I probably should leave this thread well enough alone, but I'm a glutton for punishment.

@Winstonfield_Pennypacker, you need to do better research when it comes to finding data to support your argument. For one, your quotes of Obama would not accurately be paraphrased as "All economists agree with me", they would be paraphrased as "No credible economist would agree with what you just said", with the "what you just said" conveniently left out of the quote.

Also, both quotes were part of a dialogue about health care, and you keep citing articles about the stimulus, plus a single article about what the CBO said about an exceptionally early draft of HCR from last summer.

Now, a statement that I couldn't really contest, would be this quote, from this article you linked:

During a time of controversy, the best way to win over public opinion is to convince the public that there is no controversy. Sometimes, when an issue is too complicated for the general public to make an informed decision on their own, they rely on the opinions of experts, and politicians stop debating the points of the issue, and start debating the consensus. That’s a consensus war. It’s happening with the global warming issue, and it’s happening with the economy.

Totally true, and accurately calls out a tactic Obama is really practicing, without engaging in strawmen and false quotes.

He's very good at it though, and it's part of why I think he's so good at the political game -- if you take any of his quotes in their proper context, they're all fastidiously accurate, though they're usually legalistically narrow, while sounding tremendously broad. For example: "Those job losses took place before any stimulus ... You could not find an economist who would dispute that" sounds like "All economists agree with me", but that isn't what he actually said.

Even the boys at Cato, who the article was about, made this mistake:

Recently, Obama attempted to shut down the controversy surrounding his so-called “stimulus” package by saying “there is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy.”

They then cite 300 economists who "disagree" with this statement by Obama, and sign a letter that asks Obama to take action by our government, namely:

To improve the economy, policy makers should focus on reforms that remove impediments to work, saving, investment and production. Lower tax rates and a reduction in the burden of government are the best ways of using fiscal policy to boost growth.

Which is to say, they agree, action by the government to jumpstart the economy was needed, it's just that the fiscal policy they wanted was deficit-funded tax cuts instead of deficit-funded spending.

Granted, I think the people at Cato knew exactly what they were doing. They were intentionally misconstruing the quote to mean something it doesn't, to try to stir up a big fuss about people disagreeing with Obama over what government action they want, and then pass it off as evidence that Obama lied. All because they don't want to admit that Obama's right -- the debate wasn't whether government should take action, but how government should take action. That's relevant to the politics because Republicans were already talking up their general opposition to any stimulus at that point, which went contrary to the consensus among mainstream economists that some sort of stimulus was necessary.

Oh, and because Democrats ultimately won that legislative battle, part of what got done was that people's taxes got cut, making them lower than they've been since the 60's.

Would that not then mean that ... Sarah Palin is Constitutionally prohibited from becoming ... President or Vice President of the United States of America?

Well - if you want to play the rhetorical game of strict denotative definitions - then "insurrection" would mean Barak Obama should be tossed out today. An insurrection is simply "resistance against civil authority or an established government", right? As a civil rights activist Obama as resisted the government. The entire Democrat resisted an established government during GWB. The Republicans are doing it right now under Obama. You know what? The more I think about it, the more I like this goofball textpert interpretation. It essentially means that NOBODY is allowed to run for political office. Throw them all out. Good riddance.

The teabagger movement ... was founded by old skool conservative republican, Dick Armey

It would be more accurate to say that Dick Armey supported the already existent Tea Party in the same way Democrats supported the anti-war movement. Under GWB, a grassroots movement got going that was opposed to the way the Iraq war was handled. This true representation of the national mood was aided and abetted by Democrats. Democrats "astroturfed" the bejeezus out of the anti-war movement. It was politically exigent, as well as a philosophical position they agreed with.

Republicans are trying to do the same thing with the Tea Party. The Tea Party is grassroots. It is filled with citizens who hate debt and deficits - who want balanced budgets & fiscal restraint at the federal level. It is Republicans, Independants, and even Democrats for whom sound fiscal policy is a critical issue. But Republicans for years flapped thier lips about fiscal conservatism (even though they don't practice it much). Of course the GOP is going to foster & foment a movement that they politically sympathize with.

The Tea Party movement is about fiscal conservatism. They want balanced budgets, reduced spending, and limited federal power. In that sense they agree with some libertarian principles, but aren't interested in the social policies that make the libertarian party such a collection of oddballs. Neither are they interested in the "Republican party" except as a vehicle to slam the brakes on Obama & Democrats. If the GOP thinks they can just use the Tea Party like a wet-wipe and then go on to be a bunch of fiscal idiots like Bush, then they will find the TP to be an unreliable ally.

