Government Spending

Is The Christine O'Donnell Win a Sign That The GOP Will No Longer Tolerate "Moderates" or a Sign That The GOP Has to Shut Up About Social Issues?

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According to a Democratic congressman in the NY Times, the O'Donnell win over long-serving, less-filling Mike Castle in the Republican Senate primary is a sign that the GOP is going extreme:

"When Mike Castle loses in Delaware, that's a sign that moderates are no longer welcome," said Representative Chris Van Hollen, the chairman of the Democratic Congressional Campaign Committee. "They've now become the narrowest of ideological parties, and I do think that's going to alarm centrist moderate voters. It's those centrist moderate voters that determine the outcome in these swing districts."

How "moderate" was Mike Castle? Well, among other things, he supported TARP, various bailouts, and financial-reg reform. So maybe Republican Delaweenians were tired of a guy whose defenders point out defined the establishment.

And while we're at it, in the same Times story, generally useless Sen. John Cornyn of Texas has what may be a come-to-Jesus moment:

"As I've traveled," he said, "I've talked to a lot of folks who are basically independents who say: I'm fine with the Republicans as long as we're talking about fiscal responsibility. Where I go off the reservation is when you talk about social issues."

More here.

No shit, Sherlock. If the GOP can credibly embrace the idea that endless bailouts (many of which were instituted by a Republican president) of GSEs, big banks, car companies, homeowners (but never renters!), etc. are a bad idea; that increasing total government outlays by 104 percent in an eight-year period is really awful; and that doubling down on the less-winnable of two dumb wars is not smart, maybe they deserve another shot at running the House.

As Matt Welch pointed out (a lone voice howling in the mediascape), Christine O'Donnell didn't win her primary on an anti-masturbation, anti-witchcraft platform. She ran on an anti-spending platform. If she can stick to that, and not get into all her other bizarro views, she might just beat a guy who has been known to raise a tax or two. If believing ridiculous things is a bar to serving in the Senate, then I'm guessing fully 50 to 95 percent of the chamber should be calling U-Haul right about now.

But will the GOP generally get the message to be clear on fiscal responsibility and STFU about social issues? I seriously doubt it. Forget about the Ground Zero mosque and stuff like that. The GOP can't even stop wavering on an earmark ban they pledged to when they knew they wouldn't be in power.

NEXT: From Red Squad to End-the-Fed Squad

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  1. If Cornyn’s insight is genuine and becomes party gospel, the Repubs actually stand a chance of becoming worthwhile.

    Fight about your obsessive little culturual issues on your own time. The number one problem facing the Republic right now isn’t gay marriage, abortion, marijuana legalization, or whatever.

    Its spending and the growth of the Total State. That should be the single issue that matters, and we should all be single issue voters.

    1. Cornyn generally sucks, and I’m surprised he said something like that.

      1. I trust Cornyn about as far as I can throw him.

        The Tea Party-dominated Repubs will control both houses and the WH in 2013, running strictly on fiscal issues and stopping government growth.

        Once the fiscal issues are “controlled,” they will revert back to their social demagoguery with their “mandate for the restoration of American values,” or some other inappropriately-named bullshit moral crusade to limit individual freedom.

        If that were scenario were selling on intrade, I’d still buy it at $99/share. It’s in the Republican Party’s DNA to pull shit like this. Anything else would be akin to the Dems bashing union greed and calling for people to rely on their own efforts and stop counting on the government.

        In other words, don’t trust a word these fuckers say. Keep voting for the Tea Partiers the Repubs run against. And vote for different ones every cycle so none of them can get corrupted by the system and become party shills.

        1. Nah. Everybody is overplaying the power of the Tea Partiers amoungst the voting public at large (as opposed to the population of people who vote in an off-year Republican primary).

          This is merely a “throw the bums out” election, because the economy sucks. Not that the government can really do all that much to fix the economy, nor that the Democrats haven’t done anything that would. The Dems are in charge now, so the mushy middle is voting for the other “team”, which happens to be the Republicans.

          But, come 2012, the tide will swing back to the Democrats. At the very least, Obama will defeat whatever Republican manages to win the Republican primary, which mainly will consist of different people trying to out-Jesus each other.

          If fiscal responsibility was really the key to winning elections, Ron Paul would be president right now.

    2. R C Dean get a grip. If you think about it, government is less involved in your life now than at any time since the industrial revolution. Taxes are pretty damn near the lowest they’ve been in forever. Sure, some new regulatory agencies have come into being, but I bet even you’d be happy to trade mandatory armed forces conscription for some food safety rules.

      The “growth of the Total State” is only an issue in your warped, paranoid little mind.

      1. *slurp*

        Mmmm, that’s good.

      2. Considering even RC Dean probably wasn’t around during the industrial revolution, I’m pretty sure that government involvement in his life is definitely higher than it was when he wasn’t alive.

        but I bet even you’d be happy to trade mandatory armed forces conscription for some food safety rules.

        Moreover, saying “things could be worse” is not an argument for not doing things correctly.

        Try being a productive member of society sometime, it’ll probably change your views on a lot of things.

      3. D-

        See me after class.

    3. Fight about your obsessive little culturual issues on your own time. The number one problem facing the Republic right now isn’t gay marriage, abortion, marijuana legalization, or whatever.

      This cuts both ways.

      1. True.

        But when looked at objectively, it isn’t gay marriage et al supporters trying to stop states from legalizing issue “x” via government force.

    4. “The number one problem facing the Republic right now isn’t gay marriage, abortion, marijuana legalization, or whatever.”

      Then why do so many libertarians keep insisting that stands on those types of issues are determining who they support?

  2. “As I’ve traveled,” he said, “I’ve talked to a lot of folks who are basically independents who say: I’m fine with the Republicans as long as we’re talking about fiscal responsibility. Where I go off the reservation is when you talk about social issues.”

    Yes, no shit – because, either way, whenever you politicos talk about social issues, invariably you talk about how much YOU want to shape the world and how much you’r etaking from ME to pay for THAT.

  3. Jesus Christ, only a fucking mindless libertairan hack can come to the defense of a dingbat like O’Donnell on the basis that, dingbat though she is, she opposes higly debatable economic policies the fallacy of which libertarian hacks have turned into articles of faith. Gillespie, you make me puke.

    1. Whee. Wheeee. Wheeeeee.

      1. Oh. So you’re that little piggy in the Geico commercial.

    2. […]she opposes hig[h]ly debatable economic policies the fallacy of which [sic] libertarian hacks have turned into articles of faith.

      Uh . . . what?

      1. I make typos, but only commies and you right-wing libertarian fucks build dogmatic worldviews on dubious economic assumptions, asshole.

        1. Re: Max,

          I make typos, but only commies and you right-wing libertarian fucks build dogmatic worldviews on dubious economic assumptions, asshole.

          Max, baby, those were more than mere typos… your grammar left a lot to be desired.

          1. Nevertheless, who could possibly argue the overwhelming success of bastardized Keynesian government intervention? Besides those implementing those policies, and their devoted horse-blinder wearing loopy left-wing sycophants

    3. Gillespie, you make me puke

      That information will only encourage Gillespie.

    4. ARFARFARFARFARFARFARFARFARFARFARF!!!!!!!!!!

  4. O’Donnell, a person who you know actually won her primary is a pariah. But Charlie Crist and Lisa Mukowski who lost their primaries and launched “Don’t you know who I am!!” third party campaigns are just fine.

