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US Economy Shrinks 0.1% in Fourth Quarter

Subutai
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1/30/2013 10:48:05 AM
Posted: 3 years ago
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.
I'm becoming less defined as days go by, fading away, and well you might say, I'm losing focus, kinda drifting into the abstract in terms of how I see myself.
imabench
Posts: 21,230
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1/30/2013 11:04:28 AM
Posted: 3 years ago
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

1) Its a drop of .1%, chill the f*ck out
2) Obama's economic policy is not the sole factor that determines if the economy grows or not, and anybody who knows a damn thing about economics knows that.
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darkkermit
Posts: 11,204
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1/30/2013 11:20:44 AM
Posted: 3 years ago
At 1/30/2013 11:04:28 AM, imabench wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

1) Its a drop of .1%, chill the f*ck out
2) Obama's economic policy is not the sole factor that determines if the economy grows or not, and anybody who knows a damn thing about economics knows that.

1) A .1% drop is pretty huge considering that there's population growth and the economy has traditionally been growing. The US obviously hasn't reached steady state peak growth, considering richer nations like Hong Kong and the Scandenavian countries have been growing.
2) What do you think the other factors are? A .1% drop is pretty bit.
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Subutai
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1/30/2013 11:52:46 AM
Posted: 3 years ago
At 1/30/2013 11:04:28 AM, imabench wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

1) Its a drop of .1%, chill the f*ck out

First of all, it's a drop in the first place. Our economy should be right back on track but Washington is saying otherwise. Compared to all recessions since WWII, this has been the worst recovery by far.
2) Obama's economic policy is not the sole factor that determines if the economy grows or not, and anybody who knows a damn thing about economics knows that.

But nothing serious has hit the economy. And again, we should have recovered by now.
I'm becoming less defined as days go by, fading away, and well you might say, I'm losing focus, kinda drifting into the abstract in terms of how I see myself.
malcolmxy
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1/30/2013 12:15:50 PM
Posted: 3 years ago
At 1/30/2013 11:04:28 AM, imabench wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

1) Its a drop of .1%, chill the f*ck out
2) Obama's economic policy is not the sole factor that determines if the economy grows or not, and anybody who knows a damn thing about economics knows that.

another drop of any amount next quarter would mean we had another recession. We've not recovered from the '07 recession completely yet and then we have another one.

I'm not going to be so bold as to blame the president, given how little effect a president has on the immediate economy (exception, historically, being Bush 43, but that was an anomaly), but it's a pretty big deal.
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OhioGary
Posts: 68
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1/30/2013 1:58:53 PM
Posted: 3 years ago
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...
"There ain't no good guy. There ain't no bad guy. There's only you & me & we just diasgree."
darkkermit
Posts: 11,204
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1/30/2013 2:43:21 PM
Posted: 3 years ago
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...

There's no economic law that states that a decrease in spending means that the economy must fall as well. From 1993-2007, Canada decreased its spending, yet saw its economy grow:

http://www.cato.org...
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wrichcirw
Posts: 11,196
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1/30/2013 2:49:18 PM
Posted: 3 years ago
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

Obama got elected because the economy grew. Now the "powers that be" are adjusting for reality.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Kinesis
Posts: 3,667
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1/30/2013 2:58:41 PM
Posted: 3 years ago
This is a headline grabbing number, but it isn't nearly as bad news as it seems. The drop in GDP was partially caused by the 22 percent slash in military expenditure, which most members of this site would agree is a good thing. It was also caused by exportation problems which are in turn caused by the Eurozone crisis - hardly the fault of Obama's stimulus package.
Subutai
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1/30/2013 3:12:56 PM
Posted: 3 years ago
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...

Unlike what most Keynesians claim, austerity measures do not reduce the amount of economic growth. In fact, the only other alternative, increasing taxes, is a lot more destructive than spending cuts.

