fall. How much more Keynsian intervention is needed to prove that these theories are rubbish? Is there a point where you ever think free market voluntary exchange and an end to the money printing should be tried instead?

I guess I can't say much about advocating "priting money" because I don't think it really has that much of an effect.  Running deficits has a bigger effect, but when we have $500 billion of our currency being "sold" to foreigners for them to use every year, our fiscal deficits need to be bigger to maintain a proper balance of financial assets to service our domestic debt and productive economy.  As much as you'd love for our country to run on gold, bitcoin, and private everything, it runs on the dollar, and we have debts we have to pay in those dollars or we get foreclosed on... so we actually NEED a decent amount on our balance sheets to service our debts and our productive capacity... but since t-bills are just another form of monetary savings for us, they might as well be cash, especially when held by the US banking system getting paid IoR.

- It doesn't matter how much the fed "prints" if it's burning just as much after it's traded with the banks in t-bills, especially when the fed is paying IoR and has no meaningful reserve ratio.  How many times do we need to point this out?

- The 2013 deficit, I believe, is projected to be about $650 billion.  The deficit is falling.

- Labor participation does suck.  This is why we need demand... to use our productive capacity.  Our aggregate demand is currently short of our aggregate productive capacity, and this is why we have high unemployment.

- We have a very market-driven economy... but like all economies, it's a mixed economy.  The market is telling us a lot of things... it's screaming at the federal government "please borrow money from me," it's producing almost no inflation nor predicting much into the future, it's not hiring our excess capacity, reducing the price of gold from $1,900 to $1,200 over the last couple years,and foreigners are buying half a trillion per year of our currency to put on their balance sheet.  The problem is, you want to talk about the market instead of listening to it.

- Government consumption and investment where true Keynesianism lies... not transfer payments... and in a world where the economy dropped several points below capacity, more than a several hundred billion in additional spending is going to need to be approved to reinvigorate it.  And a solid third of that was offset by reduced state/local spnding.  We have people retiring AND a recession AND a world that wants the dollar.  We're simply going to have to run bigger federal deficits to oblige those demands... otherwise we'll continue to have a shortage of demand and economic recession.

- The purchasing power PER DOLLAR will increase if you allow deflation, but the purchasing of the economy overall does not, because there's less dollars.  In fact, the existence of deflation makes productive activity less necessary, as many people are seeing real yields from taking ZERO risk by simply holding money. There is just as much productive potential no matter how much confetti is on our balance sheets... however, the proper amount of money to pay debts AND demand our society's productive capacity is key.

[Kshartle]

When we have $500 billion of our currency being "sold" to foreigners for them to use every year, our fiscal deficits need to be bigger to maintain a proper balance of financial assets to service our domestic debt and productive economy. 

The world sends us $500 billion of valuable stuff and the US sends out useless slips of paper. This is a tremendous swindle. Take it to it's logical conclusion. Imagine the rest of world cedes ownership of everything of value they have and in exchange accepts slips of paper (or electronic dollars). Now they have to work as slaves basically for everything because all they own are slips of paper!

The trade deficit is basically the rest of the world "giving" us stuff for free. They get nothing in exchange except useless slips of paper that they keep accumulating. Do you think that the rest of the world "giving" us stuff for free makes us poorer? If so....how?

[Kshartle]

- Labor participation does suck.  This is why we need demand... to use our productive capacity.  Our aggregate demand is currently short of our aggregate productive capacity, and this is why we have high unemployment.

Can you define what you mean by demand? I would like to understand what you think we need more of and I fear we might have a different definition of it.

Also, how do you think we can best increase what you define "demand" as?

These are tougher questions but I think it's important to define the terms so we know we're talking about the same thing. That way actual beliefs can be scrutinized rather than perceived ones.

Ohhh yeah I don't think anything in particular should be used as money, whatever people choose voluntarily is fine with me, I don't think it will be bitcoin   Bitcoin is a response to fiat money and absent fiat money I don't think it would have ever been created. Should fiat money go away I think bitcoin will immediately follow, although I don't think it will last that long. We'll see.....

[moda0306]

When we have $500 billion of our currency being "sold" to foreigners for them to use every year, our fiscal deficits need to be bigger to maintain a proper balance of financial assets to service our domestic debt and productive economy. 