    You are witnessing the GOP committing suicide. If they take over and go back to stealing, there will be a third party and they will go the way of the Wigs. These people are so arrogant and stupid, I think it is at least a good bet they will do just that. I give the GOP a 50/50 chance of being around at the end of the decade.

    1. I think our good friend John is referring to the white powdered perukes that the Founders were so fond of wearing.

      He might also have meant The Whigs.

      Either way…

    2. You are witnessing the GOP committing suicide.

      Come on, John. You can do better than Democrat talking points.

    3. “You are witnessing the GOP committing suicide.”

      I do think they’re starting to realize that their Southern Strategy was a mistake…

      Let all the George W. Bushs go back to being the Southern Democrats of yesteryear.

      Bye, bye, social conservatives! We were willing to tolerate you so long as Reagan was in office, in case you haven’t noticed? We’ve been trying to break up with you ever since…

      We’re just not that into you anymore.

      1. There are a lot of social conservatives in places beyond the South. And they are looking to leave the GOP as well. It is not about social conservatism. It is about a ruling class who is more interested in stealing than governing. The GOP won’t commit to ending ear marks. They don’t want to give up the ability to pay off their cronies. That has nothing to do with social conservativism. It is about a group of people running both parties who really don’t care about the welfare of the country.

        1. The South has historically been full of people who vote for social conservatives because they’re social conservatives, and the Republicans have been loathe to give up on that rhetoric because of that…

          Wedge issues like gay marriage and Terry Schaivo were relics of that era.

          It’s why (before Obama) there hadn’t been a Democrat elected to the White House without a Southerner on the ticket since Franklin D Roosevelt*.

          If the support of a critical mass of those social conservatives is no longer necessary for the Democrats to win–it’s probably no longer necessary for the Republicans either.

          That social conservative vote is slowly eroding, and if they keep their boat anchored to that dock, the Republicans really might go the way of the Whigs.

          *You gotta think of Kentucky as “South” for these purposes, but even if you don’t–that’s quite a trend even if there was one exception in 1949.

          1. You could count FDR as a Southerner.

            Rumor has it that he was quite a fan of Georgia ‘shine.

            1. I had to look it up, but Truman was from Missouri too, so he’d probably count as a Southerner–even if his Kentuckian vice didn’t.

              It’s hard to bet against social conservative mores–they may come back when people are less concerned about the economy. But the Obama/Biden ticket winning should count for something in favor of bucking that trend. …and with gay people having come pretty much completely out of the closet, um…that should count for something too.

              Everybody’s got any kind of vice they want at their fingertips–at least the kind you can savor through an LCD screen…

              Furries and Goreans don’t shock half as many people as they might have in the past… Social Conservatism had a good run on Main Street–goin’ on seventy years.

              That’s longer than “Cats” has been on Broadway–but all awful things have to come to an end, eventually.

              Nice run, social conservatives–but I can’t say I’m gonna miss ya.

    4. You are witnessing the GOP committing suicide. If they take over and go back to stealing, there will be a third party and they will go the way of the Wigs. These people are so arrogant and stupid, I think it is at least a good bet they will do just that. I give the GOP a 50/50 chance of being around at the end of the decade.

      I think you are onto something here. If the GOP gets in and goes right back to the way they were under Bush, the electorate will probably never trust them again, and justifiably so.

      What’s really kind of sad is that the Libertarian party just isn’t organized and motivated enough to take advantage of the incredible opportunity that they have been given by the present political situation and the general vacuum in American leadership.

      In my opinion, this is the best moment the libertarians have had probably since 1992 to step up to the plate and make a forceful case for a true “third way” of governance, but by and large they are squandering the opportunity sitting on the sidelines carping and making snarky comments about people like Palin and O’Donnell who have filled the vacuum instead.

      1. Its not like libertarians are given a visible platform of which to express they views. How many pundits on the news channels are libertarians? I think we are ignored for a reason…

        1. I’m really starting to get tired of people using “they hate us and ignore us” as an excuse.

          You don’t have to have a prominent show on Fox News Channel in order to make waves and fill a vacuum that is begging to be filled. Take O’Donnell for instance. Nobody had ever even heard of this woman until like a week or two ago! It could just as easily have been a libertarian in her place instead.

        2. Start arguing libertarian views on blogs other than this one… That’d be a good start.

  5. Christine O’Donnell[…] ran on an anti-spending platform. If she can stick to that, and not get into all her other bizarro views, she might just beat a guy who has been known to raise a tax or two.

    Bizarro views, indeed! Not like other mainstream views like spending our way out of a recession and our future being “green jobs” and tax rate cuts are costs – no, those ain’t bizarro; HER views are.

    1. The CBO says the stimulus “saved or created” jobs based on mathematical models that have no basis in reality. But O’Donnell is unfit for polite society because she once said “when I was in my 20s I thought witchcraft was kind of cool.

      And remember it is the liberals who swear that all conservatives want to burn witches.

      1. i agree that the CBO runs economic models that are poorly grounded in reality. but i think the residual of that is that they probably dramatically underestimate the horror of the alternate scenario.

        from private debt levels in excess of 350% of GDP, chances are a deleveraging unmitigated by expansionary fiscal policy following the balance sheet shock that we’ve suffered would have sent the economy into a tailspin considerably worse than that seen in the early 1930s. i don’t think 20% u-3 would be out of the question by now, 2+ years on.

        1. Whoa blast from the past.

          1. LOL – an old-schooler, mr sage!

        2. And your approach has even been tried in Japan in the 1990s. And it caused nothing but economic stagnation for an entire decade.

          First, the Keynesian approach has never once worked. It didn’t work in the 1930s. People forget that Hoover spent like crazy. And the economy only recovered in the late 1940s after a period of enforced austerity known as the war. It should also be noted that no one was more surprised by the late 1940s boom than the Keynesians who were convinced the returning soldiers would send us back to a depression.

          This kind of economic thinking has been wrong for over 80 years. And it has failed every time it has been tried. Its adherents are now reduced to the pathetic and unprovable defense of “it would have been worse if we had not done it”.

          You are an economic illiterate and an ignoramus. Believing in this shit is no better than believing in phrenology.

          1. the observation, mr john, that stimulus caused a decade of stagnation is exactly correct — truth be told, the period ran from 1990 to 2005.

            where you’re wrong, i expect, is in the counterfactual. you suppose things would have been just dandy in the aftermath had japan done nothing. that is little short of daft, i submit.

            japan’s burst asset bubble vaporized wealth in excess of 3x GDP — a collapse twice as large as the 30s depression in the US. and yet they never suffered the loss of a third of GDP that we did then. why?

            the answer is fiscal stimulus — the use of public debt creation to offset private sector debt retirement to prevent the complete collapse of the national balance sheet, incomes and deposits in synchronicity.

            i might note it is only under the special circumstance in which we now find ourselves (and in which japan then found itself) that such “keynesian” remedies are effectual. keynes himself never drew the connection explicitly, and few keynesians since have either. it was left to japanese policymakers to rediscover WHY “keynesian” stimulus sometimes worked (as in japan, when it was tried intermittently, and as it did in the US between 1933-36, and as it did in germany beginning in 1933) and sometimes was ineffectual or even dangerous (as in the US in the 1970s).

            1. All of this was soundly refuted in Paul Krugman’s blog comments over the last six months or so.

              1. LOL — it was “refuted” only for those who want to stick their head in the sand about how national accounts work. there’s always going to be a large number of people who simply don’t understand because they either haven’t got the inclination to learn about how the world actually works or are too dim to even begin. c’est la vie. i’m not here to make the stupid smart.

