Posted on 12/01/2004 11:42:47 AM PST by xsysmgr
Bartlett is a policy analyst. Keynes was right about deficits, but the government should promote investment and business activity, not demand. Manipulating currency is a zero sum game. For everything it gives it takes away, and often times it leads to loss of confidence in the currency. Trade balances are no problem as long as they result from differences in domestic growth between trading partners. The federal deficit is the real problem. If a Democrat was in the White House I'd probably get close to 100% agreement around here.
Huh? It isn't so much the absolute level as it is the rate of decline (or rise). Even your own chart shows that what happened after 1994 was nothing compared to the drop between 1985 and 1987, or the current drop. Besides if you want to talk about levels, go back to before 1973 and be honest about it.
The Fed raised rates in 1994. I don't recall a crash. The Fed raised rates in 1989. I don't recall a crash. You need to read John Kenneth Galbraith's book: "A History of Financial Euphoria". It's all there. A bubble every 20-30 years and everyone has the same traits. Nobody sees it, nobody blames themselves but they blame everyone else. Somebody must PAY!
I just looked up the special liquidity facility. So what? Certain banks can pay over and above the discount window rate for money? Big deal. Have you ever been the officer at a bank who has to go to the discount window for money? It's like you are the heathen banker of the forest. They don't treat you very well. They don't cooperate with you at all. You'd BETTER have a real good reason and it'd better not be that your bank is going under.
I think you'll get 100% agreement around here that spending is out of control. The deficit is much, much lower than the norm in a time of war. And let's not even go to the "biggest deficit in history" crap. It isn't. You have to measure the deficit in terms of the balance sheet and the income statement.
The military still only takes up about 4% of our GDP. It's nothing compared to WWII. Using the war as an excuse is the typical W apolegetics. GWB has a perfect "no veto" record. Something he also did as governor long before the War.
First of all I didn't use the war as an excuse. (Reading 101, see Spot run.) Secondly, I smell a liberal type debater here. You should try DU. They use tactics such as yours. You have ignored a lot of my questions and made up your own trickies to divert attention from my comments that you seem to have no answer for. I know your type well. I married into a family of them and I live in a city full of them. Remember the movie Arthur? "Don't screw with me Bert."
The Fed wasn't targeting the stock market either. That only happened in 1929 and 1999. In late 1999 and early 2000 it was already clear the economy was slowing on its own. Do you know why?
You might also want to look at price levels in 1989 and 1994. The situation was very different in 1999. The dollar was already very strong and commodities were making multi year lows. Raising the rates made no sense, unless he was attacking the stock market (though it still made no sense).
The Special Liquidity Facilty also had the promise that the Fed would buy all sorts of securities in order to keep the financial system afloat. Not only did it make the dollar a safe haven for Y2K but also stocks and and other financial instruments. I don't think it's a coincidence that the steepest part of the bubble occured as soon as the facility was announced (October 1999). Even though it didn't have to be used it had the effect of a gigantic rate cut.
I most certainly don't and I am waiting for your blessed testimony. By the way, how do you know what the Fed is "targeting" at any point in time? I have personally known some of the pr economists on Wall Street who get paid millions to figure that out. I guess you could do it for, what, a couple a hundred a year? LOL!
Right, you're not using the War as an excuse. I look at government spending as how much it really needs, not how much we can afford. Therefore, justifications as a percentage of GDP or any other measure mean nothing to me. GWB's no veto record tells me all I need to know.
I do grant that you are talking about the deficit and I recognize your point that we all pretty much agree that spending is out of control.
The Special Liquidity Facility was a last resort if zero interest rates couldn't stimulate the economy. The Fed would buy longer term securities from the banking system flushing cash through the system. At the time I thought it was incredibly open and forthright of the Fed to publicly announce this.
I too am disquieted at the "no veto" record. At the same time I see a president who has openly stated that he is able to work with a republican congress to get legislation that they both can agree on. Think about it, he now has a Republican Congress, Senate and a GW Bush cabinet. If he can shrink, government, get a fair tax, win the war, and reform SS without a veto, GO FOR IT Mr. President.
