Hey big spender...

[djAdvocate]

Aug 22, 2012 11:59:52 GMT -5 rockon said:

"the tea partiers are either completely economically illiterate, or they hate America. "

We are in big trouble when people as smart as DJ believe this!

i would appreciate NOT being quoted out of context, rockon. what i said just before that is that cutting spending in a recession is NOT a good way to ensure economic growth, which is NECESSARY to get out of the budget problems we are in. i have NEVER heard a tea partier say that. in fact, they seem to think that if we cut spending, we will recover faster, which is totally absurd. and no, i don't think tea partiers hate America. but i do think that most of them are profoundly ignorant of basic economics. what i didn't say is that i am not sure the general public is much better. they probably aren't. they just don't wear it on their sleeve.

It would seem much more logical IMO to believe in a crazy conspiracy theory that the people responsible for running our country into 16 trillion dollars of debt might qualify as economically illiterate or hateful of America.

i actually didn't take any position on what the rest of America might know. they don't state their opinions as often as the tea partiers do. so, i really don't know. but if you believe they are just as ignorant, i have no means of contesting that claim.

but again, i don't think tea partiers hate America. i was just using logic.

[rockon]

So you don't think the Tea Party hates America however you do think they are economically illiterate but the ones responsible for burying us in debt are not?
There is a logical case for spending during a recession if it is for very specific reasons to meet a very specific objectives however our government including the clowns in power today suggest spending like drunk sailors in good times and bad. There is also very good logic for reducing spending during a recession if the money being spent is not achieving a useful and intended purpose. There is no one size fits all answer except that we need to change the way our government conducts business or our children's future will not be good. I think the Tea Party would actually support that statement.

[rockon]

The only conclusion I have arrived at with people who loath the Tea Party is that they tend to hate any opposition to their own believe and they tend to believe the wild accusations made by this administration and the media that the Tea Party (all 48 of them) were able to block everything good that the president would have done if they weren't there.

[djAdvocate]

Aug 22, 2012 13:18:54 GMT -5 rockon said:

So you don't think the Tea Party hates America however you do think they are economically illiterate but the ones responsible for burying us in debt are not?

this question doesn't even make sense to me, given that people like Paul Ryan and Newt Gingrich are just as much responsible for the problem as people like Barney Frank and Barbara Boxer.

you assume that where we are is the product of economic illiteracy. i don't. i assume it is the product of pandering for votes, and yielding to powerful influences over sensible economics. that doesn't mean that people are ignorant. it means that the corruption in the system leads to bad choices.

well, at least that is what i think.

[rockon]

Well I think I agree with you. The corruption in the system has led to many bad choices however singling out the Tea Party as economically illiterate makes no sense to me when our system as a whole has driven us over a cliff. As a matter of fact i would be much more comfortable arguing that the Tea Parties call for change is long over due. I applaud their efforts.

[djAdvocate]

Aug 22, 2012 13:26:59 GMT -5 rockon said:

The only conclusion I have arrived at with people who loath the Tea Party

hold on right there. first of all it is loathe, i think.

secondly, i don't loathe the tea party, any more than i loathe our pet dog. i simply think they are ill informed on economic issues. i don't loathe the ignorant. i pity them.

i actually like the Tea Party people i have met. they are thoughtful, caring, and above all, WORRIED people that have a genuine concern about America's future. but their fears, and their ignorance, make them useful tools to people that don't have their interests at heart, imo. and they are also very conflicted about the issues.

for example, if you ask them, to a person, should we cut spending, they will say yes. but if you ask them if we should cut DEFENSE spending, a strong majority will say NO. if you ask them why, they will either come up with the moral/idealogical justification (we need a strong defense), or, amazingly, the KEYNSIAN ONE (defense dollars create jobs and wealth). in fact, over HALF of those that support maintaining spending in the TP cite the Keynsian justification. but that is TOTALLY INCONSISTENT with the core positions of the TP (that cutting spending and getting the government out of the private sector increases competition and creates jobs and economic growth).

so, i find the TP folks very muddled and confused- and unable in MOST cases to differentiate between supply and demand side economics.

that is what i am talking about. but i don't hate them. i like them. i just think they are woefully ill informed, in most cases.

[djAdvocate]

Aug 22, 2012 13:49:04 GMT -5 rockon said:

Well I think I agree with you. The corruption in the system has led to many bad choices however singling out the Tea Party as economically illiterate makes no sense to me when our system as a whole has driven us over a cliff.

i am not blaming them, rock. i actually LOVE that they are treating economics as if it is something other than an academic discussion. that is awesome. i just wish they had their positions better sorted out.

