Double-dip!

[city diehard]

I dont think he has answered a question at all

Just one big long political broadcast for the Labour Party

Political broadcast? The opinions I advocate are that of a Nobel Prize winning economist who says that the current government austerity measures will not work, simple as. If there is inadequate demand because everybody is tightening their belts where does the recovery come from. I advocate policies which are the best way, the current governments policies, who you prop up, has delivered us a double dip recession, youth unemployment of over a million and unfortunately a 'lost' generation; which is criminal.

The reason austerity doesn't work to quickly fix the problem is that, when the economy is already struggling, and you cut government spending, you also further damage the economy. And when you further damage the economy, you further reduce tax revenue, which has already been clobbered by the stumbling economy. And when you further reduce tax revenue, you increase the deficit and create the need for more austerity. And that even further clobbers the economy and tax revenue. And so on. Puts it nicely.

It's not party political and it shouldn't be, it's the best way to recover, so for you to pass it off as part political is pathetic and try and contrast the two methods and see the results from history. and come to your conclusion.

--------------------------

Responsible Keynesianism
To oppose the surplus is to will the debt
Mar 9th 2011, 18:16 by M.S.

EARLIER this week I noted Tyler Cowen's New York Times op-ed arguing that the government has been unable to pursue responsible, effective Keynesian policies because it has proven politically impossible to run the surpluses Keynes advocated during the years at the top of the business cycle, in order to save up for the rainy days of recessions. There's a reason for that, and Mr Cowen should have been more specific about what that reason is. When the government runs a surplus, conservatives insist it give the money back in tax cuts. Remember 2001, when the Heritage Foundation was saying stuff like this?

In the end, given the sheer size of the projected surplus over the next 10 years, the only responsible course of action for the federal government is to return the surplus tax revenues to the taxpayers who paid them in the first place.
Which is exactly what happened. Plenty of the people who were responsible for eliminating the surplus in 2001, and scrapping the Clinton administration's plans to pay down the national debt, are still in Congress today, whining about the size of the debt they helped create. Here's what Orrin Hatch had to say about the 2001 Bush tax cuts that made that surplus disappear:

“With a bourgeoning surplus, Utah's families deserve to have more of their money back in their own pockets instead of in the hands of Washington bureaucrats."
Just think out the reasoning process here. At the bottom of the business cycle, the government runs a deficit. At the top of the business cycle, when the government runs a surplus, it must immediately return that surplus to taxpayers. What exactly did these people expect this model would lead to?

I find it hard to watch the same people who ten years ago were desperate to avoid the supposed dangers of government budget surpluses now trying to zero out Teach for America and the United States Institute for Peace, in order to scratch together a few pennies for interest payments on the debt they helped create by cutting taxes. But the most disturbing part is that, then as now, they try to present themselves as "responsible".




In answer to GDM about running a surplus in good times, this is an interesting argument which I intend to agree with and that the notion of 'saving for a rainy day' is difficult as you don't know when that 'Minsky Moment' will occur, so politically it is very difficult to attain. So therefore a medium between the two in what Brown formulated by the Golden Rule is the best option due to the politics which is why the policies implemented are somewhat restricted. Logical? No, Political? Yes, but the average Joe would elect the person who's going to put money in the backpocket rather than the other candidate who is prophesying about a rainy day.

Thanks for finally replying to my question ;-) I must have posted something last night, hence the dot above. I'd had a few beers so I imagine it wasn't exactly the Gettysburg Address!

The point that I make repeatedly on this matter is that if we weren't even working towards a surplus after fifteen years of consecutive growth, then it was never going to happen, at least while Gordon Brown was around (as PM or Chancellor). I also accept your point that Realpolitik plays a part and let us not forget that the Tories were all for matching Labour's spending prior to the credit-crunch, although I suspect under a little duress in order to get elected.

The state was too small when Labour came to power in 1997 and it was too big when they left office in 2010. Returning to your previous point, both of these situations were brought about by political ideology.