Regardless of what's happening in the short term, I think in the long term it's something to be worried about. China has given indication that it wishes to diversify from US treasury bond holdings numerous times. That in and of itself will have a compounding effect over time. A crisis isn't necessary either, a genuine crisis would be an appreciation followed by an abrupt depreciation brought about by an investor and foreign sovereign fund run as investors lose faith in the federal government being able to pay off the debt. Merely an incremental interest rate rise and appreciation would hurt competitiveness.

Do agree that '2011' is horribly vague, but then it does offer some much needed flexibility as well, while still sending a signal.
>> ^NetRunner:
>> ^RedSky:
While expansionary fiscal policy is necessary during a crisis such as this one, it is equally important to signal to the market that you're not going to either create inflation through over stimulating the economy and you're not going to be forced into a position of printing money to honor your deficit. By promising to reduce expansionary spending in the future, you're getting the best of both worlds.

This is spot on in terms of economic analysis, except for one bit -- there's no indication we're anywhere near the crises you mention, and market indicators actually show that the markets are wanting us to borrow more (interest rates are actually going down).
Based on the actual language Obama used, he basically said the spending freeze would take place after the crisis had ended and when recovery is well on its way. I think that's perfectly reasonable. However, he did put a timeframe on it, but it was just "in 2011," which could easily mean the freeze "starts" on Dec 31st, 2011. Also, as much as I hate to say it, one thing the last year has shown is that Obama sure as hell doesn't have a problem letting a deadline slip if it's necessary (like with health care), or even merely expedient (like with repealing Don't Ask Don't Tell). If unemployment is still not coming down by the end of 2011, he'll need to go into full FDR mode unless he wants to be succeeded by a Republican in 2012, and watch the Democratic party die off completely.
Long story short, I'm not worried. It's a stupid gimmicky way to try and put out an olive branch to conservatives, and while I'd like to think that people are too smart to fall for it, I suspect it will actually resonate with some conservative-leaning independents as a gesture showing that he knows the debt and deficit is a concern, and that cutting spending most certainly is on the table.

>> ^RedSky:
While expansionary fiscal policy is necessary during a crisis such as this one, it is equally important to signal to the market that you're not going to either create inflation through over stimulating the economy and you're not going to be forced into a position of printing money to honor your deficit. By promising to reduce expansionary spending in the future, you're getting the best of both worlds.


This is spot on in terms of economic analysis, except for one bit -- there's no indication we're anywhere near the crises you mention, and market indicators actually show that the markets are wanting us to borrow more (interest rates are actually going down).

Based on the actual language Obama used, he basically said the spending freeze would take place after the crisis had ended and when recovery is well on its way. I think that's perfectly reasonable. However, he did put a timeframe on it, but it was just "in 2011," which could easily mean the freeze "starts" on Dec 31st, 2011. Also, as much as I hate to say it, one thing the last year has shown is that Obama sure as hell doesn't have a problem letting a deadline slip if it's necessary (like with health care), or even merely expedient (like with repealing Don't Ask Don't Tell). If unemployment is still not coming down by the end of 2011, he'll need to go into full FDR mode unless he wants to be succeeded by a Republican in 2012, and watch the Democratic party die off completely.

Long story short, I'm not worried. It's a stupid gimmicky way to try and put out an olive branch to conservatives, and while I'd like to think that people are too smart to fall for it, I suspect it will actually resonate with some conservative-leaning independents as a gesture showing that he knows the debt and deficit is a concern, and that cutting spending most certainly is on the table.

I know I'm swimming against the tide here, but it's a good move which should be moderated by the situation in a year's time.

Maddow is correct about economics 101, but she gives no indication she understands anything beyond that here.

You have to remember that the US is in a huge deficit. Perhaps not as large as Japan's relative to GNP, but the largest in absolute terms. The point here is that the size of the US economy is so large world credit supply will at some start to become less and less tolerable of more borrowing.

Higher public or for that matter private debts inevitably raise the risk of borrowing in a country. Higher rates of borrowing encourage investors who are looking for high interest rates on their returns. That appreciates the currency. What an appreciation of the currency would do is make US exports uncompetitive, which essentially destroys the competitive edge of the economy. Together with higher borrowing costs, that would be particularly crippling. Yes as a counter-argument it does make necessary imports such as energy supplies cheaper, but on the whole it's indisputably damaging.

While expansionary fiscal policy is necessary during a crisis such as this one, it is equally important to signal to the market that you're not going to either create inflation through over stimulating the economy and you're not going to be forced into a position of printing money to honor your deficit. By promising to reduce expansionary spending in the future, you're getting the best of both worlds.