[djAdvocate]

Aug 22, 2012 13:18:54 GMT -5 rockon said:

There is a logical case for spending during a recession if it is for very specific reasons to meet a very specific objectives however our government including the clowns in power today suggest spending like drunk sailors in good times and bad.

this is really the core problem. and as i have stated many many times, i am opposed to big spending projects when times are good. we should pay down debt during good times. that would build up reserve credit for the bad times.

[rockon]

"so, i find the TP folks very muddled and confused- and unable in MOST cases to differentiate between supply and demand side economics."

So I can accept some of your examples as muddled and confused but do you not see the same mud and confusion in both parties in general? I sure do. At least the Tea Party is suggesting in words the need to change the way we allow our government to operate while the two major parties simple defend their own ideology that not only illustrates their economic incompetency, we have history to prove it.

[djAdvocate]

Aug 22, 2012 13:58:08 GMT -5 rockon said:

"so, i find the TP folks very muddled and confused- and unable in MOST cases to differentiate between supply and demand side economics."

So I can accept some of your examples as muddled and confused but do you not see the same mud and confusion in both parties in general?

no, not really. and because of that, i find it far less forgivable.

i think it is the product of corruption, competing interests, pandering for votes, and the influence of powerful lobbies. i don't think it is a matter of IGNORANCE in other words, but i do think that there is an element of schizophrenia in the government that precludes coherent policy.

and no, frankly, i don't know how to fix that.

[rockon]

"this is really the core problem. and as i have stated many many times, i am opposed to big spending projects when times are good. we should pay down debt during good times. that would build up reserve credit for the bad times. "

This seems like a generally correct statement to me however the first problem is that we did not build reserves or pay down debt during good times so as a consequence it becomes equally illogical to borrow even more money from a communist country who "loathes" us and spend these monies on projects that have no defined objective, specific purpose or proposed pay back. Our actions defy almost every ones logic except the talking heads who drug us into this hole to begin with.

[fairlycrazy23]

The problem with having the government "make up" spending in the bad times, is that it will misdirect capital.

[rockon]

So... despite all of the "ignorant" ideas of the Tea Party they have brought the real issue (economics) to the table and the powers that be do not want to discuss what they have done in front of the American public because it simple cannot be explained in any rational way. The only alternative for them is to belittle them and try to make them seem ignorant and irrational when in fact what they are suggesting makes much more sense then the road we are on.

[djAdvocate]

Aug 22, 2012 14:10:48 GMT -5 fairlycrazy23 said:

The problem with having the government "make up" spending in the bad times, is that it will misdirect capital.

not following your meaning. clarify.

[djAdvocate]

Aug 22, 2012 14:19:31 GMT -5 rockon said:

So... despite all of the "ignorant" ideas

i didn't say they had ignorant "ideas". cutting spending is not an ignorant idea. the idea that this will lead to economic growth is, however, utterly ignorant.

furthermore, as i already stated, they think that defense spending is stimulative, which is a Keynsian notion. so they have conflicting notions at best.

[djAdvocate]

Aug 22, 2012 14:19:31 GMT -5 rockon said:

So... despite all of the "ignorant" ideas of the Tea Party they have brought the real issue (economics) to the table and the powers that be do not want to discuss what they have done in front of the American public because it simple cannot be explained in any rational way. The only alternative for them is to belittle them and try to make them seem ignorant and irrational when in fact what they are suggesting makes much more sense then the road we are on.

i am not sure it makes any more sense. that is actually my problem with it. if it were a more coherent message, then it would make sense. as it is, they have some nice ideas, stated in a really alarmist fashion (ie "if we don't do something we will go bankrupt"), without any concept of how to practically implement them.

i have already stated that the best course forward is the one we had in the 90's. it is the one that took us from a 6% deficit to a 0% deficit in (15) years. we should double down on that idea NOW, and have a surplus in 2030.

[rockon]

Here is where your economic intelligence and my opinion part ways. I do not think we made any fundamental corrections during the 90's or over quite a few decades for that matter. We have had high points and low points in cycles but we have been going the wrong direction for a long time. As a matter of fact my argument would center around the fact that many things that appeared to many as high points were actually based on poor decisions that resulted in short term gain and fame but had and will have devastating results in the long term. We are now living with some of these consequences and our children will likely deal with much worse because of these failed policies.

[djAdvocate]

Aug 22, 2012 15:44:50 GMT -5 rockon said:

Here is where your economic intelligence and my opinion part ways. I do not think we made any fundamental corrections during the 90's or over quite a few decades for that matter.

i do. the rate of spending growth slowed dramatically in the 90's. in addition, we raised taxes. that combination was very powerful.