The article you posted adds little to the debate imo as it is clearly lifted from US publication. Also disagreeing with a Nobel Prize winner doesn't mean you're wrong, especially if they are an economist. As it happens I predicted this downturn would last at least a decade when the shit hit the fan in 2008, which was contrary to what most economists thought at the time. Does that make me a genius? No - just a lucky guess probably, which is what most economics actually is: guesswork, where a lucky guess can give you the status of a prophet. I think they're all full of shit, so waving a Nobel Prize around the thread isn't going to win me over.

By highlighting his Nobel Prize I believe it gives my opinions, views more credibility, and obviously it strengthens your argument, nothing wrong with that, that's how you construct an argument, simple as. But what we can all learn from his history and history tells us, which he highlights that the best way to recover is by using Keynesian demand management policies, most notable being the policies undertaken post the Great Depression. History doesn't lie and hence this also tells us that such measures being taken by the government are wrong and not the best way to recover.

Secondly, the article is not to highlight where it is from but the theory it explains, so therefore to discredit the article just because it has not occurred in this country is pathetic and that it could be applied to most developed economies. Moreover, discrediting because he did not foresee the financial crisis is also pathetic as most didn't however as you'll see int he below video he was aware of such a crisis emerging.

[youtube]http://www.youtube.com/watch?v=T4DF97QSKSU&feature=youtube_gdata_player[/youtube]

So therefore to say that any amateur could predict a major recession when is a poor attempt to discredit a well renowned economist in order to belittle my argument which I have presented.

 

[Sun Jihai's ghost]

There were plenty of economists and politicians that did predict the housing bubble and financial crisis. Google Peter Schiff, Gerald Celente, Doug Casey, Max Keiser...take a look at what Ron Paul and Lew Rockwell have been warning about for 20 years.

People like Krugmann get prizes because they spout the drivel what governments and central bankers want to hear which is more government and more QE. All Paul Krugman is advocating is a continuation of the status quo and to give up more power to the same people that have got us into this mess. Since the US and UK started QE the recession has got worse, if it were possible to inflate your way out of debt then zimbabwe would be a wealthy country.

 

[city diehard]

There were plenty of economists and politicians that did predict the housing bubble and financial crisis. Google Peter Schiff, Gerald Celente, Doug Casey, Max Keiser...take a look at what Ron Paul and Lew Rockwell have been warning about for 20 years.

People like Krugmann get prizes because they spout the drivel what governments and central bankers want to hear which is more government and more QE. All Paul Krugman is advocating is a continuation of the status quo and to give up more power to the same people that have got us into this mess. Since the US and UK started QE the recession has got worse, if it were possible to inflate your way out of debt then zimbabwe would be a wealthy country.

Hyper-inflation is a different kettle of fish and to utilsie it as an example to discredit mild inflation is a diservice to yourself. It isthe same as what Krugman is advocating of about 4% inflation which would decrease real debt. The so called economists you have mentioned,'Austerians' have promoted policies which have never worked; whereas the policies advocated by the new-Keynesians today have compelling evidence to support fiscal stimulus and hence demand management policies. So to pass it off as preserving the status quo is plain wrong and in fact it is some how popular and moral to promote crippling austerian measures which has led us into a depression which we are nowhere near of recovering from and are losing a generation in the process, which is criminal.

Ron Paul by the way wants a return to the Gold Standard... Enough said.

Your comment about Krugman arse licking central bankers could not be more wrong since he has slated the Fed for not doing enough despite the now Chairmen once hiring him as a professor at Princeton. So again that comment is unfounded.

To suggest that QE is the cause of both the UK's and Americas economic performance is ludicrous since it is an expansionary policy which failed to deliver due to unconfident banks refusing to lend. Due to the liquidity trap which we find ourselves in also means that it incurs 'immaculate' inflation and thus has no effect even if banks were to lend this the economy is so depressed. The austerian measures which have depressed the economy have caused the trouble we find ourselves in now with the real rick od debt deflation coming into full effect.