In fact: "I"ve studied every 3-year peace-time period since the U.S. founding in 1790, and in cases when federal spending declined, real GDP over the same years grew by 11%, on average, not materially different from the average growth rate recorded in periods of rising spending. Government spending cuts have not been bearish for growth. From 1840 to 1843 U.S. federal spending was cut by 51% while real GDP grew by 11%; from 1866 to 1896 spending declined 38% as GDP grew by 9%; from 1874 to 1877 spending fell 20% as GDP advanced by 9%; from 1899 to 1902 spending dropped by 20%, but GDP rose by 13%; finally, between 1921 and 1924 spending decreased 43%, yet GDP climbed by 23%. No 3-year spending cut has occurred since 1949, and since then, GDP growth has slowed."[1]

There really is no correlation between reduced spending and economic lethargy.

Sources:

[1]: http://www.forbes.com...
I'm becoming less defined as days go by, fading away, and well you might say, I'm losing focus, kinda drifting into the abstract in terms of how I see myself.
Subutai
Posts: 3,253
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1/30/2013 3:15:18 PM
Posted: 3 years ago
At 1/30/2013 12:15:50 PM, malcolmxy wrote:
At 1/30/2013 11:04:28 AM, imabench wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

1) Its a drop of .1%, chill the f*ck out
2) Obama's economic policy is not the sole factor that determines if the economy grows or not, and anybody who knows a damn thing about economics knows that.

another drop of any amount next quarter would mean we had another recession. We've not recovered from the '07 recession completely yet and then we have another one.

I'm not going to be so bold as to blame the president, given how little effect a president has on the immediate economy (exception, historically, being Bush 43, but that was an anomaly), but it's a pretty big deal.

The president's actions are certainly not the only factor that determine an economy's growth, but he is certainly a significant factor. Obama has passed so many anti-Laissez Faire bills it's not even funny. I know this sounds kind of dumb, but a president has a greater ability to wreck the economy than he is to propel the economy.
I'm becoming less defined as days go by, fading away, and well you might say, I'm losing focus, kinda drifting into the abstract in terms of how I see myself.
Subutai
Posts: 3,253
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1/30/2013 3:17:45 PM
Posted: 3 years ago
At 1/30/2013 2:58:41 PM, Kinesis wrote:
This is a headline grabbing number, but it isn't nearly as bad news as it seems. The drop in GDP was partially caused by the 22 percent slash in military expenditure, which most members of this site would agree is a good thing. It was also caused by exportation problems which are in turn caused by the Eurozone crisis - hardly the fault of Obama's stimulus package.

As I already pointed out in an earlier post, spending cuts are not significant when it comes to driving an economy. Even so, the many spending increases certainly weighs out any of the effects of that.

And I will admit that the Eurozone crisis made America's economic situation worse, but Europe is recovering. It makes no sense to have a slowdown now.
I'm becoming less defined as days go by, fading away, and well you might say, I'm losing focus, kinda drifting into the abstract in terms of how I see myself.
BigRat
Posts: 465
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1/30/2013 4:39:16 PM
Posted: 3 years ago
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...

When you run deficits that are historically large, as Obama has, you eventually have to cut spending.

Instead of blaming the tea party, maybe you should look at the people who put us in this fiscal position that forces us to reduce spending.
Contra
Posts: 3,941
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1/30/2013 6:15:55 PM
Posted: 3 years ago
At 1/30/2013 2:58:41 PM, Kinesis wrote:
This is a headline grabbing number, but it isn't nearly as bad news as it seems. The drop in GDP was partially caused by the 22 percent slash in military expenditure, which most members of this site would agree is a good thing. It was also caused by exportation problems which are in turn caused by the Eurozone crisis - hardly the fault of Obama's stimulus package.

The military was already cut that much? That's probably enough.

I'm surprised myself, I thought that a slowdown in GDP wouldn't come until the Obama tax hikes this year (payroll, income tax increases).
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
wrichcirw
Posts: 11,196
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1/30/2013 6:25:03 PM
Posted: 3 years ago
At 1/30/2013 3:12:56 PM, Subutai wrote:
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...

Unlike what most Keynesians claim, austerity measures do not reduce the amount of economic growth. In fact, the only other alternative, increasing taxes, is a lot more destructive than spending cuts.

False dichotomy. The real dichotomy is austerity measures, or no austerity measures. Instead of increasing taxes, one can just engage in deficit spending, which is what Keynes advocates.

