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Old 02-28-2013, 07:21 AM
 
14,298 posts, read 7,651,517 times
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Quote:
Originally Posted by middle-aged mom View Post
Iceland has a population of about 300,000. It uses the Nordic Welfare model. No one in Icelanad is without healthcare. Fishing remains a primary industry. Iceland nationalized its banks. Iceland has no national defense or associated costs.

Income tax rates range from 37-46%.
Capital gains are taxed at 20%
VAT is 25.5%
Corporate tax is 20%, one of the lowest in Europe. The tax code does not favor large corporations with so called loopholes. So one has to compare effective tax rates.
I think his point was that Krugman was wrong about Iceland, and was barely able to admit it, and yet still thinks he is never wrong.
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Old 02-28-2013, 08:10 AM
 
Location: Texas
23,574 posts, read 9,828,057 times
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Quote:
Originally Posted by le roi View Post
What you're describing is not austerity, what you're describing is a budget surplus.
Austerity is the lack of excess

Quote:
Originally Posted by le roi View Post
fiscal austerity - In economics, austerity is when a government reduces its spending and/or increases user fees and taxes to pay back creditors.
AND by doing so stays out of the private sector. Which is why I mentioned Iceland and its lack of government intervention by denying the bailout. That's the part you are missing. (what you're describing is a budget surplus.)
btw Which country has spent less than it has taken in?

Quote:
Originally Posted by le roi View Post
So use a different measure if you like. Go ahead, make your case that the U.S. economy is experiencing runaway inflation that would require austerity. I'm waiting.
Make your case why in the world would that be THE reason to require austerity? Like I said getting government out of the private sector by lowering spending. Less spending, less influence.
btw To cure runaway inflation you raise interest rates. Inflation is the money supply. Remember Volcker?
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Old 02-28-2013, 08:28 AM
 
Location: Texas
23,574 posts, read 9,828,057 times
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Quote:
Originally Posted by EinsteinsGhost View Post
Austerity is about spending cuts, not necessarily bringing spending below revenue although that is the idea believed by many to be the only way (or else, you could argue that increasing revenue to surpass spending is also austerity).
yes it is about spending less than you take in. That is what austere means.
And no it is not just about increasing revenue to surpass spending. You missed the other part of the equation. Reducing governments effects in the economy. You do that by lowering spending, not by just having it lower than revenue.


Quote:
Originally Posted by EinsteinsGhost View Post
A myth.
There is no myth. Iceland didn't do the bailout, period. One can argue they didn't go fully with austerity.

Last edited by Loveshiscountry; 02-28-2013 at 08:58 AM..
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Old 02-28-2013, 08:31 AM
 
Location: Texas
23,574 posts, read 9,828,057 times
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Quote:
Originally Posted by Finn_Jarber View Post
No, that is not what an austrity measure is. That would be the goal of successful austerity measures. If the goal is not reached, it does not mean austrity measures were not taken, it only means the measures did not accomplish what they were hoped to accomlish. As a matter many people argue they usually DO NOT accomplish their goals. In the worst case they can have the exact opposite effect.
Who says that? The ones who thought manipulating the free market in housing would help the economy?

Quote:
Originally Posted by Finn_Jarber View Post
If the austerity triggers lay-off and unemployment, the government will end up spending more money to support the unemployed, and it can offset any savings coming from the austerity cuts. Win some, lose some, but are you winning more than you are losing? That's the question.
Government spends more when they do things like allow unemployment benefits for 99 weeks. The idea is to not delay the fall or prolong it, hit bottom and get it over with.


Quote:
Originally Posted by Finn_Jarber View Post
Are you seriously trying to argue UK has not taken austerity measures when they just eliminated 200 government agencies?
Like I said which you ignore. They haven't spent less than they have taken in. They have allowed bailouts. They have not lessen the impact of the public sectors influence in trying to fix the economy.
Eliminated 200? or just cut jobs?

Last edited by Loveshiscountry; 02-28-2013 at 08:41 AM..
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Old 02-28-2013, 08:51 AM
 
Location: Texas
23,574 posts, read 9,828,057 times
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Quote:
Originally Posted by gwynedd1 View Post
Define austerity. That , as it typical in this forum, is your problem. Most countries after 2008 were in a state of financial austerity.
The problem is YOURS. A state of austerity? lol really? Yea lets see all the examples of decreased government and less government in the economy of all those places.
QE 1,2,3, (more to come?) Is that austere or excess?

Quote:
Originally Posted by gwynedd1 View Post
Because you make up what you think it is and then tell people they are wrong.
And because you say without using examples people should take YOUR word???


