Stimulus

What Are All These Crazy Politicians Doing Trying to Cut Spending?!

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What if we're hurtling toward the second valley in a double dip recession? The paper of record offers a "news analysis" comparing the country's current financial troubles to the one-two punch of the 1980 and 1981-1982 recessions—and suggesting that, if we're recession-bound once again, policymakers might not be ready or able to act. Here's the no-questions-asked capsule summary of the last time the economy took a dive:

When what may eventually be known as Great Recession I hit the country, there was general political agreement that it was incumbent on the government to fight back by stimulating the economy. It did, and the recession ended.

That's one way of putting it. Another way of putting it would be that we spent roughly $800 billion in deficit-financed taxpayer dollars stimulating the economy and maybe-or-maybe-not creating jobs only to produce a period of weak growth that may or may not be slipping into yet another recession. Anyway.

But Great Recession II, if that is what we are entering, has provoked a completely different response. Now the politicians are squabbling over how much to cut spending.

Heavens to Hayek! It's almost as if the federal books are already submerged in debt and projected to take on enough additional obligations to sink them far, far deeper. Why in the name of all that is Keynesian and holy would policymakers possibly want to look for ways to spend less than planned in order to trim annual deficits? It's almost as if some of them have this crazy idea that an "unsustainable" long-term debt is a bad thing—and might even be a factor in our current economic woes.

But that can't be right. Or can it? Here's Harvard's Kenneth Rogoff, coauthor of what is probably the most comprehensive history of financial crises, on what conventional analysis of the economy's current troubles gets wrong:

The phrase "Great Recession" creates the impression that the economy is following the contours of a typical recession, only more severe – something like a really bad cold. That is why, throughout this downturn, forecasters and analysts who have tried to make analogies to past post-war US recessions have gotten it so wrong. Moreover, too many policymakers have relied on the belief that, at the end of the day, this is just a deep recession that can be subdued by a generous helping of conventional policy tools, whether fiscal policy or massive bailouts.

…Many commentators have argued that fiscal stimulus has largely failed not because it was misguided, but because it was not large enough to fight a "Great Recession." But, in a "Great Contraction," problem number one is too much debt.

It's the debt, dummy? Sadly, even this week's multi-trillion dollar deal isn't likely to do much about the root problems of the federal debt. 

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  1. July jobs report out.

    Private sector: up 154,000.
    Public sector: down 37,000.

    Bottom Line: the source of this job crisis is government layoffs and attrition; not government spending; not government borrowing.

    If government would just stop throwing its own workers onto the unemployment line, all of us would be suffering a lot less.

    1. How is government spending not at least at some level coupled to government employment?

      1. should have read “excessive government spending” — in that sense, source of crisis is lower government spending, specifically on payroll.

        1. Lower STATE AND LOCAL government spending, not federal. Most states have spent themselves into a budget crisis and have had to make huge cuts. They can’t print their own money to monetize the debt away.

        2. I see. So in the limit as government employs everyone, then the economy will be perfect, right? I look forward to our impending Cubanization!

          1. Of course, Id. There are only two positions to take: the government employs everyon,e or the government employs no one. There is nothing in between. Thank you for this scintillating contribution!

            1. Why do you believe that current government employment is too low?

              1. because unemployment remains high even while the private sector is hiring;

                and because government is laying people off, putting them on the unemployment line.

                1. because unemployment remains high even while the private sector is hiring;

                  Yeah, I’m sure long-term unemployment has no role in this at all. None whatsoever.

      2. You’re asking me a question like I know something or something.

        At any rate, the Republicans are to blame.

        1. Nice handlejack, coward. Gee, why does everybody hate Libertarians? Hint: it’s mostly personal.

        2. Wahh! The bigs kids won’t let me play! Mooommmmmmyyyyyy!

    2. Bottom Line: the source of this job crisis is government layoffs and attrition; not government spending; not government borrowing.

      Horseshit–have you seen the employment-to-population ratio? It’s at 30-year lows. The economy needs to create roughly 150K jobs a month just to keep up with new workers–that’s not even counting the current unemployed.

      In order to keep up the government employee levels, the money coming in from the private sector has to be able to support it. When you’ve got millions of people still out of work, guess what? The government’s income is going to be less, and sooner or later government jobs will have to be cut. That’s basic math, and it doesn’t give a shit whether you think more government employees need to keep their jobs.

      To assert that government borrowing and spending isn’t part of the problem is even more absurd in the face of these facts, given that a government entity can only borrow so much relative to its income before the structure finally blows up, particularly when the government apparatus is as highly scaled, complex, and insidious as ours.