The world sends us $500 billion of valuable stuff and the US sends out useless slips of paper. This is a tremendous swindle. Take it to it's logical conclusion. Imagine the rest of world cedes ownership of everything of value they have and in exchange accepts slips of paper (or electronic dollars). Now they have to work as slaves basically for everything because all they own are slips of paper!

The trade deficit is basically the rest of the world "giving" us stuff for free. They get nothing in exchange except useless slips of paper that they keep accumulating. Do you think that the rest of the world "giving" us stuff for free makes us poorer? If so....how?

First off, isn't this the "rest of the world" that you think is going to be economically successful?  I believe I heard you once say that you thought China would excel.  How is that if they're sending us stuff for useless confetting and that it's going to come back to bite them?

Secondly, it makes sense to the degree that they want our money and we send it to them.  It's a free transaction, which you seem to be quite fond of, so where's the rub? Further, doesn't it put us in a great strategic position to get stuff for confetti?

Currency is obviously an odd game, but the fact is the rest of the world is demanding our fiat currency and is sending us stuff for it.  This means that, in the mean time, we have to produce more of it to use ourselves, because Chinese widgets can't be used to buy groceries, nor are they liquid in the least.

- Labor participation does suck.  This is why we need demand... to use our productive capacity.  Our aggregate demand is currently short of our aggregate productive capacity, and this is why we have high unemployment.

Can you define what you mean by demand? I would like to understand what you think we need more of and I fear we might have a different definition of it.

Also, how do you think we can best increase what you define "demand" as?

These are tougher questions but I think it's important to define the terms so we know we're talking about the same thing. That way actual beliefs can be scrutinized rather than perceived ones.

Ohhh yeah I don't think anything in particular should be used as money, whatever people choose voluntarily is fine with me, I don't think it will be bitcoin   Bitcoin is a response to fiat money and absent fiat money I don't think it would have ever been created. Should fiat money go away I think bitcoin will immediately follow, although I don't think it will last that long. We'll see.....

Demand is a consumer's willingness to go out and pay a price for a certain product, or, more appropriately in macro, the aggregate productive output of the economy.

The "price" we are willing to pay for goods and services in the economy is 1) denominated and serviced in US dollars, and therefore 2) dependent on the existence and abundance of US dollars on our balance sheet to both service our debts AND consume what our economy can produce.  If we have an existing amount of debt within a certain price level and certain productive capacity against that price level, there is a proper amount of money (and a proper mix of "inside" and "outside" money, within that proper amount) that our economy will need to function at full capacity.  One pretty easy way to tell whether we have enough is (gasp) the balance between price stability and full employment.  If we have 1% inflation and 7.5% unemployment and tons of underemployment, we NEED MORE MONEY.  If we have 1% unemployment (too low... think WWII), and 7.5% inflation, we have TOO MUCH money in the system.  If we have bubbles/crashes, we probably have too much debt-money (bank loans) and not enough base-money (cash/t-bills).

Until we can agree that a recession is a shortage of demand against a backdrop of rich productive capacity,rather than an economy with "real" constraints like having lost a war, or incapabable/congested infrastructure, or a poisoned, corrupt system of private property (with some exceptions, of course), the rest of your predictions and assertions will continue to be completely NOT reflected by the economy, and we'll debate in these circles until the end of time.  When you realize that a recession/demand, mostly, is simply a shortage of demand (whether it's 1929 or 2009), then we can really have productive discussions.

One thing to note, is that we don't need to make people's investment mistakes go away... just give them the damned ability to work it off like they could if we lived in a barter "free-society."  Unemployment is pure poison after a certain amount of time.  6 months teaches someone a lesson.  36 can take a massive amount of productive steam out of someone's life... but then again if we can't even acknowledge that public infrastructure can facilitate production than we probably will never agree on whether a government can facilitate wealth creation.  But maybe we should start with a thread where you can prove that vast sums of property taken from nature are a natural extension of our individual sovereignty, rather than an act of force upon the natural world and therefore others .  Then we'll be able to judge these horrible, coercive actions taken by governments in a little bit more perspective/context.

I'm curious, if you think bitcoin would fail, what currency do you think we would use?  Gold?  Silver?  Genuinely curious... not trying to be snarky.  Do you think there is true demand for an alternative currency, or that maybe bitcoin is just an interesting sociological experiment in scarcity?

