$800 Billion: Too Much? Too Little? Yes. 45 comments
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Is the $800 billion stimulus package too small, as many Democrats claim (such as Paul Krugman), or too big, as most Republicans claim? The answer is yes. Too big and too small.
If the criterion is how much annual stimulus to demand is needed to bring the economy back up to the level of potential output in 2010 and beyond, and to bring the unemployment rate back down to the natural rate of unemployment, then $800 billion is not enough. The Congressional Budget Office has estimated that the economy will fall short of potential output by about 7 per cent of GDP, in both 2019 and 2010. (The new Director of OMB, Doug Elmendorf – an outstanding choice to run that agency, by the way — testified on January 27. The news on jobs and other economic indicators since then has continued to show rapid deterioration of the economy.) The $800 billion is to be spread over several years; the peak is to be at most $356 billion in 2010, which is about 2 ½ per cent of GDP. The most optimistic estimate of the “Keynesian multiplier” that anyone has is 2, which would imply a 5 per cent boost to GDP. That is less than the 7 per cent gap, and so not enough to return the economy to full employment.
In practice, even if interest rates were to stay very low, the actual multiplier in effect would almost certainly be substantially less than this. For one thing, much of the stimulus takes the form of tax cuts, and the part of this that gets saved will not contribute to demand and thereby enter the stream of spending and income. (Of course a shortage of national saving is part of how we got into this problem, so that an increase in private saving is welcome in the longer run. But the question here is how to stimulate demand that has been depressed by the current crisis.) And the part of the tax cut that is another one-year AMT patch, while desirable, will have no effect on spending because the beneficiaries, forecasters, and everyone else were already assuming that they would not be paying this tax. If we are lucky, the American Recovery and Reconstruction Act would close half of the gap, relative to the magnitude of the recession we would have otherwise had. So, no, it is not enough.
But in another sense, $800 billion is too much. The 2009 fiscal-year deficit is already expected to exceed $1.2 trillion, so we are talking about deficits thereafter that could surpass 10 per cent of GDP. This is far above the levels that are considered danger signals when they come from any other country. Until now, the US has not been “any other country.” The rest of the world has been willing to finance American profligacy cheerfully. But there have already been signs in the last few weeks that the prospect of this much Treasury debt coming onto the markets is already beginning to push bond prices down and long-term interest rates up. My feeling is that if the current stimulus package were to break the $1 trillion benchmark, it would increase the odds of truly alarming international financial investors, who would in that case stop acquiring dollar assets, thus precipitating the hard landing of the dollar that so many of us have feared for so long. In those circumstances, the Fed would lose the ability to keep interest rates low, and we would be in even worse trouble than today.
Everything would be different if we had spent the last 8 years preserving the budget surpluses that Bill Clinton bequeathed to George Bush. Then we would have paid down a lot of the national debt by now, instead of doubling it. We would be in a strong enough fiscal position to undertake the expansion that we really need.
In that light it is ironic, to say the least, that the politicians who are warning against the size of the stimulus bill, particularly the Congressmen who are voting against it, are mostly the same Republicans who supported the original fiscal policies that gave us the doubling of the national debt: the huge long-term tax cuts of 2001 and 2003 and the greatly accelerated rate of government spending. What we need now is a fiscal policy that maximizes short-run demand stimulus relative to long-run damage to the national debt. Lots of bang for the buck. The Republicans supported fiscal policies that did the opposite. Lots of buck for the bang. They are still doing it today when they argue that tax cuts give stimulus and spending does not. One doesn’t even hear them give an economic argument in support of this position (such as the, admittedly discredited, theories of the supply siders). They just close their eyes and endlessly repeat their “tax cut” mantra, like a religious cult that can’t even remember why.
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itunes.apple.com/WebOb...
Or just search on "deficit calculator" at the iTunes store.
According to CBO, individual category projections, averaged, the multiplier effect would be between 0.66% and 1.86% for each dollar of the federal stimulus. According to this analysis, the federal stimulus would stimulate economic growth equaling between $561 billion and $1,581 billion. Estimating that the multiplier effect is the average of these two numbers, than the stimulus would promote $1,071 billion of new growth. This represents a 26% return overall and an annualized return from the years of 2009 through 2011 of 9.34%. Based upon these numbers the federal stimulus appears to be a good investment, but is it?
