Stimulus Issues: What's The GOP's Answer?

[Zippa D Doodah]

Why not? That's what Keynsian economics is all about, I think. It sounds like a good idea to me.





Actually, my real frustration comes from trying to understand economics. I wish I paid closer attention in school.

You and I should form a club or something! I consider myself a pretty good abstract thinker, but economics is not my strong suit. I remember sitting through 2-3 Econ classes along the way, making A's, but not really paying much attention. I wish I had a time machine so I could go back 25 years and kick myself in the butt.

 

[moburg]

Why not? That's what Keynsian economics is all about, I think. It sounds like a good idea to me.

Actually, my real frustration comes from trying to understand economics. I wish I paid closer attention in school.

Bankrupting the country sounds like a good idea to you?

 

[lovemygoofy]

I'm not advocating that individuals pile up debt, I'm advocating that the government pile up debt.

When the gov't piles up debt, the American people pile up debt. The gov't debt is paid off by the people through taxes. The more taxes increase to pay off gov't debt, the less money the people have in their pockets to buy which can also lower the GDP. The GDP overall cannot increase if no one is buying what is being made. If no one is buying what is being made, then the companies will have to reduce the number of people making which again will reduce the number of people buying.



By the way, when the gov't does not increase taxes, nor increase inflation but still needs money guess where it comes from? I believe right now China owns almost 40% if not more of the debt that we owe. At some point China is going to want their money back especially since they are expercing a gov't downslide also.

 

[mumom95]

By the way, when the gov't does not increase taxes, nor increase inflation but still needs money guess where it comes from? I believe right now China owns almost 40% if not more of the debt that we owe. At some point China is going to want their money back especially since they are expercing a gov't downslide also.

Does anyone know what happens if China says they want us to pay up and we refuse? I'm not saying I think we shouldn't pay. People just keep talking about how China is going to want their money back someday (which I agree they will), but frankly I just see our government saying too bad, we can't/won't pay.

 

[JMD]

In the long run your analogy makes sense. But in the short run I think this is what we should try to achieve:
In a recession, dump extra water into the lake. In a period of expansion, pay back the extra water by taking it out of the lake.

During an expansion, there are many sources of water being dumped into the lake, so we can afford to take a bucketful out.

If you agree that this plan will not create long term economic growth, then what makes you think short term expansion is possible?

 

[lovemygoofy]

Does anyone know what happens if China says they want us to pay up and we refuse? I'm not saying I think we shouldn't pay. People just keep talking about how China is going to want their money back someday (which I agree they will), but frankly I just see our government saying too bad, we can't/won't pay.

Well I guess we could give them one of the states we don't use too much

They could shoot themselves in the foot and reduce the number of goods exported to the states, which could drive up the costs of things that we do use on a regular basis from China. Walmart would be hating life at that point.

They could even refuse to import our goods that we export to China, which again would hurt them but hurt us even more.

I guess China could even pair up with other countries to try to put a hurt on us...think oil as China is one of the top users of oil in the country

There could be some mandate possibly from the UN, though I never see that happening.

Or we all need to start learning some chinese

 

[Disney Doll]

Do you honestly think that any good is going to come from a debate about this issue when you worded your original post in such a disrespectful, inflammatory manner?

I was hoping to gain more knowledge about the situation, but clearly that was not the impetus for this post.

I'll leave you folks to rehash your inane partisan arguments.

 

[TLSnell1981]

When the gov't piles up debt, the American people pile up debt. The gov't debt is paid off by the people through taxes. The more taxes increase to pay off gov't debt, the less money the people

I'd much rather "trickle down" than "trickle up".

Bankrupting the country sounds like a good idea to you?

Unfortunately, this is what the dem's "stimulating" plan will do.

Does anyone know what happens if China says they want us to pay up and we refuse?

Well I guess we could give them one of the states we don't use too much

I can think of a couple I wouldn't mind giving up!

 

[Charade]

The more I think about it, the more I am convinced that government spending is a better stimulus than tax cuts. Government spending is 100% spending, all of it is an addition to GDP. Tax cuts may or may not result in an addition to GDP. For instance, some people may choose to save the money, others may choose to spend it on foreign goods and services.

Well, no. Unless you put your money under your mattress, any money you save by putting it into a bank account or investment account (earning interest for you or not), the bank gets to loan money to others who are most likely going to do some direct spending which stimulates the economy.

 

[CPT Tripss]

Why not? That's what Keynsian economics is all about, I think. It sounds like a good idea to me.





Actually, my real frustration comes from trying to understand economics. I wish I paid closer attention in school.