                1. Re: gaius marius,

                  LOL — it was “refuted” only for those who want to stick their head in the sand about how national accounts work.

                  “National accounts”? Countries being construed as acting individuals, Mr. gaius marius? Right.

                2. It was refuted so effectively that Pauli Krugnuts limited comments to his articles to 150 characters. He couldn’t take the long, detailed critiques that professional economists were posting there.

            2. The only thing you have in defense of the position is the unfalsifiable claim that “things would have been worse”. That is nothing but faith.

              1. that is nothing but a sensible empirically-derived conclusion upon the observation of several similar cases, mr john. i think you must not know enough about economic history to know how silly your counterfactual really is.

                1. “that is nothing but a sensible empirically-derived conclusion upon the observation of several similar cases”

                  That you don’t bother to list. And I give numerous cases where the policies failed. But since your entire claim relies upon unfalsifiable arguments, there is no way any stimulus could ever be judged a failure since things could always have been worse. Further, you never respond to my points below regarding the 1873 and 1837 economic contractions. Funny you accuse me of ignorance and I bet you didn’t even know there was such a thing as the 1873 or 1837 contractions before now.

                  1. wrong. stimulus outside of balance sheet recessions is highly undesirable. there are a lot of ways fiscal stimulus can be bad. but our current situation is about the best possible time for the united states to employ it.

          2. Based on the shape of your skull, that’s exactly what he expected you to say.

          3. First, the Keynesian approach has never once worked. It didn’t work in the 1930s. People forget that Hoover spent like crazy. And the economy only recovered in the late 1940s after a period of enforced austerity known as the war. It should also be noted that no one was more surprised by the late 1940s boom than the Keynesians who were convinced the returning soldiers would send us back to a depression.

            i can’t imagine a more ahistorical accounting of that period than this.

            1. “i can’t imagine a more ahistorical accounting of that period than this.”

              You only think it is ahistorical because you don’t know anything about history. Go read the history of the 1946 off year elections. The Democrats and the Keynsians wanted to keep government planning and war rationing even though the war was over. The Keynesians predicted that the soldiers returning from the war would send the economy back into a recession and that only increased government spending and control would stop it. The people rebelled against this and gave the Republicans the majority in both Houses and war measures ended. Yet, the economy boomed.

              I can’t have a discussion with someone who doesn’t understand basic history. You don’t know anything Gaius. You think you do, but you don’t. And it makes having an intelligent discussion with you impossible.

              1. actually, there were fairly severe global recessions in 1947-48, 1950 and again in 1953 before the ratio of private sector debt to GDP bottomed in 1954. but let’s not bother with the facts.

            2. Hoover inherited a large budget surplus, which hequickly turned into a deficit. By 1932, when he lost his bid forreelection, the deficit had reached $2.7 billion?the third-largestbudget deficit America had ever experienced. Hoover increased government spending from $3.1 billion to $4.7 billion in a failed effort to stimulate the economy. And he increased marginal tax rates to63 percent

              https://reason.com/blog/2010/09…..n#comments

              Hoover spent like crazy. He was already trying Keynesian stimulus when FDR was elected. Count this as lesson number 1 in your hopefully successful flight from historical ignorance.

              1. http://cei.org/op-eds-and-arti…..t-spending

                Sorry wrong cut and paste. Here is the proper link for the quote above.

                1. Try again, John.

              2. hoover spent not nearly enough to offset the size of the private sector debt contraction he faced, which is the only measure that matters — similarly to today, only more deficient in scale. he also made episodic efforts, as part of the political bargain for increased spending, to run a balanced budget by raising taxes as it was (mistakenly) believed to be necessary for the good of the gold standard.

                what happened, of course, was not the budget balance he intended — and that is because austerity forces even larger deficits than spending. this is a point i don’t expect you to believe or even grasp, mr john, but in truth public austerity in a balance sheet recession forces deflation and increases the impetus to save, collapsing the economy and government revenues — thereby forcing the deficits necessary to offset private savings required by national accounting. the reason hoover ran huge deficits was because he tried not to.

                this counterintuitive phenomena was observed in japan as well, both in 1995 and 2001, following efforts at austerity. it was also observed in the US in 1937-8.

                the lesson is, if you want smaller deficits, create enough public debt to offset private sector debt remediation, thereby short-circuiting deflation and refusing to make the damage to balance sheets any worse than it has to be.

                1. the reason hoover ran huge deficits was because he tried not to.

                  Ummm…then he was doing something seriously wrong. Its impossible to run a deficit if you try not to in the right way…dont spend any money until it has come in. Period. Accidental deficit impossible.

        3. Re: gaius marius,

          [F]rom private debt levels in excess of 350% of GDP, chances are a deleveraging unmitigated by expansionary fiscal policy [that means deficit spending in everyday parlance, kids – OM] following the balance sheet shock that we’ve suffered would have sent the economy into a tailspin considerably worse than that seen in the early 1930s.

          Like digging a hole under a person that’s falling from a cliff – it just delays the inevitable, g.m.

          1. i don’t think so, mr mexican. japan, for example, now carries private sector debt at a 50-year-low as a percentage of GDP. it’s true they have demographic issues besides, thanks to their inability to either have kids or import workers. but japan has carried out a titanic private sector delevering, in fits and starts, that has left it ready to kick off another debt expansion cycle — the growth resulting from which would quickly retire much of the huge JGB outstanding, much as the US and britain quickly retired their massive public debts from 1948 onward.

            1. Re: Gaius marius,

              i don’t think so, mr mexican. japan, for example, now carries private sector debt at a 50-year-low as a percentage of GDP.

              Whopee.

              but japan has carried out a titanic private sector delevering, in fits and starts, that has left it ready to kick off another debt expansion cycle.

              And that is supposed to be a good thing… no?

              — the growth resulting from which would quickly retire much of the huge JGB outstanding

              Yes . . . until the subsequent bubble bursts, and then it’s deja vu all over again.

              much as the US and britain quickly retired their massive public debts from 1948 onward.

              They didn’t, g.m.

              1. Yeah, I was also wondering about this supposedly retired public debt that now totals, what, $15 trillion? If that qualifies as retired debt, I’d hate to see unretired debt.

                1. it was, mr m, heading into this crisis under 50% of GDP — a very low level by the standards of western nations and of the united states itself historically. but i’d expect it will get well over 150% of GDP before this balance sheet recession is over.

              2. let me start form the last, mr mexican —

                They didn’t, g.m.

                indeed, france is still paying off some notes incurred in the 1790s. the point is that economic growth has rendered those debts tiny. the dirty little secret about public debt is that it is NEVER paid off — nor should you wish it to be, as it is from a national accounts point of view the facilitator of private savings by the laws of accounting.

                much as the US and britain did following the bottom of private debt-to-GDP in 1954, economic growth eradicates the real value of the debt — not by paying it down, but by outgrowing it, which is the same in effect.

                as to the rest, i’d suggest the long-wave cycles that we observe in economic history are largely the result of a series of multidecadal debt booms followed by multidecadal busts. just how it works.

                there are other effects now — demographic, resource constraints — that complicate the picture. but the basic mode remains.

                1. Re: gaius marius,

                  the point is that economic growth has rendered those debts tiny.

                  So you’re arguing from an accounting trick.

                  1. growth is real, not a trick, mr mexican. again, we may be faced with limited factors now — demography, resources — that are, shall we say, malthusian? but the capacity of the US to outgrow its public debt in the 1950s and 60s was no trick.

