Conservatives have no ideas what to do about recessions

POSTED BY: kpo
UPDATED: Monday, March 9, 2026 17:30
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FREMDFIRMA

Saturday, January 4, 2014 12:11 PM

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Originally posted by M52NICKERSON:
Call it what you want, Economics/Usury it is still hypocritical to say it is bullshit and then post an article talking about using it as control.

As a "Science" it *is* complete bullshit, it's a THEORY, and a theory, especially one which fails any scientific attempt to support it, is not SCIENCE - it's just an excuse, is what it is.
And I shouldn't have to even explain that to you, you're just being a jackass cause I outed you.

-F

MAGONSDAUGHTER

Saturday, January 4, 2014 4:07 PM

Wow, M52nickerson is Dreamtrove?

GEEZER

Saturday, January 4, 2014 7:36 PM

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Originally posted by SIGNYM:
GEEZER, before you get all apoplectic about Federal debt, and before everyone gets focused on the government, I want to re-introduce something that every seems to have forgotten.

As far as I can tell, the largest inflator of USD is the investment banks. They have - literally- 10 times as much money in hedge funds as there are assets throughout the entire world. Domestic banks, too, have a license to "print money"- by the rules of the FDIC they are allowed to loan out approximately 10X as much money as they actually have on hand.

Since almost ALL money exists in one bank account or another, and banks are free (under current laws) to loan out far more than they have on-hand, banks have proved to be very capable of expanding the US money supply by a factor of five- or more. All of this non-government money-printing tends to go under the radar.

This excessive speculative lending (on real estate, and then stocks in 1929; and on subprime mortgages in 2000-2007) inflated the money supply, and that inflation completely bypassed government spending controls bc the government wasn't even part of it.

If you want to stop bubbles before they start, you NEED to require that banks have a LOT MORE money on-hand as part of their lending practices, and also that they define their asset classes in something other than fantasmic terms (how do you value your loan or bond portfolio when their prices are gyrating? "Mark to market"? "Mark to maturity"?)

Anyway, will be busy today. Just wanted to point out that the Federal budget is not the main money-supply-expander, it's the banks.

But if you require banks to have a lot of money on hand, doesn't that take that money out of circulation, thus decreasing the 'blood flow' you suggest is needed for an economy to work?

"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

GEEZER

Saturday, January 4, 2014 7:47 PM

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Originally posted by M52NICKERSON:
Deficits would get paid down when the economy is doing well. I covered that already. Please try and follow along. Second you really need to understand that governments using their own issued fiat currency can't go insolvent.

The last time the national debt went down was 1957. I think there were periods since then when the economy was doing well. So apparently the debt doesn't get paid down.

http://www.treasurydirect.gov/govt/reports/pd/histdebt/histdebt_histo4
.htm

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Originally posted by Geezer:
Not sure I see much in these to support "Had government spending been lower, and taxes stayed high the economy of the 20's may not have been as roaring but it might have helped prevent the Great Depression."

Okay I will spoon feed you. Look at the Specific theories of cause section. It talks about how lending increased as interest rates fell. They fell because people were paying off thier debts and the banks needed to make loans more appealing. If the economy had not grown as fast as it had in the twenty loans would have stayed more stable as people would not have paid down thier debts and banks would not have looked to lower interest rates.

You also had productivity shock which again stemmed from the economic growth in the twenty. The heavy flow of money in the twenty and the easy of finding investors ment that production skyrocketed. That caused a flood of stock and a fall in prices.

Look at an of the explantions you want and will find that they all have one thing in common, a tie into the rapid growth of the economy of the twenties.

So you're saying that the government should have raised taxes at a time when government spending was going down, just so people would not have enough money to pay off their loans?

Maybe you and SignyM should discuss whether the flow of money is a good or bad thing.

"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

GEEZER

Saturday, January 4, 2014 8:23 PM

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Originally posted by SIGNYM:
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The reason I keep bringing this up is that you are more likely to have a good-sized war than you are to implement the spending programs you propose.
Well, that is your supposition, but not our proposal. So don't keep saying that KPO and I think that was is the answer. War is YOUR answer.

As the only example you or KPO can give of the Keynesian cure working is WWII, I think it's a pretty well-founded supposition.

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AFA getting stimulus spending thru, I think a lot of ppl already recognize that much of our infrastructure is well past its safe lifespan, that our health care system is a clusterfuck, that a lot of big jobs need doing. Where they are stymied is not at the level of "the people" (because polls show that people support spending on specific programs) but at the level of "Congress".