      1. So you think you’re gonna pave the way back to full employment with pink-slips for government workers?

        Well, you’re getting your wish even as we speak, bozo. Let’s see how it turns out.

        1. If their unemployment checks are less than their bloated government salaries, it’s a net win to the taxpayer, you tool.

        2. So you think you’re gonna pave the way back to full employment with pink-slips for government workers?

          Well, you’re getting your wish even as we speak, bozo. Let’s see how it turns out.

          The private sector is going to have to build a stable employment base back up, not the public sector, bozo. In case you forgot, the public sector is hosed without a strong private sector base. Where do you think the money comes from, Bernanke’s ass?

          Stop expecting the government to bail everyone and everything out–that’s been part of the whole goddamn problem.

          1. Where do you think the money comes from, Bernanke’s ass?

            Uh, don’t give them any ideas.

        3. Where does the money come from to pay all those government workers?

            1. Don’t forget me and my trusty printing press!

              1. We don’t.

        4. And go back to school and take a fucking math class on exponential functions. You might actually learn a thing or two before you spout off about third-tier clerks not being able to jerk off all day.

    3. If anything, that’s good news. The private sector jobs have real value, and don’t cost taxpayers.

      1. All those expendable teachers, firefighters, and cops. Parasites!

        1. Smartest thing I’ve ever seen you write here.

    4. D- trolling. I have trouble believing anyone is stupid enough to make this claim and still operate a computer. The part where you made fun of other people’s contributions to the discussion was funny in a meta way, so good job with that part.

      1. Generous grading.

    5. based on these numbers –

      Private sector: up 154,000.
      Public sector: down 37,000.

      We need to cut more public sector jobs to grow the private sector! If you want to play with numbers. Or your jack-handle.

  2. Rogoff says “bring on the inflation.” Sounds better than the Ron Paul gold-buggery.

    1. I think they’re largely the same sentiment, different only in the government action they advocate. Either way, holding gold is a win.

  3. Dow still sinking.

    Tell me again: how did that “hostage taking” work out for America, Senator McConnell?

    1. it’s the other side’s fault! both parties AREN’T to blame!!

      1. behold the cowardly handle-jack!

        1. i don’t know who to believe anymore

          1. Now this sock is all crusty. And smells like me.

    2. Left-wing arguments pre-debt ceiling hike: “IF WE DON’T RAISE THE DEBT CEILING WE WILL DEFAULT AND THE STOCK MARKET WILL CRASH A BLOO BLOO BLOO!!”

      Left-wing arguments post-debt ceiling hike: “THIS STOCK MARKET CRASH IS ALL THE RIGHT-WINGERS FAULT! MONEY COMES FROM ELVES AND WORMHOLES A BLOO BLOO BLOO!!”

    3. Jesus Christ, you aren’t gonna find any McConnell fans here, so take your Team Blue show elsewhere.

      1. Exactly, the other KY senator is much more supported here.

        1. Senator Jelly, that is.

  4. Where were all of the liberal Keynesians when the economy was strong?

    1. Voting for Al Gore, the lockbox, and opposing the Bush tax cuts — classic upside Keynesianism.

      1. Voting for Al “reducing a 7% increase to a 5% increase is a spending cut” Gore is classic upside Keynesianism?

        1. OK, I got it now. Liberal Keynesianism: When the economy is good, grow the government, when the economy is bad, grow the government more!

          1. as long as the government keeps growing!

            1. “Be sure to pick up a copy of my brand new book for kids: CLIFFORD, The Big Red Government!

          2. I figure that’s what the term “progressive” means: progressive increase in government.

      2. Hahaha, the lockbox?! Trollin trollin trollin…

      3. There’s a big surprise for you inside that “lockbox”, mobiushit.

  5. You can’t stimulate your way out of this dip. You can’t deregulate your way out of this dip. You can’t tax-cut your way out of this dip.

    Consider-
    unemployment: above 9%
    GDP growth: below 2%
    Price of oil: near or above $90 per barrel (!!!)

    How are you going to pump another two percentage points into GDP, or shave 3 percentage points off of unemployment, without sending oil way into triple digits? And how can you sustain high growth or full employment with oil in the triple digits?

    (Nota Bene Palinoids: we could start drilling off the US coastline tomorrow and it would take five years before we started pumping even 1,000 barrels per day out of it.)

    You can’t.

    You. Just. Can’t.

    We have hit an economic wall. It is beyond federal policy to change. We need a triage strategy to protect basic human well-being during a long period of interconnected slow-growth, low-employment, and high energy prices.

