Quote:
Originally Posted by knowledgeiskey
Newsflash: Austerity is the last thing a government should do during an economic slump.
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Quote:
Originally Posted by knowledgeiskey
Keynesian economics is what got the US out of the Great Depression.
Austerity has never worked.
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That would be indicative of one-dimensional linear thinking that fails to exercise foresight. And it erroneously assumes that all economic slumps have the exact same root causes (they do not).
It was WW II that got you out of the Great Depression, not spending.
You failed to read and understand the Medicare annual report which recommended an
immediate tax increase of 3.7% or cutting Medicare spending by 17%.
You fail to understand that Congress has done neither of the things Medicare recommended.
Because you failed to read and understand the Medicare annual report, you failed to note that Medicare did not meet its revenue projections for 2011.
Because you failed to read and understand the Medicare annual report, you failed to note that Medicare will not meet its revenue projections for 2012, or for any of the years between 2012 and 2024, when Medicare believes the HI Trust Fund will be totally exhausted and Medicare will completely collapse with forced cuts.
You failed to consider the impact of a tax hike to 3.7% for Medicare on the economy.
You failed to consider the impact of a 17% reduction in Medicare on the economy. You failed to consider that many might shift disposable income to additional insurance coverage in light of Medicare spending cuts, and the impact that would have on the economy.
You failed to read and understand the Social Security annual report. You failed to understand that Social Security did not meet its revenue projections for 2011, will not meet its revenue projections for 2012, and will not meet any of its annual projects through 2020. You failed to consider that short-fall of at least $1.7 TRILLION will occur.
You failed to consider how eliminating the FICA tax holiday will impact the economy. Because you didn't read the Social Security report or understand it, you failed to consider the negative economic impacts of removing the cap. You also failed to consider the negative economic impacts caused by raising the FICA rate incrementally from 6.2% to 16.4%.
You also failed to consider that continued spending leads to greater National Debt, and that you can fund your programs if and only if investors on Earth are willing to purchase your debt. You failed to consider that the world economy can only absorb
X amount of US Dollars and that once this amount is absorbed, Real Inflation begins to drive up wages and prices.
You ignored the ramifications of both your National Debt exceeding your GDP, and your public debt, which is fast approaching your GDP.
The events that led to the Great Depression are based on a set of facts that are dissimilar to the events that led to the recessions 1959-1961, 1978-1985, 2000 and 2008. And all of those recessions had different root causes.
Was the US plagued by Real Inflation running 15%-25% annually prior to the 2008 Recession? No, but that was the case of the Great Depression. Real Inflation set in starting in 1916 very slowly due to government spending during the Spanish-American War and the subsequent Panics in the first decade of the 1900s. Real Inflation increased dramatically in 1920 due to spending during the WW I period. That Real Inflation drove up housing prices which actually caused a collapse of the housing market in 1925. After the collapse of the housing market, Real Inflation started to subside and was nominal (<5%) by 1928. Did a tax increase cause the 2008 Recession? No, but it caused, in part, the Great Depression. Did restrictive import tariffs cause the 2008 Recession? No, but that also in part caused the Great Depression. Did rampant bank failures cause the 2008 Recession? No, but bank failures exasperated the Great Depression.
Unless you start running a balanced budget now, you are hopelessly and utterly screwed. Your reckless spending will induce Real Inflation about 2023, and it will peak a few years later around a 35%-45% annual rate for about 5-6 years before tailing off, assuming you can start sucking money out of the economy.
The party's over.
Watch what happens...
Mircea
Quote:
Originally Posted by Kirdik
It wasn't just spending. There was real product created and sold.
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Yes, many American families were ordering destroyers, frigates, corvettes and merchant vessels to collect and trade with their friends, or ply the Seven Seas in their own private naval fleet. Wasn't one of FDR's campaign promises "
a fast-frigate in every backyard"?
Reality bites....
Mircea
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Austerity is beholden to NOBODY!
