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On August 07 2012 13:54 JonnyBNoHo wrote:
All the typical ones (both leading and lagging).
I'm glad we got that straightened out. If you're using the "all the typical ones", where's your cutoff for the effectiveness of fiscal policy in terms of core CPI and nominal GDP/LRGDP for the United States, and why?
On August 07 2012 13:54 JonnyBNoHo wrote:
Because you are still running a deficit.
Did you really just define "selling bonds at a negative interest rate" to be "running a deficit"? Do you really believe what you're saying?
Tell me, if you loan someone money, and they pay you back with negative interest, have they gained or lost money?
On August 07 2012 14:00 JonnyBNoHo wrote:
Yes I'm equating deficits with stimulus. As far as I know that's pretty basic Keynesian economics.
You do realize that the aggregate demand curve in basic Keynesian economics is flat during times of diminished AD, right?
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On August 07 2012 13:57 sunprince wrote:Show nested quote +On August 07 2012 13:35 sam!zdat wrote:On August 07 2012 13:08 sunprince wrote:On August 07 2012 12:32 sam!zdat wrote:On August 07 2012 12:19 1Eris1 wrote:
Let's just remember, that despite it faults, Capitalism has been good for many many people, certainly more so than its alternatives, so if you want to change it, you're going to need a damn good alternative. Yeah, we're in complete agreement on this point. (Marx himself was incredibly impressed by many things about capitalism. He didn't think it was "bad" necessarily, just that it was historically situated and would eventually come into crisis - which it is doing now. The mistake of the early 20th century communists was that they didn't realize (edit: ignored the fact) that, according to Marxist theory, you had to go through capitalism in order to get to communism) Their real mistake was failing to realize that even though capitalism primarily benefits the capitalist class, capitalism also benefits the working class, enough so that they would be satisfied with the status quo instead of rebelling. The crisis we have now is that the 1% seems to have gotten too greedy. They've forgotten the importance of leaving enough cake for the other 99%. It's more that capitalism is a good way to establish an effective industrial/commercial infrastructure, and to promote technological innovation (though I would argue that this dynamic is much different in an information society, in which capitalism not really needed for - and can stand in the way of - technological innovation). + Show Spoiler +(The problem is that capitalism also requires primitive accumulation, so recommending capitalism to a society that is not already capitalistic is problematic. In this case, you might need to reconsider the capitalism -> communism plan, which is mostly talking about an already established European capitalism. You could maybe replace the primitive accumulation with foreign aid, but this is a totally different topic). Recommending any sort of new economic system is problematic. Economic systems evolve gradually (see, for example, China's gradual transition away from communism), except when forced to evolve rapidly by revolutionary force.
It's an open question what the best strategy is. The problem is that the conversation is taboo. My only polemical objective here is to reopen the question.
Show nested quote +On August 07 2012 13:35 sam!zdat wrote:
Centering any analysis of a world-historical process on the moral failings of individual humans (greedy) is always a mistake. Why? You're making an assumption here with no actual argumentative basis for your position. High-minded ideals aside, most economists, psychologists, and sociologists will tell you that centering analysis of historical processes on human incentives is precisely the correct thing to do.
No, you are looking at complex systems of agents with human incentives. You study the incentives, but you also have to study aggregate effects (ideology and culture more generally, as well as technological, historical, social context). You should study individual incentives, but you should not center your analysis on them.
Can you find me a quotation of somebody making such a claim? (If not that's cool too, I would just be curious to see the specific claim they were making)
Show nested quote +On August 07 2012 13:35 sam!zdat wrote:
The capitalist class exists in a fundamentally antagonistic relationship with the proletariat (it's a sort of truce). This is what consumerism is about. A fundamentally antagonistic relationship can still be beneficial for everyone. For example, see how predator-prey relationships benefit both in the larger context of ecology.
Yes, absolutely. Capitalism used to behave like this. It is no longer is the optimal strategy for the new historical moment, which of course has been shaped by capitalism. This what Marx is talking about when he talks about dialectical contradictions in the system. It produces it own antithesis, and then has to resolve that contradiction OR endure periodic crisis (with increasing amplitude). Capitalism is going to go on having booms and depressions, all the while depleting a) quality of the soil (i.e. natural capital) and b) the worker. As the world reaches its carrying capacity, you need a steady-state economic system, not one that is constitutively focused on growth for itself. It just produces too much waste heat, to use a metaphor, and fucks the system after a while. It's like this reaction that is useful at first but after a while you have to control it so it doesn't burn down your fucking house.
