62 replies to this topic

[MikeyG]

It's actually Keynesian solutions that get country's INTO debt to the point of being precarious because the private sector is looked upon as being "inefficient".

So, in essence, it's never worked, and tremendous failure as is social engineering....the proof is all around us.

Exactly.

Truth, unbridled.

[andiron]

[/quote] It's what Keynesian economics is all about...the government is the only truly efficient mechanism that can make the economy run... Fib [/quote] I am aghast that you completely miss the rationale behind Keynesian stimulus...that you brought in "efficiency" betrayed the ignorance, for Keynes famously opined - of course as an illustration - that the govt could as well have ordered tons of holes to be dug only to provide work for excess labor (valid in 30s and post 2007 in USA)...and thus could provide the turnaround in the economy... While private sector can run businesses efficiently is not in doubt, however in deep recession-depression, the efficiency works at cross purposes as even more workers at the bottom rung are let go, diminishing even more demand in the economy....and a vicious cycle sets in....

[fib_1618]

...that the govt could as well have ordered tons of holes to be dug only to provide work for excess labor (valid in 30s and post 2007 in USA)...and thus could provide the turnaround in the economy...

Share this load of excrement with those who are still looking for work and then "allow" the government to provide them with essentials just so they don't have to look any further.

99 weeks of unemployment wasn't enough...now they MUST allow government control their economic lives for they are told they have no future without their divine intendance.

With Obama Care, the cradle to grave mentality is now complete...and YOU are paying for all of it whether you like it or not.

Keynesian Economic Theory strikes at the heart of our Constitution and capitalism itself...it is a cancer that has no cure except the death of the patient itself.

Fib

[MikeyG]

If you pay people not to work and you tax those that do... Don't be surprised to find not a lot of people working

[MikeyG]

...that the govt could as well have ordered tons of holes to be dug only to provide work for excess labor (valid in 30s and post 2007 in USA)...and thus could provide the turnaround in the economy...

Share this load of excrement with those who are still looking for work and then "allow" the government to provide them with essentials just so they don't have to look any further.

99 weeks of unemployment wasn't enough...now they MUST allow government control their economic lives for they are told they have no future without their divine intendance.

With Obama Care, the cradle to grave mentality is now complete...and YOU are paying for all of it whether you like it or not.

Keynesian Economic Theory strikes at the heart of our Constitution and capitalism itself...it is a cancer that has no cure except the death of the patient itself.

Fib

I thought the Keynsian experiment died with Europe...

Oh well, maybe when there is 50% unemployment instead of 25% in Spain...

[fib_1618]

I thought the Keynesian experiment died with Europe...

Nope, not yet, once committed it's hard to wean yourself off.

Labor unions have learned to exploit this weakness, no less, play "dealer" in this same analogy.

Fib

[salsabob]

Federal debt is precarious because the private sector is seen as inefficient???

I've heard all the silly arguments why an entity's debt in the currency it issues is precarious, but I've never heard this one.

I'm interested; care to expand on the notion?

It's what Keynesian economics is all about...the government is the only truly efficient mechanism that can make the economy run.

As an example, the talk of late is that no one can build a business by themselves that government must help in doing so.

This is the backbone of Keynesian Economics and why we have a Federal Reserve...why Congress needs to pass stimulus to promote commerce as to regulate the business cycle with fiscal policy.

Fib

Okay, you're obviously a smart guy; you're one of the ones I follow to get TA insight (thanks, and maybe I owe you with another hopeless/thankless mini-effort). So, let's put aside the ideology for a minute and do this from facts and business sense.

Here is the what I consider the best indicator as to what households are doing -



Essentially that is a measure of the degree households are buying more or less. You'll notice it is now below zero and trending down. That bad, and getting grimmer, picture is confirmed by today's report that consumer credit spending dropped an unexpected $3B plus. And you probable know that consumer confidence measures are not supportive of any growth and employment is just barely keeping up with population growth.

This is a bit old but it is exemplary as to the reason why we are in this situation -



- as shown, we have an enormous unprecedented overhang in household debt. Further, to de-leverage that debt, households are, on net, saving - that means they're not, on net, spending. The thing about most modern economies, particularly ours, one person's spending is another's income. Somebody has to spend to provide income. Somebody has to increase spending to grow the economy.

The other possible sector where business could get sales is with exports. The problem is the US is a net importer and has been since the 1980s and no one is predicting that is going to change much. Yes, US business can still export, it has been a bright spot (we'll see what Europe does to that), but on net, we are an import nation and that represents a demand leakage - we cannot support job growth, investment to the extent we could if we weren't importing all those goods and services.

Now that's the macro; how's that translate to the micro.

Let's say your a smart businessman who owns a hamburger joint - maybe a little better or a little worse at attracting that zero growth in spending that PCE measure indicates. Now you've got the chance to hire the most efficient waiter within miles. Would you add to your payroll? Do you think if you did your new waiter would turn around and buy enough of your hamburgers to pay his salary? If you do, then you maybe you should get into the public service game because, sorry, your not much of a businessman.

Or, maybe a salesman has convince you he can sell you the most efficient hamburger flipper in the world for just $50 grand - he's probable as desperate as you for some sales. In the face of your own zero sales growth, however, would you invest your hard-earned savings into a machine that will make your hamburgers more efficiently? Sure, one way to build your profit is to lower your cost, but wouldn't you hesitate given the zero growth in your order book?