The federal stimulus will add an additional $888 billion dollars to the federal budget. The federal government currently runs a deficit, so in effect; the federal stimulus will add an additional $888 billion to the debt. The federal stimulus is not all appropriated in a single year. As such, the increase in deficit spending will occur over several years. In year 2009, the cost of the federal stimulus, will add $233 billion dollars to the deficit, bringing total deficit spending for 2009 to $1,573 billion dollars. This represents a total deficit of over 10% of GDP. The federal stimulus will add an addition $460 billion to the deficit bring the combined total to $1,303 billion dollars or slightly more than 9% of GDP, in year 2010. Things get better in 2011, but only slightly, as the federal stimulus adds an additional $141 billion in spending, bring the total budget deficit to an estimated $782 billion dollars or 5.3% of GDP. The years 2012 through 2019 see an additional $48.3 billion in federal stimulus related deficit spending. Even with record low interest rates on federal borrowing, the net interest on the $888 billion dollar stimulus is projected to cost $347 billion dollars by 2019. This brings the total real cost of the stimulus of $1,235 billion dollars. Taking my analysis assuming the average multiplier effect, into consideration, the net return on the stimulus is a negative 13.27% or an annualized loss of 1.32% from years 2009 through 2019. Based upon these narrow calculations, it appears that the federal stimulus will have a net negative effect on the long term economic health of the US.
Secondly, the author is correct, tax cuts are a waste of time because the money that is taken from tax payers is used give those that are still employed tax-cuts by accumulating debt and that action reduces government revenue in future as the scenario worsens.
Thirdly, in a country where massive money has been made through massive fraud, there is large possibility of induction of violence if the effected population feels that it has been shortchanged and left to hold the bag. These economic thesis miss on violence eruption consequences of melt downs. The class warfare is a definite possible consequence of such a melt down.
The choices are clear to me. Spend it and spend it wisely on those effected the most or you will have a class warfare on your hand.
There is $8 billion dollars in it for Reid's high speed train from Disneyland to Las Vegas. After about 7 to 9 years of environmental impact reports and endless lawsuits, 8 billion won't do it. But there is probably some little clause that allows Nevada to just keep the money if the train is never built (It won't be)
At some point, I hope the citizens of this country wake up to what is being done to them and their children
The answer is of course that you cannot just stop and rewind, but you need to rethink everything from scratch, and the solution, if there is one, is going to involve sacrifice and hard work. But most importantly, choices are going to be mainly about compromise.
On Feb 13 05:09 PM E.D. Hart wrote:
> There is plenty of blame to go around among the Republicans and the
> Democrats. The hypocrisy seems a little greater on the Republican
> side however. Economic security is every bit as important as national
> security, and arguably Republican policies (unregulated markets,
> new projects without oversight, bailouts for wall street, while fighting
> raising unemployment benefits), running larger and larger deficits,
> massive war spending.
>
> There is plenty of irony, and hypocrisy to go around. But to criticize
> the Republicans doesn't make one a Democrat, or even an anti-republican.
> I know lots of good republicans who are furious at their party leaders
> for betrayal of they key Republican planks. Why cant you be a good
> Republican and excoriate the Republicans? They certainly have caused
> a lot of their own problems. Libertarians are about the most intellectually
> consistent politicians out there that I can see.
On Feb 13 08:13 PM JohnL wrote:
> There is a lot of talk about kick-starting the economy, but is that
> valid? The implication is that the economy is fundamentally sound
> and would be humming along if it just got a nudge. It just lacks
> confidence or positive inertia or something.
>
> I don't think the economy runs on confidence, but on good balance:
> between levels of investment and consumption, between levels of debt
> and income, between the prices of various commodities and those of
> finished goods, between the mix of goods produced and the mix that
> consumers want to buy, between interest rates and required savings
> rates, etc.
>
> My belief is that the problems we are seeing and the size of the
> government "solution" indicate severe imbalance and accumulated malinvestment
> -- imbalances caused by years of government intervention and loose
> monetary policy. The economy doesn't need stimulus -- it needs to
> re-balance. That is what economies do, if left alone. The stimulus
> package will simply prevent the natural healing process.