[Kshartle]

When we have $500 billion of our currency being "sold" to foreigners for them to use every year, our fiscal deficits need to be bigger to maintain a proper balance of financial assets to service our domestic debt and productive economy. 

The world sends us $500 billion of valuable stuff and the US sends out useless slips of paper. This is a tremendous swindle. Take it to it's logical conclusion. Imagine the rest of world cedes ownership of everything of value they have and in exchange accepts slips of paper (or electronic dollars). Now they have to work as slaves basically for everything because all they own are slips of paper!

The trade deficit is basically the rest of the world "giving" us stuff for free. They get nothing in exchange except useless slips of paper that they keep accumulating. Do you think that the rest of the world "giving" us stuff for free makes us poorer? If so....how?

First off, isn't this the "rest of the world" that you think is going to be economically successful?  I believe I heard you once say that you thought China would excel.  How is that if they're sending us stuff for useless confetting and that it's going to come back to bite them?

The loss for the Chinese occurs whenever they exchange stuff of value for useless paper. They are stashing away a lot of paper. If they ever try to spend it all everyone will see how obvious the swindle was.

The Chinese economy has been growing at a much stronger pace and will continue to grow at a faster pace.

Would you rather be a producer that gives his stuff away for free but can stop or a non-producer living off charity?

[Kshartle]

This means that, in the mean time, we have to produce more of it to use ourselves, because Chinese widgets can't be used to buy groceries, nor are they liquid in the least.

Why do we need more slips of paper? Why can't the price of groceries just fall or stay stable or whatever it needs to do to move off the shelves? How does more slips of paper floating around help the economy? It doesn't, it just makes prices go higher and that PREVENTS many people from purchasing because they can't afford it now.

You realize that printing more slips of paper causes prices to rise or prevents them from falling right? You realize when prices are lower people are more likely to buy right?

How does raising the price of something make it more likely for someone to buy it?

[Kshartle]

The "price" we are willing to pay for goods and services in the economy is 1) denominated and serviced in US dollars, and therefore 2) dependent on the existence and abundance of US dollars on our balance sheet to both service our debts AND consume what our economy can produce.

Yes, and if the price stays stable or falls it is easier for people to buy. The cost of production is also lower. Lower price to buy encourages buying and lower cost of production encourages production. If the government printed 1 trillion dollars and gave that out to everyone we would not be better off. We'd actually be worse off for all the wasted effort and resources that went into the printing and distribution.

The same principle applies to 300 million trillion as $1. The mechanism by which they print and spend is even worse because it's politicians spending money to convince people to vote for them. This screws up all kinds of prices causing unsustainable singnals to people to do particular work or produce things that people really don't want.

[moda0306]

The world sends us $500 billion of valuable stuff and the US sends out useless slips of paper. This is a tremendous swindle. Take it to it's logical conclusion. Imagine the rest of world cedes ownership of everything of value they have and in exchange accepts slips of paper (or electronic dollars). Now they have to work as slaves basically for everything because all they own are slips of paper!

The trade deficit is basically the rest of the world "giving" us stuff for free. They get nothing in exchange except useless slips of paper that they keep accumulating. Do you think that the rest of the world "giving" us stuff for free makes us poorer? If so....how?

First off, isn't this the "rest of the world" that you think is going to be economically successful?  I believe I heard you once say that you thought China would excel.  How is that if they're sending us stuff for useless confetting and that it's going to come back to bite them?

The loss for the Chinese occurs whenever they exchange stuff of value for useless paper. They are stashing away a lot of paper. If they ever try to spend it all everyone will see how obvious the swindle was.

The Chinese economy has been growing at a much stronger pace and will continue to grow at a faster pace.

Would you rather be a producer that gives his stuff away for free but can stop or a non-producer living off charity?

If China, a communist country, is going to do so well EVEN AS it gives us "charity," then what the hell are we doing even debating your ridiculous points that socialism is going to rip us apart, that devaluing currency (as they are) is bad, that universal healthcare is an evil scam, and that government investment is just a waste.

You are a walking (or typing?) contradiction, man.  It's truly impossible to debate you sometimes.

[Kshartle]

Until we can agree that a recession is a shortage of demand against a backdrop of rich productive capacity,rather than an economy with "real" constraints like having lost a war, or incapabable/congested infrastructure, or a poisoned, corrupt system of private property (with some exceptions, of course), the rest of your predictions and assertions will continue to be completely NOT reflected by the economy, and we'll debate in these circles until the end of time.  When you realize that a recession/demand, mostly, is simply a shortage of demand (whether it's 1929 or 2009), then we can really have productive discussions.

