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The fact that the US is borrowing from other nations today is largely irrelevant, if anything that puts the US in a better position. Debt is rather artificial in the current global financial system. The US gets products from the rest of the world and we give them pieces of paper and some how its the US that is on the wrong side of the deal.
LOL You're killing me with this. You're not even worth the time anymore.
Your theory is fine as far as it goes, but no theory can be pushed too far. That's how we got into this whole mess, by pushing economic theories that are plausible to a point beyond the point that the traffic can bear.
I really don't know what you are trying to say here, if the theory is correct then it can be pushed as much as you want. Much of what I'm saying is not even theoretical, its just how our monetary system works. But the rest is really run of the mill economic theory.
There is even a straight forward analogy for households. What will a responsible household do when its income drops? It will start using its savings to supplement its income. Naively, one may suggest that the government should "save money" like a household would so that they too could use it during hard times, but what exactly is the government going to save? Paper? There is nothing for the federal government to save in a fiat system...nothing at all. Federal deficit spending in a fiat monetary system is analogous to a household spending their savings during hard times. The federal government can replenish its savings by paying down the deficit in the future, but it can never pay it down to zero.
This crisis was not caused by economic theories running amok, it was caused by people across the board running amok.
The government grew the economy in the thirties not the free market so the growth was phony it didn't get us out of the slump.
You are just begging the question, why was the growth phony?
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Originally Posted by amirelez
The personal savings skyrocketed and the war made America rich. Production and Savings. We went from high unemployment to labor shortage. Woman and children had to fill gaps.
The war was based on massive government spending. If government spending on something as useless as war can solve problems why can't government spending on national infrastructure do the same? This is the important question, feel free to address it. Talking about "production and savings" just begs the question...production and savings increased BECAUSE the government started to spend like a mad man.
The savings rate in the 1940's was not particularly high in a historic sense, although it did increase a lot from the lows in the 1930's.
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Originally Posted by amirelez
If manufacturing does return to the U.S. why does it have to be cheap junk that's made?
Because that is what people like to buy.
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Originally Posted by amirelez
I don't know if you can be persuaded past this if a decade of government stimulus in japan and a decade long stimulus during the great depression doesn't work it means stimulus just won't work.
The stimulus during the depression most certainly worked, by the mid 1935's GDP was growing aggressive and unemployment dropped around 50% from the lows in 1933.
Japan did not pursue the same policies that the US did during the depression, they focused much more on monetary policies rather than fiscal policies. Quantitative easing is NOT fiscal stimulus. Furthermore suggesting that Japans policies were a failure because it had a "lost decade" is rather silly, they would have more than likely had a depression otherwise.
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Originally Posted by amirelez
The problem with Keynesians is they can cause bubbles and try to fix the crashes but could never see a crash coming.
You obviously know nothing about Keynesianism. Keynesian theory suggests that the government should "save" during the good times and spend the savings during the bad. But in a fiat system, there is nothing to save. All you can do is deficit spend and pay down the deficits during good times. Sounds like responsible financial management to me!
But tell me, which bubble was caused by Keynesians? Certainly not this one! All the people in power were free-market monetarists! Alan Greenspan and friends hated Keynes! After all Keynes was insightful and they were dogmatic dullards.
The government just doesn't have an endless supply of money but they actually depend on tax revenue at some point.
There is where most people go wrong in their thinking about macroeconomics, they think of the federal government as just another household. But its not just another household. The government actually does not need tax revenue at all, rather taxes are collected to keep the rate of inflation modest.
The government actually does have an endless supply of money, the FED can purchase treasuries all night and day. Of course doing this in excess will result in inflation, but what is "excess" depends on the current state of the economy.
You are just begging the question, why was the growth phony?
*It was just the government trying to manage the economy after they caused the depression. The growth wasn't done by the free market producing and saving. There is no doubt in my mind mind that even though the government tried to grow the economy the great depression didn't end because of it. As many have tried to point out to you here we still had the depression during the thirties.
The war was based on massive government spending. If government spending on something as useless as war can solve problems why can't government spending on national infrastructure do the same? This is the important question, feel free to address it. Talking about "production and savings" just begs the question...production and savings increased BECAUSE the government started to spend like a mad man.
* I feel like I keep repeating myself to you. The government spent money on means to produce. Government spent money on training to get people to work. You're willfully ignoring the fact that production and exporting was actually what got us out of the depression. Government spending only did good because it was the capital necessary to get us producing and on our feet. Exporting goods was what got us our income. red purple face blue face
The savings rate in the 1940's was not particularly high in a historic sense, although it did increase a lot from the lows in the 1930's.
*Savings increased because more were employed and the government could then borrow that savings.
Because that is what people like to buy.
* My point was that people don't like to buy cheap stuff they are forced to buy cheap stuff because that's all they can afford.
The stimulus during the depression most certainly worked, by the mid 1935's GDP was growing aggressive and unemployment dropped around 50% from the lows in 1933.
Japan did not pursue the same policies that the US did during the depression, they focused much more on monetary policies rather than fiscal policies. Quantitative easing is NOT fiscal stimulus. Furthermore suggesting that Japans policies were a failure because it had a "lost decade" is rather silly, they would have more than likely had a depression otherwise.