Show nested quote +On August 07 2012 13:35 sam!zdat wrote:
(Of course it's true that, over the past two hundred years capitalism has raised the livings standards yadda yadda. Capitalism was a very good idea for its time, the point is just that it has outlived its usefulness. Bread and circuses only take you so far). Who says that raising the living standards of everyone can only take you so far? Yet another assumption without any actual arguments for your position.
Because we have everything we really need, we just need to have it more efficiently and distribute it more equitably. The thing is, guys, cultures in which wealth is distributed highly unequally are just kinda shitty places to live. (n.b. I also think a flat distribution of wealth would be a terrible idea.) (edit: also, innovation will all be on the model of open source software - not institutionally, just that's the way it will be)
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On August 07 2012 14:03 acker wrote:Show nested quote +On August 07 2012 13:54 JonnyBNoHo wrote:
All the typical ones (both leading and lagging). I'm glad we got that straightened out. If you're using the "all the typical ones", where's your cutoff for the effectiveness of fiscal policy in terms of core CPI and nominal GDP/LRGDP for the United States, and why?
I don't see how setting a cutoff in those terms makes sense.
Show nested quote +On August 07 2012 13:54 JonnyBNoHo wrote:
Because you are still running a deficit. Did you really just define "selling bonds at a negative interest rate" to be "running a deficit"? Do you really believe what you're saying?
I do in fact believe what I am saying.
Show nested quote +On August 07 2012 14:00 JonnyBNoHo wrote:
Yes I'm equating deficits with stimulus. As far as I know that's pretty basic Keynesian economics. You do realize that the aggregate demand curve in basic Keynesian economics is flat during times of diminished AD, right?
Your point?
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On August 07 2012 14:41 JonnyBNoHo wrote:
I don't see how setting a cutoff in those terms makes sense.
Care to explain why a cutoff the effectiveness of IS policy makes no sense in terms of CPI and nGDP? I believe you were using "all the typical" economic indicators. Or did you mean "all but CPI and nGDP"?
If you meant the latter, I can give you more...basic...economic indicators to use and explain for your cutoff for effective IS policy*. If you mean that you use more variables than CPI and nGDP, can you explain the most general cutoffs you use, which indicators they pertain to, and why you use them in conjunction?
*Treasury real yield curves and current/LR real GDP come to mind, the basic set used by every macroeconomics professor in the United States. Immediately before (sorry, not after) economic models based on core CPI and nGDP.
On August 07 2012 14:41 JonnyBNoHo wrote:
I do in fact believe what I am saying.
Explain the rest of my quote, then.
Tell me, if you loan someone money, and they pay you back with negative interest, have they gained or lost money?
Tell me that the entity you're paying money to is running "deficient spending".
On August 07 2012 14:41 JonnyBNoHo wrote:
Your point?
...
You do know what a flat AD curve can imply in the basic Keynesian model of aggregate demand and supply, right? If I recall correctly, you were the one who brought up the basic Keynesian model, you must know of it.
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On August 07 2012 14:51 acker wrote:Show nested quote +On August 07 2012 14:41 JonnyBNoHo wrote:
I don't see how setting a cutoff in those terms makes sense. Care to explain why a cutoff the effectiveness of IS policy makes no sense in terms of CPI and nGDP? I believe you were using "all the typical" economic indicators. Or did you mean "all but CPI and nGDP"? If meant the latter, I can give you more...basic...economic indicators to use for your cutoff for effective IS policy*. If you mean that you use more variables than CPI and nGDP, can you explain the most general cutoffs you use, which indicators they pertain to, and why you use them in conjunction? *Treasury real yield curves and current/LR real GDP come to mind, the basic set used by every macroeconomics professor in the United States. Immediately after economic models based on core CPI and nGDP. Show nested quote +On August 07 2012 14:41 JonnyBNoHo wrote:
I do in fact believe what I am saying. Explain the rest of my quote, then. Show nested quote +
Tell me, if you loan someone money, and they pay you back with negative interest, have they gained or lost money?