By "tough on savers", what you mean is traders at the expense of savers. Traders are still free to trade in a hard currency system, they just can't wildly speculate...which has been a major problem anyway in terms of recessions and panics. How many times have savers caused an economic downturn vs how many massive speculations, panics, contagions sown by freeish money made available through government fiscal policy and lose central banking.

You are right though, there is an incentive to destroy the environment for hard currency when that currency is gold. Look at Zimbabwe, they are destroying their rivers and other live giving infrastructure. You could use something other than metals, but really, metals aren't going anywhere, the are going to be mined milled and used in other areas. Not having them as a basis of currency isn't going to stop people from wanting gold, silver, oil or whatever we wanted to choose. In fact, it is BECAUSE they are valued and hard to obtain that we wanted to select it as a currency denomination.

As I see it, when you favor Fiat currency, the evils you make are inflation (which can be rightfully called a tax), larger business cycles, and the debt monster which will one day eat your currency alive when exponential growth is no longer possible.

SS is no answer to this at all, our current SS policy is a ponzi scheme. It requires more investors to pay out dividends to the old ones. At some point, that will bust, and to the detriment of everyone alive at the time to watch it.

In short, I think central bankers morgage the future for current gains. This is at the direct cost of the savers, they are being exploited the whole while. The recent bank bust is just more case to this. The savers forced to bail out the massive speculators. Not only does their money get debased, but they have to bail them out when massive speculation made possible by freeish money finally comes crashing down.

ObamaCare and many other schemes like it are unconstitutional. So are Medicare, Social Security and government schools. Whether social programs are worth their salt is debatable, but they are unconstitutional. The joke on those who say otherwise is none of it will be perpetually solvent or affordable in the next 20 years. There never has been, or will be, a free lunch.

The Constitution is a negative document that LIMITS government power. Communist Obama thinks it means the opposite, one of many reasons why he's dangerous.

If the "welfare clause" meant what liberals claim it does, the Founding Fathers wouldn't have bothered to carefully enumerate the few but important legitimate powers of government.

The paradox of the Constitution is the very fools that constantly make government bigger, more intrusive and more dangerous to liberty are the ones entrusted to willfully limit government power. Any semblance of balance between the federal leviathan and the States died with States' Rights.

Liberals and now a great many fakeservatives believe the Constitution was written on an Etch-A-Sketch...a few shakes and twists of the knobs and any popular entitlement the mob wants is now a 'right'.

"A Democracy (aka mob rule) cannot exist as a permanent form of government. It can only last until the citizens discover they can vote themselves largesse out of the public treasury. After that, the majority always votes for the candidate promising the most benefits from the public treasury with the result that the Democracy always collapses over a loose fiscal policy, to be followed by a dictatorship, and then a monarchy." --source unknown

>> ^Nithern:
By your own words, you said the money supply within the US has gone up 271%. That would mean the economy is coming back from the recession.


You can't be serious. Printing more money means that the economy is recovering? Wow, why didn't we think of this before... if we just keep printing more and more money then we'll never see another recession!

As unpopular as BobKnight's comment was, he's right about our current fiscal policy being quite dangerous. There is a very real possibility of destroying the dollar. It may not happen, but if Obama and company screw this up then we're going to have problems that terrorists could never dream of causing.

I like Obama and many of his policies, but don't underestimate the gravity of the financial situation. They're trying to walk a fine line between propping up economic activity and devaluing the currency. I'm guessing that there is some behind-the-scenes political maneuvering in an attempt to avoid problems with our creditor nations.

It may work and bring us out of the recessionary forest intact, but don't think for a moment that our current path of printing money to pay the bills is a safe one.

Ah, yes, Ventura touches on the very reason torture should not be justified. It's not because it causes unpleasantness, it's because it causes victims to lie. A tool such as that CANNOT be justified by ANY government, because the power to cause someone to lie for you is the power to control history... Does anyone remember Room 101?

Supposedly the Republicans are against big government, yet they defend a tool of power such as torture? I don't think they even know what big government is. Fiscal policies are the clothing of big government, but what about what's underneath, such as the big dick of war and the anus of inhumane justification?

I'm coining a new term: The big dick and defecating anus of government.

Imstellar,

As always you misinterpret data to fit your perceptions.

Real GDP growth has doubled from 1970 to 1990 check BEA, national debt has only increased larger then a fraction of total GDP from 1980 to 1990, with massive debt growth from 1990 to 2000. These levels however are still below levels of World War 2.