What predictions are those? I've been predicting that the economy will not and cannot recover as long as the government keeps growning and printing and prevents interest rates from rising. I think you've argued the opposite, that the government needs to keep growing and spending and stimulating. How's that working out? What do you think is going to happen when it stops?

[Kshartle]

Demand is a consumer's willingness to go out and pay a price for a certain product, or, more appropriately in macro, the aggregate productive output of the economy.

So ok, you have said that it's the lack of people's willingness to go out and pay a price for products that's the problem. How do you think this problem would be best solved?

[Kshartle]

One thing to note, is that we don't need to make people's investment mistakes go away...

That's quite a note

Do you realize what an investment mistake is? It's economic activity that wastes resources. It is when you take labor and capitial and resources and combine them into a product or service that people value less than the cost of the resources. The way this is expressed in the marketplace is losses. The losses signal to the business people that they are wasting scarce resources and need to stop what they are doing.

Moda, I apologize for the snarkiness but this is econ 101. The belief that investment mistakes and bankrupt businesses should be bailed out is immoral and uneconomical. It requires theft and makes us poorer.

[moda0306]

Demand is a consumer's willingness to go out and pay a price for a certain product, or, more appropriately in macro, the aggregate productive output of the economy.

So ok, you have said that it's the lack of people's willingness to go out and pay a price for products that's the problem. How do you think this problem would be best solved?

Their willingness to demand our full productive capacity could easily be fulfilled by putting more nominal purchasing power on their balance sheets:

Bigger Deficits!

[Kshartle]

I'm curious, if you think bitcoin would fail, what currency do you think we would use?  Gold?  Silver?  Genuinely curious... not trying to be snarky.  Do you think there is true demand for an alternative currency, or that maybe bitcoin is just an interesting sociological experiment in scarcity?

I think it would be gold for the most part. I think many people would accept silver, maybe platinum but by and large the "money" supply would probably be gold. Of course all kinds of things would be used as money. There would be plenty of barter for a lot of transactions, especially B2B when they performed services or had products the other biz wanted.

This is not possible to prove but I think it's based on reason and logic as well as history.

[Pointedstick]

I'm curious, if you think bitcoin would fail, what currency do you think we would use?  Gold?  Silver?  Genuinely curious... not trying to be snarky.  Do you think there is true demand for an alternative currency, or that maybe bitcoin is just an interesting sociological experiment in scarcity?

I think it would be gold for the most part. I think many people would accept silver, maybe platinum but by and large the "money" supply would probably be gold. Of course all kinds of things would be used as money. There would be plenty of barter for a lot of transactions, especially B2B when they performed services or had products the other biz wanted.

This is not possible to prove but I think it's based on reason and logic as well as history.

How would e-commerce work with a gold-based currency? Gold notes? Doesn't that get us right back to the slippery slope of notes not 100% backed by gold?

[Kshartle]

First off, isn't this the "rest of the world" that you think is going to be economically successful?  I believe I heard you once say that you thought China would excel.  How is that if they're sending us stuff for useless confetting and that it's going to come back to bite them?

The loss for the Chinese occurs whenever they exchange stuff of value for useless paper. They are stashing away a lot of paper. If they ever try to spend it all everyone will see how obvious the swindle was.

The Chinese economy has been growing at a much stronger pace and will continue to grow at a faster pace.

Would you rather be a producer that gives his stuff away for free but can stop or a non-producer living off charity?

If China, a communist country, is going to do so well EVEN AS it gives us "charity," then what the hell are we doing even debating your ridiculous points that socialism is going to rip us apart, that devaluing currency (as they are) is bad, that universal healthcare is an evil scam, and that government investment is just a waste.

You are a walking (or typing?) contradiction, man.  It's truly impossible to debate you sometimes.

Socialist? They have one political party yes, but all I hear is how the Chinese are able to outcompete because they don't have all the laws and regulations constraining business there. They have a much more market driven economy. If they adopted the laws of the US you would see labor and producers fleeing en masse.

What contradiction? I have said over and over and over that their devaluing of their currency is bad. It's stealing the fruits of their labor and lowering their standard of living. Yes uninversal healthcare is a scam but it's the theft and the violence needed to accomplish it that's evil. Again, what contradiction am I guilty of?