Yep. When you ask people if they support spending, they do until told that they will be providing the money spent. Then they vote out the congressperson who is spending their money.

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Not sure if you know this, but the wealthy are "investing" their money either in already-produced unique items (diamonds, gold, Bitcoins, fine art) or in futures/ hedge funds. This is part of a complex discussion about what happens to "savings", already addressed by Keynes and other economists. -signy

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Anecdotal. Cites? -geezer

Oh, this is all over the economic news. Chinese wealthy are buying a crapload of gold, wine, art, vehicles, etc. The EU wealthy are buying up gold, art, diamonds, mansions. The mix varies from year to year (one year its art, the next year its Bitcoin) but speculation is definitely the ongoing game:
www.ml.com/media/114235.pdf

The ml.com piece shows total worth of the high wealth individuals at $42.7 trillion. They don't say how much if spent on "investments of passion", but When they talk about millions spent on art, etc., that leaves a lot of $42.7 trillion that's not.

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Didn't work in Smoot-Hawley. Any reason to expect different now?
Because in an increasingly resource-poor world, we got the goods- if we can manage our farms, water supplies, fisheries, to be sustainable. The only other nations that match our resource wealth are Russia, Brazil, and (maybe) Canada.

Quite a bit or resource, much of it undeveloped, in Africa and other South American countries as well. China is moving to get raw materials out of Africa, as well as places like Afghanistan. Also populations in many places who will work for a lot less than folks here and feel like they're making a good living. Also, you will be playing tariff wars with countries with a command economy and leaders who don't care about the effect of their bans on buying and selling on the people, as long as their political aims are advanced.

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Geezer, son, this isn't rocket science. If people have more $ in-hand, they will be in the market to buy.

But if they have more money in hand because they are getting higher wages, then the price of the things they are making and buying will be higher (even if it's made overseas, since your tariffs will increase the price). Therefore they can buy less of it. I suppose that there might be a balance point at which an increase in wages is larger than the increase in price, but finding it will be rocket science.

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So nothing. Just a comment.-geezer
So, you have no problem with increased taxes. Good to know.

Depends on how it's done.

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And finally- bringing up the point that you didn't address -- how do you feel about 1% of the population taking in more $ than the bottom 50%? Are you aghast, do you see it as a problem, or are you OK with it?

To keep on the subject of cures for recession, I don't care for the bailouts of banks, etc. by the Bush

GEEZER

Saturday, January 4, 2014 8:36 PM

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Originally posted by kpo:
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Yep. Need a good war to make Keynes work.

No, Keynesian stimulus always works. If the spending is small, the effect will be small. If the spending is big, the effect will be big. A big stimulus is better than a small stimulus. But a small stimulus is better than no stimulus at all. If WWII had not happened and Roosevelt had spent all that money on infrastructure it would have worked EVEN BETTER. He could've spent a fraction as much, and it would've worked better.

But Roosevelt couldn't sell spending on the scale required before WWII. That's my point. There is no example of the Keynesian cure actually succeeding in ending a depression other than WWII.

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Apparently there are no policies (short of world war) that are liberal enough for you

World war is a liberal policy... another one for your anti-liberal scrapbook.

Hey. You're the one who criticized Roosevelt for not going far enough down the Keynesian liberal road. As noted, the only success story you can show for Keynes is WWII.

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Where did I say there was a single factor causing the GD?

Let me rephrase: You were the one who made out that only one type of policy was tried during the GD ('10 years of liberal policies').

Let me rephrase as well: 10 years of mostly liberal policies.

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Graphs above show national debt going up during the 1929-1939 period, so revenues did not increase at the same rate as spending.

You're forgetting GDP again. Debt was steady as a proportion of GDP.

Nope. As noted above:

"This graph shows Federal spending as a percent of GDP went from less than 4% in 1929 to almost 11% in 1936. Doesn't look like spending was being braked much to me."

http://www.usgovernmentdebt.us/spending_chart_1920_1940USp_15s1li011mc
n_F0f_US_Federal_Spending

"When your heart breaks, you choose what to fill the cracks with. Love or hate. But hate won't ever heal. Only love can do that."

SIGNYM

Saturday, January 4, 2014 9:54 PM

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The reason I keep bringing this up is that you are more likely to have a good-sized war than you are to implement the spending programs you propose.-geezer

Well, that is your supposition, but not our proposal. So don't keep saying that KPO and I think that was is the answer. War is YOUR answer. -signy

As the only example you or KPO can give of the Keynesian cure working is WWII, I think it's a pretty well-founded supposition.-geezer

Not true. Keynesian spending stabilized and began to reverse the plunge that was the Great Depression. And redistributive spending (Social Security, etc) was followed for many years AFTER WWII, and we had a robust economy.