GERMAN DEPRESSION DISAPPEARED WHEN HITLER WENT ON A MASSIVE DEFICIT.
BUILD THE AUTO BAHN, THE VW THE PEOPLES CAR, SINCE GERMANY LOST WORLD WAR 1 HITLER WENT ON A MASSIVE ARM RACE BY 1938
GERMANY WAS BOOMING, HIS FOLLY AND DIASTER WAS WHEN HE STARTED INVASION OF OTHER COUNTRIES.
JAPAN ECONOMY COLLAPSED WHEN THE REAL ESTATE BOOM STARTED, A $1 MIILION CONDO IN PRIME TOKIO AREA WENT UP TO $7 MIILION DOLLARS.
FDR STIMULUS STOPPED THE AMERICAN ECONOMY FROM BLEEDING BUT IT DID NOT CREATE PROSPERITY, OBAMA $800 BILLION WILL DO THE SAME SLOW THE BLEEDING PROCESS.
AFTER THE END OF THE MASSIVE DESTRUCTION OF GERMANY,
THE ECONOMY STARTED TO BOOM AGAIN THE REBUILDING OF GERMANY,
AT THE END OF WORLD WAR 11, THE US ECONOMY STARTED TO BOOM SINCE WE HAD THE CAPACITY TO PRODUCE, EXPORT, AND SELL FOODS ETC TO THE REST OF THE WORLD.
HERE IS A DRANCION REMEDY FIRST OF ALL I AM ANTI WAR AND PRO LIFE.
WHEN A CORPORATE ENTITY HAS MORE DEBTS THAN ASSETS IT DECLARES BANKRUPTCY AND WIPES OUT ITS DEBT.
THE US SHOULD FILE BANKRUPTCY AND WIPE OUT ALL OF ITS DEBT MOSTLY TO JAPAN AND CHINA, WE SHALL START WITH DEBT FREE THEREAFTER PRINT NEW MONEY AND USE MASSIVE GOVERNMENT MONEY TO CREATE MASSIVE REBUILDING, SCHOOLS, NUKE POWER PLANT, AND OTHER PROJECTS TO MAKE US FREE FROM OIL IMPORT.
DESTROY ALL THE EXCEESS HOUSING THAT WAS BUILD, ALLOW BANKS TO GO BANKRUPT IF THEY HAVE MADE MISTAKES.
HAVE PRIVATE ENTERPRISE WITH THE HELP OF GOVERNMENT
ESTABLISH NEW BANKS THAT WILL MAKE LOANS.
THE USA IS SELF-SUFFICENT AND DOES NOT NEED TO IMPORT IN ORDER TO SURVIVE.
RATHER THAN HAVE A WAR THAT WILL DESTROY THE Entire EXCESS BUILDING BULL DOZE THE EXCESS HOUSING THAT WAS BUILD DURING THE ERA OF FRE MONEY THAT CREATED THE REAL ESTATE FRENZY AND BUST.
THE REASON WE CAN USE THIS DRANCION REMEDY IS That WE ARE A SELFSUFFICENT COUNTRY ABLE TO PRODUCE ALL THE GOODS AND SERVICES FOR ITS CITIZEN...
THE NEW DOLLAR CURRENCY WILL REESTABLIH ITS VALUE.
I HAVE USED THE DRANCION APPROACH WHICH WILL SCHOCK THE READERS TO THINK ABOUT OTHER CONSTRUCTIVE APPROACH.
ONE MORE THOUGHT GIVE EVERY CITIZEN $20,000 AND TELL THEM TO SPEND IT, ALL OF A SUDDEND WE MAY HAVE A SHORTAGE CARS IN AMERICAN SHOW ROOMS,
IF YOU HAVE OTHER GOOD DRACION REMEDY PLEASE SHARE IT WITH ME,
JOSEPH FOSTER 78 YEARS OF AGE A RETIRED SUCESSFUL BUSINESS MAN, SELF-MADE FROM POVERTY TO WEALTH..
WE ALL ARGUE ABOUT WHAT SHOULD BE DONE WHEN YOU HAVE A DEPRESSION BUT FAIL TO GO BACK TO HISTORY AS TO WHAT WAS DONE.