Scale that back up to the macro. Again, you got no growth in household spending. Businesses having no reason to invest in hiring or capital. Export sales, on net, negative.

Put the ideological BS that you've been brainwashed with for decades, and tell me where demand growth for your hamburgers is going to come from?

pssss , it doesn't matter how efficient your business if you ain't got the sales - most people figure that out with their first lemonade stand.

Edited by salsabob, 10 September 2012 - 08:51 PM.

[MikeyG]

Federal debt is precarious because the private sector is seen as inefficient???

I've heard all the silly arguments why an entity's debt in the currency it issues is precarious, but I've never heard this one.

I'm interested; care to expand on the notion?

It's what Keynesian economics is all about...the government is the only truly efficient mechanism that can make the economy run.

As an example, the talk of late is that no one can build a business by themselves that government must help in doing so.

This is the backbone of Keynesian Economics and why we have a Federal Reserve...why Congress needs to pass stimulus to promote commerce as to regulate the business cycle with fiscal policy.

Fib

Okay, you're obviously a smart guy; you're one of the ones I follow to get TA insight (thanks, and maybe I owe you with another hopeless/thankless mini-effort). So, let's put aside the ideology for a minute and do this from facts and business sense.

Here is the what I consider the best indicator as to what households are doing -



Essentially that is a measure of the degree households are buying more or less. You'll notice it is now below zero and trending down. That bad, and getting grimmer, picture is confirmed by today's report that consumer credit spending dropped an unexpected $3B plus. And you probable know that consumer confidence measures are not supportive of any growth and employment is just barely keeping up with population growth.

This is a bit old but it is exemplary as to the reason why we are in this situation -



- as shown, we have an enormous unprecedented overhang in household debt. Further, to de-leverage that debt, households are, on net, saving - that means they're not, on net, spending. The thing about most modern economies, particularly ours, one person's spending is another's income. Somebody has to spend to provide income. Somebody has to increase spending to grow the economy.

The other possible sector where business could get sales is with exports. The problem is the US is a net importer and has been since the 1980s and no one is predicting that is going to change much. Yes, US business can still export, it has been a bright spot (we'll see what Europe does to that), but on net, we are an import nation and that represents a demand leakage - we cannot support job growth, investment to the extent we could if we weren't importing all those goods and services.

Now that's the macro; how's that translate to the micro.

Let's say your a smart businessman who owns a hamburger joint - maybe a little better or a little worse at attracting that zero growth in spending that PCE measure indicates. Now you've got the chance to hire the most efficient waiter within miles. Would you add to your payroll? Do you think if you did your new waiter would turn around and buy enough of your hamburgers to pay his salary? If you do, then you maybe you should get into the public service game because, sorry, your not much of a businessman.

Or, maybe a salesman has convince you he can sell you the most efficient hamburger flipper in the world for just $50 grand - he's probable as desperate as you for some sales. In the face of your own zero sales growth, however, would you invest your hard-earned savings into a machine that will make your hamburgers more efficiently? Sure, one way to build your profit is to lower your cost, but wouldn't you hesitate given the zero growth in your order book?

Scale that back up to the macro. Again, you got no growth in household spending. Businesses having no reason to invest in hiring or capital. Export sales, on net, negative.

Put the ideological BS that you've been brainwashed with for decades, and tell me where demand growth for your hamburgers is going to come from?

pssss , it doesn't matter how efficient your business if you ain't got the sales - most people figure that out with their first lemonade stand.

So lets become Greece!!!

Deficits reduce confidence, which suppresses economic activity further...

If government spending is the answer, why don't we just pass a $1,000,000,000,000,000,000,000 stimulus and then we will all be rich!!!

[dasein]

"If government spending is the answer, why don't we just pass a $1,000,000,000,000,000,000,000 stimulus and then we will all be rich!!!" SBob - great posts as always. M, this is what they have been doing, but the problem is where they are injecting the stimulus, and that explains why "some of us" have become awfully rich and not others - it is not stimulating broadbased consumer demand as sbob says, it is targeted to banks and their management just siphons it off, and just barely means the banks do not implode - it is only enough to do that. why they do it so is a political question and so it cant be answered here, but this is the only answer to the contraction that either party - dems and repubs - have offered since 2008. Not one of the so-called bailouts, incentives etc is about giving money to the consumer - it is about insuring the banks can make some profit on their loans, and therefore, the pension funds etc do not go completely bust, and that people will have some money left to support the equities markets, with hopes that those companies do not go bust, since that would also blow out the unemployment numbers to spanish proportions. We are once again going to see ags save some of our trade balance #s - commodities inflation helps one of the US main exports - grain - and thus balance of payments - but revenues from ags will never equal the #s from former inflows to GDP of financial engineering.

[...]

If government spending is the answer, why don't we just pass a $1,000,000,000,000,000,000,000 stimulus and then we will all be rich!!!

One lousy sextillion?



Not enough. Of course, to Keynesians who don't have a clue about why their "solutions" have never worked, no amount is ever enough, "more" would have worked if only it had been tried, no matter how many previous failures, no matter how much debt is incurred, no matter how much money is wasted.

It's all in service of growing and furthering a utopian vision of omnipotent government, no matter what the horrendous costs and consequences. The DMV writ large.