 

[Sun Jihai's ghost]

Hyperinflation is the loss of confidence in a currency which the conditions are always excessive government spending and excessive/unserviceable debt. You think that is an impossible scenario we will have to agree to disagree, it has happened throughout history. The Weimar Republic and Argentina of the 80s thought they could also control inflation and inflate away the debt, there are plenty more examples.

I am not promoting "Austerians" at all. Osborne is as inept as Balls, both are bought and paid for, both are in bed with the bankers and will continue to bail out the tbtf banks in perpetuity.. The problem has gone so far beyond being able to solve it with austerity that the Tories might as well not bother wasting their time and just bribe the electorate like the Labour party does.

Nope Ron Paul does not want to force people onto a gold standard. He wants competing currencies which would mean you could choose to keep your money in fiat if you wanted to.

QE has been a failure, unemployment rates are trending upwards (these are also heavily massaged figures). Pensioners are being shat on from a great height, peoples wage increases aren't going up with inflation and the banks are free to continue gambling without any moral hazard, proof being the derivatives market is now over $800 trillion which is up almost $300 trillion since the crisis officially hit. Banks aren't lending more to small business owners at all. To suggest Paul Krugman is against the fed is delusional, all of his policies revolve around having money on tap from the fed and artificially low interest rates.

But ultimately Keynesians and the likes of Krugman can never be wrong can they, Governments will continue to deficit spend, central banks will continue to print money and QE because it is all they can do to keep the system going...until it doesn’t any more. ....and whatever happens Krugman will always be right because he will always argue that the problem was not that the solution was wrong, just that we didn't do it hard or fast enough....and for Keynesianism - growth is always infinite, government deficits can always be paid down tomorrow and government will act responsibly during the good times. What a joke.

 

[Rammy Blue]

All this political and economic claptrap is completely irrelevant, just look at the basics that the eurozone is fubar and once Spain and Italy inevitably pop then we can have all the policies we want but the fallout will fuck us up.

The Spaniards aren't happy and it's only going to get worse (you won't read the true stuff on mainstream media)....

http://www.greenleft.org.au/node/51702

 

[Sun Jihai's ghost]

All this political and economic claptrap is completely irrelevant, just look at the basics that the eurozone is fubar and once Spain and Italy inevitably pop then we can have all the policies we want but the fallout will fuck us up.

The Spaniards aren't happy and it's only going to get worse (you won't read the true stuff on mainstream media)....

http://www.greenleft.org.au/node/51702

Agreed the situation is far worse than is being reported in the mainstream. If/When Europe blows up it will take the worlds financial system down with it. Japan is another cot case ponzi which is not objectively reported on and has only survived so far becuase the people are patriotic to a fault and keep buying up thier own debt which is now at 230% of GDP, close to $15 trillion.

 

[city diehard]

Hyperinflation is the loss of confidence in a currency which the conditions are always excessive government spending and excessive/unserviceable debt. You think that is an impossible scenario we will have to agree to disagree, it has happened throughout history. The Weimar Republic and Argentina of the 80s thought they could also control inflation and inflate away the debt, there are plenty more examples.

I am not promoting "Austerians" at all. Osborne is as inept as Balls, both are bought and paid for, both are in bed with the bankers and will continue to bail out the tbtf banks in perpetuity.. The problem has gone so far beyond being able to solve it with austerity that the Tories might as well not bother wasting their time and just bribe the electorate like the Labour party does.

Nope Ron Paul does not want to force people onto a gold standard. He wants competing currencies which would mean you could choose to keep your money in fiat if you wanted to.