*GO reread history Japan did use monetary but also fiscal stimulus too. Today we are following Japan's mistakes in the 90's. My point was that no matter what stimulus they tried it still took them too long to recover. The great depression went on to last for a decade as well. Round and round we go. I think you're the only one I know that thinks the lost decade is a good thing. Yes Japan's monetary and fiscal policies were a bad move. If the government hadn't intervened there would have been a sharp downturn and recession/depression but it would have only lasted maybe a few years.
You obviously know nothing about Keynesianism. Keynesian theory suggests that the government should "save" during the good times and spend the savings during the bad. But in a fiat system, there is nothing to save. All you can do is deficit spend and pay down the deficits during good times. Sounds like responsible financial management to me!
But tell me, which bubble was caused by Keynesians? Certainly not this one! All the people in power were free-market monetarists! Alan Greenspan and friends hated Keynes! After all Keynes was insightful and they were dogmatic dullards.
*Keynesian theory fails because you can't take money out of the economy to go back in the economy. The government can only run deficits or cause inflation. YOu're robbing Peter to pay Peter.
There is where most people go wrong in their thinking about macroeconomics, they think of the federal government as just another household. But its not just another household. The government actually does not need tax revenue at all, rather taxes are collected to keep the rate of inflation modest.
The government actually does have an endless supply of money, the FED can purchase treasuries all night and day. Of course doing this in excess will result in inflation, but what is "excess" depends on the current state of the economy.
The government doesn't need taxes!?!? You are farther out there than I realized. Here then you admit that it will cause inflation. If government just printed money without any income from taxes our dollar wouldn't just be inflated it would be destroyed. You make no sense whatsoever in these lame arguments of yours. Everybody keeps trying to explain to you why you're wrong and you just cover your eyes when it starts to make sense.
Let's recap: The great depression didn't really last a decade. The economy was growing and doing great so let's just not call it depression anymore. The decade long stimulus in Japan was okay because it would have been worse if the government didn't jump in.
The government doesn't need taxes they only help stave off inflation. Yeah I would say that is some crazy talk man. You sir can't be helped.
Keynesian theory fails because you can't take money out of the economy to go back in the economy. The government can only run deficits or cause inflation. YOu're robbing Peter to pay Peter.
Keynesian theory is not different than households saving during the good times and spending savings during the bad. You are only "robbing" from future/past productivity, but the same can be said of a household using savings.
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Originally Posted by amirelez
Let's recap: The great depression didn't really last a decade. The economy was growing and doing great so let's just not call it depression anymore. The decade long stimulus in Japan was okay because it would have been worse if the government didn't jump in.
Look its not my fault you are not familiar with US history. The depression was two events and there was a clear recovery between 1933 and 1936 in any measure you like at (e.g., unemployment, GDP, industrial production, etc). The 1937 recession was directly related to anti-stimulus actions taken by the government to pay off the deficit. They did this because things greatly improved! But they ended the stimulus too soon.
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Originally Posted by amirelez
The government doesn't need taxes they only help stave off inflation.
Yes, and that is just a fact about our money system. Governments don't need to tax in fiat systems, taxing just acts to keep inflation down. Not sure what is so hard to understand about this, if you can create money why do you need tax revenue for your spending? You don't.
Keynesian theory is not different than households saving during the good times and spending savings during the bad. You are only "robbing" from future/past productivity, but the same can be said of a household using savings.
Any time the Keynesian theory has been tried by governments it was not by using savings for a rainy day. It was by inflation and debt.
Look its not my fault you are not familiar with US history. The depression was two events and there was a clear recovery between 1933 and 1936 in any measure you like at (e.g., unemployment, GDP, industrial production, etc). The 1937 recession was directly related to anti-stimulus actions taken by the government to pay off the deficit. They did this because things greatly improved! But they ended the stimulus too soon.
*I do know what happened in the thirties and I know what you're trying to say but I disagree with your interpretation. The government did spend money in WW2 but it was to produce and export which is what got us out of the depression. Roosevelt wanted to balance the budget so he eased stimulus and that's when it dipped. The government tried to ease the recession by stimulus but the fact is the recession had to come to clean things out. That's why all the stimulus by Hoover and then Roosevelt just made things worse turning a recession that had to come into a depression and it lasted a whole decade. It was artificial growth between those three years 33-36.
The government has to rely on the people to grow things not the other way around. The very fact that the 37 dip came and unemployment went back up proves my point. They tried to prime the pump and it failed. If three straight years of GDP growth and lowered unemployment but by no means low was not enough but producing and exporting for WW2 was enough to get out of the depression not just post some phony numbers you can see I'm on the right side of this just like the other people that have shown you the same thing.
Yes, and that is just a fact about our money system. Governments don't need to tax in fiat systems, taxing just acts to keep inflation down. Not sure what is so hard to understand about this, if you can create money why do you need tax revenue for your spending? You don't.
Inflation is a stealth tax. They aren't creating money they are destroying the purchasing power of our currency.
Last edited by amirelez; 11-03-2009 at 12:27 PM..
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You're killing me with this. You're not even worth the time anymore.
purple face 
blue face 
The decade long stimulus in Japan was okay because it would have been worse if the government didn't jump in. 