Tell me that the entity you're paying money to is running "deficient spending". ... You do know what a flat AD curve entails in the basic Keynesian model of aggregate demand and supply, right?
The U.S. isn't completely financed by new bonds. New borrowing will fall under the newer rates, as will any bonds that are matured (and must be borrowed again). It's still deficit spending since it's not likely to end before bonds get back into positive territory. However, it IS the cheapest time to borrow.
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On August 07 2012 15:03 aksfjh wrote:
The U.S. isn't completely financed by new bonds. New borrowing will fall under the newer rates, as will any bonds that are matured (and must be borrowed again). It's still deficit spending since it's not likely to end before bonds get back into positive territory. However, it IS the cheapest time to borrow.
See PM.
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On August 07 2012 15:03 acker wrote:Show nested quote +On August 07 2012 15:03 aksfjh wrote:
The U.S. isn't completely financed by new bonds. New borrowing will fall under the newer rates, as will any bonds that are matured (and must be borrowed again). It's still deficit spending since it's not likely to end before bonds get back into positive territory. However, it IS the cheapest time to borrow. See PM.
I must be missing something...
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On August 07 2012 15:15 aksfjh wrote:Show nested quote +On August 07 2012 15:03 acker wrote:On August 07 2012 15:03 aksfjh wrote:
The U.S. isn't completely financed by new bonds. New borrowing will fall under the newer rates, as will any bonds that are matured (and must be borrowed again). It's still deficit spending since it's not likely to end before bonds get back into positive territory. However, it IS the cheapest time to borrow. See PM. I must be missing something...
It's been sent now.
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On August 07 2012 14:51 acker wrote:Show nested quote +On August 07 2012 14:41 JonnyBNoHo wrote:
I don't see how setting a cutoff in those terms makes sense. Care to explain why a cutoff the effectiveness of IS policy makes no sense in terms of CPI and nGDP? I believe you were using "all the typical" economic indicators. Or did you mean "all but CPI and nGDP"? If meant the latter, I can give you more typical economic indicators to use for your cutoff for effective IS policy (Treasury real yield curves and current/LR GDP real GDP come to mind, the basic set used by every macroeconomic professor in the United States). If you mean that you use more variables than CPI and nGDP, can you explain the most general cutoffs you use, which indicators they pertain to, and why you use them in conjunction?
You really need to re-frame your original question. I'm not going to have a discussion with you about fiscal policy strictly within the confines of your academic background.
Show nested quote +On August 07 2012 14:41 JonnyBNoHo wrote:
I do in fact believe what I am saying. Explain the rest of my quote, then. Show nested quote +
Tell me, if you loan someone money, and they pay you back with negative interest, have they gained or lost money?
Tell me that the entity you're loaning money to is running a deficit instead of a surplus.
Gaining or losing money has nothing to do with surpluses / deficits. The negative real interest rates make the burden of additional debt less painful but you still need to repay the principal. The problem with 'turning a profit' is that the cash collected from issuing the bond is not kept, nor is it necessarily spent on something that will produce a future stream of income from which the principal can be repaid.
You do know what a flat AD curve is, right?
Yes. You do realize that real life is a bit more nuanced and complicated, yes? And that making good arguments involves more than simply stating a random fact that you think supports your argument without explaining why you believe so?
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On August 07 2012 15:37 JonnyBNoHo wrote:
You really need to re-frame your original question. I'm not going to have a discussion with you about fiscal policy strictly within the confines of your academic background.
...
These numbers are used for IS policy analysis by every macroeconomist on the planet*. The alternative, as far as anyone else on the planet knows, involves reading animal entrails and divination. Or "gut instinct".
I'm guessing the latter. Prove me wrong, please, I'd hate to be right.
*It gets more complicated. Consider you've refused to give numbers for even the foundational economic metrics. If you feel like using the more complicated metrics and give justifications for your cutoffs, go ahead.
On August 07 2012 14:41 JonnyBNoHo wrote:
Gaining or losing money has nothing to do with surpluses / deficits. The negative real interest rates make the burden of additional debt less painful but you still need to repay the principal. The problem with 'turning a profit' is that the cash collected from issuing the bond is not kept, nor is it necessarily spent on something that will produce a future stream of income from which the principal can be repaid.