In fact: "I"ve studied every 3-year peace-time period since the U.S. founding in 1790, and in cases when federal spending declined, real GDP over the same years grew by 11%, on average, not materially different from the average growth rate recorded in periods of rising spending. Government spending cuts have not been bearish for growth. From 1840 to 1843 U.S. federal spending was cut by 51% while real GDP grew by 11%; from 1866 to 1896 spending declined 38% as GDP grew by 9%; from 1874 to 1877 spending fell 20% as GDP advanced by 9%; from 1899 to 1902 spending dropped by 20%, but GDP rose by 13%; finally, between 1921 and 1924 spending decreased 43%, yet GDP climbed by 23%. No 3-year spending cut has occurred since 1949, and since then, GDP growth has slowed."[1]

There really is no correlation between reduced spending and economic lethargy.

I read a study by Christine Romer on this correlation. The logic was essentially that austerity measures equate to consumers delaying big ticket purchases. Such delays result in decreased factory output and thus less profits. With less profits, more firms go bankrupt, leading to job losses, and thus steeper austerity measures, and even more decreased output. This was the Great Depression.

I can try to dig up this report if anyone wants it (will take a while).

Sources:

[1]: http://www.forbes.com...
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
Posts: 11,196
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1/30/2013 6:27:13 PM
Posted: 3 years ago
At 1/30/2013 4:39:16 PM, BigRat wrote:
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...


When you run deficits that are historically large, as Obama has, you eventually have to cut spending.

Instead of blaming the tea party, maybe you should look at the people who put us in this fiscal position that forces us to reduce spending.

The solution will be inflation, IMHO.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
Contra
Posts: 3,941
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1/30/2013 6:34:44 PM
Posted: 3 years ago
@wrichcirw:

The Depression was long because of austerity, even though spending rose to new levels? That doesn't make any sense.

When tax hikes are used to reduce the deficit, they are still economically destructive, but since they are directly infusing capital back into the economy to the original private lenders, they can then invest in the economy, leading to economic growth.
"The solution [for Republicans] is to admit that Bush was a bad president, stop this racist homophobic stuff, stop trying to give most of the tax cuts to the rich, propose a real alternative to Obamacare that actually works, and propose smart free market solutions to our economic problems." - Distraff

"Americans are better off in a dynamic, free-enterprise-based economy that fosters economic growth, opportunity and upward mobility." - Paul Ryan
wrichcirw
Posts: 11,196
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1/30/2013 6:38:42 PM
Posted: 3 years ago
At 1/30/2013 6:34:44 PM, Contra wrote:
@wrichcirw:

The Depression was long because of austerity, even though spending rose to new levels? That doesn't make any sense.

There was no spending during the Hoover years. Spending by Roosevelt ostensibly caused a lift, until 1937 when austerity measures took over again.


When tax hikes are used to reduce the deficit, they are still economically destructive, but since they are directly infusing capital back into the economy to the original private lenders, they can then invest in the economy, leading to economic growth.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
BigRat
Posts: 465
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1/30/2013 7:03:25 PM
Posted: 3 years ago
At 1/30/2013 6:27:13 PM, wrichcirw wrote:
At 1/30/2013 4:39:16 PM, BigRat wrote:
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...


When you run deficits that are historically large, as Obama has, you eventually have to cut spending.

Instead of blaming the tea party, maybe you should look at the people who put us in this fiscal position that forces us to reduce spending.

The solution will be inflation, IMHO.

The solution is inflation?

I'm not an austrian or a gold bug but to suggest that we can inflate our way out of our unsustainable fiscal obligations is simply preposterous.

Higher NGDP growth from the Fed may be able to boost the economy in the short run, but it cannot make up for bad supply side polices.
BigRat
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1/30/2013 7:16:28 PM
Posted: 3 years ago
BTW, fiscal austerity did NOT lead to the great depression. There are a few plausible explanations of the depression:

1.) The Fed's easy money policy led to high amounts of malinvestment that needed to be corrected and the New Deal as well as Hoover's interventions held back the genuine economic recovery

2.) The stock market crash was not what led to the decline. It was actually the government interventions that came later. In other words, the interventions by Hoover (price and wage fixing, tax hikes, protectionism) and Roosevelt substantially held back recovery by not allowing wages and prices to adjust and creating a sort of "regime uncertainty".