As to what Greenspan was targeting and why I gave you my reasons. It was pretty clear in his speeches too. There were two great evils, the "wealth effect" (his way of naming the stock market) and full employment. OK, I didn't mention that before, so you can only pay me $1.9 million. BTW, I don't care what you used to do or who you know and how much they get paid. Considering how the stock market bubbles up and crashes you all must be a bunch of overpaid idiots, or excellent con artists who went to the right schools.
Obviously you didn't go to the right schools, or any schools, and obviously you lost a pile of money in the 2000 crash and you want to blame it on everyone but the person responsible. Whatever, I have tried to be civil here but am not getting anywhere. Why am I even talking to you? Well, I'm not anymore.
AMF
Stick a fork in it.
What is your source for trade deficit versus GDP being worse than it is now?
I just did the calculations for the trade deficit versus the GDP from 1960 to 2003, and 2000-2003 were the worst four years in that time span, with 1987 and 1986 were fifth and sixth.
Here are my calculations:
Year Nominal Trade Trade Balance GDP in Balance versus $ billions $ millions GDP % ==== ======= ========= ===== 1960 $526.40 $3,508.00 0.67% 1961 $544.70 $4,195.00 0.77% 1962 $585.60 $3,370.00 0.58% 1963 $617.70 $4,210.00 0.68% 1964 $663.60 $6,022.00 0.91% 1965 $719.10 $4,664.00 0.65% 1966 $787.80 $2,939.00 0.37% 1967 $832.60 $2,604.00 0.31% 1968 $910.00 $250.00 0.03% 1969 $984.60 $91.00 0.01% 1970 $1,038.00 $2,254.00 0.22% 1971 $1,127.00 -$1,302.00 -0.12% 1972 $1,238.00 -$5,443.00 -0.44% 1973 $1,382.00 $1,900.00 0.14% 1974 $1,500.00 -$4,293.00 -0.29% 1975 $1,638.00 $12,404.00 0.76% 1976 $1,825.00 -$6,082.00 -0.33% 1977 $2,030.00 -$27,246.00 -1.34% 1978 $2,294.00 -$29,763.00 -1.30% 1979 $2,563.00 -$24,565.00 -0.96% 1980 $2,789.00 -$19,407.00 -0.70% 1981 $3,128.00 -$16,172.00 -0.52% 1982 $3,255.00 -$24,156.00 -0.74% 1983 $3,536.00 -$57,767.00 -1.63% 1984 $3,933.00 -$109,072.00 -2.77% 1985 $4,220.00 -$121,880.00 -2.89% 1986 $4,462.00 -$138,538.00 -3.10% 1987 $4,739.00 -$151,684.00 -3.20% 1988 $5,103.00 -$114,566.00 -2.25% 1989 $5,484.00 -$93,141.00 -1.70% 1990 $5,803.00 -$80,864.00 -1.39% 1991 $5,995.00 -$31,135.00 -0.52% 1992 $6,337.00 -$39,093.00 -0.62% 1993 $6,657.00 -$70,195.00 -1.05% 1994 $7,072.00 -$98,379.00 -1.39% 1995 $7,397.00 -$96,265.00 -1.30% 1996 $7,816.00 -$103,942.00 -1.33% 1997 $8,304.00 -$108,178.00 -1.30% 1998 $8,747.00 -$164,868.00 -1.88% 1999 $9,268.00 -$263,252.00 -2.84% 2000 $9,817.00 -$378,344.00 -3.85% 2001 $10,100.00 -$362,692.00 -3.59% 2002 $10,480.00 -$421,735.00 -4.02% 2003 $10,980.00 -$496,508.00 -4.52%
It's good that we agree that the present value of the dollar is not important.
Let's work together on the "rate of decline (or rise)" with hard numbers and see if the facts warrant the use of the word "crisis". The biggest drop in recent memory was '85. No recession and low unemployment for years. We finally had a slight recession in '90, after years of a level exchange. Our next recession was in 2001 after several years of a strengthening dollar.
Let's be honest with each other. I like hard numbers because I believe people (should) have power over their feelings-- but I know most people don't.. If you don't like numbers ("numbers don't lie but liars use numbers") you're in good company and we can leave it at that.
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