Once again, I commend you for your well-thought out response.
Thanks for the complement!
I'm curious as to what Keynesian points, policies, w/e that you makes up that <25%? Not trying to attack or anything, I just didn't expect you to show any openness to Keynesianism.
Manageable debt is not necessarily a bad thing. Businesses do it all the time, but they do it fully projecting a specific return at or before a time certain.
The space program is one of the things I would put in the 25%. It is expensive, but the innovations resulting from the space program, both directly and indirectly, are mind boggling.
Think of all of the industries and economic activity which sprang from the desire to explore space.
Now some could argue that NASA is unconstitutional, which means it was a stimulus program when you get right down to it.
Me? I don't know whether it is or it isn't, but I like it. I just wish we had constructed Moon Bases in the 40-plus years since we first went there.
After the next Space Shuttle mission, we won't have anything.
But in my mind, manageable debt should be measured in billions, not trillions.
This actually reminds me of a policy argument between Krugman and another Keynesian Richard Koo... It basically went like this:
Koo argues that because of the zero lower bound (0% interest rates) monetary policy is inneffective at spurring growth in a liquidity trap. Koo is actually well known in part for coining the term "balance sheet recession" when he first used it to describe Japan's lost decade, which is remarkably similar overall to the situation in the U.S. atm (high levels of both public and private debt, no V shaped recovery just a long period of stagnant type growth, etc). Koo argues that fiscal policy (stimulus) is the only option for the U.S. and that the Fed should stay on the sideline; He argues that QE3, even though it helps those in debt, etc just isn't worth it for the trade-offs.
Krugman on the other hand has a bit of an admittedly excentric view in most people's eyes. He argues that the zero lower bound is a very real barrier but not one that cannot be overcome. He argues that because of inflation expectations, the Fed could "convince the markets it is not responsible" and in effect, the market would generate a negative interest rate - which would be the missing peice of the monetary policy puzzle and the answer to why monetary policy has been relatively ineffective compared to normal times.
Personally, I'm still a little undecided. I find it much easier to accept that monetary policy is just not as effective in a liquidity trap, meaning fiscal stimulus is the best option(Koo's argument)... But Krugman's argument, something that's never been tried BTW, would make quite the experiment! Can we reach negative interest rates!?! Such a strange question... Only thing is, it's not like you can just do it and not expect any consequences... these are people, and their jobs we're talking about - not lab rats or computer models. I think it would be much safer to stick with stimulus for that reason, not because I dont think Krugman's idea could work - it's just that there is no proof that it does work, and I'm an evidence kind of guy myself.
The QEs will eventually stop because there will be no other option. Interest rates will rise and if this happens at a time when the economy actually begins to improve, we will be right back where we started, but with staggering inflation.
And what we have now is bad enough.
This is actually a pretty interesting point, as I dont usually take advantage of coupons unless I was already planning on buying that item at some point anyway so I'm not going to contest this point but I am going to contest your conclusion...
Let's assume that all it did was move that spending into the timeframe that cash for clunkers was active from the next couple of years... Because that economic activity happened during the slump, it helps close the gap of excess capacity in the short term but since we're moving that spending from the future the sector will presumably face a a period of sub-average activity.
You would say, that because of this the program was a failure because it didn't create any new activity it simply moved it...
But what were the overall results? Did it work?
It seems to me if priming the pump were all that was required, the economy would be a pumping motherfucker right about now.
I'd argue that "moving" the economic activity serves as a momentum builder for the overall economy because it A)helps the economy stop contracting any further, which would jeapordize future spending, and/or B)makes the output gap smaller in a very bad timeframe, in favor of contributing to a hypothetical larger output gap in the future; The reason it's okay for this to happen later, is that you'd be betting on a more healthy, resilient overall economy to make up for the loss.
That would be true if the events you describe had actually happened.
Recovery Summer was a farce.
Economic growth following the last stimulus was so anemic it would be laughable if it were not so tragic.
Housing, well you know about that.
And employment fluctuated, but never really went down to what any reasonable person would call acceptable.
The stimulus failed because it focused on the wrong things. Now there is no mood to give the same guys who fucked it up another shot.
This coupled with your very last statement makes no sense, unless you dont mind explaining your thought process? I'll elaborate at the bottom...
First, as I have made clear (hopefully clearer with my explanation), I am against stimulus spending for the most part. The proper stimulus is to let the market forces function unmolested by the government.
Stimulus packages give the public the impression that the proactive economic policies of politicians can positively affect an economy. It's hogwash. A stimulus fairy if you will.
That's exactly what the argument of the confidence fairy is. There is "uncertainty" apparently for all the reasons you mentioned, and government "getting out of the way" instills "confidence". That's exactly the argument that dubs Austerity expansionary, when it clearly is not. Either you believe all those things you said, and then believe in confidence or you dont... gotta choose though!
I choose confidence over uncertainty.
You choose to laugh confidence off as a some sort of 'fairy.'
It is real, although not tangible.
I agree(except for that the time to act on debt is not now), tax cuts from the Republicans when they're in power combined with spending programs when they're both in power (you'd think it's mostly the democrats here but didn't Bush spend a shit ton on closing a coverage gap in medicare?). I mean, you can't project a budget unless you know for sure what kind of revenue and spending will happen in the future, so when taxes are cut and services are not (or increased in some cases) than you end up with budget deficits... Really just comes down to irresponsible legislating brought on by politics IMO. You can't cut taxes just because you want to, if you can't afford to do so or aren't willing to cut services, just as you should be increasing services without raising taxes to keep those services solvent... Our government constantly makes both mistakes to avoid hard choices.
We have enough revenue. Revenue is not the problem.
Spending beyond the budget is the problem.
Shrewd policy would be to craft a budget based on how much money we will have to spend, not how much money we want to spend.
This debt is no longer manageable. It may already too late.
And for the record, I also agree that Obama is being fucking pussy. He needs to grow a fucking pair and stop making compromises for re-election and start making them for the people; To me, that means no Austerity without jobs first... If I were him, that'd be my message. Obviously you'd probably do something different... It would just be nice if politicians cared a little less about their seat and a little more about the people that seat represents.
There will no jobs until business feel they can earn a profit without fear of a rapacious government taking them to the cleaners.
If a business earns a decent profit which is eaten up by onerous taxes and burdensome regulations, the owner of that business essentially works for free.
No one in their right mind would sign up for that.
Fair enough, but I believe Japan's lost decade ended in 200% or so debt levels and they were not in our position either... Even better than that, they most definantly didn't have to answer to the ECB like in Greece's situation; Since they were sovereign and could monetize debt, they were never in danger of default... I think our situation is much more closely related to Japan than Greece at any rate.
The U.S. is probably more akin to Japan.
But the states are definitely some variety of the floundering Euro-Weenie countries who got their Socialism, but now can't pay for it.
And are taking to the streets because the check has come due.
Termporary exemptions, the rest I think we've beaten the drum enough on... Let's agree to disagree on HC reform haha, our opinions will likely never change regardless of what either of us say.
I'll go along with that.
If there is a demand problem, the tool to use then would be stimulus wouldn't it? I mean, it is the demand side solution, right?
But it didn't work. It just extended the misery.
Pull the band-aid off all at once. It will sting for a little while, then it's all better.
edit: good luck with the puppy
Thanks.
Hopefully I can place him. He's cute as all get out.
But my dog is not happy.
And the cats are beside themselves with "DO NOT WANT!"