*headdesk*
Oh god, you think that negative interest rates means positive interest rates. Think about what you've written.
On August 07 2012 14:41 JonnyBNoHo wrote:
Yes. You do realize that real life is a bit more nuanced and complicated, yes? And that making good arguments involves more than simply stating a random fact that you think supports your argument without explaining why you believe so?
If you bring up basic Keynesian economics, I expect you to be able to understand basic Keynesian economics.
On August 07 2012 14:00 JonnyBNoHo wrote:
Yes I'm equating deficits with stimulus. As far as I know that's pretty basic Keynesian economics.
I'm sorry that real life is somewhat more nuanced and and complicated than your basic framework allows.
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On August 07 2012 16:01 acker wrote:Show nested quote +On August 07 2012 15:37 JonnyBNoHo wrote:
You really need to re-frame your original question. I'm not going to have a discussion with you about fiscal policy strictly within the confines of your academic background.
... These numbers are used for IS policy analysis by every macroeconomist on the planet*. The alternative, as far as anyone else on the planet knows, involves reading animal entrails and divination. Or "gut instinct". I'm guessing the latter. Prove me wrong, please, I'd hate to be right. *It gets more complicated. Consider you've refused to give numbers for even the foundational economic metrics. Show nested quote +On August 07 2012 14:41 JonnyBNoHo wrote:
Gaining or losing money has nothing to do with surpluses / deficits. The negative real interest rates make the burden of additional debt less painful but you still need to repay the principal. The problem with 'turning a profit' is that the cash collected from issuing the bond is not kept, nor is it necessarily spent on something that will produce a future stream of income from which the principal can be repaid. *headdesk* Oh god, you think that negative interest rates means positive interest rates. Think about what you've written. Show nested quote +On August 07 2012 14:41 JonnyBNoHo wrote:
Yes. You do realize that real life is a bit more nuanced and complicated, yes? And that making good arguments involves more than simply stating a random fact that you think supports your argument without explaining why you believe so? If you bring up basic Keynesian economics, I expect you to be able to understand basic Keynesian economics. Show nested quote +On August 07 2012 14:00 JonnyBNoHo wrote:
Yes I'm equating deficits with stimulus. As far as I know that's pretty basic Keynesian economics. I'm sorry that real life is somewhat more nuanced and and complicated than your basic framework allows.
I will defend him a little bit on the interest rates. First off I don't think he doesn't know fiscal multipliers are a thing. His point is that if you borrow money at negative interest then throw it in a hole and burn it, you still have to pay back some money, even if its less than you borrowed in the first place. This argument isn't surprising me because many Americans think that the government does pretty much exactly that with their money.
Edit: What the hell, I'll say a little more, play the Devil's Advocate. I think his point is that the US has reached a dangerous debt to GDP ratio, especially considering the toxic environment in Congress in regards to the debt ceiling (yeah the markets pretty much ignored a slight cut but out credit isn't invulnerable to any shocks) and how much of our debt we roll over continuously, exposing us to any long term bond market fluctuations.
Additionally the overall effect of fiscal stimulus is debated. (http://www.ecb.int/pub/pdf/scpwps/ecbwp1090.pdf) Our nominal GDP growth is not reaching expectations not because of a lack of stimulus but instead, because of external shocks from the global market due to everything from earthquakes to the euro crisis. (only 1 letter isn't a bad range, alphabetically) Without a net effect equal to the real yield on bonds, further deficit financed stimulus is a net loss.
Plus their are national security concerns about the ability of countries to dump our bonds at any point and disrupt our financial stability. The bonds that are sold domestically are worse in some ways because of the opportunity cost for a negative yield.
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On August 07 2012 16:01 acker wrote:Show nested quote +On August 07 2012 15:37 JonnyBNoHo wrote:
You really need to re-frame your original question. I'm not going to have a discussion with you about fiscal policy strictly within the confines of your academic background.
... These numbers are used for IS policy analysis by every macroeconomist on the planet*. The alternative, as far as anyone else on the planet knows, involves reading animal entrails and divination. Or "gut instinct". I'm guessing the latter. Prove me wrong, please, I'd hate to be right. *It gets more complicated. Consider you've refused to give numbers for even the foundational economic metrics.
