Early in my career I had a boss scream at me (a day before a review with the Board) , "Just get me some God Damn data that I can cite. I can make it say whatever the hell I want!"
Originally Posted by atlcomedy
LOL!
Know what you mean. Along a similar vein, I was in a meeting a few years ago with some partners looking at an equity-participation financing package for a commercial real estate deal. A couple of guys were more than a little bit skeptical of the loan package's attractiveness.
This was during the time when there were a lot of news stories about harsh "interrogations" of terror suspects. The guy pitching the loan package left the room for a minute, and one of the partners said he was taking a break to massage the numbers. Another said, "Hell, that's not going to do the trick. He'll have to
waterboard 'em to get them to look good enough to me!"
Speaking of waterboarding numbers, I think they had to do something like that to come up with this:
http://money.cnn.com/2010/07/14/news...port/index.htm
People often ask how they come up with stuff like that. The main way is that they use biased or flawed macro models that spit out a number of "jobs created" for each dollar of input, paying too little heed to what the money is actually spent on. They talk about jobs "created" or "saved", but they really ought to add a third category: Jobs
imagined!
...They actually try to eliminate the huge disparity in incomes to keep from being compared to a Banana Republic, something we are headed for because of people like you...
Originally Posted by WTF
Oh, I see. The problem is
my fault!
I've created many thousands of jobs over the years. How about you?
That statement by Krugman is defendable. I do believe we needed a larger package that would keep priming the pump beyond this December. I will quibble with what they put into the package, but think on the whole it was too small. For example I would have put in A LOT more money into upgrading infrastructure; gets people working and gives something of lasting value. More money into education.
Originally Posted by discreetgent
Krugman does mention (almost in passing) the desirability of investing in much-needed infrastructure and development. However, most of his statements have addressed primarily the
amount of spending and his belief that we need to fill what is called the "output gap." He clearly believes that government spending of almost any kind "stimulates" the economy.
But history strongly suggests that the reverse is the case. Japan tripled its debt/GDP ratio over the last 20 years, indulging in one "stimulus" effort after another in order to try to boost the economy. It hasn't worked.
Britain's attemts to do the same failed in the 1950s, '60s, and '70s.
But the experience with which we're most familiar, of course, is that of the U.S. in the 1970s.
Many people forget this, but Nixon declared himself a Keynesian during his first term. And here's an excerpt from his 1971 State of the Union address:
"This is not good enough for the man who is unemployed in the seventies. We must do better for workers in peacetime and we will do better.
To achieve this, I will submit an expansionary budget this year--one that will help stimulate the economy and thereby open up new job opportunities for millions of Americans.
It will be a full employment budget, a budget designed to be in balance if the economy were operating at its peak potential. By spending as if we were at full employment, we will help bring about full employment."
(Yes, he actually said that!)
Also in 1971, Nixon closed the "gold window" so that the dollar could float. Together with that, he pressured the Burns Fed to plump up the money supply in order to maximize his re-election chances in 1972.
What did this weak-dollar/expansionary monetary policy and expansionary fiscal "stimulus" give us. Well, apparently not much -- it didn't prevent the 1973-75 recession from being the worst (up until that time) since the Great Depression!
Big-spending politicians love economic doctrine undergirding arguments in favor of stimulus spending. It gives them a ready excuse to do what they love most -- spend other people's money to buy votes!
The sad fact is that today's spending on favored political constituencies, public employee unions (by way of sending states hundreds of billions of dollars with no accountability), and entitlement expansion sharply reduces our ability to spend on things we might really need (such as useful or needed infrastructure).
Since you brought the topic up (lol) my real fear is that tightening of money supply will hearken back to 1937 and lead the economy into another dip...
Originally Posted by discreetgent
I see no evidence that the Federal Reserve is likely to tighten the money supply any time soon. In fact, I think the reverse is the case. They've announced that they will keep ZIRP in place for an extended period of time and are already discussing additional quantitative easing efforts.
As you noted, the Fed did tighten the money supply in 1937 (by means of big adjustments in bank reserve requirements). That led to a severe double-dip in 1937-38.
Problem is we can get double-dip recession in more than one way...
Originally Posted by discreetgent
Yes, we sure can!
There are a lot of ways to inflict damage on an economy.
My main point is that we certainly have needs, especially in the area of deferred infrastructure maintenance -- but we need to spend
more wisely, not just more liberally. We've been rapidly increasing government spending for at least 7-8 years now. In fact, the federal budget has more than doubled in nominal terms since 2001.
Some very difficult, painful choices are going to have to be made. As part of that, the tax burden on the middle class is going to greatly increase during this decade. There's just no way around that unless we run deficits of close to 10% of GDP until we suffer a calamitous fiscal bust.
I believe that within the next couple of years we'll see serious proposals for a VAT.
BTW, discreetgent, I love a good, spirited policy discussion with those who disagree with my viewpoints. I just prefer that folks refrain from telling me I am "mired in ignorance", as TexTushHog did. (Even though he obviously didn't understand the issue he was addressing!) Thanks for bringing politeness and a nice, civil tone to the discussion.
It sure would be a more pleasant place if everyone would follow that example.
, I can tell whatever story I want
