AAPL stock: $433.26 ( -1.32 ) *Cached every 60 seconds. For live updating, Click Here |
| Tips and Deals ---- 'Friendly' Political Ranting |
You are currently viewing the 'Friendly' Political Ranting forum
| How are the federal deficit and the current economic slump related? Posted by: Acer
Date: August 15, 2012 09:16AM
|
| Re: How are the federal deficit and the current economic slump related? Posted by: mattkime
Date: August 15, 2012 09:33AM
|
| Re: How are the federal deficit and the current economic slump related? Posted by: cbelt3
Date: August 15, 2012 09:43AM
|
Capital. It's all about capital. And confidence. While a politician could clearly link the two as cause and effect, an economist (*) will know better. If capital is tied up in soverign debt, and the debt is 'uncertain', then other capital is not available for investment and growth, because investors don't like to have too much risk in one area.
The Eurozone is in much worse straits because their currency is under attack from failing national economies whose indebtedness, on a GDB percentage basis, is far above ours. Our economy is globally linked to other nations and economic structures, so we "feel" their pain as well.
Beyond that it gets very relativistic and subjective. I'm sure you could get any number of economists to come to blows over drinks by simply asking the question at a party.
(*) I am not an economist, nor do I play one on the internet. I'm just an opinionated middle aged guy who barely remembers Econ 101 and 102 from college.
The Eurozone is in much worse straits because their currency is under attack from failing national economies whose indebtedness, on a GDB percentage basis, is far above ours. Our economy is globally linked to other nations and economic structures, so we "feel" their pain as well.
Beyond that it gets very relativistic and subjective. I'm sure you could get any number of economists to come to blows over drinks by simply asking the question at a party.
(*) I am not an economist, nor do I play one on the internet. I'm just an opinionated middle aged guy who barely remembers Econ 101 and 102 from college.
| Re: How are the federal deficit and the current economic slump related? Posted by: Ted King
Date: August 15, 2012 09:46AM
|
I can connect the dots the other way... how the slump in the economy has caused a significant part of the increase in the debt. The primary cause of the economic slowdown was the financial crisis in 2008 and the main way the government had a role in that happening was due to there being not enough regulation on banks, especially the repeal of Glass–Steagall which essentially let bankers gamble with government insured savings. When the economy tanked incomes dropped. When incomes dropped, income tax revenues to the federal government dropped. The government responded the way it has responded to every economic downturn in modern times (including St. Reagan's administration) - it increased deficit spending on the social safety net and some stimulus spending. Along with reduced revenues, that spending increased the deficit. The economic downturn was the worst since the Great Depression so it's not surprising that deficit spending to address the problems was higher than what has taken place in milder recessions.
Edited 2 time(s). Last edit at 08/15/2012 09:52AM by Ted King.
Edited 2 time(s). Last edit at 08/15/2012 09:52AM by Ted King.
| Re: How are the federal deficit and the current economic slump related? Posted by: Acer
Date: August 15, 2012 09:56AM
|
I can certainly see the connection in that direction, Ted. But Ryan's assumption is that the relationship is reversed: The deficit is the direct cause of the current economic slump. By reducing the deficit, we reduce the slump.
Cbelt, I do see a thread of logic in the "capital" angle. But that is a very complex relationship. Where is said capital right now, the capital that is not being used because of uncertainty? Is it tied up in government-issued investments? Is it sitting in a savings account?
Has Ryan or Romney said anything about Europe in this relationship, except to point and snicker at their failure?
Edited 1 time(s). Last edit at 08/15/2012 09:59AM by Acer.
Cbelt, I do see a thread of logic in the "capital" angle. But that is a very complex relationship. Where is said capital right now, the capital that is not being used because of uncertainty? Is it tied up in government-issued investments? Is it sitting in a savings account?
Has Ryan or Romney said anything about Europe in this relationship, except to point and snicker at their failure?
Edited 1 time(s). Last edit at 08/15/2012 09:59AM by Acer.
| Re: How are the federal deficit and the current economic slump related? Posted by: cbelt3
Date: August 15, 2012 10:02AM
|
Well, instead of Capital I could have said "monetary policy". We've recognized, by keeping the Fed's interest rates at zero, that US money is worth.. less. And less. Essentially we're letting our currency 'float down', which it's been doing for many years.
And Ted has a good point.
I think they key take away is that all of the issues are interrelated, but claiming cause and effect is typicaly politician oversimplification.
And Ted has a good point.