    1. An economic “wall” implies that innovation, growth, and value are somehow concepts that are no longer operating. This is ridiculous on it’s face. What is no longer operating are the notions that continued leveraging, government ponzi schemes, and “stimulus” are what drive GDP. It’s very simple: the government cannot and does not provide economic growth. It can pull on it, and clearly it can get it’s prodigious girth in the way, but it is not a driver.

      1. Yeah. “Innovate” your way out of 90 dollars a barrel over the next 18 months. This I gotta see.

        1. Read last sentence again re: “Getting in the way”. Oh, and GFY.

    2. oh, I know! We’ll SPEND our way to savings!
      Is that about right?

      1. ooh, we can SAVE our way to spendings!

        shit, that made sense….

        1. the cowardly handle-jacks never end at Reason dot com!

          1. dude, this is the internet.

            didn’t you read the manual?

            1. this handle-jacking only happens on Reason. I never see it anywhere else. It is a reflection of the fundamental character flaws of the typical Libertarian.

              1. … and now, if you’ll excuse me: I’m off to my room with this jumbo-sized bottle of baby lotion, for some more handle-jacking.

              2. I’ll drink to that!

              3. That they stopped developing intellectually after they read Ayn Rand in 9th grade?

                1. Replace “Ayn Rand” with “John Maynard Keynes”, and you’re on to something.

          2. You know there’s only, like, four people on this site, right?

            1. I know you’re not me, and I *think* you’re not Matt or The Jacket, so … yeah, that’s about right.

      2. Let me repeat the first line of the post for your benefit:

        “You can’t stimulate your way out of this dip.”

        Now, tell me: did your mother have any children who didn’t choke out on their own umbilical cords?

        1. Derp!

    3. which basic humans should I protect the well being of?

      Ah hell, here’s a guitar, I hope singing Kumbaya protects your well being.

    4. It’s time, boys. Time to end the fucking government.

      It is the fucking problem. THE problem…not just one of many. Fuck.

      1. The cowardly handle-jack! It’s not just for hackers anymore.

        1. The cowardly handle-jack! It’s not just for hackers anymore.

          1. But it is for jackers! fap fap fap oooh Obama oooh Keynesian economics oh yes Krugman im cummin im cummin im cummin…

    5. And you can’t reconcile the fact that if we’ve hit the wall, there’s no way to build things back up without significant pain. Your problem is you actually think politicians would be able to fix this without inconveniencing you.

      1. Now you’re just making thing up that no one ever said. How is triage painless?

        1. Now you’re just making thing up that no one ever said. How is triage painless?

          What’s your definition of “basic human well-being?” Perhaps if you didn’t start from an obtuse premise, you wouldn’t get beaten on so easily.

          1. Your mind is an assortment of completely random jargon:

            “stable employment base”
            “exponential functions”
            “scaled, complex, and insidious”
            “obtuse premise”

            Where do you get this crap? It’s worse than talking to a Berkeley Marxist.

            You think shoveling tens of thousands of workers onto the unemployment line at this particular point in an economic downturn — so as to avoid having to publicly borrow money at nearly zero interest — is a good idea? Fine. You’re already getting your wish. What is going on right now is a function of policy consistent with your preferences.

            Own it.
            Smell it.
            Get your ragged face down in it.

            This is your world, the way you want it. Stop blaming me. I’m just the counterfactual.

            1. Your mind is an assortment of completely random jargon:

              Whereas “basic human well-being” and “triage” are crystal clear definitions.

              Where do you get this crap? It’s worse than talking to a Berkeley Marxist.

              So you have a limited vocabulary, got it.

              You think shoveling tens of thousands of workers onto the unemployment line at this particular point in an economic downturn — so as to avoid having to publicly borrow money at nearly zero interest — is a good idea? Fine. You’re already getting your wish. What is going on right now is a function of policy consistent with your preferences.

              LOL at your goonfiction–what part of “the public sector cannot survive forever without a strong private sector” and “30-year-lows in the employment to population ratio” do you not understand?

              This is your world, the way you want it. Stop blaming me. I’m just the counterfactual.

              What counterfactual? You cited one fucking statistical comparison as if it represented everything that was wrong with the entire unemployment picture. You conveniently ignored the above mentioned employment to population ratios, the impact of long-term unemployment, private sector job losses since 2007, the continuous influx of new workers on top of current unemployed, and the exponential growth of our national deficit, and your big solution is “WE NEED TO KEEP ALL THESE GOVERNMENT WORKERS EMPLOYED REGARDLESS OF ECONOMIC REALITY OR REVENUE STREAMS!!”