You and I should form a club or something! I consider myself a pretty good abstract thinker, but economics is not my strong suit. I remember sitting through 2-3 Econ classes along the way, making A's, but not really paying much attention. I wish I had a time machine so I could go back 25 years and kick myself in the butt.

I think you two guys are in good company. Save the time machine and the kick in the @$$. George H.W. Bush was on the right track with his, ..."Voodoo Economics" line. In reality he should have said "economics is voodoo."

There still isn't any consensus among economists about what got us out of the Great Depression . . . let's just hope it doesn't take another Big War!

 

[Free4Life11]

I'm not advocating that individuals pile up debt, I'm advocating that the government pile up debt.

What do you think we've been doing the past few decades?

And what happens in 2, 5, 10 years from now when we have to INCREASE tax rates to start repaying the debt and personal incomes DECREASE as a result? Less money = less spending and here we go again.....

On the other hand you can rapidly DECREASE government spending, but we all know how well THAT works!

It's interesting that Bush got slammed year after year regarding the deficit, but suddenly a potential $2 TRILLION deficit IN ONE YEAR is no big deal because it's "necessary." Ridiculous!

 

[CPT Tripss]

Well, no. Unless you put your money under your mattress, any money you save by putting it into a bank account or investment account (earning interest for you or not), the bank gets to loan money to others who are most likely going to do some direct spending which stimulates the economy.

Less any money that they put aside for reserve for bad debts . . . or to acquire other banks . . . or pay out in executive bonuses.

 

[SteveInBrooklyn]

I think you two guys are in good company. Save the time machine and the kick in the @$$. George H.W. Bush was on the right track with his, ..."Voodoo Economics" line. In reality he should have said "economics is voodoo."

There still isn't any consensus among economists about what got us out of the Great Depression . . . let's just hope it doesn't take another Big War!

I know some people say it was the New Deal that got us out of the Depression and some people say it was WWII. Both of those are examples of government spending though.

 

[minnie61650]

Less any money that they put aside for reserve for bad debts . . . or to acquire other banks . . . or pay out in executive bonuses.

The "regulatory capital requirements" that banks used to be required to reserve for bad debts are no longer the norm and that I believe is one of the main reasons our economy is in trouble..

I have posted about the Credit Defult Swaps and how I think they played a very large role in the meltdown of our financial institutions. I will repost my comments with a couple of more links because I think it explains in simple terms why I think this recession is not like the recessions we have experienced in the last 40 years and why this recession may turn into a depression unless we head it off a different plan/plans than were used in past recessions.

It is my opinion that this recession is very different and needs a different solution!

-------------------------

I think the blame for this recession falls on the pure greed of the financial institutions.
Although the financial institutions would like us to believe and have led us to believe that mandated morgage lending is the reason they are in trouble , I believe the Credit Default Swaps are the real reason that our financial institutions are in dire straights.


I am 58 years old and have lived through many recessions.
This recession is unlike the others I have known.
In the past we had manufacturing crisis, fuel crisis, inflation crisis, dot. com crisis etc.

In the last 40 years every other recession our country was in those who had very good or excellent credit were able to get loans. Those loans may have come with double diget interest but they were still available.

This recession is different because the lending institutions do not have the money to loan.

I think the problem started way before the mandated morgage lending.
I think it stated over 10 years ago in 1997 when the JP Moragn came up with a wonderfully evil ( my words) idea to free up their monies called Credit Default Swaps.

The Credit Default Swaps were invented in 1997 by a team working for JP Morgan. They were designed to shift the risk of default to a third-party, as this shifted risk did not count against their regulatory capital requirements. In essence the swaps were created as a regulatory loophole


Basically banks used to need to keep monies on hand to back up loans. The financial institutions decided they could free up more money for loans if they had a 3rd party be responsible if a loan was defaulted.
Kind of like an insurance policy but unlike a real insurance company which is regulated these 3rd party companies are not regulated and did NOT have money to pay the defaults and that is why our financial institutions are in such a mess.

The banks kept lending money they did not have and now lots of defaults are coming in with no one to pay the defaults. My guess is that the banks are almost bankrupt and no longer can even pretend to lend the money they do not have.

These articles explains a little about Credit Default Swaps:

http://www.globalresearch.ca/index.php?context=va&aid=8634


http://www.time.com/time/business/article/0,8599,1723152,00.html

http://www.moneymorning.com/2008/09/18/credit-default-swaps/

http://topics.nytimes.com/topics/reference/timestopics/subjects/c/credit_default_swaps/index.html

 

["Got Disney"]

By the way did you know that.....

$1 Trillion dollars stacked on top of each other in $100 bills = 689 miles high

and

$1Trillion dollars in $100 bills side by side could wrap around the Earth at it's equador 30.9 times = 969,065 miles......