QE has been a failure, unemployment rates are trending upwards (these are also heavily massaged figures). Pensioners are being shat on from a great height, peoples wage increases aren't going up with inflation and the banks are free to continue gambling without any moral hazard, proof being the derivatives market is now over $800 trillion which is up almost $300 trillion since the crisis officially hit. Banks aren't lending more to small business owners at all. To suggest Paul Krugman is against the fed is delusional, all of his policies revolve around having money on tap from the fed and artificially low interest rates.

But ultimately Keynesians and the likes of Krugman can never be wrong can they, Governments will continue to deficit spend, central banks will continue to print money and QE because it is all they can do to keep the system going...until it doesn’t any more. ....and whatever happens Krugman will always be right because he will always argue that the problem was not that the solution was wrong, just that we didn't do it hard or fast enough....and for Keynesianism - growth is always infinite, government deficits can always be paid down tomorrow and government will act responsibly during the good times. What a joke.

The inflation hawk you seem to be and the post-apolcalyptic soundings you make are totally unfounded, many of the economist you propped warned two year ago that we'd be suffering from crisis far worst than the one which hit us in 08 with the possibilty of inflation. Now despite a fiscal stimulus (which was inadequate) in the US and the burgeoning problems in Europe, inflation has fallen in, particularly core inflation which doesn't take into account volatile commodity prices. Due to the liquidity trap we are in, long term interest rates will not rise due to the government spending not crowding out private spending due to the resources being unemployed and hence inflation will not increase. Inflation is not the issue, it is one of the solution to induce growth with higher employment.

Why is that a Joke? The policies you support prop up the top 1% of earners that would benefit from such high intrest rates, lenders who getting nothing at the minute as interest artes are low, not the fear that we could have hyper-inflation which is just plain scaremongering and that somehow it is government which has caused this problem; it may have allowed them to overindulge their animal spirits but it was those tope 1% earners hedge fund managers etc who knew Heads: they win and Tails: Taxpayers lose. It is the 'Big Lie' which inflation hawks like you peddle that somehow the little government regulation in place was at the fault and that less should of been, however it is moronic even to entertain that notion.

Your comments about the Tories and Labour couldn't be more far away from the truth. The tories have certainly not bough the electorate, have you seen the recent polls? Labour are proposing policies opposite to that of tories to recover from the depression we find our selves in, hardly buying them. To suggest that all politicians are bought and they are out to get us, some sort of persecution complex is childish, however the Messiah that is Ron Paul will save us with his outlandish policies that have no historical evidence to suggest they are correct will do is just plain wrong.

Krugman in his recent book has slagged off the FED for not doing enough hardly brown nosing.

An interesting debate between the two: <a class="postlink" href="http://www.guardian.co.uk/world/us-news-blog/2012/apr/30/paul-krugman-ron-paul-economics" onclick="window.open(this.href);return false;">http://www.guardian.co.uk/world/us-news ... -economics</a>

 

[SWP's back]

We are now in a depression eh? Nothing like someone that is totally party political hamming things up to try and prove an erroneous point.

On a side note, anyone looking at a re-mortgage should consider a 2 year variable, the BoE will NOT be raising interest rates until atleast 2014 it has come to light.

 

[SWP's back]

All this political and economic claptrap is completely irrelevant, just look at the basics that the eurozone is fubar and once Spain and Italy inevitably pop then we can have all the policies we want but the fallout will fuck us up.

The Spaniards aren't happy and it's only going to get worse (you won't read the true stuff on mainstream media)....

http://www.greenleft.org.au/node/51702

Markets up still on the calendar year rammy. Your apocalypse still yet to materialise:

 

[SWP's back]

By highlighting his Nobel Prize I believe it gives my opinions, views more credibility, and obviously it strengthens your argument, nothing wrong with that, that's how you construct an argument, simple as.

Maybe in high school perhaps, but grown ups call it an argument from authority and it's fallacious, especially in economics where 100 economists will give you 100 different answers. That is not to say that you may not have a point, just you are going about making it in a very clumsy manner (and as you ended your last paragraph so beautifully, I shall do the same) end of.