In order to ensure that this thread continues to meet TL standards and follows the proper guidelines, we will be enforcing the rules in the OP more strictly. Be sure to give them a re-read to refresh your memory! The vast majority of you are contributing in a healthy way, keep it up!
NOTE: When providing a source, explain why you feel it is relevant and what purpose it adds to the discussion if it's not obvious. Also take note that unsubstantiated tweets/posts meant only to rekindle old arguments can result in a mod action.
Lousy jobs report. OK, you don’t want to put too much stress on one month’s numbers, yada yada, but it doesn’t look at all good.
But is this really a surprise? I mean, it’s true that the incipient housing recovery has made many people somewhat optimistic — I’ve been one of them — but when all is said and done, we are following strongly contractionary fiscal policy in an economy in which monetary policy is still ineffective because of the zero lower bound. How contractionary? Look at CBO’s estimates of the cyclically adjusted budget deficit (third column):
That deficit has declined from 5.6 percent of potential GDP in 2011 to 2.5 percent in 2013 — that’s 3 percent of GDP, which is a lot of austerity. Not all of that cut has even hit yet — the sequester isn’t in the macro numbers yet — but the rise in the payroll tax is very clearly driving the latest bad numbers, which show big declines in retail.
This is really stupid; as long as we’re at the zero lower bound, austerity is a huge mistake. Yet for what, the third time since 2009, all discussion in Washington has turned away from job creation to deficits (even though the debt problem has largely faded away) and the need for an early Fed exit from stimulus (even though unemployment remains high and inflation low).
Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Stimulus will be a necessary evil to plug the holes in the economy, or it goes into a tailspin. Running up a large national debt really isn't as bad as it's made out to be.
Austerity, however, is. It's like self-cannibalism, eventually you run out of bodyparts to eat.
Interestingly, the 3 most "fiscally reckless", high government debt, advanced countries are Japan, US, and UK.
But the countries with the lowest government borrowing costs are Japan, US, UK.
There is no reason to believe fiscal recklessness causes low government borrowing costs. The cause is more likely to be that these are stable, advanced countries, with their own currency, in a depressed economic climate. However, at least this is not 1, but 3, counterexamples to the claim that fiscal recklessness is necessarily punished by high government borrowing costs.
the disability fraud thing is pretty bad. probably explains some of the imbalance of federal aid/contribution between southern red states and northern blue states.
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
The latest jobs report was certainly crummy. But a few optimistic notes:
- Retail lost ~24K jobs. That's terrible but there's reason to think that those jobs will bounce back. From the bls report:
In March, retail trade employment declined by 24,000. The industry had added an average of 32,000 jobs per month over the prior 6 months. In March, job declines occurred in clothing and clothing accessories stores (-15,000), building material and garden supply stores (-10,000), and electronics and appliance stores (-6,000).
Prior to the jobs report retailers were saying that cold weather killed March sales for seasonal items (source). The bls data supports that idea and once warm weather hits a lot of what was lost will come back
- Construction is still showing job gains which further supports the idea that housing is rebounding.
- Jan and Feb numbers were both revised upward by ~30K.
Don't get me wrong - a crummy report is a crummy report and this was a crummy report. But if there was going to be a crummy report this year it was the sequester March report.
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
Why not ?
In the long run, he is right. Eventually you will hit a critical point when the interest on the debt will eat into your budget so much that basic government functions can no longer be sustained. But the US isn't there yet, in fact it's not even very close. Austerity is not a necessity for the US yet, and hopefully doesn't have to be.
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
Why not ?
In the long run, he is right. Eventually you will hit a critical point when the interest on the debt will eat into your budget so much that basic government functions can no longer be sustained. But the US isn't there yet, in fact it's not even very close. Austerity is not a necessity for the US yet, and hopefully doesn't have to be.
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
Why not ?
In the long run, he is right. Eventually you will hit a critical point when the interest on the debt will eat into your budget so much that basic government functions can no longer be sustained. But the US isn't there yet, in fact it's not even very close. Austerity is not a necessity for the US yet, and hopefully doesn't have to be.