I understand economic metrics. I do not understand 'setting cutoffs to evaluate the effectiveness of IS policy.'
Show nested quote +On August 07 2012 14:41 JonnyBNoHo wrote:
Gaining or losing money has nothing to do with surpluses / deficits. The negative real interest rates make the burden of additional debt less painful but you still need to repay the principal. The problem with 'turning a profit' is that the cash collected from issuing the bond is not kept, nor is it necessarily spent on something that will produce a future stream of income from which the principal can be repaid. *headdesk* Oh god, you think that negative interest rates means positive interest rates. Think about what you've written.
*facepalm*
No I don't... How the hell did you interpret that? Sorry, but you are pretty stupid if you think that negative real interest rates mean that deficits don't exist. If you disagree then prove it.
Show nested quote +On August 07 2012 14:41 JonnyBNoHo wrote:
Yes. You do realize that real life is a bit more nuanced and complicated, yes? And that making good arguments involves more than simply stating a random fact that you think supports your argument without explaining why you believe so? If you bring up basic Keynesian economics, I expect you to be able to understand basic Keynesian economics.
Yep, cool. Your stating of random economic concepts without context or supporting statements really showed me up.
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On August 07 2012 16:25 TheFrankOne wrote:
I will defend him a little bit on the interest rates. First off I don't think he doesn't know fiscal multipliers are a thing. His point is that if you borrow money at negative interest then throw it in a hole and burn it, you still have to pay back some money, even if its less than you borrowed in the first place. This argument isn't surprising me because many Americans think that the government does pretty much exactly that with their money.
This is the identity that started everything.
On August 07 2012 12:58 JonnyBNoHo wrote:
Expansionary fiscal policy = stimulus = deficit spending.
That he doesn't know about fiscal multipliers is one thing. That he has absolutely no idea what a negative interest rate on a bond entails is a failure in basic algebra. If you're selling bonds with a negative interest rate and people are buying them, you can literally jack off to the collected interest while doing nothing to the initial money and still collect a surplus. Stimulus=deficit spending is an identity? Absolutely not.
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On August 07 2012 16:27 JonnyBNoHo wrote:
I understand economic metrics. I do not understand 'setting cutoffs to evaluate the effectiveness of IS policy.'
I have two different quotes on the matter.
+ Show Spoiler +On August 07 2012 12:14 acker wrote:
Per your opinion, what economic indicator do you use to estimate the effectiveness of IS policy in times of a downward-shifted IS curve? On August 07 2012 14:51 acker wrote:
Care to explain why a cutoff the effectiveness of IS policy makes no sense in terms of CPI and nGDP? I believe you were using "all the typical" economic indicators. Or did you mean "all but CPI and nGDP"?
If you meant the latter, I can give you more...basic...economic indicators to use and explain for your cutoff for effective IS policy*. If you mean that you use more variables than CPI and nGDP, can you explain the most general cutoffs you use, which indicators they pertain to, and why you use them in conjunction?
By "cutoff", I mean "numbers". You have some sort of framework where right-shifting IS policy is acceptable and isn't acceptable. So what economic cutoffs do you assign to which economic metrics to determine whether rightwards-shifting IS policy is acceptable or not, and why?
On August 07 2012 16:27 JonnyBNoHo wrote:
No I don't... How the hell did you interpret that? Sorry, but you are pretty stupid if you think that negative real interest rates mean that deficits don't exist. If you disagree then prove it.
I'm sorry, but I'm starting to think you're doing this on purpose. Start talking on how a negative real interest rate necessarily means "deficit spending" if stimulus happens. If you recall, just one page ago, you posted this identity:
On August 07 2012 12:58 JonnyBNoHo wrote:
Expansionary fiscal policy = stimulus = deficit spending.
Yeah. Have fun with negative interest rates.
On August 07 2012 14:41 JonnyBNoHo wrote:
Yep, cool. Your stating of random economic concepts without context or supporting statements really showed me up.
Tell me about it.