Your example really however applies when it comes to the recent so called growth from 1997 to 2007, as real wage increases were nonexistent, so was real stock market growth on the S&P 500. So instead of the economy expanding the US economy has been fueling growth with borrowing. At the same time credit card debt started overtake real wages, with massive increases from 2003Q1.
http://www.businessweek.com/the_thread/economicsunbound/archives/2009/02/the_failure_of_1.html

Your idea that private enterprise can solve these issues is again wrong, given that the Progressive movement brought government intervention to sustain fair markets and competition which lead to break ups of monopolies. Bringing forth agencies like the FDA, FTC and the Interstate Commerce Commission. The Federal Reserve was created to control tariffs and antitrust cases. All these agencies came about in the 1900s and were responses to citizen requests after laissez-faire economics in the 1800s, they also paved the way for the roaring 20s. Before you start complaining about the the government extending the great depression a recent study showed that only 20% of professional economists hold that view, and even then they claim that they Fed should have been the one to instigate change by reducing interest rates and allow credit back in the economy but this is in hindsight with development of Monetary policy in the 50s and 60s.

Furthermore, I never advocated for socialism in the US because it is not going to happen, what I said was socialistic policies, the capitalistic component is not being removed from the US unlike what you seem to believe. Its called a Mixed economy for a reason. There is no pure capitalistic or socialistic economy in the world bar Cuba and some failed states, the closest capitalistic state in the world is actually Singapore.

You keep saying '2%' unemployment.

The unemployment problem is far more severe, but you are underestimating its very nature, the stimulus package was created to save or create 3.5 million jobs, the unemployment figures currently place it at 4.4 million (half of this in the last 4 months) since the start of the recession.

With levels spiking to 8.1 as I mentioned earlier in single month, the highest level since 1983. This strikes at consumer confidence, and further reduces consumption and aggregate demand, not to mention that it means that more foreclosures are coming. Consumption is already taking a hit as confidence plummets and expenditure is being relegated to essentials (however I think the electronics sector will still thrive, especially the video games market, it has been shown to be fairly recession proof unless EA goes crazy and starts to buy up other companies).

Not only are layoffs large but there is increasing firms that are simply coming out of entire market sectors. The Labor department has stated that Unemployment benefits will not recover lost jobs but more must be spent on actual job retraining to realign the US economy with trend factors over the last 10 years, 4.5 billion is in the stimulus package for job retraining. That is still too low as in current dollars $20 billion a year went to job training in 1979, compared with only $6 billion last year.

This recession will fundamentally rebuild the economy, even with unemployment benefits and a sudden resurgence in consumer confidence there is not enough credit available to allow a short term return to employment. Which again necessitates the large fiscal policies we are seeing enacted.

Education will also play a vital role in this, am an advocate of centralized educational standards. I disagree with educational avenues in the US, which usually require graduates to graduate with massive debt which they repay for several years afterward. Not to mention that systems like the SAT and No Child Left behind have only created a system where children learn more about test taking then actual acquisition of knowledge. But this is another debate entirely which I don't really feel like expanding on right now.

Finally. Again to reiterate what I said about the 'let them fail' ideas with regards to the banking system. The Treasury still has not made up its mind how it will cover the toxic debt, the Fed let Lehman Brothers fail and see what happened, the entire finical sector melted down and dragged several other big firms with it. There is talk of letting Citigroup fail, that is a huge bank, and the actual cross exposure is not clearly relevant if its allowed to fail. It could drag the rest of the financial sector with it. However there is clear rallying right now as Citigroup posted a profit, with markets perking up.

Imstellar,

Regarding your unemployment figures and the levels you cite from the 70s and 80s when unemployment was 9% to 11%, the Fed at the time was maintaining high interest rate levels, in response to growing unemployment levels it started to cut back interest rates to increase aggregate demand.

The interest rate now is 0%, the Fed cannot provide any stimulus to the economic given that there is large fear in the economy regarding credit. This is why Fiscal policy has come into effect, seeing as there is no avenue for Monetary policy in the system right now.

Furthermore it was predicted that 8% was going to be the average unemployment level for the whole of 2009, while in February the unemployment level spiked to 8.1%. The projections were clearly too optimistic.

With regards to accusations of hyperinflation, the actuality is that American investors are retaining more of their money here, while China continues to buy Treasury bills and accumulating American debt. Their already vast US dollar reserves demand a sustain dollar thus hyper inflation nor a dollar run is unlikely to occur any time soon. However the US accumulating the money around the world means less is available to other less developed nation seeking the same.

The whole argument about the package being too big has been discussed, I believe the package itself is too small, the CBO projected a shortfall of 14% of GDP over the next two years which translates to $2 trillion.