Quote:
Originally Posted by gwynedd1 View Post
Austerity Definition | Investopedia
A state of reduced spending and increased frugality in the financial sector. Austerity measures generally refer to the measures taken by governments to reduce expenditures in an attempt to shrink their growing budget deficits.
So what most people are talking about is that government did little to counteract financial austerity from the death in bank credit. So a person may claim that fiscal austerity has not dropped but it is not the entire truth.
Austere - deny excess, spend less than you save. Since when are bailouts an austere measure? Where did that money come from? Revenue?

Quote:
Originally Posted by gwynedd1 View Post
If you actually wanted to be insightful, you would note that those prices are rising because assets prices are rising relative to wages. Its not hard to understand when you know banks lend against fixed assets and not capital production. However no one is taking that money to build capital. They just recycle it back into more rent seeking like a REIT reinvesting its dividend into more shares..
Asset prices are rising because the dollar is being debased and losing purchasing price. That is what happens when you print money. Does anyone want to be paid with a coin that is 80 percent gold and 20 percent garbage metals or do they want the 100 percent gold coin? Talk about your lack of insight.
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Old 02-28-2013, 08:52 AM
 
Location: Dallas, TX
31,777 posts, read 23,848,828 times
Reputation: 12105
Quote:
Originally Posted by Loveshiscountry View Post
yes it is about spending less than you take in. That is what austere means.
No! Austere measures are about harsh reductions, nothing to do with spending. You can have austere measures regardless of the revenue versus spending levels. But, according to you, if revenue increases 10% and spending also increases 10%, as long as revenue remains higher, we're still following austerity. Get the premise of your argument right.

Quote:
And no it is not just about increasing revenue to surpass spending.
According to your argument: "spending less than you take in, is austerity", is that.

[quote]Reducing governments effects in the economy. You do that by lowering spending, not by just having it lower than revenue.[quote]
That isn't the idea being challenged, but the myth that your ideas promote, that if we lay off 2.2 million government employees tomorrow, the economy will take off. I guess, that also explains why you right wingers want to disown sequestration (which really came about as a push for cutting spending).

Quote:
There is no myth. Iceland didn't do the bailout, period.
"In this heroic story that’s going around in the world, Iceland didn’t let the debt of private banks migrate from the private to the public sector. I wish this was true but it isn’t. Not quite. Quite some myth-making here"

More:
"Just before Landsbanki collapsed there was the last helping. This kept VBS alive until the following spring when the Government propped it up with ISK26bn (€16.2m), which prolonged its life until early 2010. Together with support to Saga Capital, the Icelandic Government helped these two banks with almost 3% of GDP 2009.
:
In the Icelandic IMF programme, ISK25bn (€15.5m) was set aside to fix the building societies. Out of ten remaining societies, five have been saved by the state. If the cost of saving these banks and a few others are all added it, the amount is over ISK70bn (€43.6m). By adding the cost of saving Sjova, an insurance company, and ILS, the state mortgage company, this bail-out sum rises to ISK118bn (€73.6m) – and that amounts to 7,7% of GDP, not a trivial sum."


The article spells out the Icelandic version of the bailouts for you.
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Old 02-28-2013, 08:56 AM
 
Location: Miami, FL
57,930 posts, read 31,464,064 times
Reputation: 9297
Quote:
Originally Posted by Loveshiscountry View Post
Like I said which you ignore. They haven't spent less than they have taken in. They have allowed bailouts. They have not lessen the impact of the public sectors influence in trying to fix the economy. Eliminated 200? or just cut jobs?
You don't understand what an austerity measure means, so there is no point in continuing this.
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Old 02-28-2013, 09:08 AM
 
Location: Long Island, NY
19,700 posts, read 10,909,602 times
Reputation: 5595
Quote:
Originally Posted by Roadking2003 View Post
Ah, the history revisionists.

The study that you cite has been discredited and debunked. I discredited it myself in 2011 on CD. The evidence is indisputable that the new deal policies of Franklin Roosevelt reversed the downward trend in the falling economy.

From 1929 until 1933, when FDR's policies went into effect, GDP fell to half. In addition, unemployment was at least 25%, perhaps as much as 40%, based upon the methods used to compute unemployment. Once the new deal policies were enacted, the economy grew and it wasn't until 1937, when FDR took the advice of the Republicans and took his foot off the gas of the new deal, did unemployment resume. But the next year when FDR restarted the new deal, unemployment fell once again.

What Republicans and conservatives are trying to do is is use revisionist history to dispute evidence that is indisputable.
Quote:
Originally Posted by BigJon3475 View Post
But there are some differences from Keynes theory and what actually occurred. The shortage of labor and consumer goods wasn't what drove the economy. It was the government selling that war materiel to allies. The civilians in America couldn't buy goods and weren't even getting raises (hence the pent up demand) and the industrial capacity was built up to supply bombs, ships, planes, etc. When it switched over you had large numbers of labor disputes and the passage of laws like right-to-work and work-at-will which was left up to the states because industry couldn't supply goods fast enough to the American consumers.