[moda0306]

I'm curious, if you think bitcoin would fail, what currency do you think we would use?  Gold?  Silver?  Genuinely curious... not trying to be snarky.  Do you think there is true demand for an alternative currency, or that maybe bitcoin is just an interesting sociological experiment in scarcity?

I think it would be gold for the most part. I think many people would accept silver, maybe platinum but by and large the "money" supply would probably be gold. Of course all kinds of things would be used as money. There would be plenty of barter for a lot of transactions, especially B2B when they performed services or had products the other biz wanted.

This is not possible to prove but I think it's based on reason and logic as well as history.

How would e-commerce work with a gold-based currency? Gold notes? Doesn't that get us right back to the slippery slope of notes not 100% backed by gold?

I'd imagine it'd be a 100% reserve gold storage type system... lending being seperate...

Though there seems to be a natural demand to collect interest on deposits, even if it's a result of us being "sheeple" of the the bank oligopily sheppard.

[Kshartle]

Demand is a consumer's willingness to go out and pay a price for a certain product, or, more appropriately in macro, the aggregate productive output of the economy.

So ok, you have said that it's the lack of people's willingness to go out and pay a price for products that's the problem. How do you think this problem would be best solved?

Their willingness to demand our full productive capacity could easily be fulfilled by putting more nominal purchasing power on their balance sheets:

Bigger Deficits!

So the government should borrow more money and spend it? I just want to be clear that this is what you think is needed to improve the economy.

Any idea how much? Should they be borrowing 2 trillion a year, 3 trillion? I must point out that the FED is currently printing and buying more bonds annually than the entire deficit. This means that in order to prevent rates from rising (and it's not certain this could be accomplished) the FED would have to print dollar for dollar every additional dollar the government needs to deficit spend. Or the government needs to print it directly.

So essentially, the government or some agency should print slips of paper and the politicians should decide what to buy to improve the economy and get Americans producing.

[Kshartle]

I'm curious, if you think bitcoin would fail, what currency do you think we would use?  Gold?  Silver?  Genuinely curious... not trying to be snarky.  Do you think there is true demand for an alternative currency, or that maybe bitcoin is just an interesting sociological experiment in scarcity?

I think it would be gold for the most part. I think many people would accept silver, maybe platinum but by and large the "money" supply would probably be gold. Of course all kinds of things would be used as money. There would be plenty of barter for a lot of transactions, especially B2B when they performed services or had products the other biz wanted.

This is not possible to prove but I think it's based on reason and logic as well as history.

How would e-commerce work with a gold-based currency? Gold notes? Doesn't that get us right back to the slippery slope of notes not 100% backed by gold?

I can't prove with 100% certainty what would happen but if people used to use slips of paper representing ownership of gold then there's no reason they couldn't use electronic gold now. In fact this already exists.

[Kshartle]

I think it would be gold for the most part. I think many people would accept silver, maybe platinum but by and large the "money" supply would probably be gold. Of course all kinds of things would be used as money. There would be plenty of barter for a lot of transactions, especially B2B when they performed services or had products the other biz wanted.

This is not possible to prove but I think it's based on reason and logic as well as history.

How would e-commerce work with a gold-based currency? Gold notes? Doesn't that get us right back to the slippery slope of notes not 100% backed by gold?

I'd imagine it'd be a 100% reserve gold storage type system... lending being seperate...

Though there seems to be a natural demand to collect interest on deposits, even if it's a result of us being "sheeple" of the the bank oligopily sheppard.

Banks would compete for deposits in a variety of ways. Interest would be one, security, perceived security of notes, level of reserves, other conveniences...... 

We would probably have the most amazing banks in the world since they would be driven by consumer demand. Better banking practices would keep emerging to satisfy customers. The entire world might decide the banks based here in freedomland were the safest and best place to store their gold and would pay the banks to do so!

[moda0306]

The loss for the Chinese occurs whenever they exchange stuff of value for useless paper. They are stashing away a lot of paper. If they ever try to spend it all everyone will see how obvious the swindle was.

The Chinese economy has been growing at a much stronger pace and will continue to grow at a faster pace.

Would you rather be a producer that gives his stuff away for free but can stop or a non-producer living off charity?