We have had high points and low points in cycles but we have been going the wrong direction for a long time. As a matter of fact my argument would center around the fact that many things that appeared to many as high points were actually based on poor decisions that resulted in short term gain and fame but had and will have devastating results in the long term. We are now living with some of these consequences and our children will likely deal with much worse because of these failed policies.

yeah, we really do disagree.

in the 90's, we made GOOD choices. we slowed spending growth, and raised taxes to cut a thorny deficit from the 10 year average of 4% GDP to 0% in (8) years. i would say that was pretty damned good.

fast forward. in the 00's, we made BAD choices. we increased spending growth, and lowered taxes, which raised a manageable deficit of approximately 0% to one that averaged 4% over the next decade. i would say that was pretty damned bad.

to say that those two eras resembled each other in any way other than the fact that we both lived through them is kinda missing the details, imo.

[Driftr]

An interesting chart from Denninger showing total debt to GDP. Look how quickly the debt pulls away from GDP. I do not believe that will be able to happen again.

market-ticker.org/akcs-www?get_gallerynr=3123

The entire post is intersting to me.

market-ticker.org/akcs-www?post=210078

[fairlycrazy23]

Aug 22, 2012 15:20:44 GMT -5 djAdvocate said:

Aug 22, 2012 14:10:48 GMT -5 fairlycrazy23 said:

The problem with having the government "make up" spending in the bad times, is that it will misdirect capital.

not following your meaning. clarify.

Hope I did not leave the impression that government spending only misdirects capital in the 'bad times'; Government spending will always misdirect capital and labor by creating artificial demands for things.

If government starts to subsidies widgets, this will create a demand for widgets, people will attempt to supply the demanded widgets, even though without the subsidies people didn't really demand the widgets (people weren't demanding widgets at unsubsidized price).
So capital and labor was directed to supplying widgets at the detriment of other things. And you will very likely have the widget bubble burst, leaving all this labor and capital directed to producing widgets that nobody wants

By government spending, I am including the FED, it's actual spending and its control of the interest rate.
And speaking of capital, how do you actually create capital? Real capital can only be created by savings, and of course the FED doesn't like to encourage saving.

[rockon]

"furthermore, as i already stated, they think that defense spending is stimulative, which is a Keynsian notion. so they have conflicting notions at best. "

Again there is no reason to discount that in some form defense spending could be stimulative, essential and even required just as Obama believes that fixing "a" bridge is stimulative, essential and required. It has to have more analysis then that to determine if the reward justifies the risk, the cost and the effort. Both parties seem hell bent on defending and supporting their side of the argument but few want to look at the whole picture and the long term effect of each individual decision instead of simply looking at "defense" or "entitlements" as a whole.

[rockon]

"in the 90's, we made GOOD choices. we slowed spending growth, and raised taxes to cut a thorny deficit from the 10 year average of 4% GDP to 0% in (8) years. i would say that was pretty damned good."

Is this the same time period that we signed the free trade agreement with a communist country?

[djAdvocate]

Aug 22, 2012 15:56:35 GMT -5 rockon said:

"furthermore, as i already stated, they think that defense spending is stimulative, which is a Keynsian notion. so they have conflicting notions at best. "

Again there is no reason to discount that in some form defense spending could be stimulative, essential and even required just as Obama believes that fixing "a" bridge is stimulative, essential and required. It has to have more analysis then that to determine if the reward justifies the risk, the cost and the effort. Both parties seem hell bent on defending and supporting their side of the argument but few want to look at the whole picture and the long term effect of each individual decision instead of simply looking at "defense" or "entitlements" as a whole.

actually, i was not making that argument: the argument of "which works".

what i was saying is that the TP is pretty openly anti-Keynsian. they think that demand side spending is bad, and that supply side is good. but clearly, that thinking does NOT apply to defense. which puts their thinking in conflict.

i, on the other hand, think that demand side spending is good in economic downturns. i have, and can again if you wish, explain why- but the reasoning is very simple and sound.

i think that the muddled thinking is what got us to where we are. we need clarity. if we are going to cut spending, and maintain economic growth, we should target the areas that have the lowest ROI. this is actually really well known stuff. it is not sorcery and witchcraft. but the problem is that i don't hear ANY discussion of this. and you know why? because everyone's sacred cows would be gored!

what is going on is a giant shift of wealth right now- and the wealthy are running the show. do you really expect that to change?

i don't.