Anyways. I agree with your post for the most part but here's a graph that puts Keynes back and leaves him utterly distressed. When the injection of money via whatever means disappears you end up in the same place you were before but with a larger debt and the same unemployment. In other words, if you're not destroying your competition with bombs, war ships, air planes and nuclear bombs, all you did was blow your load and you still left her unsatisfied.



And your long term trend and why you'll never be able to spend the money you'll need:



You wanna guess which way your trend continues?

So, you're going to spend your way out of that? No, I didn't think so. Spending massive amounts of money now is not the same as it was in World War II and quiet frankly I don't think it will ever work that way again seeing as how war spending like that won't be the same in a nuclear age. It won't have the same effects. You won't end up with the same results.
Let's look at your graphs but use the post war period, stopping in 1970. As one can see, during the 1930s, the New Deal policies skyrocketed GNP, apart from what our right-wing adversaries contend. The War contributed greatly to GNP gains. After the war growth gained 5-10% except in recession years. That's rather respectable.



Now let's take your other graph, which raises red flags because of the narrow time period -- Apr. 1948 to Oct. 1949. It looks like this graph was designed to tell a misleading story. Why do you think unemployment rose from Jan to Oct, 1949? There was a recession.



Let's expand that timeline too:



What have we learned? Unemployment was as low as 2.5% in the early 1950s (prob. due to the Korean War) and got as high as 7.5% during recessions but mainly was in the 3-4% range otherwise.
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Old 02-28-2013, 09:40 AM
 
Location: Long Island, NY
19,700 posts, read 10,909,602 times
Reputation: 5595
Quote:
Originally Posted by OICU812 View Post
I think his point was that Krugman was wrong about Iceland, and was barely able to admit it, and yet still thinks he is never wrong.
Where was Krugman wrong about Iceland? This is the first thing Krugman wrote about an Iceland bailout:
The $850 billion bailout - NYTimes.com

Quote:
Iceland has just bailed out Glitnir Bank, with the government putting in 600 million euros — $859 million — in return for a 75% stake.

Iceland has only a bit more than 300,000 people, about 1/1000th the population of the United States. So this was, per capita, the equivalent of an $850 billion bailout here.

Notice, by the way, that it was an equity injection rather than a purchase of bad debt; I approve.
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Old 02-28-2013, 09:55 AM
 
Location: Texas
23,574 posts, read 9,828,057 times
Reputation: 5246
Quote:
Originally Posted by MTAtech View Post
Ah, the history revisionists.

The study that you cite has been discredited and debunked. I discredited it myself in 2011 on CD. The evidence is indisputable that the new deal policies of Franklin Roosevelt reversed the downward trend in the falling economy.
You debunked nothing. A V shape recovery like gee that explains it. Cut spending and taxes 40 percent in 2 years time and we recovered. When did unemployment ever drop that fast? From 12 to less than 4 in two years time?
You used GDP and CPI two worthless numbers that in no way take into account quality.
At least this time you left CPI out in this post? At least you're learning, something.

Quote:
Originally Posted by MTAtech View Post
From 1929 until 1933, when FDR's policies went into effect, GDP fell to half. In addition, unemployment was at least 25%, perhaps as much as 40%, based upon the methods used to compute unemployment. Once the new deal policies were enacted, the economy grew and it wasn't until 1937, when FDR took the advice of the Republicans and took his foot off the gas of the new deal, did unemployment resume. But the next year when FDR restarted the new deal, unemployment fell once again.

What Republicans and conservatives are trying to do is is use revisionist history to dispute evidence that is indisputable.

Let's look at your graphs but use the post war period, stopping in 1970. As one can see, during the 1930s, the New Deal policies skyrocketed GNP, apart from what our right-wing adversaries contend. The War contributed greatly to GNP gains. After the war growth gained 5-10% except in recession years. That's rather respectable.



Now let's take your other graph, which raises red flags because of the narrow time period -- Apr. 1948 to Oct. 1949. It looks like this graph was designed to tell a misleading story. Why do you think unemployment rose from Jan to Oct, 1949? There was a recession.



Let's expand that timeline too:



What have we learned? Unemployment was as low as 2.5% in the early 1950s (prob. due to the Korean War) and got as high as 7.5% during recessions but mainly was in the 3-4% range otherwise.
In late 1936 and 1937 FDR doubled down on his horrific policies. He set wages and prices again. The Reserves on banks were raised twice at a time when money was need in the economy. SS payments were kicking in, less money for companies to use to hire people. Taxes on undistributed profits for the first time so now companies couldn't retain employees or use the money in research and development which we know is an intelligent economic move during down times.

Horrific unemployment numbers and economy for 10 years and that's helping us?
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