                2. Public debt is rendered smaller in real terms through an inflationary monetary policy. The problem with that is that eventually the people buying the debt wise up, realize their returns are not very good, and stop buying it. We’re getting closer and closer to that point.

                  1. you’ll have to explain why japan can sell 50-year JGBs for under 2% before you can credibly claim we’re getting close to public sector debt revulsion, mr m.

                    1. From Veronique de Rugy:
                      It has gotten away with its carelessness without risking default because the country relies more heavily than most on domestic investors to fund its follies.

                3. Andy J paid off the debts. Well, even with him not entirely, but that was basically rounding, even for the time.

            2. What’s all this Mr. shit, mr. gaius marius?

              1. it’s me digging up ancient affectation for fun, mr pip. :^)

                1. your courtesy is sickening.

        4. I see that gaius marius is carrying the neo-Keynesian water for me today. Excellent. I can concentrate on funny comments about powdered Wigs.

          Gaius, here’s how I look at it: we need to vote for the Repubs as a check on the Dems, but once we do we should quickly get on the phone to them and remind them that it would be a disaster to attempt to balance the budget any time soon, for the reasons you mention. That is, we should do that if we think there is a snowball’s chance in hell that they will come anywhere near trying to balance the budget.

          Luckily, they seem poised to cut taxes, which should serve admirably to boost aggregate demand.

          1. i agree, mr draco, that tax cutting won’t hurt. i’d rather the government spent, however, because i expect tax reductions will be saved without ever being circulated as income. if the government pushes spending through construction firms for roads, for example, the income probably sees a few bottom lines before it is saved or used to pay down debt. as a tax refund, it likely goes straight to debt reduction, therefore doing less work. there’s no employment, no rebuilt commons to support future expansions, etc.

            1. Re: gaius marius,

              i’d rather the government spent, however, because i expect tax reductions will be saved without ever being circulated as income.

              World, meet another nitwit who believes in the Paradox of Saving canard.

              The reason people would put their money back into savings is because they already depleted them, g.m. Capital comes from savings. Your thinking was followed by Hoover and FDR (and countless half-witted Harvard and Yale technocrats in Latin American countries,) leading to too much credit expansion and capital consumption (the contrary of capital expansion or investment.)

              Instead, the years after WW1 when Harding and Coolidge cut the size of government spending and taxes lead to capital expansion (investment) in the 20s.

              1. It’s a damn shame Coolidge didn’t decide to run again in 1928.

                1. Its a damn shame Coolidge didnt decide to run in 2008.

                  1. Well, if he’d run in 1928, we wouldn’t have had a Great Depression.

                    1. ROFL — it’s realy funny what some people have convinced themselves of. like coolidge could do anything about the economics of the first world war.

                    2. Oh, there would’ve been a recession, no doubt. But hopefully, the gears wouldn’t have been set in motion for all the horribly bad economic policies which prolonged the pain an extra decade.

          2. Yay, more debt! Take that animal spirits!

        5. And to steal a line from Fluffy, these things have a mathematical boundary. Asset values cannot go to zero. Wages cannot go to zero. Unemployment cannot go to 100%. Eventually prices will get so low that those with money will begin to spend. The US economy suffered much worse shocks in 1837 and 1873 than it did in 1929. In the first two cases, the contraction was severe but short lived. In the latter case, the bust lasted a decade. Why? Because geniuses like you decided that the government could spend its way out of recessions. It can’t. It never has. You are left making unfalsifiable claims about how “it would have been so much worse had you not acted”. That is a meaningless claim. The unemployment rate could be 30% and you could still make that claim.

          1. 1837 and 1873 were examples of shocks to systems in much less debt than was true of 1929 and certainly today. debt bubbles like these find their genesis in international flow of funds imbalances that persist over time. during the early imperial gold standard period, such imbalances were hard to run over long periods — thus restricted the size of the possible collapse. that 1929 was so much greater was the result of the first world war’s abandonment of the gold standard for the duration, setting up the united states in a role very similar to that of china, japan and germany today.

            if the initial private sector debt debt level in 1873 had been as large as it was in 1929, we’d have seen a similar depression. as it was, it took six years to remediate and starvation became a significant problem in the US — many who lived through both believed the long depression the worse of the two for that reason. unlike 1929, where new deal government spending stepped in to break the income leakage into the paradox of saving in 1933 rather than let the middle section of the country go over to communist revolt, the deflationary leakage of income to debt remediation continued to prey upon aggregate demand until the population was virtually too poor to save — the unintermediated endpoint of any severe balance sheet recession.

            1. “1837 and 1873 were examples of shocks to systems in much less debt than was true of 1929 and certainly today.”

              Bullshit. the 1873 recession was the result of an asset bubble just like today. And FDR did a lot more than keep people from starving. You could have easily done that and avoided the rest and more damaging parts of the New Deal. That is nothing but a bait and switch.

              And further, today’s economy already has social security and hundreds of billions of dollars in entitlements that both keep money flowing and keep people from starving. Spending a trillion dollars was absolutely uncalled for.

              1. not all asset bubbles are identical, mr john. you should look more closely.

                1. And not all government polices are the same. Unlike 1873, we already have built in entitlements the likes of which God had never seen back then. Those things will prevent starvation and the dreaded liquidity trap. But, with people like you enough is never enough. You do nothing but make unfalsifiable claims that things would have been worse if you hadn’t gotten your way and demand more spending.

                  No one but idiots listen to Krugman anymore. He is nuts. No amount of spending will ever satisfy him. And no evidence of failure, no matter how stark, will ever convince him that spending wasn’t effective.

                  1. my view is not that the government can spend us to prosperity. my view is that the government will be afforded the opportunity to replace — not expand, but replace — debt being retired or defaulted upon by the private sector in order to prevent a deflationary collapse. that will look nothing like prosperity; indeed, if all goes well, it’d look like japan.

                    and i would further argue that we won’t have it that easy. japan was an exporter in a time of massive global growth, and therefore self-funding; the US is an importer entering a time of deglobalization, highly reliant on outside funding to support its banking system. we will probably experience the kind of bond volatility and impetus to devalue the dollar that the british did in 1931 at some point. i agree with much of what krugman beats the drum about (because he’s broadly correct on the economics and correctness doesn’t have a political position), but i’ve never heard him admit the truth that we look more like 1997 south korea than 1990 japan and face a potential sudden stop of funding — indeed were experiencing one two years ago today.

                  2. as an aside — you like to use the word “unfalsifiable”, and as a reader of popper i agree.

                    but there’s no benchtop lab experiment for globalized economies, and even if there were it would render no useful information thanks to systemic complexity. possible paths forward can only be determined by empirical analysis of past examples, and those analyses are unremittingly supportive of fiscal stimulus and devaluation for currency sovereigns.

        6. Ah, they found you. Excellent.

        7. Nice to see you again, Gaius!

            1. This “Mr.” shit is douchie, dude. It’s hard to take people seriously when they purposefully go out of their way to make themselves look like as big a douche bag as possible.

      2. Something to consider.

        The GOP and Dems really aren’t all that different. They’ve been able to successfully maintain the illusion that they have serious policy disagreements for decades. Now suddenly, we’ve got a popular grassroots movement propelling truly outsider candidates into the general election on major party tickets. This simply will not do.

        So, the establishment GOP is perfectly willing to do whatever it takes to make sure O’Donnell and any like her don’t get into office, because when it comes down to it, the candidate with the (D) behind their name is the one that’s really and truly “their guy” in this election, inasmuch as they’ll maintain the acceptable duopoly status quo.