Why does that need to happen ?
Because you have to pay interest proportional to the amount of debt that you have in order for it not to spiral out of control?.
You have to make people think that you're actually interested in balancing your budget and paying off your loans if you don't want them to just rip you off on the interest rates. Thats the point of austerity. You spend more when you have more and you spend less when you have less. Why should governments act any different then any of us?
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
Why not ?
In the long run, he is right. Eventually you will hit a critical point when the interest on the debt will eat into your budget so much that basic government functions can no longer be sustained. But the US isn't there yet, in fact it's not even very close. Austerity is not a necessity for the US yet, and hopefully doesn't have to be.
Why does that need to happen ?
Because you have to pay interest proportional to the amount of debt that you have in order for it not to spiral out of control?.
You have to make people think that you're actually interested in balancing your budget and paying off your loans if you don't want them to just rip you off on the interest rates. Thats the point of austerity. You spend more when you have more and you spend less when you have less. Why should governments act any different then any of us?
Because, wait for it... governement are not people ! And you know what, they don't die, which is pretty convenient you will admit. as for your first point, that doesn't mean we can't have debt, that just mean we have to manage it.
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
Why not ?
In the long run, he is right. Eventually you will hit a critical point when the interest on the debt will eat into your budget so much that basic government functions can no longer be sustained. But the US isn't there yet, in fact it's not even very close. Austerity is not a necessity for the US yet, and hopefully doesn't have to be.
Why does that need to happen ?
Because you have to pay interest proportional to the amount of debt that you have in order for it not to spiral out of control?.
You have to make people think that you're actually interested in balancing your budget and paying off your loans if you don't want them to just rip you off on the interest rates. Thats the point of austerity. You spend more when you have more and you spend less when you have less. Why should governments act any different then any of us?
Because, wait for it... governement are not people ! And you know what, they don't die, which is pretty convenient you will admit. as for your first point, that doesn't mean we can't have debt, that just mean we have to manage it.
Wasn't the first point about unsustainable spending? The only way to manage that is to make it sustainable (raise taxes / cut spending)...
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
Why not ?
In the long run, he is right. Eventually you will hit a critical point when the interest on the debt will eat into your budget so much that basic government functions can no longer be sustained. But the US isn't there yet, in fact it's not even very close. Austerity is not a necessity for the US yet, and hopefully doesn't have to be.
Why does that need to happen ?
Because you have to pay interest proportional to the amount of debt that you have in order for it not to spiral out of control?.
You have to make people think that you're actually interested in balancing your budget and paying off your loans if you don't want them to just rip you off on the interest rates. Thats the point of austerity. You spend more when you have more and you spend less when you have less. Why should governments act any different then any of us?
Because, wait for it... governement are not people ! And you know what, they don't die, which is pretty convenient you will admit. as for your first point, that doesn't mean we can't have debt, that just mean we have to manage it.
Wasn't the first point about unsustainable spending? The only way to manage that is to make it sustainable (raise taxes / cut spending)...
Let's say I'm not convinced taxation is systematically the superior financial method compared to borrowing. Edit : And I mean, obviously unsustainable spending is bad, because, well, it's unsustainable. The question being, which kind of spending is unsustainable. And that's a tough one.
On April 05 2013 22:54 McBengt wrote: Human beings, who are almost unique in having the ability to learn from the experience of others, are also remarkable for their apparent disinclination to do so - Douglas Adams.
Austerity did terrible terrible damage to Europe. My friend lost his job due to government cutbacks, my university cut about a third of the seminars to save money. In the end it changed basically nothing. Don't make the same mistake, reducing the deficit means nothing if growth is stunted as a consequence. Austerity is a publicity stunt to wave to the electorate to show how neat and disciplined you are, but it's not the responsible approach.
Austerity is bad, but its necessary when your country has been spending money it doesn't have for too many years. This kind of spending is unsustainable, but politicians love to keep passing the problem on to the next government. It can't go on forever.
