WORLDWIDE ECONOMIC SITUATION WORSENING, UNEMPLOYMENT RISING, DESPERATE MEASURES.

Look at the history of American recessions. This one is still not quite as bad as the 1982 recession.

However, Americans saved over 10% of their income in 1982. Today, it's pathetically low. That's one disadvantage we have of getting out. One single bright spot is that oil and commodity prices have come down significantly, which helps us and hurts many nations that are unfriendly to us at the moment, Russia being the most noteworthy.

The important thing to realize is that the economy will not continue to sink until it hits zero and we're all poor. We will get out, it's a matter of a time.

I do not, however, believe that printing and borrowing trillions of dollars and pouring them down the fucking toilet is going to help. That's called keynesian economics, an economic theory founded on the ideal of infinite growth and deficit spending. Just so you know, kids, the government's money is YOUR money. No such thing as a free lunch.

When things go off the proper path, it can take some pain to get back on track.

author=harmonic link=topic=3297.msg65620#msg65620 date=1236548362
Look at the history of American recessions. This one is still not quite as bad as the 1982 recession.

However, Americans saved over 10% of their income in 1982. Today, it's pathetically low. That's one disadvantage we have of getting out. One single bright spot is that oil and commodity prices have come down significantly, which helps us and hurts many nations that are unfriendly to us at the moment, Russia being the most noteworthy.

The important thing to realize is that the economy will not continue to sink until it hits zero and we're all poor. We will get out, it's a matter of a time.

I do not, however, believe that printing and borrowing trillions of dollars and pouring them down the fucking toilet is going to help. That's called keynesian economics, an economy theory founded on the ideal of infinite growth and deficit spending. Just so you know, kids, the government's money is YOUR money. No such thing as a free lunch.

Yeah, what idiot would think ending a recession through deficit spending was a workable idea?

author=harmonic link=topic=3297.msg65631#msg65631 date=1236554711
ST, the Great Depression is still a hotly debated topic. Especially what got us out of it. I am disappointed in you for presenting your case as though it was written by God. Linking wikipedia and sarcastically calling him an idiot just to spite me is no way to debate this.

If you look at various economic indicators of that time, you will find that we weren't really economically healthy until we geared up for WW2, which put almost every able bodied American to work somehow. (Note: Our national debt was over 100% of our GDP by 1945 as a result of the war)

Many economists argue that the New Deal actually lengthened the effects of the depression, by continuing to support insolvent institutions. (AIG)

Also, if you want to look at historical examples, look at what absolutely did get us out of the 1982 recession, which was the worst economic situation since 1933. Tax cuts.

I wasn't trying to spite you. I was merely stating that there is some decent support for deficit spending being a winning strategy, and very fondly remembered policy makers gambled on it and won (whether or not correlation and causation line up this time is anybody's guess--Economics is only slightly more reliable than meteorology or voodoo in the first place).

It's not like Keynes was some crackpot who came up with his economic theories while on opium. He was in Terranigma, and whenever I did things he told me to, the cities always expanded!

harmonic, I don't think you really understand anything at all about economics or government spending. You really seem to be taking the simple black & white role of a "political fiscal conservative" without looking at any of the data. Most economists, including conservative ones, would absolutely disagree with the entirity of your rants here.

For one, tax cuts have been proven to be less effective at stimulating the economy as they require a larger amount of dollars to do the same amount of good as direct spending does. You know, since in a recession citizens tend not to spend as much and save the money or pay old bills.

I got $1500 in that God-awful tax stimulus by Bush in 2007 and I put it all in the bank.

Second, while the amount of public debt today is extremely high in terms of dollars, as a percent of our GDP it it actually less than it was during the prosperous 1990's. Even conservative economist agree that the federal government has such an array of financial tools at its disposal that private citizens, corporations or even the states lack access to that it will not simply go bankrupt, as the "political fiscal conservatives" are trying to fearmonger us with.

"OMG THE USA IS BANKRUPT AND OBAMA DID IT!"

Besides, most of the national debt (over 70%) is actually owed to... you guessed it! U.S. Government agencies or private citizens of the United States! I know you didn't mention it, but it's a prevailing theory that China actually owns most of the United States debt and somehow will call us on it.

I hate bad spending as much as anyone, and there is some really bad spending in the $410 billion Omnibus package being debated this week (it should be vetoed), but to pretend that all government spending is the same is well, stupid.

Tax cuts have rarely been proven to solve anything except on a temporary basis. And in the end, you don't have anything to show for them -- not a single bridge, a school, technological development, nothing. Usually they end up just making the wealthy richer and masking the true systemic issues we have in this country.

I really don't care how astronomnically large the US GDP can get if only a small percentage of the population benefits from it.

PS. The idea that F.D.R. "caused" and/or lengthened the Great Depression has only really recently gained any interest and is, at best, revisionist history.

author=harmonic link=topic=3297.msg65671#msg65671 date=1236571652
You know, a massive entitlement system isn't going to help the country dig its way out. That money has to come from somewhere. Wanna talk about benefits? One of the best benefits someone can have is a job.

I am not talking about an entitlement system. I am actually talking about wages. The American middle class that actually does the work continues to get shafted in favor of the Ivy League CEOs and other forms of "American" nobility.

author=harmonic link=topic=3297.msg65671#msg65671 date=1236571652
You don't understand the Federal Reserve. A dollar is not wealth. It represents wealth. It's a piece of paper. The Fed prints money, or leverages spending with T-bills. By printing money, we are not increasing real wealth. In fact, we are weakening the purchasing power of each dollar. It's wealth redistribution, and those on the government dole benefit the most. The Fed can try all the manipulation of currency and interest rates as it wants, but in the end, you can't fight real market forces, they will always "win out," or have their intended effect, whether we feel the pain or not.

You don't understand the Federal Reserve, the dollar or anything else either. Gold isn't really worth anything. "Market forces" are an imaginary human construct used to describe actions that people and/or businesses take. Economics is all arbitrary, it's why it is a social science and not mathematics.

Edit: OK, I have begun to slightly derail this topic. I will refrain from being condescending to those who I disagree with, and we will also stick to discussing specifically the current global economic crisis and not abstract ideas about economics.

Also, Holbonomics sounds awesome and I will keep that term for future use.

author=Holbert link=topic=3297.msg65681#msg65681 date=1236572590
Gold isn't really worth anything.

Tell that to my clients whose gold-laden investment portfolios took a giant dump all over stocks and mutual funds. It also has extensive industrial applications as a material. In bullion form, it represents commodities as they stand relative to currencies. They're like hedge funds without the hedge. That said, it's not really an "investment," which is why it sucks for bull markets.

But anyway, in respect to the topic, I am worried just like most people in the world of finance. I do have my part time teaching job to fall back on should some disaster happen, but I'm not taking any chances.

Saskatchewan is kicking ass still. You guys should all move here. (Plus, RMN Meets would be much easier).

http://www.cnn.com/2009/WORLD/americas/03/04/saskatchewan.economy/index.html#cnnSTCText

Wall's province is one of the exceptions to the unemployment increases battering provinces across Canada. Saskatchewan's unemployment rate fell to 4.1 percent in January from 4.2 percent in December, making it the only province recording a decline.

So come on up (bring a toque).

author=harmonic link=topic=3297.msg65756#msg65756 date=1236618379
The most successful investor in history and richest man in the world would like to chime in.

http://www.businessinsider.com/warren-buffett-explains-how-the-bailout-is-crushing-healthy-companies-2009-3

Pfft. Like I'm going to take financial advice from the guy who wrote "Math Suks."