    2. In all fairness, it isn’t O’donnell who is expressing strange views, it’s dems digging up shit from her high school years.

  6. “If she can stick to that, and not get into all her other bizarro views, she might just beat a guy who has been known to raise a tax or two.”

    She is sticking to that. It is her enemies and Reason magazine who keep obsessing about shit she said 15 years ago not her. And of course the same people who think O’Donnell is not fit for public office think Hillary, a woman who had seances in the Whithouse is fit to be President. The rules only apply to some people apparently.

    1. I heard on the radio this morning that she wouldn’t even lie to hitler to save Anne Frank. God would provide her an answer without having to resort to deception.

      1. That is what Emmanuel Kant would say to. I don’t see him or his writing being drummed out of public. And beyond that what the fuck does that have to do with anything? What the hell kind of a question is that?

        And if she won’t lie to save Ann Frank, maybe she won’t lie to stay in office. Now that is a radical concept.

        1. actually, that she wouldn’t lie is a feature of O’Donnell that I actually like. that kind of honesty is just anathema to the Senate.

          1. So like O’Donnell, you too are an anti-Semite?

      2. she wouldn’t even lie to hitler to save Anne Frank

        Those men-in-a-lifeboat hypotheticals are silly and pointless sidetracks.

        1. I say we toss the Jew overboard.

          1. But he was the one that sold us our seats.

      3. I heard on the radio this morning that she wouldn’t even lie to hitler to save Anne Frank.

        If this is true, she’s a moral idiot and not fit to be a dogcatcher.

        1. I can’t access it at the moment, but I believe you can find that on a YouTube clip. She said it during an interview on Politically Incorrect, IIRC.

      4. So what exactly? Are you afraid she’s going to build a time machine, go back in history, and not save Anne Frank?

        1. No offense to Anne Frank and her struggles, but that would have saved me an untold amount of utter boredom in 8th grade.

          1. How? Maybe if she burned her diary…

    2. It is her enemies and Reason magazine who keep obsessing about shit she said 15 years ago not her.

      And this is different from the treatment of any political figure how?

      It seems that “digging up” something a candidate said “15 years ago” is perfectly valid and provides unimpeachable evidence when done against “their guy” but it’s just pesky and silly “obsessing” when it’s done against “my guy.”

      Whether or not these people are “obsessing” about what she said, the fact remains that she has said some bizarro shit – like scientists have cloned mice with fully-functioning human brains.

      As others have said, if she sticks to doing nothing more than reducing the size of the federal government and its spending, she might be fine. But ya gotta wonder about her when she’s apparently focused at least some of her attention in the past on teh eeeevil gay agenda and that horror of horrors – “self abuse”.

      1. Love Story was based on my life story.

      2. flower for algernon, rats of nimh? I’m convinced!

  7. The whole O’Donnell thing is just becoming a big witch hunt.

    (despite what you may have read elsewhere, I’m the first to make that joke)

  8. you’re certainly right that the senate is a den of closet crazies (even if less so than the house), mr gillespie.

    but it isn’t o’donnell’s stance on witchcraft or abortion hat makes her dangerous. as mr welch notes, she ran on the political right’s favorite meme-only-when-in-opposition: spending. and THAT is what makes her dangerous — or rather, that her nuttiness can be overlooked by the core GOP constituency in favor of that One Big Issue.

    even far more moderate republican leadership like john boehner, under pressure from the crazies unsubtly polishing their weaponry, is proposing fiscal policy changes that would precipitate an epochal economic disaster. as a statement of the militancy of budget-cutting earnestness among the party, o’donnell becomes more lethal, not less.

    1. “is proposing fiscal policy changes that would precipitate an epochal economic disaster.”

      So spending money we don’t have is the only thing that will save us from disaster. Ah, okay.

      1. ah, exactly. i haven’t been here in a while, but i imagine the economic competency of the board in aggregate probably hasn’t moved much from the “dismal” it read in 2005. let me guess — snarky know-nothings intermixed with a smattering of reality-denying austrians?

        1. Re: gaius marius,

          I wasn’t here in 2005. Care to explain economics to me?

          1. If we knew anything about economics we’d obviously understand that the solution to recessions is to go so far in debt that your currency collapses.

      2. ah, exactly. i haven’t been here in a while, but i imagine the economic competency of the board in aggregate probably hasn’t moved much from the “dismal” it read in 2005. let me guess — snarky know-nothings intermixed with a smattering of reality-denying austrians?

        1. clearly my commenting proficiency hasn’t changed much either. sorry for the double.

        2. you’re forgetting about the EKONOMIKS 79, “DEMAND KURV” crowd and twaddlenock goldbugs. (i guess it’s the same, just wanted to welcome you back)

          1. ah thanks — we don’t want to leave anyone out, mr moose. :^)

          2. Damn, VM, I was just about to shout “DEMAND KURV!”

            REASON was a lot better back when I was fast enough to be first to post an obvious joke. *sniff, sniff*

          3. What, Viking Moose? I thought you were dead!

            1. Despite all efforts by Mr. Steven Crane, well, let’s just say that the Noam Chomsky blow up doll is in need of serious maintenance.

            2. The Moose Abides.

  9. Brand New Facebook O’Donnell Watchdog Page. Please “Like” this page and help compile the truth about TEA Party darling Christine O’Donnell. She could be the factor that determines if the democrats hold onto the senate.
    http://www.facebook.com/group……amp;ref=mf

    Video: Christine O’Donnell – I touch Myself http://www.youtube.com/watch?v=hYbindWziUE

    1. My, how junior high.

      1. Quick — slide over so she can’t sit here!

  10. Wait wait wait – she’s anti witchcraft? I thought she was pro.

    I’m starting to have second thoughts.

  11. And lost in all the news about Christine O’Donnell from the witchcraft to the masturbation, is the fact that she is on record opposed to the war on drugs.

    She was asked specifically on her stance at the Libertarian Party of Delaware meeting on June 20 in Dover. Kent County Libertarian Chair Will McVay said she answered:

    “Get the feds out of it, drug policy should be controlled by the states.” Further, McVay said, “she didn’t shy away from the libertarian label.”

    Now we’re learning she’s a rabid Hayekian oppposed to “Keynsian economics,” and is heavily rumored to be in favor of abolishing the Federal Reserve and support of a return to the Gold Standard.

    None of this is being reported anywheres in the media. Of course, they don’t want to highligh her libertarian streak. Easier to paint her as a “Christian Conservative wingnut.”

    1. Moving the drug policy from fed to state isn’t anti-war on drugs. It’s just against the feds doing it.

      I don’t know if she is or isn’t. But the above is not prove she’s against it.

      But getting the feds out of it will prevent the looming problem if Prop 19 pass in CA.

      1. Getting the feds out of the war on drugs would be a tremendous victory. It would allow states to experiment with legalization. It would allow people who are against the war on drugs to concentrate on winnable small battles like Proposition 19 instead of having to deal with the Feds.

        1. It would be. I agree. But you don’t have to be against the war on drugs to want to move it to the state level any more than being pro-life and wanting to move abortion to states.

          The issue was is O’Donnell against the drug war. I’m just pointing out that Dondero hasn’t made a case that she’s against it.

          1. There is more information on this, that has yet to be released. Another libertarian group has her documented as taking a surprising strong stance against the war on drugs.

            It may be released later in the week.

