Keynesian Economics

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Parker

Well-Known Member
BuddhaC said:
Future value, if real interest rates drop too much because of supply (caused by deflation) then people may simply decide that the present value is worth more than the banks can compensate for in interest rates. The thing is that their infrastructure doesn't really need (or didn't need) improvement because it was already well-maintained (unlike ours) and thus (my belief) is that they turned the public works. Depending on the type of work they did public works programmes might not even serve to maintain job skills (which deteriorate with time if unemployed long enough). Where being in the military adds to your job skills, and can potentially exponentially add to your opportunities to develop higher-levelled skills (entirely based on the country, but here in America if you're a vet you get very hefty educational bonuses). As well bombs don't have to be made by the government, they can be government-demand driven but private-produced like the American Air Force. This also goes with the expansion of military bases which, again depending on the country, can mean that private contractors are brought in which directly helps the private sector. You have this 'crowding out' effect, where money becomes more expensive for the private sector because the government is driving up demand (which increases prices) and thus possible entrepreneurial activities are stopped from ever occurring, but when you're in a liquidity trap or just have stagnant/declining aggregate demand then you don't have to worry about that because there's nothing significant to crowd out.

EDIT:
Additionally, they /already/ were willing to spend the money on inefficient public works (the same folly of the New Deal) what I'm proposing is that there's certain sectors that the government can use that are more relatively efficienct than others.
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Agreed about being in the military helps with job skills. There are few in the military with the entitlement attitiude. The ones in the military use team work.
Hire the vet.
 
OGEvilgenius

OGEvilgenius

Well-Known Member
NoDrama said:
Depends on whether it is something I need, or something I want. Needs override wants. And when we talk about deflation we aren't talking about high percentages here, were talking about .5% a year until equilibrium. So, would I forgo buying a new $30,000 car today when a year from now I can get it for $150 less? I suppose it depended on how much utility the vehicle would give me, if that utility exceeded the $150 savings, then yes I would buy the car now.
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In the house example, it's not necessarily worth less either. Loans would behave differently and banks would have to take on more risk with their own actual capital which would make loans not be so easy to attain and less catastrophic failures, JMO.
 
OGEvilgenius

OGEvilgenius

Well-Known Member
BuddhaC said:
According to this:
The growth rate of real income was: (Table 3 page 18 in text, p^t)
1980-1990 1.03702
1991-2001 1.00304
2002-2006 1.02185

p^t is defined, first paragraph of page 19 (in the text, not on the pdf) as "The growth rate of real income[,] ρ[^]t"

That's an average real income growth rate of .3% for a ten year peroid. (And this, imo, is weighted a little bit by the 2.9% real income growth in 1991, the first year of the 'gradual' crisis)
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It's just one subjective interpretation of what they have been through. They are living longer, are well fed, etc etc.

As far as your real wages are concerned, how much have US debt levels risen? How do Japan's compare?
 
N

NoDrama

Well-Known Member
Government should never be used to save people from themselves.

also, almost ALL of Japan's debt is owned by the Japanese. Unlike US debt which is mostly owned By China, Japan, Germany and Private corporations.

Japan cannot export it's inflation to other countries because the US dollar is the reserve currency. The biggest reason the US has the reserve currency is because it was backed by gold when the rules of international money were put into place.
 
OGEvilgenius

OGEvilgenius

Well-Known Member
BuddhaC said:
Pretty sure they still have a self defence force, albeit minuscule for their size. Not having to crowd out the private sector to fund a military has seemed to help Costa Rica out substantially, especially when compared to regional neighbours. Increasing their military spending probably would have been a good vehicle for government stimulus, seeing as they already have a very impressive infrastructure in place.
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Military spending is only useful in that it stimulates some level of research and developing (skills/technology). In terms of reality it is always bad for a global economy, in real terms, unless you think destruction of things is good economic policy. It's a profitable business though, that's for damn sure, only its profits come at the expense of EVERYONE else.
 
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NoDrama

Well-Known Member
Growth cannot continue forever, economy will eventually mature and at some point stagnate and then fall. This has been proven over and over and over again throughout the centuries. USA is the New Rome and the presidents after Kennedy are all just Caesar.
 
B

BuddhaC

Active Member
OGEvilgenius said:
Military spending is only useful in that it stimulates some level of research and developing (skills/technology). In terms of reality it is always bad for a global economy, in real terms, unless you think destruction of things is good economic policy. It's a profitable business though, that's for damn sure, only its profits come at the expense of EVERYONE else.
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What I was saying is that Military spending, or other similar avenues of gov't employment that actually produce something, are superior to public works projects that produce nothing.

I'm pretty sure we got food preservatives from WWI.

"As far as your real wages are concerned, how much have US debt levels risen? How do Japan's compare?"

Japanese debt levels sky-rocketed during their recession as well as ours, but I'm pretty sure there's was worse because they bailed out a lot more companies (again bring reference back to 'zombie' banks). But that's just a logical assumption I've made. (But I think I saw something that Japan has a high-level of persistent debt)

EDIT:
Ah here we go:
Japan		| 208.2% |2011 est. |220.00% |2010http://en.wikipedia.org/wiki/List_of_countries_by_public_debt

From the same source America is around 94% in 2010, and the 2011 estimate is 102%.

EDIT:
The percentage is by GDP, so 100% = (debt = GDP)
 
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