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On August 07 2012 16:29 acker wrote:Show nested quote +On August 07 2012 16:25 TheFrankOne wrote:
I will defend him a little bit on the interest rates. First off I don't think he doesn't know fiscal multipliers are a thing. His point is that if you borrow money at negative interest then throw it in a hole and burn it, you still have to pay back some money, even if its less than you borrowed in the first place. This argument isn't surprising me because many Americans think that the government does pretty much exactly that with their money. This is the identity that started everything. Show nested quote +On August 07 2012 12:58 JonnyBNoHo wrote:
Expansionary fiscal policy = stimulus = deficit spending. That he doesn't know about fiscal multipliers is one thing. That he has absolutely no idea what a negative interest rate on a bond entails is a failure in basic algebra. If you're selling bonds with a negative interest rate and people a buying them, you can literally jack off to the collected interest and still collect a surplus.
The problem with your math on negative rates is that the cash raised in the sale of the bond is spent, not saved (by definition, since we're dealing with deficits). Therefore, when the bond comes due the government will need to either refinance the bond at a rate that may be higher than inflation (and likely so!) or it will need to tax the citizenry to collect the cash necessary for repayment.
I am aware of multipliers BTW.
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On August 07 2012 16:29 acker wrote:Show nested quote +On August 07 2012 16:25 TheFrankOne wrote:
I will defend him a little bit on the interest rates. First off I don't think he doesn't know fiscal multipliers are a thing. His point is that if you borrow money at negative interest then throw it in a hole and burn it, you still have to pay back some money, even if its less than you borrowed in the first place. This argument isn't surprising me because many Americans think that the government does pretty much exactly that with their money. This is the identity that started everything. Show nested quote +On August 07 2012 12:58 JonnyBNoHo wrote:
Expansionary fiscal policy = stimulus = deficit spending. That he doesn't know about fiscal multipliers is one thing. That he has absolutely no idea what a negative interest rate on a bond entails is a failure in basic algebra. If you're selling bonds with a negative interest rate and people a buying them, you can literally jack off to the collected interest and still collect a surplus.
Yes... I mean, kind of. Technically the ten year nominal rate is 1.56% so you have to do something with the money to beat inflation or you're still at a loss, we are talking real rates here after all.
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On August 07 2012 16:48 TheFrankOne wrote:
Yes... I mean, kind of. Technically the ten year nominal rate is 1.56% so you have to do something with the money to beat inflation or you're still at a loss, we are talking real rates here after all.
That's true if nominal rate is positive instead of zero. The necessary correction is complicated but not altogether difficult, though. See PM.
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On August 07 2012 14:00 JonnyBNoHo wrote:Show nested quote +On August 07 2012 13:06 kwizach wrote:On August 07 2012 12:58 JonnyBNoHo wrote:On August 07 2012 12:45 kwizach wrote:On August 07 2012 12:42 JonnyBNoHo wrote:On August 07 2012 12:28 kwizach wrote:On August 07 2012 12:08 JonnyBNoHo wrote:On August 07 2012 11:31 kwizach wrote:On August 07 2012 11:14 JonnyBNoHo wrote:On August 07 2012 10:37 kwizach wrote:
[quote]
Its size makes it a clear example of a substantive product of Obama's economic policies being blocked by Republican opposition, which is what was being discussed. No other such substantive bill has passed since 2010, making your assertion that plenty of such bills have passed and currently pass incorrect. I'm not talking about the various small patches that did pass, I'm talking about actual substantive bills that encapsulate Obama's economic policies, that have/would have had a very clear impact on the economy which can then be/could then have been evaluated.
