All Forums > General Discussion > Non-Sports > Who should give in?
3/12/2013 12:45 PM
In a normal economy without the threat of another massive stimulus and the coming of Obamacare the free market would increase spending. Someone would take the risk and get things moving.
3/12/2013 1:04 PM
Posted by swamphawk22 on 3/12/2013 12:45:00 PM (view original):
In a normal economy without the threat of another massive stimulus and the coming of Obamacare the free market would increase spending. Someone would take the risk and get things moving.
In a normal economy there isn't a need for stimulus.
3/12/2013 2:51 PM
Acttually there is almost never a need for a Federal Stimulus.
3/12/2013 3:19 PM
Only when demand collapses.
3/13/2013 4:23 PM
What if demand collapsed because of an artifical bubble burst, and it didnt come back because of fear of the debt.

Wouldnt cutting spending make sense then?
3/13/2013 5:59 PM
Posted by swamphawk22 on 3/13/2013 4:23:00 PM (view original):
What if demand collapsed because of an artifical bubble burst, and it didnt come back because of fear of the debt.

Wouldnt cutting spending make sense then?
Demand did collapse because a bubble burst. But it didn't come back for reasons that are very simple and have nothing to do with the debt.

The bubble burst and a lot of mortgages reset. A lot of people lost jobs. A lot of people were scared that their job would be next.

If your house payment suddenly goes up a lot or you lose your job or you think you have a very good chance at losing your job, you can't spend as much on food, clothes, cars, boats, kitchen remodels, swimming pools, vacations, football tickets, online simulation games, etc.

If you make or sell food, clothes, cars, boats, kitchen remodels, swimming pools, vacations, football tickets, online simulation games, etc., your sales decline. You need less employees or go out of business.

Now more people are unemployed and the cycle continues downward.

There's only one way to reverse that downward cycle, and paying off the debt isn't it.

You have to increase demand. Government spending, tax cuts, low interest rates, & increases in the money supply all do the job at varying levels of effectiveness. Or you cross your fingers and hope it turns around on its own. It's less likely and it's slower, but it's an option.

Bu it has nothing to do with the debt level. People don't make decisions on what to buy or who to hire based on the overall level of debt the federal government is carrying.
3/14/2013 11:38 AM
It is true that there are people that are deciding not to buy based on their situation and they are not thinking about the debt.

The issue is that the eceonomy is not recovering in part because of the debt.


companies see the debt as a sign that the economy is in trouble. It may be mostly appearances but a government that cannot fix small problems does not inspire confidence. Sequester and CRs are part of this.

If Obama could get a budget with spending cuts in place and show the government is moving foward there would be an incredible spike in growth.

So companies would expand, jobs would be created and the guy from the 1st sentence would buy a new refirgiator.
3/14/2013 11:57 AM
Posted by swamphawk22 on 3/14/2013 11:38:00 AM (view original):
It is true that there are people that are deciding not to buy based on their situation and they are not thinking about the debt.

The issue is that the eceonomy is not recovering in part because of the debt.


companies see the debt as a sign that the economy is in trouble. It may be mostly appearances but a government that cannot fix small problems does not inspire confidence. Sequester and CRs are part of this.

If Obama could get a budget with spending cuts in place and show the government is moving foward there would be an incredible spike in growth.

So companies would expand, jobs would be created and the guy from the 1st sentence would buy a new refirgiator.
companies see the debt as a sign that the economy is in trouble

Why would that signal a troubled economy? We've had a massive amount of debt for over 30 years.

If Obama could get a budget with spending cuts in place and show the government is moving forward there would be an incredible spike in growth. 


How would taking money out of the economy spike growth?

3/14/2013 12:06 PM
It isnt the governments money.

When they spend money they took it from somewhere.

3/14/2013 12:16 PM
Posted by swamphawk22 on 3/14/2013 12:06:00 PM (view original):
It isnt the governments money.

When they spend money they took it from somewhere.

Not if it's deficit spending. It wasn't taken from anyone.
3/14/2013 4:04 PM
I know the myth is that borrowed money doesnt impact anything, but it is a myth.

The money is borrowed from somewhere. That money could be invested somewhere else.

Remember the government gets the lowest return on its investment.
3/14/2013 4:30 PM
Posted by swamphawk22 on 3/14/2013 4:04:00 PM (view original):
I know the myth is that borrowed money doesnt impact anything, but it is a myth.

The money is borrowed from somewhere. That money could be invested somewhere else.

Remember the government gets the lowest return on its investment.
Ok, what rate of return do you get when you invest in treasury bonds? 
3/14/2013 7:08 PM
Are you being intentionally obtuse here BL?  Seems obvious to me that he's not talking about the return on your bonds - which is also quite bad - but the fact that if you invested the money you put into bonds in stocks, even "safe" stocks, the corporations to which you're lending your money would do more with that money and inject more jobs, products, and services than the government does with the same money.  If the bonds weren't being sold, maybe people would invest in private corporations and the net money multiplier would go up.
3/14/2013 7:27 PM
Posted by dahsdebater on 3/14/2013 7:08:00 PM (view original):
Are you being intentionally obtuse here BL?  Seems obvious to me that he's not talking about the return on your bonds - which is also quite bad - but the fact that if you invested the money you put into bonds in stocks, even "safe" stocks, the corporations to which you're lending your money would do more with that money and inject more jobs, products, and services than the government does with the same money.  If the bonds weren't being sold, maybe people would invest in private corporations and the net money multiplier would go up.
No, my point is that the money going into government bonds isn't being diverted from stocks. The rate of return is just way too low. If not invested in government bonds, that money would sit in some other guaranteed, low interest rate investment like a savings account or CD.
3/20/2013 5:27 PM
You still seem to view the economy as infinite.

If we keep borrowing that ties up a part of the economy.

You can argue if that makes the economy sluggish, but you cannot argue that there is only so much money. We are not priniting money out of the blue, we are borrowing it from someone else.
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