I think they key take away is that all of the issues are interrelated, but claiming cause and effect is typicaly politician oversimplification.
| Re: How are the federal deficit and the current economic slump related? Posted by: $tevie
Date: August 15, 2012 10:44AM
|
| Re: How are the federal deficit and the current economic slump related? Posted by: Mike Sellers
Date: August 15, 2012 11:20AM
|
| Re: How are the federal deficit and the current economic slump related? Posted by: Ted King
Date: August 15, 2012 11:35AM
|
| Re: How are the federal deficit and the current economic slump related? Posted by: Ca Bob
Date: August 15, 2012 01:49PM
|
It's nonsense because our federal deficit is being used to stimulate the economy and the overall debt is not at a level that would be ruinous. There are lots of data points and well founded theory to support the Keynesian approach. The right wingers like to snipe at Keynesian economics (most particularly the idiot supply-siders), but when things start to turn down, all the economists, the fed, and state governments ask for some stimulus funding. In the case of 2009 to the present, the stimulus helped but it wasn't large enough to do the complete job. If we had continued on the road that began in 2007 or so and allowed the largest banks to collapse, we would have been in for another great depression. The fact that there was a strong bipartisan consensus to prop up the banking system using federal money is telling. The fact that we didn't go into a decade-long depression (like we did starting in 1929) shows that the world has learned something since the days of Herbert Hoover. The fact that we haven't gone into a powerful growth era like in the 1950s is due to the fact that the world has changed, but is also partly due to the anti-growth policies of the right wing, even though they claim the opposite.
There is an argument that is at least partially convincing that the growth in income disparity is contributing to slow growth. Roughly speaking, when a substantial fraction of the American people can barely pay their bills or are getting deeper and deeper in debt, that is a formula for lack of business growth. The idea that cutting taxes on the wealthy would stimulate growth is utter nonsense for just this reason. Real world experience shows that GDP growth happens more robustly under Democratic presidents, and this is one reason.
There is an argument that is at least partially convincing that the growth in income disparity is contributing to slow growth. Roughly speaking, when a substantial fraction of the American people can barely pay their bills or are getting deeper and deeper in debt, that is a formula for lack of business growth. The idea that cutting taxes on the wealthy would stimulate growth is utter nonsense for just this reason. Real world experience shows that GDP growth happens more robustly under Democratic presidents, and this is one reason.
| Re: How are the federal deficit and the current economic slump related? Posted by: $tevie
Date: August 15, 2012 01:52PM
|
Yeppers.Quote
Ca Bob
There is an argument that is at least partially convincing that the growth in income disparity is contributing to slow growth. Roughly speaking, when a substantial fraction of the American people can barely pay their bills or are getting deeper and deeper in debt, that is a formula for lack of business growth. The idea that cutting taxes on the wealthy would stimulate growth is utter nonsense for just this reason. Real world experience shows that GDP growth happens more robustly under Democratic presidents, and this is one reason.
"You can believe me because I never lie and I'm always right."
| Re: How are the federal deficit and the current economic slump related? Posted by: Ted King
Date: August 15, 2012 02:20PM
|
Quote
Ca Bob
It's nonsense because our federal deficit is being used to stimulate the economy and the overall debt is not at a level that would be ruinous. There are lots of data points and well founded theory to support the Keynesian approach. The right wingers like to snipe at Keynesian economics (most particularly the idiot supply-siders), but when things start to turn down, all the economists, the fed, and state governments ask for some stimulus funding. In the case of 2009 to the present, the stimulus helped but it wasn't large enough to do the complete job. If we had continued on the road that began in 2007 or so and allowed the largest banks to collapse, we would have been in for another great depression. The fact that there was a strong bipartisan consensus to prop up the banking system using federal money is telling. The fact that we didn't go into a decade-long depression (like we did starting in 1929) shows that the world has learned something since the days of Herbert Hoover. The fact that we haven't gone into a powerful growth era like in the 1950s is due to the fact that the world has changed, but is also partly due to the anti-growth policies of the right wing, even though they claim the opposite.
There is an argument that is at least partially convincing that the growth in income disparity is contributing to slow growth. Roughly speaking, when a substantial fraction of the American people can barely pay their bills or are getting deeper and deeper in debt, that is a formula for lack of business growth. The idea that cutting taxes on the wealthy would stimulate growth is utter nonsense for just this reason. Real world experience shows that GDP growth happens more robustly under Democratic presidents, and this is one reason.
Right! What Tea Partiers and those who are generally like-minded just don't seem to want to see is that the primary problem with the economy now is lack of demand. Lack of demand is THE primary reason business isn't investing more now in a manner that would produce more jobs and get a virtuous economic cycle going. That's why deficit spending is so necessary - to get demand up enough to initiate a virtuous cycle. This is not at all unusual, it happens in every recession that isn't really shallow; the only thing that is different is, as you say, that this recession is so deep that it requires more stimulus than recent past recessions to get that cycle going again. I suppose I should say that it is necessary to get the cycle going again much more rapidly. Eventually, probably many years down the road, that cycle would pick up by itself, but the long term damage to the economy would be greater than the cost of a stimulus package - probably by many orders of magnitude.
Edited 1 time(s). Last edit at 08/15/2012 02:22PM by Ted King.
| Re: How are the federal deficit and the current economic slump related? Posted by: billb
Date: August 15, 2012 08:49PM
|
[www.youtube.com]
Obama is awesome !
[www.freethegrapes.org]
norwegian wood reality TV
[www.youtube.com]
Obama is awesome !
[www.freethegrapes.org]
norwegian wood reality TV
[www.youtube.com]
Sorry, only registered users may post in this forum.
Contact Us
|
Advertising
MacResource.com respects your privacy. Read our Privacy Statement. Use of MacResource.com and the Forums are subject to the Terms of Service. Read our TOS. ©1996 - 2013 Price.com; All Rights Reserved. All other copyrights are property of their respective holders.