      2. But it IS anti-war on drugs. The states are where the power should reside, IMHO (and in the founders’ HO as well).

        Tell me, what “war on Drugs,” would there be if the feds weren’t involved? A mish-mash of varying state laws, allowing for experimentation of different legal, use and distrubution systems that would show how silly the war in general is.

        Sure, some states would still be restrictive at first. Imagine, though, when a state populus realizes they are spending $20 B a year to keep something illegal that another state id generating $5B in extra taxes while saving the $20B they are spending…and there are actually drops in drug-related deaths and incarceration levels are cut in half?

        I’d be willing to bet the minority party in the state losing out on that $25B (minimum) would start a legalization campaign and would overwhelmingly win.

        1. So, using this rationale, why are a majority of KY counties still dry?

          Not that I dont agree with your general premise, that moving it to the states is clearly anti-drug war.

          1. Because they’re all busy growing pot on the back 40.

            In the event you hadn’t noticed, KY, small as we are, is #2 in pot production nationwide.

        2. “”Tell me, what “war on Drugs,” would there be if the feds weren’t involved?””

          Just moving it to the states doesn’t mean the state won’t prohibit. I use abortion as an example. There are right to lifers that want to give it to the states because they know the state will prohibit.

          Moving it to the states is anti-fed, and that is a good thing. But if you’re really anti-drug war. You would take the postion that states can’t prohibit either. It wouldn’t matter which government.

      3. Well the states at least have the constitutional power to make drugs illegal. I’d say that’s a massive improvement to where we are now.

    2. will be interesting to see if that position survives the scrubbing she’s about to get to make her into a “viable” senatorial candidate.

  12. Wait a minute! Dondero was on the mailing list?

    1. dhex’s squirrels got loose in the mailroom. We’re still rounding them up.

  13. None of this is being reported anywheres in the media. Of course, they don’t want to highligh her libertarian streak. Easier to paint her as a “Christian Conservative wingnut.”

    It will be soon enough. That way pundits can paint all libertarians as Satan-worshiping anti-masturbatory crackpots.

    Also,
    DOOOOOOOOOOOOOOOOOONDEROOOOOOOOOOOOOO

    1. Just say no to Satan’s hand jobs.

  14. even far more moderate republican leadership like john boehner, under pressure from the crazies unsubtly polishing their weaponry, is proposing fiscal policy changes that would precipitate an epochal economic disaster.

    WHEEEEEEEEEE!!!!!!!!

    Put me on your list as a snarky know-nothing.

    1. Emphasis on “know nothing”. It amazes me how liberals will re-write history and then act shocked when the actual history is pointed out to them.

  15. . i’m not here to make the stupid smart.

    Charity begins at home, you know.

  16. If the GOP moves away from social issues, how will Bill O’Reilly run his culture war? 😉

  17. I think it’s a mistake for the GOP to ignore the social cons in any midterm. I don’t know how many people are actually a part of the secular tea party movement, but I guarantee they don’t outnumber religious conservatives who vote solely on social issues. Besides, just as they showed when they went for Perot, the baggers aren’t exactly footsoldiers for the GOP. It’s dangerous for the GOP to bet on them and ignore the social cons. But I encourage them to do it.

    1. The social conservatives can be pacified with the States Rights argument. Just let them try to get whatever crazy agendas they support passed at the state level.

      In other words, for federal elections anyway, both libertarians and social conservatives can easily make their truce along the lines of supporting the Constitution.

      1. I don’t think social cons care that much about either the constitution or the bigness of the federal government. I think their main motivation is government doing right by Jesus.

        1. “I don’t think…”

          You should have stopped there

          1. But he is right in this case. Do you really think so-cons debate the immorality of HUGE government prosecuting victimless crimes?

  18. John said,

    So spending money we don’t have is the only thing that will save us from disaster. Ah, okay.

    You don’t understand the logic John.

    If you keep hitting your thumb with the hammer it will eventually stop hurting.

  19. For gaius, proper policy:

    Crash and fucking burn.

    1. ah! that explains much, mr robc. i’ll have to find my tin hat and sandbags, then.

      1. Hail Eris!

        Im an extreme-schumpeterian. Allowing failures to fail is ALWAYS a good thing. Whether it be restaurants, banks, economic systems, societies or governments.

      2. I stand behind my decree two plus years ago that would stood at a choice, 2 years of suck (depression even) followed by great growth OR 10+ years of Japan style non-growth. “We” chose the latter.

        The first would have been better, we would be in recovery right now if we had never passed TARP. Real recovery, from a real bottom. With lots of cheap housing available for those able to buy.

        1. I fail to see where this magical growth would have come from if we had let the various industries we saved go under, increasing unemployment a great deal more. The economy was more likely to enter a vicious downward spiral than it was to rise phoenix-like from the ashes, though I’m all ears if you have some explanation for how that would have happened.

          1. Companies that would have gone under are money losers, and thus, net drags on the economy.

            They needed to be liquidated, so the profitable portions of the companies could continue to function while the sick portions died.

            That would create a net positive for the economy.

          2. In an unregulated economy, prices began to fall below their true value. When this happens, people with money begin to buy again. This promotes job growth and the economy recovers.

            If a regulated economy, prices aren’t allowed to fall and so those with money hoard it. No one wants to buy overpriced assets. This is why the Great Depression, the Japanese recession and the current recession last so long.

            1. Also what Joe M said.

          3. I fail to see where this magical growth would have come from if we had let the various industries we saved go under, increasing unemployment a great deal more.

            By invoking the animal spirits through spending.

            1. If the companies went under, it would cause temporary unemployment, but assets would have been sold from the liquidated companies and employment would have come back. Putting off the correction as Obama is doing will only bring about a more serious correction down the road.

              1. By reducing interest rates to 0, massive government spending, and invoking the animal spirits, there will never be another recession. We will live in a perpetual bubble that will not pop because government spending increases the private economy by 12 times.

        2. at least you’re right about the choice we faced, mr robc — though i would argue that the rabbit hole is a lot deeper than just two years after thrity years of accumulated leverage, deregulation and fraud.

          read richard koo’s book — he does a great job explaining how depressions are not dissipative corrections but self-feeding collapses. the difference is the balance sheet shock in a time of high indebtedness, which does massive damage to private sector balance sheets and forces credit demand (not just supply) to go net negative (as today). the leakage of the income stream to debt remediation diminishes aggregate cash flows, incomes and deposits such that — without counteracting fiscal policy — asset values (in the process of being repriced to discounted cash flows in the first place) are further revalued lower thanks to collapsing cash flow. this increases balance sheet damage, increasing the need to pay down debt (or default) — at exactly the same time that incomes are being reduced for the same reason. thus leakage of incomes (ie savings and debt remediation) INCREASES the intensity of the depression by forcing everyone to save MORE with LESS income. it’s a savings target you can never get to UNLESS the public sector creates cash flows through deficit spending.

          if instead the public sector attempt to balance the budget (as hoover did), the leakage from income continues to fuel the downward spiral until all debt is defaulted on and the society is too poor to net save. having reached equilibrium there, the deflation stops.

          i’d wager you that, from 350% private debt:GDP — as compared to 260% in 1930 — that equilibrium is so far down that the united states as a society would have collapsed before we reach it. indeed that’s the pain tolerance we hit in 1933. it’s also the same thing we’re seeing in ireland and greece and portugal as civil order starts to give way to strikes and violence.

          1. http://www.google.com/imgres?i…..amp;ty=131

            Yes, housing prices obviously were not in the need of any correction. Housing prices were just sitting in their room, listening to their Will Smith CD, when for no reason, aggregate demand dropped creating a “self-feeding collapse.”

