Cut your cutting

OECD cautions over austerity cuts

That's to say to America, that yes, Obama is on the right track. Spend! spend! spend! And to warn Europe, that no, the economic recovery is not yet well established and it needs more than faith. It needs spending! spending! spending!

I like the way how everything can be solved in macroeconomics by shoving it with money when there's low inflation. Sounds like irony, but it isn't.

+1 for team Keynes

Obama

-1 for team Keynes

Keynes is theory, theory, theory. When we see application of the theory, it follows with failure. And then the excuse is always "we/they haven't REALLY followed Keynesian economics" blah blah blah. Economics is highs and lows. When things are high, everybody justs adjusts their expectations. When things are low, they over-react, mostly because of politics.

LOL! You definitely got your theories switched. Every time a mainstream strategy fails, it is because we were not "faithful" to the theory: the state intervened, it acted too soon or too strongly or someone did something it shouldn't or a natural disaster got in the way.

Keynesian economics is very straight-forward. The only thing that we can complain about is how much needs to be spent. I don't remember the figures, but I do know that the stimulus package wasn't big enough to reduce the output gap to 0, and from what I've heard, it hasn't been used at a fast rate.

Economic growth has its ups and downs, but for the past decades they've been subdued due to the development of macroeconomics. A society is better off that way.

As someone who actually has a degree in economics, I don't think it is as simple as spend, spend, spend.

That WOULD be true if the problem was a lack of demand. However, the problem is a lack of credit.

This is why the Federal Reserve has been trying to get people to LOAN, LOAN, LOAN. By providing money to banks, etc.

Every dollar, however, that the federal government spends is a dollar of money that is loaned to the federal government, RATHER, than being loaned or invested in the private sector.

Since the problem is one of credit, the best thing the government can actually do is to stop borrowing money. Government debt is taking money AWAY from the private sector and preventing the creation of jobs.

So, the solution is not to spend more money the government doesn't have. It is actually to spend less money, so that investers will be forced to invest in the market and create jobs, rather than spend mo

The US cannot balance the budget. Even if they did it temporarily, already existing programs like Social Security will offset anything as the years melt away and is already destined to be bankrupt. The Republican party has thrown around the idea of killing SS programs and pushing the age up 5 years. But without an alternative, Greece will look like flag football in comparison to what will happen in the United States, and so will the Govt Response from Greece look like a flag football game.

Really balancing the budget in the US has more to do with redistribution of wealth than any conservative who wants the budget balanced will ever admit.

What is really killing the budget? Social Programs like Social Security, Welfare, Medicare and Medicaid. Excessive poverty in the country will only continue ballon these non negotiable benefits. Without more wealthy citizens, there will be no more private sector investment. Small Business made up an ex

I remember why I don't like discussing economics with americans all that much now. Then again, I started this thread to get you guys to talk. So, on that spirit:

Some people do what is necessary, some do what is right, and others prefer to act under ideology.

Loans are the problem? Does anyone feel like taking a loan right now? No! Yet, interest rates are at an all time low. They don't want to contract a loan because they fear for the future, they do not trust on a good outlook. Households, firms, the State, everyone, are trying to reduce their debt to remove some liabilities. This collectively is... depressing. Like japanese depressing.

You can't lower your reference interest rate to stimulate private investment and spending, so what are you going to do? Well... you can increase expected inflation, thus lowering the real interest rate and making those investments look mighty attractive, and jump-starting the economy.

Oh, I like what Wendy said:
"Puts money in people's pockets."

That's far more reassuring than asking a bank for a loan.

Something that you can't accurately shove into a model is what Keynes called animal spirits. And those spirits seem to be lacking.

Laguna - as you are European, I'm sure you know that Germany is fairing well during this crisis and they have NO stimulus plan. Perhaps that is an example that will help prove how the stimulus can backfire.

Likewise, I'm sure you know that the EU places a requirement for a semi-balanced budget for its members.

Further, I'm sure you are aware of the damage done by the Greece debt.

Face reality or don't. Your choice. Europe is a prime example.