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AFA getting stimulus spending thru, I think a lot of ppl already recognize that much of our infrastructure is well past its safe lifespan, that our health care system is a clusterfuck, that a lot of big jobs need doing. Where they are stymied is not at the level of "the people" (because polls show that people support spending on specific programs) but at the level of "Congress". -signy

Yep. When you ask people if they support spending, they do until told that they will be providing the money spent. Then they vote out the congressperson who is spending their money.-geezer

Not really. People have consistently polled for a tax on the wealthy, it would be THOSE (wealthy) people who would by paying for the spending.

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Not sure if you know this, but the wealthy are "investing" their money either in already-produced unique items (diamonds, gold, Bitcoins, fine art) or in futures/ hedge funds. This is part of a complex discussion about what happens to "savings", already addressed by Keynes and other economists. -signy

Anecdotal. Cites? -geezer

Oh, this is all over the economic news. Chinese wealthy are buying a crapload of gold, wine, art, vehicles, etc. The EU wealthy are buying up gold, art, diamonds, mansions. The mix varies from year to year (one year its art, the next year its Bitcoin) but speculation is definitely the ongoing game: http://www.ml.com/media/114235.pdf-signy

The ml.com piece shows total worth of the high wealth individuals at $42.7 trillion. They don't say how much if spent on "investments of passion", but When they talk about millions spent on art, etc., that leaves a lot of $42.7 trillion that's not.-geezer

But doesn't address the trillions spent in hedge funds, which are simply bets made in the direction of future indexes. Sort of llike the housing bubble was bets made in the direction of housing price futures. And, as I mentioned before, there is roughly 10 TIMES the total world GDP placed in hedge funds at the moment. That's a lot of speculation!

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Didn't work in Smoot-Hawley. Any reason to expect different now? -geezer

Because in an increasingly resource-poor world, we got the goods- if we can manage our farms, water supplies, fisheries, [ETA forests] to be sustainable. The only other nations that match our resource wealth are Russia, Brazil, and (maybe) Canada. -signy

Quite a bit or resource, much of it undeveloped, in Africa and other South American countries as well. China is moving to get raw materials out of Africa, as well as places like Afghanistan. Also populations in many places who will work for a lot less than folks here and feel like they're making a good living. Also, you will be playing tariff wars with countries with a command economy and leaders who don't care about the effect of their bans on buying and selling on the people, as long as their political aims are advanced.-geezer

Except for tantalum, chromium, and titanium (and we can trade for those) we really don't NEED Africa, and Africa is being flayed alive for resources. Whatever is there isn't doing Africans any good (except the few corrupt leaders at the top) and isn't developing their economy. So as far as being a unified force, Africa is a non-entity.

And a

M52NICKERSON

Saturday, January 4, 2014 11:29 PM

Quote:
Originally posted by Geezer:
The last time the national debt went down was 1957. I think there were periods since then when the economy was doing well. So apparently the debt doesn't get paid down.

That is because the government does not reduce spending during those times. That was explained to you before as well.

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Originally posted by Geezer:So you're saying that the government should have raised taxes at a time when government spending was going down, just so people would not have enough money to pay off their loans?

Maybe you and SignyM should discuss whether the flow of money is a good or bad thing.

Yes that is what I'm saying. During good economic times the government should reduce spending and raise taxes which take money out of the economy, or slows the flow of money. That will slow economic growth which helps prevent massive bubbles, sharply falling interest rates and other such things that can lead to recessions.

Keynesian economics is about using government spending as a counter weight to the economy. Government spending should go up when the economy enters a recession and it should go down when the economy is in a boom. Taxes should be lowered in a recession and rise in an boom.

This is not hard.

Yes money flowing is a good thing. To much flow can be bad as can to little.

I do not fear God, I fear the ignorance of man.

KPO

Sunday, January 5, 2014 7:25 PM

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You're forgetting GDP again. Debt was steady as a proportion of GDP.

Nope.

I'm sorry my friend, but that is indisputable fact. Do I have to show the debt/GDP graph again?

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This graph shows Federal spending as a percent of GDP

Yes spending went up. Yes debt went up. But two other things ALSO went up: 1) revenue and 2) GDP. When you take all of these factors into account, and don't omit any of them for convenience, then debt is steady as a proportion of GDP from around 1933. Which means the US's debt burden was not growing.

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As noted, the only success story you can show for Keynes is WWII.