[djAdvocate]

Aug 22, 2012 15:59:39 GMT -5 rockon said:

"in the 90's, we made GOOD choices. we slowed spending growth, and raised taxes to cut a thorny deficit from the 10 year average of 4% GDP to 0% in (8) years. i would say that was pretty damned good."

Is this the same time period that we signed the free trade agreement with a communist country?

dunno. did we?

i wasn't talking about trade deficits, tho. i was talking about domestic revenue -vs- spending deficits.

[rockon]

fast forward. in the 00's, we made BAD choices. we increased spending growth, and lowered taxes, which raised a manageable deficit of approximately 0% to one that averaged 4% over the next decade. i would say that was pretty damned bad.

So who made these bad decisions? Democrat, Republicans, Tea party, all of the above?
Is it possible some were effects of the decisions made during the 90's?
Is it possible some of our problems today are a result of bad decisions made during past years?

Who are we kidding? We all know they shared power through these years and that they both made bad decisions through these decades that are having bad effects on us now but the real question is why would any intelligent person defend the continuation of it?

[djAdvocate]

Aug 22, 2012 16:07:16 GMT -5 rockon said:

fast forward. in the 00's, we made BAD choices. we increased spending growth, and lowered taxes, which raised a manageable deficit of approximately 0% to one that averaged 4% over the next decade. i would say that was pretty damned bad.

So who made these bad decisions? Democrat, Republicans, Tea party, all of the above?

well the TP didn't exist in the period in question. but i wasn't blaming the TP for the deficits.

Is it possible some were effects of the decisions made during the 90's?

other than the repeal of G-S, and the subsequent bailouts, not really.

Is it possible some of our problems today are a result of bad decisions made during past years?

well, there are decisions that cost money, and those that don't. our trillion dollar middleast boondoggle was not a product of Clinton. the stupid part B thing wasn't either. nor were the tax cuts. those were all Bush/Obama things. basically Clinton left us with a functioning system, and we have since folded it over and humped it to unconsciousness.

Who are we kidding? We all know they shared power through these years and that they both made bad decisions through these decades that are having bad effects on us now but the real question is why would any intelligent person defend the continuation of it?

i agree, they all shared in the intelligent decisions of the 90's, and they all shared in the really bad ones in the 00's. i hold them BOTH responsible for BOTH the successes AND the failures.

what i suggested is that t he solution looks more like the 90's than like the 00's or the 80's. you are free to disagree, but there is an awful lot of data out there that you are going to have to argue with.

[rockon]

"dunno. did we?"

"i wasn't talking about trade deficits, tho. i was talking about domestic revenue -vs- spending deficits."

My point is that decisions made decades ago that no one even pays attention to probably has more long term effect our revenue vs spending then anything else yet people try to assign reason to why there was improvement or decline based on something that happened today.
While I agree with your point that defense spending in general would certainly not be a good stimulate or have the suggested Keynsian effect neither does increased spending on entitlements or random infrastructure projects as the other party would have us believe.

[djAdvocate]

Aug 22, 2012 16:19:55 GMT -5 rockon said:

"dunno. did we?"

"i wasn't talking about trade deficits, tho. i was talking about domestic revenue -vs- spending deficits."

My point is that decisions made decades ago that no one even pays attention to probably has more long term effect our revenue vs spending then anything else yet people try to assign reason to why there was improvement or decline based on something that happened today.
While I agree with your point that defense spending in general would certainly not be a good stimulate or have the suggested Keynsian effect neither does increased spending on entitlements or random infrastructure projects as the other party would have us believe.

i am not familiar enough to quote figures for you, but i am pretty sure that if you rank social spending, defense spending, and tax breaks by stimulative effect, social spending comes out on top, next defense, and finally tax breaks. but i have run out of time today. gotta go. i have a big order i have to close.

[rockon]

"basically Clinton left us with a functioning system, and we have since folded it over and humped it to unconsciousness."

Now we enter an area of total disagreement. I was very close and involved with some of the decisions made during the Clinton years and predicted that the decision to open free trade with China would result in a devastating long term effect on our economy and feel very certain that he left office while the economy was racing building new machines and banks of product so we could send 37% of our high tech manufacturing jobs and the technology to a foreign country that still hates us and our ideals. It is the classic example for short term gain to rape our future and it was so predictable!

[rockon]

"i am not familiar enough to quote figures for you, but i am pretty sure that if you rank social spending, defense spending, and tax breaks by stimulative effect, social spending comes out on top, next defense, and finally tax breaks. but i have run out of time today. gotta go. i have a big order i have to close. "

I think you may be right but I qualified it with "good" stimulus. Cya take it up tomorrow.