If China, a communist country, is going to do so well EVEN AS it gives us "charity," then what the hell are we doing even debating your ridiculous points that socialism is going to rip us apart, that devaluing currency (as they are) is bad, that universal healthcare is an evil scam, and that government investment is just a waste.

You are a walking (or typing?) contradiction, man.  It's truly impossible to debate you sometimes.

Socialist? They have one political party yes, but all I hear is how the Chinese are able to outcompete because they don't have all the laws and regulations constraining business there. They have a much more market driven economy. If they adopted the laws of the US you would see labor and producers fleeing en masse.

What contradiction? I have said over and over and over that their devaluing of their currency is bad. It's stealing the fruits of their labor and lowering their standard of living. Yes uninversal healthcare is a scam but it's the theft and the violence needed to accomplish it that's evil. Again, what contradiction am I guilty of?

I guess I can't really debate anymore... you're making China out to be some kind of flawed "mixed economy" with some problems but mostly ready to boom, while the U.S. is a socialist nightmare of immorality that's going to muddle on because of all of the theft, monetization, regulation, taxes, and socialism going on.

Sorry man I really can't debate on that premise.  I just think you see the world in ways that I'll never understand.  I couldn't count 2 conservatives or libertarians I know that would feel that way... nor anyone else.



Regarding deficits, I'd like to see them mostly accomplished through a payroll tax holiday, the rest being infrastructure projects.  The amount?  I had had an idea at one time but forget the money multiplier math I was using to get there... how about this... until inflation hits 4% and/or unemployment hits 4.5% (actually, probably use the workforce participation rate as a measure... good point on that).

If rates rise a little bit, I really don't care.  But the fed migh want to keep QE up to keep rates low.  But we're in a balance-sheet recession so we need more nominal ASSETS on our balance sheets, not an incentive to increase the velocity of the few that we do have around.

Remember though, our deficit this year is only 650 billion or so, so another $350 Bil to keep us at the $1 Trillion you always claim we're at would be a good start.

[Kshartle]

Remember though, our deficit this year is only 650 billion or so, so another $350 Bil to keep us at the $1 Trillion you always claim we're at would be a good start.

The federal government ran a defict of more than 2 trillion from 2002 to 2007 and yet....financial crisis. Add the states in and it's bigger.

The federal government has run a defict of around 6 trillion from 2008 to 2012 and yet....no recovery in employemt. Add the states in and it's bigger.

We disagree on the logic of the result of government deficit spending. Any evidence that running deficits helps the economy grow? How is it working out in Japan? In China?

[goodasgold]

Why, why, WHY can't people see that the problem is not limited to just the national debt (awful as it is.) Rather, the BIG problem is unfunded liabilities, now estimated by Laurence Kotlikoff to be 222 trillion dollars (yes, boys and girls, that is 222 TRILLION dollars), and growing like a bat out of hell.
See: http://www.realclearpolicy.com/blog/201 ... t_363.html

When the prevailing see-no-evil dogmatists infected with Krugmania are forced to face reality one of these days, we will weep for our country, or what's left of it. God help us all. Nobody else will.

[Kshartle]

Goodasgold, you simply don't understand economics. The 222 trillion is not a problem. It can just be printed. This will also stimulate demand and fix the economy so it's like two birds with one stone!

I am kidding btw.........

[goodasgold]

Remember though, our deficit this year is only 650 billion or so, so another $350 Bil to keep us at the $1 Trillion you always claim we're at would be a good start.

Why, why, WHY can't people see that the problem is not limited to just the national debt (awful as it is.) Rather, the BIG problem is unfunded liabilities, now estimated by Laurence Kotlikoff to be 222 trillion dollars (yes, boys and girls, that is 222 TRILLION dollars), and growing like a bat out of hell.
See: http://www.realclearpolicy.com/blog/201 ... t_363.html

When the prevailing see-no-evil dogmatists infected with Krugmania are forced to face reality one of these days, we will weep for our country, or what's left of it. God help us all. Nobody else will.
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Goodasgold, you simply don't understand economics. The 222 trillion is not a problem. It can just be printed. This will also stimulate demand and fix the economy so it's like two birds with one stone!

I am kidding btw.........
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We will know the crisis is here when we put your card in the ATM machine and what comes out is currency printed on a roll of green-tinted toilet paper. Just tear off the amount you may find useful. This "currency" should feauture Krugman's portrait in the center, along with the new national slogan: "What, me worry?"