This is not a recession of over accumulation and over investment in capital that would be absorbed over a period of time, this is a recession where American wealth was lost through housing and share prices to a tune of $12 trillion dollars. Thus demand in consumption and new housing construction both declined, savings have increased but will take years to recover the lost wealth.

The current package covers only half the possible GDP losses in both these cases even at the most optimistic level, another renewed stimulus package will probably be coming in a few months. Something that is mentioned by many economists but not at all covered in the media http://mediamatters.org/items/200903060025?f=h_latest

Also the belief that private ownership and free market capitalism will simply avail this situation with hard work is one of the most ridiculous things I keep reading on this website. You sound like the Banks that failed, claiming that their problems were not insolvency based but liquidity based, you know that if we just gave them more money they could cover their debts. But you know if we just make the economy more capitalistic everything will be fine, not really accounting what it means to be unemployed for a vast majority of Americans, look at trickle down economics and tell me how that worked out.

>> ^quantumushroom:
The president is presiding over economic failure. The president is watching it, doing nothing about it.


Well, if nothing else Obama is doing what he thinks is right. It may very well turn out that his policies will cause more harm than good, but he truly seems to believe that he is following the best option available.


As far as conservatives, people follow what they understand. Very few people understand the complexity of economics, but they do understand social issues. Fiscal conservatism will never prevail as long as it is tied to social conservatism. People won't follow "cut spending and taxes" if the same guys are preaching that "gays don't deserve rights" and "stem cell research is murder".

People might follow conservative fiscal policies when they are no longer tied to social issues based on the bible.

>> ^Psychologic:
^ Everyone has opinions on what should be cut and what shouldn't, but that doesn't mean that we can keep the deficit spending going without bad things happening.
If you cut spending then you upset people who supported the areas you cut. If you raise taxes then you run the risk of inhibiting the economy and convincing businesses to relocate to less restrictive countries. If you leave the deficit spending in place then you can eventually destroy the economy and/or currency.
I'm curious as to which direction the government will choose (perhaps one not listed), but I think Schiff is very close to the truth about the dangers of our current policies.


If they're to be believed, it's supposed tremendous increases in efficiency coupled with a rise in spending on underfunded sectors while simultaneous engineering investment in other new areas.

In regards to your other post before, regarding inflation and currency depreciation - my thoughts

To add to that, the potential, inevitable problem with cutting spending in a moment of crisis such as now is creating a downwards depressionary spiral. If that happens to substantially diminish later tax returns because of a litany of companies going bust, then current fiscal prudence would have done little other than confirming the inevitable and worsening the budget deficit still. Fiscal policy, while an anathema to ideologues who oppose any form of intervention has been a consistent and effective means governments have used to prop up economies in moments of downturn.

I lean heavily on Paul Krugman for theory. Here's one of the most basic articles from him on why we need to look at fiscal policy (because we've hit the zero lower bound on monetary policy).

http://krugman.blogs.nytimes.com/2009/01/19/getting-fiscal/

Here's him on the dangers of entering a deflationary trap if something isn't done quickly:

http://krugman.blogs.nytimes.com/2009/02/04/about-that-deflation-risk/

And a less optimistic take:

http://krugman.blogs.nytimes.com/2009/01/30/damnification/

Here's Robert Reich being particularly shrill:

http://robertreich.blogspot.com/2009/02/senate-republicans-and-stimulus-playing.html

And Joeseph Stiglitz being similarly strident:

http://www.nytimes.com/2008/11/30/opinion/30stiglitz.html?_r=2

I've been sporadically checking on most of these guy's blogs, and they are mostly rebutting the opposition to the stimulus put forth by various other economists.

^ I still think you're overly generalizing about people based on the fact that they like certain things about Obama.

I "like" Obama. I like the fact that he is well-spoken and intelligent. I like that he does not show special favoritism to religion and that he focuses more on bringing people to his side rather than insulting those with opposing views. And yes, I still like how he handled himself in the video above. He is diplomatic, and that is important whether he is speaking to foreign leaders or the american public.

However, I do not agree with Obama's fiscal ideas. He is in favor of printing large sums of money to "save" the economy, which has the very real possibility of screwing things up further through forced inflation. You're right in that there are very few true fiscal conservatives in Washington currently, and that bothers me.

There have been plenty of videos posted here of people who are completely opposite of Obama on fiscal policy (Ron Paul, Peter Schiff, etc). A lot of the people who align more with fiscal conservatism still like the fact that Obama isn't an ass about everything, and I don't see a problem with that. If people blindly follow every policy Obama puts out there because they like the way he speaks then yes, that is a problem... but I think there is less of that going on than you assume.