Posted on 07/08/2009 9:19:30 PM PDT by sickoflibs
If you realize both parties in Washington think our money is theirs and you trust them to do the wrong thing, this list is for you.
If you think there is a Santa Claus who is going to get elected in Washington and cut a few taxes and spend a few trillion and jump start the economy, and get our lost money back, this list is not for you.
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Burning cash (government stimulus spending) on a bonfire does not create growth.
Stimulus spending begats higher taxes + inflation begats weaker economy begats stimulus spending begats higher taxes + inflation begats weaker economy.....
I’m now ready for my Nobel Prize in economics.
” All of these trends are consistent with the above mentioned monetary inflation and suggests that, as sound economic analysis tells us, the recent monetary inflation has not provided any real help to the economy in general, but is merely serving to spur increased prices.”
Anybody who thinks that we are in a period of monetary inflation at this point simply has no idea of how a credit collapse plays out.
Nam Vet
“I’m now ready for my Nobel Prize in economics”
##########
Consider running in 2010? You’ve got my vote!
Starve the beast BUMP! How many bureaucrats does it take to produce nothing of value?
You're light years ahead of the clown, Krugman.
I think that we do owe Obama a big thank you for proving once and for all that Keynesian economics doesn’t just suck. It really sucks and does not work.
Thanks for the basic economics class refresher... I needed that... had the basic idea, now I can elaborate to others more clearfully...
Bookmark (after renaming)
Its early. First the deflation and debt default. Then, the political panic as 2010 elections approach. Then, more government spending in a mad attempt to preserve Congresscritter jobs. Then, an ocean of money in the global economy as other countries try the same trick. Then, too much cash in a no growth economy (1970's anyone). Then, inflation pressures build. Then, the massive outstanding debt starts to lose value. Then, panic as investors unload debt and flee to tangible assets. Then inflation as tangibles (including housing prices) start to rise.
We are in for a rough ride and there are no clear answers because we can't predict the sick minds of the Democratic Quants and their lackies in government. So... good luck! Inflation with slow or zero growth cost Jimmah Kahta his job. Obama had better think about the 1980 election results.
Yup. That's exactly why less than 10% of the allocated money has been spent.
It's to be used to get the POS Democrats in congress re-elected! They could care less about you, me or the country, SOB's!!
The stupid stimulus was based on the FACT than noone knew what they were doing and the FEAR that they had to do something to prevent greater calamity. Sound familiar? It’s the same crap your local school board pulls when money gets tight and they threaten to cut football and the band. Fear tactics. That’s why it didn’t matter whether anyone had time to read it, they just wanted to pour money into the economy as fast as possible because that’s what their screwed=up Keynesian philosophy told them to do.
Except it was all wrong, and won’t work. Never has and never will. Unless you believe that a crisis is a terrible thing to waste, and can use it to fulfill political dreams that never would otherwise ever see the light of day.
It won’t stimulate because it CAN’T stimulate.
I appreciate your argument and sometimes find that position convincing. What’s working against it is the sheer quantity of credit disappearing due to massive debt default, a process that is only going to get worse as default spreads from residential real estate to the commercial sector.
I’ve seen figures indicating that defaults are in the range of 40-50 trillion, which dwarfs the 2 trillion or so that the government and Fed are injecting. That liquidity could grow if, as you point out, other central banks join the game. But will that counter the huge amounts of credit vanishing? The Japanese tried fighting a credit collapse without much success.
I’m not sure how much of that new money will get into the hands of the public. Banks aren’t lending, which makes you wonder just how much worse their balance sheets may be than we already suspect. The American public has relearned the value of thrift and that lesson may stick. This all works against the velocity of money, and for a good inflation to take off the velocity will have to pick up.
GOVERNMENT CONSUMPTION
Your credit shrink argument becomes all the more frightening as money is drying up. Deflation is now in full swing. Cash is King and dollars to repay debt are getting hard to find. Inflation does seem a long way off. The question becomes: What will the government do to try to stimulate the economy to stop the slide? It can't borrow and spend fast enough to turn it around at these rates. And the tax base is shrinking by the day.
That "gold" coin they were passing around at the G-8 was telling. If the dollar is dumped, we are the new Mexico! And... American lifestyles go down the drain...
“The question becomes: What will the government do to try to stimulate the economy to stop the slide?”
I don’t think it matters what they try. They won’t have any more success than the Japanese did. The deflation is going to continue as unemployment feeds on itself. I think we are going to see a greatly different economy emerge after this process plays itself out, with a lowered standard of living for most of America in the next up cycle.
” I’ve come to learn that the Fed has stopped QE and never really injected much new money over the past 6 months. “
A funny thing about QE - I saw someone make a case for the idea that the past credit boom was built on QE, with China being the force responsible for the long term quantitative easing. China recycled their dollar earnings into American debt instruments, holding long term rates low and fueling the credit bubble. Not that they did this by design, they aren’t necessarily all that economically sophisticated. It was a very intriguing article but right now I don’t recall who wrote it.
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