GERMAN DEPRESSION DISAPPEARED WHEN HITLER WENT ON A MASSIVE DEFICIT.
BUILD THE AUTO BAHN, THE VW THE PEOPLES CAR, SINCE GERMANY LOST WORLD WAR 1 HITLER WENT ON A MASSIVE ARM RACE BY 1938
GERMANY WAS BOOMING, HIS FOLLY AND DIASTER WAS WHEN HE STARTED INVASION OF OTHER COUNTRIES.
JAPAN ECONOMY COLLAPSED WHEN THE REAL ESTATE BOOM STARTED, A $1 MIILION CONDO IN PRIME TOKIO AREA WENT UP TO $7 MIILION DOLLARS.
FDR STIMULUS STOPPED THE AMERICAN ECONOMY FROM BLEEDING BUT IT DID NOT CREATE PROSPERITY, OBAMA $800 BILLION WILL DO THE SAME SLOW THE BLEEDING PROCESS.
AFTER THE END OF THE MASSIVE DESTRUCTION OF GERMANY,
THE ECONOMY STARTED TO BOOM AGAIN THE REBUILDING OF GERMANY,
AT THE END OF WORLD WAR 11, THE US ECONOMY STARTED TO BOOM SINCE WE HAD THE CAPACITY TO PRODUCE, EXPORT, AND SELL FOODS ETC TO THE REST OF THE WORLD.
HERE IS A DRANCION REMEDY FIRST OF ALL I AM ANTI WAR AND PRO LIFE.
WHEN A CORPORATE ENTITY HAS MORE DEBTS THAN ASSETS IT DECLARES BANKRUPTCY AND WIPES OUT ITS DEBT.
THE US SHOULD FILE BANKRUPTCY AND WIPE OUT ALL OF ITS DEBT MOSTLY TO JAPAN AND CHINA, WE SHALL START WITH DEBT FREE THEREAFTER PRINT NEW MONEY AND USE MASSIVE GOVERNMENT MONEY TO CREATE MASSIVE REBUILDING, SCHOOLS, NUKE POWER PLANT, AND OTHER PROJECTS TO MAKE US FREE FROM OIL IMPORT.
DESTROY ALL THE EXCEESS HOUSING THAT WAS BUILD, ALLOW BANKS TO GO BANKRUPT IF THEY HAVE MADE MISTAKES.
HAVE PRIVATE ENTERPRISE WITH THE HELP OF GOVERNMENT
ESTABLISH NEW BANKS THAT WILL MAKE LOANS.
THE USA IS SELF-SUFFICENT AND DOES NOT NEED TO IMPORT IN ORDER TO SURVIVE.
RATHER THAN HAVE A WAR THAT WILL DESTROY THE Entire EXCESS BUILDING BULL DOZE THE EXCESS HOUSING THAT WAS BUILD DURING THE ERA OF FRE MONEY THAT CREATED THE REAL ESTATE FRENZY AND BUST.
THE REASON WE CAN USE THIS DRANCION REMEDY IS That WE ARE A SELFSUFFICENT COUNTRY ABLE TO PRODUCE ALL THE GOODS AND SERVICES FOR ITS CITIZEN...
THE NEW DOLLAR CURRENCY WILL REESTABLIH ITS VALUE.
I HAVE USED THE DRANCION APPROACH WHICH WILL SCHOCK THE READERS TO THINK ABOUT OTHER CONSTRUCTIVE APPROACH.
ONE MORE THOUGHT GIVE EVERY CITIZEN $20,000 AND TELL THEM TO SPEND IT, ALL OF A SUDDEND WE MAY HAVE A SHORTAGE CARS IN AMERICAN SHOW ROOMS,
IF YOU HAVE OTHER GOOD DRACION REMEDY PLEASE SHARE IT WITH ME,
JOSEPH FOSTER 78 YEARS OF AGE A RETIRED SUCESSFUL BUSINESS MAN, SELF-MADE FROM POVERTY TO WEALTH..
WE ALL ARGUE ABOUT WHAT SHOULD BE DONE WHEN YOU HAVE A DEPRESSION BUT FAIL TO GO BACK TO HISTORY AS TO WHAT WAS DONE.