I sometimes forget how insulated American conservatives are from reality. Here's the CBO's verdict on Obama's ARRA stimulus:

"CBO estimates that ARRA’s policies had the following effects in the second quarter of calendar year 2011 compared with what would have occurred otherwise:

* They raised real (inflation-adjusted) gross domestic product by between 0.8 percent and 2.5 percent,
* Lowered the unemployment rate by between 0.5 percentage points and 1.6 percentage points,
* Increased the number of people employed by between 1.0 million and 2.9 million, and
* Increased the number of full-time-equivalent (FTE) jobs by 1.4 million to 4.0 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers)."

http://www.cbo.gov/publication/42216

Another recent case, Japan's 2013 stimulus spending, which an IMF director commented on in October:

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As we have stressed in this year’s Article IV Report, we at the IMF believe that the new policy framework provides a unique opportunity for Japan to end decades-long deflation and sluggish growth, and reverse the rise of public debt.

Japan has already made progress in this direction. Here, I would like to list a few achievements:

The economy grew strongly in the first half of this year, driven by sizeable stimulus spending, robust private consumption and a rise in exports.

Headline inflation rose substantially in recent months, and several indicators also point to an in increase in long-term inflation expectations.

http://www.imf.org/external/np/speeches/2013/102913.htm

You also have all the evidence of austerity that has been carried out in Europe (and the US) since 2010. Or for that matter, in the US in 1937. Austerity is the opposite of stimulus, and predictably, it has the opposite effect:

It's not personal. It's just war.

GEEZER

Sunday, January 5, 2014 10:24 PM

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Originally posted by SIGNYM:
Not true. Keynesian spending stabilized and began to reverse the plunge that was the Great Depression. And redistributive spending (Social Security, etc) was followed for many years AFTER WWII, and we had a robust economy.

Keynesian spending might have started to reverse the Great Depression, after four to seven years, depending on if you consider Hoover's approach Keynesian (I do), but that reversal wasn't sustainable, because FDR couldn't sell the country on continued spending. Then again, Hayak and Rothbard believe that FDR's interventionist policy actually lengthened the depression by keeping the market from making necessary corrections.

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Not really. People have consistently polled for a tax on the wealthy, it would be THOSE (wealthy) people who would by paying for the spending.

Yet they don't elect representatives who will increase taxes on the wealthy - or much of anybody - to the extent needed to support the spending you think Keynesian recovery requires.

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But doesn't address the trillions spent in hedge funds, which are simply bets made in the direction of future indexes. Sort of llike the housing bubble was bets made in the direction of housing price futures. And, as I mentioned before, there is roughly 10 TIMES the total world GDP placed in hedge funds at the moment. That's a lot of speculation!

But it's not all rich folks doing the speculation. Unions, pension funds, aggregations of individuals, etc.

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Except for tantalum, chromium, and titanium (and we can trade for those) we really don't NEED Africa, and Africa is being flayed alive for resources. Whatever is there isn't doing Africans any good (except the few corrupt leaders at the top) and isn't developing their economy. So as far as being a unified force, Africa is a non-entity.

But Africa's resources can be obtained more cheaply than the same things here in the U.S. The kleptocracies there, often in cahoots with the Chinese, don't care about renewable resources, or environmental or worker safety. If the Chinese can get the raw materials cheaply from Africa and manufacture cheaply in China, they can undercut the U.S. on the world market - especially if we're dealing with governments of countries already stung by our tariffs.

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That is why I would phase in the increased wages AND increased tariffs. I'm fully aware that you can't rebuild a manufacturing economy in one year. It's OK if we miss out on iPhones and TVs for a couple of years, but crucial industries need time to be built up: oil, energy conservation, renewable power, steel, fabric, chip fabs etc.

Then you have an issue of pretty much forcing folks to pay higher prices for domestic goods, but for several years don't have the domestic goods on the shelves yet. So how does money get spent to stay in circulation?

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The whole point of Keynesian economics was to increase aggregate demand. Demand FAILED because the purchasing power of the vast majority of people had been whittled down beyond the point which would sustain an economy.

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Take your mind off Mises or Keynes and the value of currency, and consider economies. An economy is the production and consumption of goods and services. Money merely facilitates that exchange. All else (currency value, stock prices, hedge funds, house prices, debt load) is meaningless except insofar as it encourages or discourages production and consumption now and in the future.

A stable economy is one where production and consumption are equal, and will remain so for the foreseeable future. The inability to maintain a steady market... ie a steady level of consumption or demand (however you want to frame it) ... has always been capitalism's problem.

Guten tag, Herr Marx.

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Finally, in terms of the USA "going it alone" by creating ta

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