              The money is JUST NOT THERE to keep these people employed–is that really so hard for you to grasp? And with $1.5 trillion deficits and 100% debt-to-GDP in place, where exactly do you think the money is going to come from? Try spending $150,000 a year when you’re only bringing in $75,000 and see how long you can keep it up.

              1. Right now the money is there, and it’s there at nearly zero percent interest. But you would rather have mass layoffs than borrow the needed increment at nearly zero percent.

                Congratulations on getting your wish.

                1. Right now the money is there, and it’s there at nearly zero percent interest. But you would rather have mass layoffs than borrow the needed increment at nearly zero percent.

                  And how exactly is this debt going to be paid back, stupid? Any entity that continues to attempt to pile on debt indefinitely above what they take in for revenue is going to eventually go down in flames. This has been a fact of history going back thousands of years, and you provide nothing but blubbery appeals to emotion as a response–“OH THOSE POOR GOVERNMENT WORKERS HOWEVER WILL THEY SURVIVE?!!”

                  Where the hell are the jobs going to come from to 1) get the millions of unemployed back to work; 2) employ the hundreds of thousands of new workers entering the workforce; and 3)bring in enough revenue to pay down not just the debt, but a $1.5 trillion structural deficit? What industries are going to build up that fast? We don’t have the lightening in a bottle that the internet provided 15 years ago, and even that was built on a bubble of ever-increasing credit that couldn’t be sustained.

                  As the links pointed out, this country has a regulatory climate that is hostile to small businesses–you think keeping a bunch of third-tier government bureaucrats on the public dole is going to fix that problem?

                  I’m going to say it again and maybe it will sink into your thick skull–if the private sector is weak, the public sector will soon follow, because the public sector is entirely dependant on the health of the private sector to survive.

                  Again, go back to school and take a course in exponential functions–it might give you some insight into exactly why we aren’t going to be able to deficit-spend our way into prosperity.

            2. Tell you what, I’ll do you a favor–read these and tell me what exactly is wrong with the analysis.

              http://www.oftwominds.com/blog…..-8-11.html

              http://www.oftwominds.com/blog…..-8-11.html

              Notice that nowhere in there is “make sure that every government employee keeps their job, because that will make things worse in the short term and things must never get worse.”

              1. RRR — those two links you provided?

                That is a lot like the “triage” I had in mind.

                Maybe we should just agree to agree?

                1. That is a lot like the “triage” I had in mind.

                  Bullshit. The entire premise of your argument is that government workers are being laid off and that can’t be tolerated no matter the economic realities–and when I had the audacity to point out that the private sector needed to be robust in order to keep the public sector solvent, you started whining about me using big words.

                  1. sounds like your one of those people who want enemies more than common ground…

                    okay then – stay cozy in Haterville, and maybe run for mayor

                    1. sounds like your one of those people who want enemies more than common ground…

                      What common ground? Unless you can point out to me how the math is in your favor, I’m not much interested whatever “common ground” you think exists here. It sounds like you’re a lot more invested in keeping the current bloated government leviathan in place than in confronting economic realities.

                      You stay cozy in Pozville, because you certainly have crowned yourself king.

                    2. Buh-bye

                    3. Let the door smack you in the face on the way out, chump–it might knock some sense into you.

                    4. RRR continues his brilliant proselytizing for the cause. How many converts will he win today? Maybe twice as many as yesterday!

                    5. In other words, twice as many as you have.

                    6. My side isn’t at 2% on election day.

                    7. Your side broke the fucking world. I don’t think I’d brag about that.

                    8. Yeah, well your side jacked my handle. Wah wah wah!

                    9. My side isn’t at 2% on election day.

                      No, but it is 100% in debt on a year-to-year basis.

                    10. I wouldn’t want to trade places.

    6. How are you going to pump another two percentage points into GDP, or shave 3 percentage points off of unemployment, without sending oil way into triple digits? And how can you sustain high growth or full employment with oil in the triple digits?

      Rev. Malthus, please pick up the white courtesy phone.

    7. “You can’t.

      You. Just. Can’t.”

      Another iron-clad argument from this mobius guy.

      I figured out now where he gets his nick, his mind is a mobius strip, constantly turning in on itself in a never-ending team-blue circle jerk.

      1. We await your “can-do” plan.

        1. “Nota Bene Palinoids:”

          You gave yourself away with this one. Don’t believe everything you read on huffpost before coming here ok?

          1. You’ve got an oil well ready to produce before Nov. ’12? Sounds like a hot investment tip. Do share.

            1. Shovel ready!

            2. Sorry you missed the point.

              Your comment gives away what you really are, the actual point is irrelevant.