GERMAN DEPRESSION DISAPPEARED WHEN HITLER WENT ON A MASSIVE DEFICIT.
BUILD THE AUTO BAHN, THE VW THE PEOPLES CAR, SINCE GERMANY LOST WORLD WAR 1 HITLER WENT ON A MASSIVE ARM RACE BY 1938
GERMANY WAS BOOMING, HIS FOLLY AND DIASTER WAS WHEN HE STARTED INVASION OF OTHER COUNTRIES.
JAPAN ECONOMY COLLAPSED WHEN THE REAL ESTATE BOOM STARTED, A $1 MIILION CONDO IN PRIME TOKIO AREA WENT UP TO $7 MIILION DOLLARS.
FDR STIMULUS STOPPED THE AMERICAN ECONOMY FROM BLEEDING BUT IT DID NOT CREATE PROSPERITY, OBAMA $800 BILLION WILL DO THE SAME SLOW THE BLEEDING PROCESS.
AFTER THE END OF THE MASSIVE DESTRUCTION OF GERMANY,
THE ECONOMY STARTED TO BOOM AGAIN THE REBUILDING OF GERMANY,
AT THE END OF WORLD WAR 11, THE US ECONOMY STARTED TO BOOM SINCE WE HAD THE CAPACITY TO PRODUCE, EXPORT, AND SELL FOODS ETC TO THE REST OF THE WORLD.
HERE IS A DRANCION REMEDY FIRST OF ALL I AM ANTI WAR AND PRO LIFE.
WHEN A CORPORATE ENTITY HAS MORE DEBTS THAN ASSETS IT DECLARES BANKRUPTCY AND WIPES OUT ITS DEBT.
THE US SHOULD FILE BANKRUPTCY AND WIPE OUT ALL OF ITS DEBT MOSTLY TO JAPAN AND CHINA, WE SHALL START WITH DEBT FREE THEREAFTER PRINT NEW MONEY AND USE MASSIVE GOVERNMENT MONEY TO CREATE MASSIVE REBUILDING, SCHOOLS, NUKE POWER PLANT, AND OTHER PROJECTS TO MAKE US FREE FROM OIL IMPORT.
DESTROY ALL THE EXCEESS HOUSING THAT WAS BUILD, ALLOW BANKS TO GO BANKRUPT IF THEY HAVE MADE MISTAKES.
HAVE PRIVATE ENTERPRISE WITH THE HELP OF GOVERNMENT
ESTABLISH NEW BANKS THAT WILL MAKE LOANS.
THE USA IS SELF-SUFFICENT AND DOES NOT NEED TO IMPORT IN ORDER TO SURVIVE.
RATHER THAN HAVE A WAR THAT WILL DESTROY THE Entire EXCESS BUILDING BULL DOZE THE EXCESS HOUSING THAT WAS BUILD DURING THE ERA OF FRE MONEY THAT CREATED THE REAL ESTATE FRENZY AND BUST.
THE REASON WE CAN USE THIS DRANCION REMEDY IS That WE ARE A SELFSUFFICENT COUNTRY ABLE TO PRODUCE ALL THE GOODS AND SERVICES FOR ITS CITIZEN...
THE NEW DOLLAR CURRENCY WILL REESTABLIH ITS VALUE.
I HAVE USED THE DRANCION APPROACH WHICH WILL SCHOCK THE READERS TO THINK ABOUT OTHER CONSTRUCTIVE APPROACH.
ONE MORE THOUGHT GIVE EVERY CITIZEN $20,000 AND TELL THEM TO SPEND IT, ALL OF A SUDDEND WE MAY HAVE A SHORTAGE CARS IN AMERICAN SHOW ROOMS,
IF YOU HAVE OTHER GOOD DRACION REMEDY PLEASE SHARE IT WITH ME,
JOSEPH FOSTER 78 YEARS OF AGE A RETIRED SUCESSFUL BUSINESS MAN, SELF-MADE FROM POVERTY TO WEALTH..
WE ALL ARGUE ABOUT WHAT SHOULD BE DONE WHEN YOU HAVE A DEPRESSION BUT FAIL TO GO BACK TO HISTORY AS TO WHAT WAS DONE.
