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Excuse me while I take a moment out....
Okay, I'm now ready to listen to your pathetic justifications of a miserably failed model called Keynesian stimulus. If that's even what's going on now. (Probably it's not).
Shanty, before you utter another word about economics, I'd like you to learn the following terms:
a) limit cycle
Now, if your math is correct, you should be able to build me a very simple DSGE model that has a mean limit cycle of 10 years, a stable attractor, a regular trajectory, and is locally stable without damping. 'Kay? I just translated your own sentence, so if what you're saying has any basis at all in reality, you should be able to build me this model. Yes?
I can never get past page 3 on this stuff. There's still so many gaping holes in the first three pages it isn't even worth progressing until they've been addressed.
We're answering the question "Why Keynesian Stimulus Fails". If we can agree on the math, I can give you the answer in under five seconds.
On economics, the Austrian School has provided very little insights into understanding economics. Other than that, they're to be ignored because they don't engage in reality.
Go ahead and address the issue, then. How can you guarantee it's not temporary?
It was Keynesians saying that 1929 could happen again. Again, you being stuck in Groundhog Day have forgotten that it was Keynesians who showed the problems of bubble economics back in the 1990s before the last two bubbles burst in 2001 and 2007.
Last edited by Shanty; 17th November 2012 at 04:32 AM.
And it figures you'd go the hyperbolic route...
Like you could do any of this? I think we should see if you can do it, or are using yet more bluff, because you never produce evidence to back your claims up.
So, tell me how you would create a DSGE model to take into effect a) changing tax rates over 10 years b) changing government spending over 10 years (including how it's spent, as different spending has different spending multipliers), c) changing regulations (and again, some regs can help the economy grow, while others don't or limit growth) d) supply shocks, etc.? I'm interested in seeing if you can do this. And, just for good measure... the weaknesses of DSGE have to be acknowledged.
Last edited by Shanty; 17th November 2012 at 04:53 AM.
We're still pumping cash into the banks. And we've pre-emptively guarenteed that if they get themselves in the same situation again, we intend to bail them out again. It's called "too big to fail", and it's teaching the exact wrong lessons. Namely, screw around all you want, when the shit blows up in your face, you'll get another bailout. Which is exactly why TBTF is going to be a permanent part of American banking.Untrue. I disagree severely with how the bailouts were done, and even that we bailed out the banks. But it's done, and other than liquidating banks unable to meet their minimu standards for operations, in an era that has a lack of firewall between commercial banks and finance banks, we're generally not bailing them out like we were in the free fall that Bush and the GOP left behind.
So we're agreed -- the government intends to print money for the banks until we get jobs. The Jobs act is the government trying to spend even more money on top of the QE(infinity) to create jobs when there's no demand in the economy. In other words, we're printing money until the republicans agree to hand out money to create jobs that aren't demanded. That makes sense. I mean really, most businesses love to take on extra workers to do work that doesn't need to get done for customers who aren't buying anything.It's not permanent, particularly if the GOP work towards passing bills like the American Jobs act and similar legislation.
But even more than that, it also means that the underlying problems in the economy aren't being dealt with. The problem with the banks was that they were making stupid decisions. Which we've now protected them from the consequences of. The problem with the consumer end was that people were spending far beyond their means, buying houses that they literally could not afford, and at the same time carrying lots of consumer debt. We were running our entire economy on debt, and none of that has been dealt with. In fact, the next bubble is probably going to be student loans when all of the kids who went into English Lit cannot pay back their student loans with their paychecks from Starbucks. We also aren't dealing with the issues brought on by globalization. We keep crying about the loss of American manufacturing while ignoring the fact that most manufacturing is done either by Chinese workers for pennies or robots for free. Our entire system is screwed up, in lots of ways ... and Keynesian economics has papered over all of it. Which means that it's going to keep happening until the strain takes the entire system completely down.
Well, I think part of the issue of WW2 and why it helped had less to do with us spending money and more to do with the enforced fiscal discipline. People remember that the government was making lots of planes and tanks and other things, but there was another side. Since so many things were rationed, the people of that time were forced to save. If you were planning a wedding, you had to save ration cards so you could get ingredients for your cake and other foods. All kinds of things were rationed, and of course people were collecting scrap metal for tanks and planes and jeeps. So people were saving money because it was impossible to spend it, which means that the government created demand for goods after the war. If it weren't for the rationing and the pent up demand for consumer goods after the war, the end of WW2 would likely be a recession.You'll have to be more specific, because largely, after Hoover's neglect of the economy crash from Coolidge's incompetence (a Laissez Faire approach), FDR reorganized regulatory laws and tried putting people to work. Like Obama, he and Democrats did not put as much money into the economy to break the high unemployment until the late 1930s. But as noted on this thread, there wasn't really a policy prescription until Keynes came up with one. And then, no one was sure it would work until WWII broke out and proved deficit spending to end a recession to work. Granted, FDR saw it when he had his double dip because he tried to bring deficits under control before the economy was able to withstand austerity measures.
Social Security made it possible to do away with pensions, by making such a thing palatable to workers. The other part is that people are no longer likely to work for a single company for life as it used to be. There's no reason for people to join the welder's union if they're not going to be a welder in 5 years. That's not "breaking the union" it's a loss of loyalty as people more and more often behave like independent contractors bidding for a job for a few years. But even that has been facilitated by the existence of a system that garentees the worker loses nothing by jumping from job to job.The corporate backing of the breaking of unions and pensions has done more for causing that than anything.
Upkeep on Interstate highways is still going on. and if you're pointing to the end of a war as a "spending program that ended" pretty much proves that you're reaching. besides which, we've pretty much been at war for the entire 20th century, as compared to the 19th in which we had only a few real wars (war of 1812, Mexican War, civil war, and Spanish American war) in the 20th, we were at war pretty much the entire time (ww1, ww2, korea, vietnam, the noreaga thing, iraq). So even if ww2 ended, it's not like we haven't had other wars since ww2.WPA, WWII government expenditure, the ARRA, the initial investments into the Interstate Highway systems, etc.