            1. woah woah woah — don’t get me wrong. house prices were the product of a massive debt binge and went crazy. i sold my house in 2006 and started renting. the collapse was not unforseeable.

              but there’s a difference between ending the debt orgy and returning valuations to discounted cash flows — and doing your level best to destroy cash flows and fire the society into oblivion. by all means — run off fannie and freddie. run off the banks. put all the many insolvent bits of the FIRE sector into runoff. but carefully support cash flows while you do it or there will be blood and a lot of it.

              1. Gaius, I had forgotten just how crazy you actually are.

              2. Why is lots of blood a bad thing?

                Seriously, if you/koo are right and instead of 2 years of depression instead the entire system collapses, SO FUCKING WHAT? It was still the right thing to do.

                We wouldnt have ended up at Thunderdome or even Zimbabwe, we would have just started over. The quicker to the bottom, the quicker the recovery.

                1. because you won’t get two years of depression; depressions aren’t cleansing processes any more than sticking your hand in a blender cleans it. deflationary depressions CREATE debt problems; they are self-feeding spirals that turn prudent loans into bank collapses as cash flows are indiscriminately destroyed. the austrian view of depressions as cathartic is misguided at best, a helf-conception.

                  and i’m not talking metaphorical blood, by the way; i’m talking civil revolt, pulling foreclosure judges out of courtrooms to lynch them on the courthouse steps, shooting sheriffs serving notices of default, burning banks, et al. from private sector debt levels this high, the economic pain would be so awful that the unwind would destroy the country. i would not put widespread hunger beyond the range of things that can transpire. the country has frankly never experienced a depression without hunger becomeing a major problem. 41mm people are currently on food stamps, and the GOP budget proposal boehner put out the other day calls for a 22% reduction in discretionary spending, which includes food stamps.

              3. i sold my house in 2006 and started renting. the collapse was not unforseeable.

                Oh, ye of little faith!

          2. Heh-heh. He said “deregulation.”

  20. Anyone who wants to see a slightly less smug and arrogant explication of the neo-Keynesian perspective on the deficit, tax cutting, etc. than Gaius Marius has provided can go read the Nick Gillespie “Conservative Dupe” topic from the weekend, which last I checked had 260+ comments. One of my explanations for why Nick should be for tax cuts (and thus expanded deficits, no bones about it) at this time is captured in my own blog here.

    I’m guessing Gaius Marius is more of an “unreconstructed Keynesian” than a post- or neo-Keynesian, which is what I’d call myself.

    And John, before you write me off or start hating on me, your good buddy Draco, let me be clear: I think both Austrians and Keynesians are right about some things. It doesn’t have to be all or nothing.

    It’s possible to be a neo-Keynesian libertarian. I hope.

    1. Not only possible–they are being keynesians right now without even realizing it when they argue for tax cuts as economic stimulus. That’s the argument I’ve been hearing, not the supply-sider stuff.

    2. Being for tax cuts isnt neo-Keynesian. Cut taxes, keep them the same, whatever, cut spending to less than 17% of GDP and everything will be a-okay in the long run.

      And, BTW, Keynes is dead, and we havent even got to the short run yet.

    3. smug?!?

      i’m not really keynesian at all, mr draco. but i think the work of richard koo, steve keen, and the MMT school has to be respected. the crisis has validated as much of their views as it has voided the neoliberal/ chicago school perspective.

      1. Sorry Gaius. I took a dig at myself as well by saying “slightly less smug…”

        There’s a lot of arrogance here, that’s for sure, from all sides.

        This is an issue where Tony and I can agree at least partially (not sure whether he understands MMT), and where sadly John and I have to agree to disagree – for now.

        Balancing the budget (or running a surplus) is a very bad idea. Cutting government’s share of the economy is a good idea. You can cut government’s use of real resources without needing to balance the budget. As a libertarian, I’d like to see simple, Constitutional government restored. But without the insanity of returning to a gold standard.

        1. Fiat money ain’t exactly Constitutional…

        2. Actually. We agree Draco. I would not want to return to the Gold standard either. And I think the tax rates are a side show. What matters is how much of our GDP government is eating up. Reducing the size and scope of government is the answer.

        3. LOL — don’t be sorry. i should’ve put a :^) in there.

          arrogant or not, i agree with you — attempts to limit necessary deficits are tantamount to economic suicide before balance sheet repair is complete. while i agree that government’s share of the economy can decline in the long run as well as the FIRE sector’s share, right now just ain’t the time for that.

          that has to be shouted from the rooftops by everyone who understands that fact, because as it is we’re about to embark on a devastating episode of austerity that will have serious ramifications in 2h2010, much less down the road.

          1. I know it gaius marius. I know it. It’s why I’ve been shouting it here for the past few weeks.

            I’ve even signed up for Warren Mosler’s “Counter Insurgency, Deficit Terrorist Squad”.

            You know, some around here love to mock the religious and their moral austerity. Then what do these same guys do when it comes to economics? They preach fiscal austerity! When the alternative is so much more pleasant, not the least because it works. It’s sort of like they have the same frame of mind as the Medieval Christians: this strange new plague happened because of man’s licentious behaviors! We must all give up pleasure for the next 10 years to make God happy again!

            They’d rather people go unemployed and begging in the streets, people reduced to living like animals, everything crashing and burning, than to run a bigger deficit and employ the excess capacity we have lying all around us.

            The same way Obama admitted that he didn’t care what effects raising tax rates on the rich would actually have, as long is it was “more fair” i.e. as long as they could be punished in order to satiate the forces of envy.

            1. I’m not against raising the deficit even more because I want people to suffer. I’m worried that the United States is putting itself in the position to set off hyperinflation that will destroy our currency and cause even more misery than deflation would.

              Look, it would be nice if wealth could be generated by just printing lots of money, but the world doesn’t work that way. The government can not create a healthy economy. Thinking it can is what got us into this mess in the first place.

              1. really examine hyperinflation, and you’ll find that it involves the removal of a significant share of the means of production.

                zimbabwe destroyed its ability to produce agriculture in a land redistribution scheme — that killed its ability to generate forex as well as feed its people. hence hyperinflation ensued.

                germany lost the ruhr valley in the first world war, the home of a third of german industrial capacity, at exactly the same time it was saddled with massive war reparations denominated in a foreign currency. hence hyperinflation ensued.

                for the US to experience hyperinflation, somehow a significant part of its economic apparatus would have to be knocked out — leaving demand far outpacing supply, leaving us unable to export. the only conceivable means of doing so, it seems to me, would be the embrace of a long period of deflationary austerity that collapsed GDP so severely as to provoke civil disorder.

            2. to be honest, i think it has a lot to do with what people can easily understand. people who cannot bring themselves to understand lifestyles different than their own are the harshest devotees of moral austerity; similarly, people who cannot understand that the economics of government are not like the economics of a household — that they are in fact more nearly the opposite of household economics — are the devotees of fiscal austerity. the simplicity of equating my own finances to those of the government is attractive. of course it’s also wrong.

  21. Gaius, Moose and Dondero?

    I think someone is spoofing or is it some sort of reunion day?

    1. I guess the money for the Keynesian PR campaign came through…

    2. I suspect it’s a spoof. Otherwise, I’d be commenting here, too.

    3. I suspect it’s a spoof. Otherwise, I’d be commenting here, too.

      1. Well, well! Nothing smacks of the good old days like an unintentional double post!

        Anyone seen Lobster Girl or Reason Pillow Girl?