    8. —“Nota Bene Palinoids: we could start drilling off the US coastline tomorrow and it would take five years before we started pumping even 1,000 barrels per day out of it.”—

      So, if we had started drilling 5 years, 10 years, 15 years ago, then the production would be on line at this point. It’s always the argument that “it will take 5 years to produce” from the new drilling, but never a choice to allow drilling to begin. You can’t get ahead of the curve that way.

      1. That’s right. If the Republicans in charge of the White House, Florida and California five and ten years ago had drilled, we might be seeing some production now.

        1. —“That’s right. If the Republicans in charge…”—

          You’ll find no love for Republicans with me. I think both parties have the same goal, government growth.

          I just find it funny that the argument is always made that it will take “X” years to bring the production on line, but neither party can seem to get drilling started. If we never start, we will never have the production.

          1. re: “X years”..
            Even this phrase is irrelevant, as the mere process of issuing the drilling permits will cause the market to react and bring down petroleum costs.

  6. even this week’s multi-trillion dollar deal isn’t likely to do much about the root problems of the federal debt.

    Oh, it’s likely to do a quite a lot, and all of it bad. The deal is to toss even more money into the black hole of federal spending.

    -jcr

    1. When the people and media stop accepting and promulgating the notion that a slight change in the first derivative of spending means a cut, maybe we’ll get somewhere.

      My wife doesn’t buy it when I tell her how much I’m saving on the latest gadget when it’s 20% off. Why does everyone seem to lose their common sense when government is involved? Don’t answer that.

      1. When the people and media stop accepting and promulgating the notion that a slight change in the first derivative of spending means a cut, maybe we’ll get somewhere.

        ^THIS^. I try not to think about this anymore because I … get … so … FUCKING ….

        1. When I think about you I jack my handle. Oh, I don’t want…

    2. My father worked two jobs so he could have money to throw into the hole, and he never complained.

  7. Just speaking for us po’ common folk, but frankly, I never saw the first recession end. I guess it did, because all the rich, smart folks said it did, but darned if it meant anything to me and mine.

    1. Depends on how you define “recession” I suppose.

    2. We’re doing just fine!

      1. Once we hire more gov’t employees, the economy will take off!

    1. the cowardly handle-jack!

      1. Stop jacking my handle!

        1. This is a big fuckin’ handle!

          1. Meh.

            1. What’s all this about handles, and jacking…?

              1. Need to borrow some lotion?

                1. Eewww!!

                  1. How ya doin?

                    1. Fuck you, I prefer 10 year old boys.

                    2. Fuck you, handle-jacker. I exclusively fuck 2 year olds.

  8. Maybe if we end some wars? I mean, is killing brown people really that important? It’s fun and all, but…

    I don’t know I’m probably crazy.

    1. another cowardly handle-jack!

      1. another handily jack-coward!

        1. another jack in my hand! cowards!

          1. cowardly handle another jack!

            1. Piss off you jerks!

    2. I thought you voted against that.
      Are you saying that Obama wants to kill brown people?

      Retard.

  9. Where did all of me come from?

    1. from the cowardly handle-jack!

  10. I mean, is killing brown people really that important?

    If they’re Libyans? Absolutely!

    1. And just thinking of all the CO2 these swarthy types won’t be exhaling makes us here want to touch ourselves.

      1. I hate Libyans, because I can’t tax ’em.

        Fucking Libyans.

        1. No need to tax.

          I mean to control Libyan oil by befriending the murderous thugs of the opposition. We can make friends with Al-Qaeda for oil. I am personally idolized by all Middle-Eastern Arabs.

          1. Fuck’em. Bomb their country, rifle their wallets.

  11. i’d jack your handle, but i’m afraid to..

  12. This terrorist sympathizing needs to come to an end.

  13. On a similar note…

    Ezra Klein v. Rick Santelli on Morning Joe today…

    http://dailycaller.com/2011/08…..overnment/

    1. Has Ezra Klein ever said anything intelligent and original? What shitty douche bag. And by that I mean a douche bag that has been filled with shit, rendering it useless as an actual douche.


      1. “I think any involvement by outsiders, Fed, European Central Bank isn’t going to help, no,” Santelli said. “I think we should let this play out as it’s playing out. And once we come to a new normal or a new stable foundation, maybe lower equity rates or lower interest rates, at that point maybe we can actually see Congress, maybe it will be after the 2012 elections, but we can see maybe they can pull out these crazy Dodd-Frank bills that nobody can understand. Maybe we can cleanse the system of everything that seems to be slowing it down and let the entrepreneurs invest and maybe we’ll deliver promises to people that are having rough times today.”

        So crazy it might just work!