Wendy - your whole post shows what you know. The federal government does NOT build bridges. State governments do. Nor does the federal government build roads. States do. The SMALL funds from the federal government for the roads not really meaningfull in terms of what you're talking about. We are comparing a mountain and a mole hill. The REAL problem with road funding is all the wasted money on mass transit and on education that is eating away at the

All the states are broke, that was part of the stimulus to get them to break even at least instead of defaulting their credit ratings, making borrowing even more expensive. The fact that they are broke, is the very reason that Obama has to create some jobs this way because the states simply cannot afford it.

Only two states are not in the red, out of 50.

Crysostom, Google procedural votes and stalling tactics.... its not all as simple as you say.

There are safeguards to stop a simple majority from say, abolishing the Supreme Courts, or making the president a dictator. In a perfect World you are right, we would have a public option. But, House Rules are House Rules.

I'd really love if I could have these conversations on my blog... Simoleans need to get out more!

http://madrantz.net/BlogRantz
New Look, its updating almost hourly!

LG, message waiting for you on LU.

A Keynesians best tool is a drawn out monologue to bore you to death. They can't win on historical evidence or logic, it's all a play on emotions. We can watch country after country (Argentina, Greece, Spain) spend spend spend itself into oblivion, yet there are still those people out there who say they're doing it right. Government spending only helps so much until it has major future consequences or outright failure because countries stop lending.

And Chrysostom, ignore Wendy. She knows absolutely nothing about economics and she'll prove it as passionately as she can.

The blog looks awesome wendy

Great, the infinite republican/democrat 'debate' reaches SimCountry. Is anything sacred anymore?

<!-Quote-!>Quote:

Great, the infinite republican/democrat 'debate' reaches SimCountry. Is anything sacred anymore?<!-/Quote-!>

Misinformed statement is misinformed.

Yes I will BC. I don't need a degree in economics. Would that make a difference. The best economic minds are behind every single decision from g8 to g20 and the world's economy is f@$#ed.

Am I any less qualified than any of them at this point? I don't see you giving lectures at any university on economics BC.

You can ignore me if you want.
-------------------------------------------
And Thanks Doubletar.

Simple practical solutions are what is needed right now. Print the money that doesn't exist.

Need I say more?

<<<<<no opinion (do have one but don't want in on this debate).

Why argue about it? All money is debt anyway.

Because LG brought it up for debate/argument. We've been through this in chat before. No minds ever really change.

So BC, you are going to sit there and act like this isn't one big

*MONEY*CONSPIRACY*
*CREDIT*CONSPIRACY*
*DEBT*CONSPIRACY*


?

*CONSPIRACY!!!!!!*

Go ahead BC, deny it! Deny it if you can. Yeah you can't! Call me crazy, get off the wheel and wake up man!

Finally a stimulating debate on SC!

All of your points are valid and the different points of view is what makes a great debate. Just because someone has a degree in economics does not make them an expert, but your points are very well made. I make my living independently investing in the stock market, watching very closely what the US does every single day. I don't have a degree or read theories, I invest real money and by far am no expert. I agree with Laguna, the US is Japan all over again. I live in Canada, so we are very tied to the US economy, but have not been effected nearly as bad as the US.

I believe the biggest thing the United Sates gov't and its citizens have to do is change the attitude, bigger is better. It does not matter how much the gov't pumps money into the economy, citizens can not handle any more debt. They are up to their eyeballs with mortgage payments, car payments and credit card debt and ca

For the Europeans that are here, they might remember that last year there were many - and some even urgent - meetings between the economic and finance ministers of each member state, the so called Ecofin. In those meetings, to put an halt to the financial crisis and following economic crisis, it was decided that all member states would extend and increase financial guarantees for banks, loans and deposits. It was also agreed among those meetings, that member states could and should increase their deficits beyond 3% without being penalized under the Stability and Growth Pack (SGP).

As a result, Germany has increased it's government consumption expenditure more than the US between the last quarter of 2007 and the first quarter of 2010 - 7,3% vs. 4,4%. Government consumption expenditure rose 4,7% in the euro area