  22. Of note, both Rand Paul and Ron Paul have endorsed Christine O’Donnell’s candidacy.

  23. ROBC: DO NOT MAKE THE MINION OF URKOBOLD WITHER AN ARBITRARY PASSER-BY’S TAINT FOR THAT.

    FLAPPY THE EAGLE AND THE ATOMIC FRUITBAT SHALL WEIGH IN LATER.

    WE HAVE NO KNOWLEDGE OF THE WHEREABOUTS OF MR. STEVEN CRANE.

  24. While we’re all pondering the efficacy of centralized stimulus spending, consider this:

    The unemployment stats have been massaged and updated constantly. John Williams at Shadowstats still runs the numbers under the old system, to get some longitudinal comparisons.

    According the methods in place in the ’70s, current unemployment is well north of 20%. Sorry, subscription wall, linky would be pointless.

    So, yeah, this is a brutal recession/depression. I have little doubt that honest GDP numbers would show that it never ended. I wonder if honest accounting would even show that we are in a bona fide depression.

    But its worse than you think, because you get your data from the government, which cooks the numbers to sugarcoat them.

    1. Shadowstats offers some highly dubious data, and John Williams is a clown.

      Carry on.

    2. shadowstats is a mess, imho, but it’s certainly true that 20%+ of the workforce is either unemployed or underemployed — and further that this si a depression, not a recession.

      1. But it would have been worse if we hadn’t spent a trillion dollars. And government debt must replace private debt to avoid deflation.

        I have never heard such absurd thinking. It frankly sends a chill up my spine that this sort of crap passes for thinking. At some point, the government will have to stop spending or it will go bankrupt and end up like Greece. At that point, when the government defaults and our money is worthless, I fully expect you and Krugman to be telling us how much worse things had been if we hadn’t gone bankrupt.

        Yes it is a depression. And massive government borrowing and spending is creating market distortions, new asset bubbles and preventing a recovery. Your kind of thinking has once again turned a recession into a depression. And worse still, you want us all to thank you for it.

        1. yes, much. and it’s frankly OK if you never conceived of it, as i suspect you don’t understand the scale of the private sector debt problems even now, much less did you years ago when it could’ve made a difference.

          our government can’t “end up like greece” because it prints its own currency. greece can and will default because it has no choice; it owes money in euros and can’t print euros. we owe money in and can print dollars. big difference.

          one of our bigger problems at the moment is that our currency is too strong, not too weak. the united states isn’t competitive with countries that have pegged their currency to us with a view toward exporting into the US. this mercantilism creates the global flow of funds imbalances which fueled the bubble from the late 1970s on. economic reality demands that the dollar devalue significantly and our standard of living decrease so that we can reduce our trade deficit. but that won’t be hyperinflationary; it will be part of our recovery, if it’s allowed to happen.

          i wouldn’t deny, fwiw, that government spending will distort economic incentives. that’s a vastly better alternative than a nation-ending collapse, particularly if we end up with a badly needed overhaul of our national infrastructure.

          1. “our government can’t “end up like greece” because it prints its own currency.”

            That is true. It can print money. But the downsides of doing so are pretty much the same as what Greece is going through now. And you are assuming that bond holders are stupid and will never realize that you are selling them debt that is about to be inflated to worthlessness. People will stop buying US Bonds forcing the country into default long before you can inflate out of it.

            “We can spend forever. We will just print our own money”. Think about what you are saying.

            1. you can’t spend forever. when you aren’t in a balance sheet recession, spending will provoke inflation — that’s when the government has to keep it in check. when you’re in a balance sheet recession, the amount of debt you’ll be able to sell will closely approximate the total of savings leakage into the banking system plus your capital account surplus. it’s not carte blanche (although some people do think there is no limit but inflation). but those are limits that we are nowhere near meeting at this point.

          2. The private sector debt problem isnt a problem for those who didnt go into debt. Decreasing asset valuation is a boon to them.

            1. if you think your income wasn’t derived in part by the excessive leveraging and asset creation of the boom, you haven’t properly conceived of what transpired.

              i for one didn’t go into debt at all, both because i expected something like this to happen and because i was fortunate enough to have means enough not to have to. but i’m wise enough to know that my means were in part derived from the reckless spending of many others. we all face a comedown in deflation.

          3. i wouldn’t deny, fwiw, that government spending will distort economic incentives. that’s a vastly better alternative than a nation-ending collapse,

            Bullshit.

            1. i don’t think so. the western economies are trying now to unwind a private sector debt bubble almost twice as large as any on record, when previous instances provokes decade-long depressions and too often civil war.

  25. “Anyone who doesn’t vote for O’Donnell is a jerk-off!

  26. I am invariably impressed by pompous establishmentarian huffing and puffing.

    All hail Doktor Professor Gaius, come to raise us lowly sinners from the muck and mire of unmutualness!

    1. LOL — i’m far from establishmentarian, as my views aren’t the views of any functioning institution i’m aware of. indeed, we’re trying austerity. good luck to you all, because we’re going to need it.

  27. Being for tax cuts isnt neo-Keynesian

    Au contraire- since all money not confiscated by the government counts as spending. tax cuts are always and everywhere categorized as Keynesian stimulus.

    Duh.

  28. robc|9.20.10 @ 1:27PM|#
    Gaius, Moose and Dondero?

    I think someone is spoofing or is it some sort of reunion day?

    The answer can be found in this song:

    http://www.youtube.com/watch?v=ZJFh3_jifoA

  29. “But will the GOP generally get the message to be clear on fiscal responsibility and STFU about social issues? I seriously doubt it. Forget about the Ground Zero mosque and stuff like that.”

    Right. Because the Ground Zero Mosque is a losing issue for the GOP, with only 2/3 of the public on the anti-mosque side.

    I know you like the mosque, Gillespie, but can you take your ideological blinders off for a second?

  30. “Don’t mention the war mosque!”

  31. http://www.slate.com/id/2267685/

    In other news Jacob Weisburg fucks sheep.

  32. What’s next? joe?

    1. God lets hope not.

  33. G.M. has succeeded in implementing our restructuring plan that we developed with them and bringing its break-even point way, way down from needing 16 million cars a year to be sold in the U.S. to needing 10 to 11 million cars to be sold. So as we sit here at the moment with car sales running between 11 and a half and 12, G.M. is making significant net income in an environment where it never could have made that money before.

    I think we should all feel that the restructuring has been very successful, the liabilities were reduced from about $120 billion to about $55 billion and about $8 billion of structural costs were taken out of the company. So there’s no question that G.M. is a viable, successful company. The only question is how successful and that is in the hands of Dan Akerson.

    Steve rattner

    It’s easy to make money if you fuck your bondholders and investors.

    Maybe Timmay should look into this.

    1. “Maybe Timmay should look into this.”

      What makes you think he is not?

  34. I find the democrats to be every bit as bad on social issues as the GOP. At least you can take or leave their bible thumping, since they can’t drag you off to church. Almost without exception, it has been left-leaning politicians who have sought to control almost every aspect of our lives: if you can own a gun, where you can smoke, what you can eat, where you can live, what you can drive, what school your kids can go to.

  35. Having lived and worked in lower slower Delaware, I can assure you there are plenty of good ol’ boys livin’ south of the St. George’s Bridge who voted for O’Donnell DESPITE of her fiscal conservatism and BECAUSE of her stand of social issues. Anecdotal evidence? Perhaps. I just know that these people are hard-core, Palinite “tea party” types and there’s nothing remotely libertarian about them…

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