    2. I liked how Mr Santelli didn’t let him get away with the normal BS implicit assumptions that most people on TV have no problem going with. Refreshing.

  14. Five easy steps to fiscal solvency and economic growth:

    1) Repeal Obamacare.
    2) Repeal Sarbox.
    3) Close Team America. Bring ’em all home.
    4) Means test Social Security.
    5) Let Bush tax cuts expire.

    1. 6) Cut all government spending 20%
      7) Eliminate current tax code in favor of a flat tax
      8) Reduce corporate tax rates to 10%

      1. 9) Eliminate all spending not explicitly mentioned by the constitution.

        1. That’s just crazy talk!

        2. 10) Moratorium on new regulations

          1. better yet, repeal 2 words of regulation for every word of new regulation. It’s not like they’ll run out of words any time soon and it will keep the politicians busy defending or attacking their favorite regulations, idle hands being the devils playground.

    2. “5) Let Bush tax cuts expire.”

      Why do you think raising taxes on the poor will help the economy?

      1. Our level of taxation is historically low. It is far from onerous. The Bush Tax cuts, and their temporary nature, simply introduce one more level of uncertainty in the economy. Let them expire. Let this be the avenue for revenue increase.

        What’s killing the economy is the constantly shifting tax and regulatory structure. Enough with this temporary horseshit. Temporary tax cuts. Temporary stimulus. Temporary asset purchase by the Fed.

        Enough already. Stop. Let people work.

        1. Our level of taxation is historically low

          What? Where in the Hell did you get that idea?

          1. This is one source.

            The projections aren’t meaningful. Only the now and the past.

        2. I fail to see how raising taxes on the poor will help anything.

        3. Why not add certainty by making tax rates for the lower brackets EVEN LOWER and EVEN MORE PERMANENT?

  15. Can we go back to Matt Damon Day?

    1. Who am I?

    2. mobiustrip!

  16. Carpet-bombing the thread with moronic gibberish again, Mobius?

    1. Nope. That’s the handle-jacker. My real posts are pearls of wisdom.

      Where are your ingenious html ‘strike’ tags, Brooks? They are oh, so witty!

      1. My real posts are pearls of wisdom.

        Yeah, these kinds of pearls:

        8====D~~~

        1. classy

          1. It’s a guy with a long, siley face, drooling.

            What do you see?

            1. Strange. I thought it was supposed to be a woman’s vayjay.

  17. mobiustrip-

    In case the children didn’t chase you off with their fart jokes, this is why you are wrong: Every government worker draws a paycheck. And because the government is so heavily leveraged, the only place it can get money is by BORROWING it from the private sector (as opposed to extracting it from tax payers.)

    Now this may be complicated to you, but when a company loans a dollar to a federal/state government, it doesn’t spend that dollar on its own employment. So get this through your skull: Every Government worker who is paid for by borrowing represents a PRIVATE SECTOR investment in capital or labor that doesn’t get made.

    In uncertain times like this, private enterprise would love to stick all its money in a nice safe investment, and the government is giving them all the low-risk investments they want at firesale prices.

    The problem with government workers is that by and large they create less value (dollar for dollar) than a private worker. And when the government gives out dollars to the private sector, it is rarely deployed to points poised for economic growth- rather it is given to the biggest political payout target.

    The problem is not that the government is laying people off, the problem is that the government has debt over 100% of GDP, and continues to borrow, displacing private investment.

    1. You nitwit, the government prints the money to pay its workers, and it is therefore the governments property, and where do you think the private sector got the money to begin with? They didn’t just make it themselves out of thin air. Twaddle.

      1. Good point. If money comes from the government why can’t they just print some and give it to me? It’s almost as if all this money represents a store of value. Like, it’s some sort of thing that we use as a common representation of actual production that we can trade amongst ourselves.

        1. I don’t understand everything you said, but I feel you’re a good man.

      2. Shorter mobiustrip: “MONEY COMES FROM ELVES AND WORMHOLES!!”

        1. You just clicked “reply to this” to a handle-jack, RRR.

          Then again, maybe RRR just got handle-jacked.

          Oy. We need Disqus.

          1. It’s not like it was any different than your actual arguements.

            1. wow, nice cover — everybody is sure to overlook your fnckup now

              1. Fuck you, handle-jacker.

    2. Right now, the government borrows money from China at near-zero interest rates. That may be a national security problem, but it isn’t a “crowding out” problem. China ain’t gonna give private companies in the US the same deal it gives on T-Bills if Washington goes the full Ron Paul overnight.

      The government’s choice is between:

      (a) borrowing some increment of money at near zero interest or

      (b) putting thousands of additional workers on the unemployment line every month in the middle of this downturn.