Why not ?
In the long run, he is right. Eventually you will hit a critical point when the interest on the debt will eat into your budget so much that basic government functions can no longer be sustained. But the US isn't there yet, in fact it's not even very close. Austerity is not a necessity for the US yet, and hopefully doesn't have to be.
Why does that need to happen ?
Because you have to pay interest proportional to the amount of debt that you have in order for it not to spiral out of control?.
You have to make people think that you're actually interested in balancing your budget and paying off your loans if you don't want them to just rip you off on the interest rates. Thats the point of austerity. You spend more when you have more and you spend less when you have less. Why should governments act any different then any of us?
Because, wait for it... governement are not people ! And you know what, they don't die, which is pretty convenient you will admit. as for your first point, that doesn't mean we can't have debt, that just mean we have to manage it.
Wasn't the first point about unsustainable spending? The only way to manage that is to make it sustainable (raise taxes / cut spending)...
Let's say I'm not convinced taxation is systematically the superior financial method compared to borrowing. Edit : And I mean, obviously unsustainable spending is bad, because, well, it's unsustainable. The question being, which kind of spending is unsustainable. And that's a tough one.
You're right on that point - borrowing certainly has its place. The Federal budget changing to a separate capital account (as most states have) would be a very good move and make the discussion over appropriate deficit levels much easier.
In the US healthcare spending is unsustainable in a huge way. Social Security spending is largely sustainable, but still problematic (the burden on young workers is growing... burdensome). Depending on projections debt service is questionable (a factor of the above two items though). I don't think anything else could be called unsustainable...
long term threats to U.S. economy will come from the growth side. as long as the U.S. has some vital growth sectors like high tech stuff doing well, the economy will grow alongside the debt and it'll be ok.
the scenarios in which U.S. growth is fucked (huge global warming destroying coastal areas etc), mostly everybody else is fucked too, so debt becomes meaningless.
pressing problems are healthcare cost and inequality, tax avoidance
Lord Turner's keynote presentation at the INET conference just a few hours ago, starts at around 2:36:15.
This is a very persuasive, comprehensive, and well presented case for stimulus financed by printing money and a permanent expansion of the monetary base.
Coincidentally, today the Bank of Japan's newly installed governor has unveiled a bold plan to hit a 2% inflation target within 2 years, by a large QE program that will double the monetary base.
(Reuters) - The Bank of Japan unleashed the world's most intense burst of monetary stimulus on Thursday, promising to inject about $1.4 trillion into the economy in less than two years, a radical gamble that sent the yen reeling and bond yields to record lows.
New Governor Haruhiko Kuroda committed the BOJ to open-ended asset buying and said the monetary base would nearly double to 270 trillion yen ($2.9 trillion) by the end of 2014 in a shock therapy to end two decades of stagnation.
The U.S. Federal Reserve may buy more debt under its quantitative easing, but with the Japanese economy about one-third of the size of the United States, the scope of Kuroda's "Quantitative and Qualitative Monetary Easing" is unmatched.
"This is an unprecedented degree of monetary easing," a smiling Kuroda told a news conference after his first policy meeting at the helm of the central bank.
"We took all available steps we can think of. I'm confident that all necessary measures to achieve 2 percent inflation in two years were taken today," he said.
One of those steps was to abandon interest rates as a target and become the only major central bank to primarily target the monetary base -- the amount of cash it pumps out to the economy. It adopted a similar policy in 2001-2006, but not on this scale.
"The result is nothing short of regime change," HSBC's Japan economist Izumi Devalier said in a report.
It seems that a video of this presentation has been put on YouTube.
The substantive stuff starts at 16:47, where he talks mainly about banking and financial regulation.
Starting at 43:00 is the case for stimulus financed by printing money.
EPT![[image loading]](https://www.nytimes.com/images/2013/04/05/opinion/040513krugman1/040513krugman1-blog480.png)