GERMAN DEPRESSION DISAPPEARED WHEN HITLER WENT ON A MASSIVE DEFICIT.
BUILD THE AUTO BAHN, THE VW THE PEOPLES CAR, SINCE GERMANY LOST WORLD WAR 1 HITLER WENT ON A MASSIVE ARM RACE BY 1938
GERMANY WAS BOOMING, HIS FOLLY AND DIASTER WAS WHEN HE STARTED INVASION OF OTHER COUNTRIES.
JAPAN ECONOMY COLLAPSED WHEN THE REAL ESTATE BOOM STARTED, A $1 MIILION CONDO IN PRIME TOKIO AREA WENT UP TO $7 MIILION DOLLARS.
FDR STIMULUS STOPPED THE AMERICAN ECONOMY FROM BLEEDING BUT IT DID NOT CREATE PROSPERITY, OBAMA $800 BILLION WILL DO THE SAME SLOW THE BLEEDING PROCESS.
AFTER THE END OF THE MASSIVE DESTRUCTION OF GERMANY,
THE ECONOMY STARTED TO BOOM AGAIN THE REBUILDING OF GERMANY,
AT THE END OF WORLD WAR 11, THE US ECONOMY STARTED TO BOOM SINCE WE HAD THE CAPACITY TO PRODUCE, EXPORT, AND SELL FOODS ETC TO THE REST OF THE WORLD.
HERE IS A DRANCION REMEDY FIRST OF ALL I AM ANTI WAR AND PRO LIFE.
WHEN A CORPORATE ENTITY HAS MORE DEBTS THAN ASSETS IT DECLARES BANKRUPTCY AND WIPES OUT ITS DEBT.
THE US SHOULD FILE BANKRUPTCY AND WIPE OUT ALL OF ITS DEBT MOSTLY TO JAPAN AND CHINA, WE SHALL START WITH DEBT FREE THEREAFTER PRINT NEW MONEY AND USE MASSIVE GOVERNMENT MONEY TO CREATE MASSIVE REBUILDING, SCHOOLS, NUKE POWER PLANT, AND OTHER PROJECTS TO MAKE US FREE FROM OIL IMPORT.
DESTROY ALL THE EXCEESS HOUSING THAT WAS BUILD, ALLOW BANKS TO GO BANKRUPT IF THEY HAVE MADE MISTAKES.
HAVE PRIVATE ENTERPRISE WITH THE HELP OF GOVERNMENT
ESTABLISH NEW BANKS THAT WILL MAKE LOANS.
THE USA IS SELF-SUFFICENT AND DOES NOT NEED TO IMPORT IN ORDER TO SURVIVE.
RATHER THAN HAVE A WAR THAT WILL DESTROY THE Entire EXCESS BUILDING BULL DOZE THE EXCESS HOUSING THAT WAS BUILD DURING THE ERA OF FRE MONEY THAT CREATED THE REAL ESTATE FRENZY AND BUST.
THE REASON WE CAN USE THIS DRANCION REMEDY IS That WE ARE A SELFSUFFICENT COUNTRY ABLE TO PRODUCE ALL THE GOODS AND SERVICES FOR ITS CITIZEN...
THE NEW DOLLAR CURRENCY WILL REESTABLIH ITS VALUE.
I HAVE USED THE DRANCION APPROACH WHICH WILL SCHOCK THE READERS TO THINK ABOUT OTHER CONSTRUCTIVE APPROACH.
ONE MORE THOUGHT GIVE EVERY CITIZEN $20,000 AND TELL THEM TO SPEND IT, ALL OF A SUDDEND WE MAY HAVE A SHORTAGE CARS IN AMERICAN SHOW ROOMS,
IF YOU HAVE OTHER GOOD DRACION REMEDY PLEASE SHARE IT WITH ME,
JOSEPH FOSTER 78 YEARS OF AGE A RETIRED SUCESSFUL BUSINESS MAN, SELF-MADE FROM POVERTY TO WEALTH..
WE ALL ARGUE ABOUT WHAT SHOULD BE DONE WHEN YOU HAVE A DEPRESSION BUT FAIL TO GO BACK TO HISTORY AS TO WHAT WAS DONE.