      I would have chosen (a). You choose (b). The country just chose (b) along with you. I lost. You own it. Now let’s just see what happens, my Smarter Than Thou friend.

      1. The country chose b?

        Ummm…then why didnt the Rand Paul budget get passed?

        1. The 37K public sector job drop was in the first post, robc. Try to keep up.

          1. The 37K public sector job drop was in the first post, robc. Try to keep up.

            You mean when governments can’t bring in enough money from the private sector to pay their employees, they have to cut employees? Who could have seen that coming?

            1. good work! this time you actually replied to me, not the thread-jacker.

              The government can bring in the money, and can do so at nearly zero interest. It chooses not to: a conscious choice to engage in mass layoffs rather than ultra-cheap borrowing.

              1. The cowardly handle-jacking never ends.

              2. Mobius- Please take a moment to step away from the pundit websites. We don’t only borrow from China. Also, the promise of “near zero interest rates” is not as win-win as you think.

                First, China owns 8% of US treasuries. Go do some research and you will find that US Treasuries are owned by businesses private and domestic. It is considered a great hedge against down markets. If the government weren’t offering these risk-hedges on the cheap, companies would see the return on investment for these (and public bonds) go down, and more money would go into private investment.

                (BTW: This isn’t controversial. Even Keynes worried about Government Spending over ~12% of GDP crowding out private investment)

                As for the Near-Zero interest rates, that is a trap. You see, we have to regularly roll over this debt because we never pay it off. Every time we re-roll, we are vulnerable to interest rate changes. The US debt represents around 100% of GDP. The average maturity of this debt is 5 years, meaning everything you ask to buy now will need to be rolled over by 2016. Right now the “Near zero interest rates” you adore cost us 1.7% of our nation’s GDP. It will be over 3% of GDP by the end of 2015. Think about that- that’s over 10% of the US Governments’ overall budget!

                1. Don’t ask mobiustrip to do basic math. He’s even worse at it than Tony.

              3. Google our balls and you’ll find them on mobiustrip’s face.

      2. The stupid is strong with this one.

    3. Corporate profits are still at record highs and the private sector is sitting on trillions in cash. Firing a few more teachers and cops isn’t going to make private investment go up.

      And I have to wonder if you guys who call teachers and firefighters valueless have ever worked in the private sector. From my experience it’s often a morass of incompetence where people figure out how to keep a paycheck coming in far more than adding value to anything.

      1. Tony- WHERE DO YOU THINK THAT CASH IS SITTING? Corporations are putting their trillions of dollars in Treasuries. And I’d do the same thing if the government was handing out riskless notes while wrecking the economy. The way to stop the corporations from hoarding cash is to STOP giving them trillions of dollars in risk free securities.

        Firefighters and teachers, dollar for dollar are less valuable than the engineers who work at my company. They are. That’s because the engineers at my company compete for their wages in a labor market- they don’t just buy off the most convenient politician.

        1. Tony- WHERE DO YOU THINK THAT CASH IS SITTING? Corporations are putting their trillions of dollars in Treasuries. And I’d do the same thing if the government was handing out riskless notes while wrecking the economy. The way to stop the corporations from hoarding cash is to STOP giving them trillions of dollars in risk free securities.

          I think you may be interested in this book excerpt on hoarding and Keynesianism in general. Unlike Tony, I’m sure you can handle reading three pages of material.

      2. Corporate profits are still at record highs and the private sector is sitting on trillions in cash.

        Do I need to post that article again explaining why the “hoarding” canard is a red herring?

        Firing a few more teachers and cops isn’t going to make private investment go up.

        Actually, cutting government spending releases trapped land, labor, and capital which causes their discounted marginal value product to decline which makes employing them profitable for businesses. So it actually does boost private investment.

        As Overt correctly points out (though I have some qualms with some of his statements), every dollar spent by the government is a dollar not spent in the private sector. Or to make it more clear, every resource used by the government is one less resource used by the private sector. For every tank built that’s hundreds of cars left unmade.

        And I have to wonder if you guys who call teachers and firefighters valueless have ever worked in the private sector. From my experience it’s often a morass of incompetence where people figure out how to keep a paycheck coming in far more than adding value to anything.

        Obviously they’re satisfying consumer demand if they manage to rake in a profit. On the other hand, we have no way of knowing if government bureaucracies are efficient because, as Overt wisely once again points out, they don’t compete on the free market and are therefore unresponsive to consumer demand.

        1. Teachers and firefighters are government workers.

          Tony hates the private sector, so it figures he’d only support government workers.