Your assertion that the existing stimulus has a poor track record is also incorrect, unless you expected it to save & create tens of millions of jobs instead of "only" millions. The fiscal stimulus under Obama has been and continues to be absolutely and relatively gigantic in scale. So what that nothing 'substantive' has been passed since 2010? Even without adding a single dollar it's still huge. The recovery is incredibly weak. I'm not sure how you can combine a huge stimulus with a tepid recovery and get anything more than a poor record out of it. You can do that by studying its impact and by imagining what the situation would have been had it not been passed (i.e. things would be much worse). A vast majority of economists agree that the stimulus has considerably helped the American economy and saved jobs. In fact, many will tell you that the stimulus was not big enough. What do you mean "So what that nothing 'substantive' has been passed since 2010"? That's precisely what I was discussing before you jumped into the discussion - the Republican blocking of bills that would have carried out Obama's economic policies. I think it is a fine argument that the initial government stimulus should have been bigger since the recession was deeper than expected. I think it is a much weaker argument that during a weak recovery that additional government stimulus (on top of the existing $1 trillion+ this year) is advisable. There are limits to stimulus and I think we've hit that limit. If you agree that the initial stimulus should have been bigger I'm having a hard time understanding why you'd think there should be no stimulus now, considering the reasoning behind the stimulus would be the exact same. Also, that "$1 trillion+" figure you came up with (what does it even correspond to?) is probably not exactly the kind of stimulus we're talking about...! On August 07 2012 12:08 JonnyBNoHo wrote:
As for the post 2010 discussion I think it is relevant that many policies Obama put in place in his first two years are still in effect and many other policies that he singed into law haven't come into affect yet - Obamacare and Dodd-Frank are still being rolled out. So even without new policies we've yet to feel the full effect of Obama's policies (good or bad). There are plenty of studies on the effects of some of Obama's policies, in particular of the 2009 stimulus bill. These studies overwhelmingly confirm it has had a positive impact on the economy. To again go back to my original argument, Republicans have blocked further attempts to substantially implement Obama's economic policies. Stimulus is deficit spending - not just bills titled as such. And I never said there should be no stimulus, just that the existing stimulus should be large enough as is (if not too large already). If Obama has found a great new project to spend money on, then the funding should come re-prioritizing existing spending. That's not the common understanding of stimulus. Your definition doesn't really make any sense in the context of this discussion. From the wikipedia entry you just linked to. In economics, stimulus refers to attempts to use monetary or fiscal policy (or stabilization policy in general) to stimulate the economy. Stimulus can also refer to monetary policies like lowering interest rates and quantitative easing. I assumed we weren't talking about the Fed so that relegates the discussion to fiscal policy. Stances of fiscal policy
The three main stances of fiscal policy are:
Neutral fiscal policy is usually undertaken when an economy is in equilibrium. Government spending is fully funded by tax revenue and overall the budget outcome has a neutral effect on the level of economic activity.
Expansionary fiscal policy involves government spending exceeding tax revenue, and is usually undertaken during recessions.
Contractionary fiscal policy occurs when government spending is lower than tax revenue, and is usually undertaken to pay down government debt. Expansionary fiscal policy = stimulus = deficit spending. If you are using some politicized definition of stimulus than let me know I'll gladly bow out of this line of discussion. Unless I misunderstood your post, you equated deficit spending with stimulus. That stimulus results in deficit spending because the government spends more than it takes in does not mean that deficit spending = stimulus and that you can look at the US deficit and declare it to be "stimulus money". If I did misunderstand you and that's not what you meant, I'm still waiting for an explanation regarding your "$1 trillion+ stimulus money this year" figure. Yes I'm equating deficits with stimulus. As far as I know that's pretty basic Keynesian economics.
Again, no, not necessarily. For example, you can run deficits without having actively engaged in a stimulus.
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On August 07 2012 16:46 JonnyBNoHo wrote:
The problem with your math on negative rates is that the cash raised in the sale of the bond is spent, not saved (by definition, since we're dealing with deficits). Therefore, when the bond comes due the government will need to either refinance the bond at a rate that may be higher than inflation (and likely so!) or it will need to tax the citizenry to collect the cash necessary for repayment.
No, NOT by definition.
Cash raised in a bond sale does not have to be spent on stimulus. It's perfectly acceptable to do stimulus using only the money people effectively pay you through the negative interest rate. If this is done, there is absolutely no need to refinance a bond after is reaches maturity. nor is there any reason to tax the citizenry as the bond literally pays for itself and more.
That's why your identity is broken. Fiscal policy=stimulus*, but it does not have to necessarily equal deficit spending, nor does it necessarily equate deficits.
*This is also debatable. Austerity is also considered fiscal policy, but austerity is not always stimulus.
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On August 07 2012 16:37 acker wrote:By "cutoff", I mean "numbers". You have some sort of framework where right-shifting IS policy is acceptable and isn't acceptable. So what economic cutoffs do you assign to which economic metrics to determine whether rightwards-shifting IS policy is acceptable or not, and why?
Ahh, ok, that's all you wanted to know? I'd say more or less just follow the Fed and push for full employment within the confines of keeping inflation moderate, more or less. I'm not sure there's a point to getting more specific than that.
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EPT