GERMAN DEPRESSION DISAPPEARED WHEN HITLER WENT ON A MASSIVE DEFICIT.
BUILD THE AUTO BAHN, THE VW THE PEOPLES CAR, SINCE GERMANY LOST WORLD WAR 1 HITLER WENT ON A MASSIVE ARM RACE BY 1938
GERMANY WAS BOOMING, HIS FOLLY AND DIASTER WAS WHEN HE
STARTED INVASION OF OTHER COUNTRIES.
JAPAN ECONOMY COLLAPSED WHEN THE REAL ESTATE BOOM STARTED, A $1 MIILION CONDO IN PRIME TOKIO AREA WENT UP TO $7 MIILION DOLLARS.
FDR STIMULUS STOPPED THE AMERICAN ECONOMY FROM BLEEDING BUT IT DID NOT CREATE PROSPERITY, OBAMA $800 BILLION WILL DO THE SAME SLOW THE BLEEDING PROCESS.
AFTER THE END OF THE MASSIVE DESTRUCTION OF GERMANY,
THE ECONOMY STARTED TO BOOM AGAIN THE REBUILDING OF GERMANY
AT THE END OF WORLD WAR 11, THE US ECONOMY STARTED TO BOOM SINCE WE HAD THE CAPACITY TO PRODUCE, EXPORT, AND SELL FOODS ETC TO THE REST OF THE WORLD.
HERE IS A DRANCION REMEDY FIRST OF ALL I AM ANTI WAR AND PRO LIFE.
WHEN A CORPORATE ENTITY HAS MORE DEBTS THAN ASSETS IT DECLARES BANKRUPTCY AND WIPES OUT ITS DEBT.
THE US SHOULD FILE BANKRUPTCY AND WIPE OUT ALL OF ITS DEBT MOSTLY TO JAPAN AND CHINA, WE SHALL START WITH DEBT FREE THEREAFTER PRINT NEW MONEY AND USE MASSIVE GOVERNMENT MONEY TO CREATE MASSIVE REBUILDING, SCHOOLS, NUKE POWER PLANT, AND OTHER PROJECTS TO MAKE US FREE FROM OIL IMPORT.
DESTROY ALL THE EXCEESS HOUSING THAT WAS BUILD, ALLOW BANKS TO GO BANKRUPT IF THEY HAVE MADE MISTAKES.
HAVE PRIVATE ENTERPRISE WITH THE HELP OF GOVERNMENT
ESTABLISH NEW BANKS THAT WILL MAKE LOANS.
THE USA IS SELF-SUFFICENT AND DOES NOT NEED TO IMPORT IN ORDER TO SURVIVE.
RATHER THAN HAVE A WAR THAT WILL DESTROY THE Entire EXCESS BUILDING BULL DOZE THE EXCESS HOUSING THAT WAS BUILD DURING THE ERA OF FRE MONEY THAT CREATED THE REAL ESTATE FRENZY AND BUST.
THE REASON WE CAN USE THIS DRANCION REMEDY IS That WE ARE A SELFSUFFICENT COUNTRY ABLE TO PRODUCE ALL THE GOODS AND SERVICES FOR ITS CITIZEN...
THE NEW DOLLAR CURRENCY WILL REESTABLIH ITS VALUE.
I HAVE USED THE DRANCION APPROACH WHICH WILL SCHOCK THE READERS TO THINK ABOUT OTHER CONSTRUCTIVE APPROACH.
ONE MORE THOUGHT GIVE EVERY CITIZEN $20,000 AND TELL THEM TO SPEND IT, ALL OF A SUDDEND WE MAY HAVE A SHORTAGE CARS IN AMERICAN SHOW ROOMS,
IF YOU HAVE OTHER GOOD DRACION REMEDY PLEASE SHARE IT WITH ME,
JOSEPH FOSTER 78 YEARS OF AGE A RETIRED SUCESSFUL BUSINESS MAN, SELF-MADE FROM POVERTY TO MODEST WEALTH..
It makes me really angry that the Pubs still claim that they are the conservatives. Liars and thieves, traitors and scum are better adjectives.
Your article is..........just bad (references provided).
