Posted by swamphawk22 on 5/16/2012 8:59:00 PM (view original):
The recovery is much slower than it would be without Obama's interference.

The idea that if only we were borrowing more money we woulde better off is shocking.

How would borrowing less help the economy?

Less debt would make the economy stronger.

Econ 101

Posted by swamphawk22 on 5/17/2012 4:12:00 AM (view original):
Less debt would make the economy stronger.

Econ 101

How, specifically, would less debt help the economy in this situation?

By showing that our government is moving in the right direction and not getting caught up in the European debt crisis the business community could invest with confidence in the American economy.

Posted by swamphawk22 on 5/17/2012 11:40:00 AM (view original):
By showing that our government is moving in the right direction and not getting caught up in the European debt crisis the business community could invest with confidence in the American economy.

Ok, let's put ourselves back in the shoes of a business owner.

You own a light bulb manufacturing company.

What kinds of things does a business owner like you do when you want to reinvest in your company?  You can provide training to your employees.  You can hire more employees.  You can buy new equipment.  You can buy or lease more space.  I'm sure there are others, but let's stick to those for now.

We were in a large recession.  Your sales (along with just about everyone else's) are down.  Way down.

You have more employees than you need.  In fact, you are considering layoffs.  Most of your machinery isn't being used, so it doesn't need to be replaced..  You defintely aren't considering buying a building or expanding operations.

At what government debt level would you start hiring more employees?  At what government debt level would you buy equipment to replace the equipment you aren't using?  At what government debt level would you move to a bigger building to replace the one that you aren't fully using now?

The reality is, business owners don't make operational and investment decisions based on the governments' debt status.  But they do make operational and investment decisions based on demand for their product.  

So you want to inspire growth by creating artificial demand.

I wan to inspire growth by showing a commitment to fiscal balance.

Neither is reality. Both will get people to start buying.

One has to be paid back!

Posted by swamphawk22 on 5/17/2012 11:57:00 AM (view original):
So you want to inspire growth by creating artificial demand.

I wan to inspire growth by showing a commitment to fiscal balance.

Neither is reality. Both will get people to start buying.

One has to be paid back!

There is nothing artificial about the demand.  If you get laid off from your job and have no money to eat, is your hunger artificial?

You would use food stamps to buy food until you got another job.

If you aren't able buy food to eat, not only do you lose out, but the people that sell food, the people that distribute food, the people that manufacture food, the people that grow food, the people that work on the trucks used to deliver food, the people that sell pesticides to protect the food, and all the people the sell things to the people that do those jobs all lose out.

The debt, long term, is an issue that needs to be dealt with.  But dealing with it during or right after a recession is the worst possible way to handle it. 

If the government borrows money to buy things that were not in demand that is artificial demand.

If I go into a restarant and buy $100 worth of take out and never intend to come back it might create an artificial demand.

Posted by swamphawk22 on 5/17/2012 5:29:00 PM (view original):
If the government borrows money to buy things that were not in demand that is artificial demand.

If I go into a restarant and buy $100 worth of take out and never intend to come back it might create an artificial demand.

But the stimulus (at least a well designed and executed stimulus) doesn't buy things that were not in demand.

The stimulus should inject money into the economy.  So, for example, the Feds can use stimulus funds to fix highways that need repair.  The highways get fixed and construction companies that wouldn't have had work, get work.  The workers have jobs and therefore paychecks, so you get the secondary effects too (workers spending their money on food and clothes and cars and movie tickets).  And, as the last little benefit, none of those workers are collecting unemployment.

I guess it is possible for government action in that situation to help, but it didnt.

And the help would actually need to be much smaller but more focused.

Posted by swamphawk22 on 5/18/2012 10:36:00 AM (view original):
I guess it is possible for government action in that situation to help, but it didnt.

And the help would actually need to be much smaller but more focused.

It did help. Private jobs increased. The GDP increased. Layoffs decreased. The stimulus could have been better but it was certainly better than nothing.

The economy had collapsed. The market forces were pushing it up.

The talk about the stimulus is always very theoretical. No one can point at actual jobs created.

Posted by swamphawk22 on 5/18/2012 5:43:00 PM (view original):
The economy had collapsed. The market forces were pushing it up.

The talk about the stimulus is always very theoretical. No one can point at actual jobs created.

9 studies on the stimulus, including studies arguing that it didn't work:

http://www.washingtonpost.com/blogs/ezra-klein/post/did-the-stimulus-work-a-review-of-the-nine-best-studies-on-the-subject/2011/08/16/gIQAThbibJ_blog.html

http://www.nationalreview.com/nrd/article/?q=MTViNmZiZmQ4NmMxM2Y5NmEzNWIwYWRmNmNhMWJlY2I=

A better expalination.

The premise if the NRO article is flawed. If the stimulus really did crowd out investment interest rates would have had to go up. The only reason the fed is able to keep interest rates low is that there is a huge amount of idle capital looking for a guaranteed safe investment.