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Wrong. Keynesian only works when you arent taking money out of the economy to fund it. Thats why your plans FAILED. If government pumps $1T into the economy and then has to borrow $1T to FUND it.. the net increase into the economy is ZERO.
That's wrong for several reasons. That claim can be true, if the economy is overheated and crowds out private borrowers. In the case of a liquidity trap, which lacks demand, government borrowing does not crowd out demand nor raise interest rates.
Then, there is the fallacy on it's own. Trillions of dollars in savings are sitting idle in the economy (that's why back interest rates are near zero.) Hence, if the government borrows this idle money and spends it, that creates demand in the economy, with a notable multiplier effect.
MTA, the government can't borrow enough money right now, so they print it, which does nothing but deflate away wealth. What are your thoughts on that?
The government CAN borrow as much as it needs, as evident that investors in government bonds are fetching record low rates. The Fed doesn't print money, it adds money to bank reserves. The Treasury is responsible to print money.
How are we deflating away wealth? Here is the money supply, which has triples, against prices, which barely moved:
The government CAN borrow as much as it needs, as evident that investors in government bonds are fetching record low rates. The Fed doesn't print money, it adds money to bank reserves. The Treasury is responsible to print money.
How are we deflating away wealth? Here is the money supply, which has triples, against prices, which barely moved:
The Treasury does not print money. The Treasury borrows money via the sale of Treasury bills/notes/bonds.
The Fed can increase/decrease the money supply, not the Treasury.
That's wrong for several reasons. That claim can be true, if the economy is overheated and crowds out private borrowers. In the case of a liquidity trap, which lacks demand, government borrowing does not crowd out demand nor raise interest rates.
What the hell does that have to do with anything I said? Thats right.. nothing.. In addition to that, its completely false. Government borrowing DOES crowd out borrowing. When you have $1M to invest, and you buy T bills with it, this means $1M isnt entering the economy
Quote:
Originally Posted by MTAtech
Then, there is the fallacy on it's own. Trillions of dollars in savings are sitting idle in the economy (that's why back interest rates are near zero.) Hence, if the government borrows this idle money and spends it, that creates demand in the economy, with a notable multiplier effect.
Wrong.. interest rates are near zero because there isnt anywhere else to put the money.. Government is crowding out investing and investors are not willing to take a risk in an idle economy so they go for the guarantee. Rich peoples strategies involves preservation of capital, not risk it all and go broke.
How are we deflating away wealth? Here is the money supply, which has triples, against prices, which barely moved:
The reason prices dont move is because they increase the money supply, and then never allow it to enter into circulation. If its not entering circulation, its not stimulating the economy
The government CAN borrow as much as it needs, as evident that investors in government bonds are fetching record low rates. The Fed doesn't print money, it adds money to bank reserves. The Treasury is responsible to print money.
How are we deflating away wealth? Here is the money supply, which has triples, against prices, which barely moved:
Who's buying the debt? The Fed. Debt monetization. QE I and II come to mind. An indirect purchase is still a purchase in my mind.
To be fair, only Congress can print money and only Congress can create debt.
Trillions on the sideline earning zero and the Fed has to buy its own debt. Why?
Last edited by TrapperJohn; 12-23-2011 at 09:30 PM..
This will end up a permanent cut, as it has become politically impossible to let temporary tax cuts of any type expire. The point was by buying 2 months, it allows time to forumlate extending them for a year, than 2, than 3...
$2,000????? What? Are you saying that we will all see $250/week more in our paychecks???? LMAO... Where in the world did you get those numbers? From Obama's calculator?
Don't be hard on him. He voted the village idiot into the whitehouse. That should sow some seeds of pitty ROTFLMAO
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In addition to that, its completely false. Government borrowing DOES crowd out borrowing. When you have $1M to invest, and you buy T bills with it, this means $1M isnt entering the economy 
What exactly IS the point of a two-month extension of the Payroll tax cut?