>> John Maynard Keynes never proposed or supported deficit spending! Ever! In fact he publicly fought against it in one instance.
en.wikipedia.org/wiki/...
Bill Clinton balanced the budget by...
>> Cutting military spending to 3% of GDP (down from a peak of 6.2%). Clinton left with military spending at the same level as the day of Pearl Harbor. America did enjoy a "peace dividend" on military spending with the fall of Russian communism. However, during Clinton's term Bin Laden attacked two US embassies (Kenya, Tanzania), a US military base in Saudia Arabia, the USS Cole and two earlier bomb attempts on the world trade center (van outside, car in the parkade). Months after Clinton's departure Osama Bin Laden launched his 3rd attack on the trade center and 5th attack on US soil. (embassies are officially US soil). Ask the thousands of families victimized on 9/11 if it was a fair trade!
en.wikipedia.org/wiki/...
>> Clinton eliminated the 30 yr bond to finance with lower interest, shorter term bonds. Of course this left America completely exposed to any increase in interest rates or inflation. Which could really hurt in the near future!
On Feb 13 08:41 PM Dr. Horrible wrote:
> Spending beyond our means seems to matter even to the iHip iPhone
> set. Check out the "Deficit Calculator"...
>
> itunes.apple.com/WebOb...;mt=8
>
>
> Or just search on "deficit calculator" at the iTunes store.
Instead of the generalities of many commenters, discussion of analysis such as this would be more productive. What can be done to maximize the near-term results and minimize the long-term effects? Of course, this discussion has no place for those who believe we should let the system deflate on its own and reset to a new equilibrium. I am not in that camp. I feel that has been tried before (1930 and 1931) and the result was not satisfactory.
Jeffrey Markel: When I look past your political comments, I find much to think about in your article. Some of the things you have presented:
1. The stimulus (according to the CBO) is insufficient to return the economy to "full employment" (my quotes added, since economists consider full employment ti be 5-5.5% unemployment).
2. In your opinion, the stimulus package would cushion half of the otherwise GDP drop that would be experienced. You state that this means the stimulus id not enough. Do you mean to imply that nothing would be better? Isn't half a collapse better than a full collapse?
3. You said "What we need now is fiscal policy that maximizes short-term demand stimulus relative to long-term damage to the national debt." Who can argue with that? Many of the commenters are completely ignoring this as a central issue.
klarsolo: Thanks for the Wiki link - very appropriate.
On Feb 13 04:47 PM AlexS wrote:
> This professor has a Ph.D. in economics and could be explaining some
> economics (like where that magical multiplier of 2 comes from) but
> instead he wants to slam the Republicans. So he's just another third-rate
> political pundit, this time fronting as an economist. Why do people
> do this to themselves and their professions? I wonder what he talks
> about in class. Did they spend last year having Obama rallies?
On Feb 13 08:04 PM RickRussellTX wrote:
> "For one thing, much of the stimulus takes the form of tax cuts,
> and the part of this that gets saved will not contribute to demand
> and thereby enter the stream of spending and income."
>
> I call FUD on that one. Consumer saving allows banks to lend to businesses
> and consumers, easing the credit situation and keeping interest rates
> low. As long as they don't use the money to buy vastly overvalued
> market-traded assets (HINT HINT), the money very much stays in the
> economy and enters the demand stream.
>
> Wells Fargo has been upselling me on the benefits of more savings
> for many months, and I suspect they are lobbying all of their customers
> this way in an attempt to build and maintain cash reserves and make
> more money available for lending.
The problem I refer to relates to an unsustainable monetary system called fractional reserve banking. Our privately held (owned) Federal Reserve System is the root of the problem. How can we ever expect to service our national debt when a private entity (the Federal Reserve) creates the US money supply and charges the US govt interest on its own currency.
An ongoing stimulus package to the US economy/taxpayer would be abolishing the Federal Reserve System and start printing our own interest free money. Imagine the economic impact of not having to annually collect $100's of billions of dollars in income taxes to service interest on the national debt.
This type of stimulus would be immediate, significant in scope and more appropriately match the size of problem we are trying to solve.
For those of you not familiar with the true "function" of the Federal Reserve System spend some time on the internet getting to know how the economic world really works. This is a problem the US Congress can solve!