  18. The phrase “Great Recession” creates the impression that the economy is following the contours of a typical recession, only more severe ? something like a really bad cold.

    That’s why I prefer “Great Caesar’s ghost!”

  19. The DOW is up 130 points now. This is undeniable proof that my agenda is working.

    1. Hey, wait! It’s proof that WE’RE winning! WTF?

      1. No, we have to keep referring to me when there are problems, remember?

        1. The DOW is only up 12 now, those fucking tee-party bastards trying to undercut my achievements….

          1. *cough*

            What are we, chopped liver?

    2. wake me when we’re back above 12K

      1. zzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzzz

      2. Fuck off, handle-jacker.

        Wake me up when there are nude 12 year olds.

  20. zzzzzzz zzzzzzzzzzzzzzzzzzzzzzzzzzzzz zzzzzzzzzzzzz

  21. Clearly, I must remind you that I had much of the Pro War Hollywood crowd on hand for my birthday bash. All of these folks support my Killer_Drone bombing of little villages in places they never heard of:

    Everybody Hates Chris Rock
    Stevie WonderWar
    Tom HanksRag
    Fucking Herbie Hancock???
    Whooopi “it’s not a WAR war”
    Chuck Barkley?????!

    And of course my PeaceFul Butt Licking Washingtonians Nancy Pelosi and Harry Reid.

    1. It always hurts when your idols turn out to be ass-kissing apologists for quasi-soft-fascists.

      1. Here’s a solution to that pain.

        1. that’s an industrial-grade remedy…

  22. This article is strange. I don’t understand what debt has to do with it. Our net interest payments are not a problem. When the housing and Wall Street bubble burst demand went into hiding. $8 Trillion loss in housing wealth pretty much caused us all to stop spending and start saving, paying off our debt etc.

    This is a demand shock. Demand is the issue. If no one is willing to spend the economy contracts. To create expansion someone needs to spend. In this case the gov. So lets imporve our infrastructure, build fixed assets we need, update bridges, improve airports and roads etc and get things going again.

    I don’t know what the debt has to do with this. Someone enlighten me (nicely) please?

    1. Democratic presidents are bad for the economy*, so if things improve because we actually address the demand-side problem, the current Democratic president might get reelected, thus causing bad things for the economy*.

      *Economy = tax breaks for billionaires

      1. mobius, you are an amateur.

        1. nope — might have been Tony

    2. The entire notion that the troughs in the trade cycle are a general glut in demand and that the government can spend the way out is Keynesian nonsense. Artificially low interest rates engineered by the FED made investments appear to profitable which did not actually conform to the preferences of consumers. This caused intertemporal distortions in the structure of productive capital which, when revealed, mark the turn from boom to bust. The solution is to allow a rise in interest rates to natural levels along with liquidation and capital restructuring so that the structure of productive capital may more closely align to consumer preferences. By papering over the problem the FED and the US government only make the eventual restructuring even worse.

      Debt is a problem because even a relatively small rise in rates will lead to unsustainable interest payments. As the government is continually rolling over debt, this may cause the government to default soon after the rise in rates.

    3. Bullshit. This is an investment shock — no one wants to invest because they have no idea what the tards in power are going to do next and think that standing still in shock and staring at the headlights will somehow protect them. The government would rather spend money on bullshit than useful public projects, precisely because of people who think that it doesn’t matter where they spend it so long as it puts money in a worker’s pocket. As a result, neither the public sector nor the private sector is investing. The only thing keeping the U.S. from utter collapse is that every other nation is a worse bet right now.

  23. In other news… Our credit rating has been downgraded. I’m sure that will have no impact on the economy. Just like I’m sure we’ll get an apology from Ben Bernake for saying that there is no chance the US will be downgraded.

    http://www.washingtonpost.com/…..print.html

  24. Some guy, don’t forget Geithner’s apology, too:

    http://thehill.com/blogs/on-th…..Q.facebook

  25. Well I see that the various Keynesean Kool Aid drinkers and assorted statists are peddleng their nonsense all over this thread.

    So here is a blanket refutation of everything ever said by any of them:

    Government does not create jobs – or anything else. All it does is redistribute wealth that has already been created by somebody else. Government spending is nothing more than forced transfer payments.

    And it is literally physically impossible that any benefit to the transferees could ever outweigh the detriment to the transferors.

    No government on earth has ever engineered a good economy into existence or saved any country from a bad one.

    Government can never do anything that makes an economy better than a hands off free market one. All it can do is make it worse by interfering in it.

    There, that pretty much takes care of it.

  26. Informative and detailed post!! Thank you !!

    Laws of prosperity

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