3.) The Fed actually pursued a deflationary, tight monetary policy in the aftermath of the 1929 crash. It was not until a more expansionary monetary regime was restored that a recovery occured (and bad New Deal policies didn't help either).

I hold a mix of 2 and 3. That is because that is where the evidence seems to support. The fiscal austerity theory, on the other hand, is not really a credible theory.

Actually, I think you would interested to hear what Christina Romer says about this. This is from a study she did on the great depression:

"This paper examines the role of aggregate demand stimulus in ending the Great Depression. A simple calculation indicates that nearly all of the observed recovery of the U.S. economy prior to 1942 was due to monetary expansion."

That's right, even according to Romer, it was expansionary MONETARY policy, not fiscal policy, that was key to recovery.
Subutai
Posts: 3,253
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1/30/2013 7:44:31 PM
Posted: 3 years ago
At 1/30/2013 6:25:03 PM, wrichcirw wrote:
At 1/30/2013 3:12:56 PM, Subutai wrote:
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...

Unlike what most Keynesians claim, austerity measures do not reduce the amount of economic growth. In fact, the only other alternative, increasing taxes, is a lot more destructive than spending cuts.

False dichotomy. The real dichotomy is austerity measures, or no austerity measures. Instead of increasing taxes, one can just engage in deficit spending, which is what Keynes advocates.

It's cut spending or raise taxes. There's really no other effective way to reduce debt. And Keynes's advocation for deficit spending doesn't work, which is the point I have been trying to make.
In fact: "I"ve studied every 3-year peace-time period since the U.S. founding in 1790, and in cases when federal spending declined, real GDP over the same years grew by 11%, on average, not materially different from the average growth rate recorded in periods of rising spending. Government spending cuts have not been bearish for growth. From 1840 to 1843 U.S. federal spending was cut by 51% while real GDP grew by 11%; from 1866 to 1896 spending declined 38% as GDP grew by 9%; from 1874 to 1877 spending fell 20% as GDP advanced by 9%; from 1899 to 1902 spending dropped by 20%, but GDP rose by 13%; finally, between 1921 and 1924 spending decreased 43%, yet GDP climbed by 23%. No 3-year spending cut has occurred since 1949, and since then, GDP growth has slowed."[1]

There really is no correlation between reduced spending and economic lethargy.

I read a study by Christine Romer on this correlation. The logic was essentially that austerity measures equate to consumers delaying big ticket purchases. Such delays result in decreased factory output and thus less profits. With less profits, more firms go bankrupt, leading to job losses, and thus steeper austerity measures, and even more decreased output. This was the Great Depression.

I can try to dig up this report if anyone wants it (will take a while).

Like I said in my quote, spending cuts correlate with spending growth. It's the cold hard facts, not some theory.

Sources:

[1]: http://www.forbes.com...
I'm becoming less defined as days go by, fading away, and well you might say, I'm losing focus, kinda drifting into the abstract in terms of how I see myself.
wrichcirw
Posts: 11,196
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1/30/2013 9:30:07 PM
Posted: 3 years ago
At 1/30/2013 7:03:25 PM, BigRat wrote:
At 1/30/2013 6:27:13 PM, wrichcirw wrote:
At 1/30/2013 4:39:16 PM, BigRat wrote:
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...


When you run deficits that are historically large, as Obama has, you eventually have to cut spending.

Instead of blaming the tea party, maybe you should look at the people who put us in this fiscal position that forces us to reduce spending.

The solution will be inflation, IMHO.


The solution is inflation?

I'm not an austrian or a gold bug but to suggest that we can inflate our way out of our unsustainable fiscal obligations is simply preposterous.

Higher NGDP growth from the Fed may be able to boost the economy in the short run, but it cannot make up for bad supply side polices.

How is it preposterous? If entitlement spending is say, $100 this year, and the dollar experiences 50% inflation in one year, that's essentially cutting entitlements by 1/3 ($100 the next year is only worth 2/3 of what it was worth this year).

Regarding GDP growth, I challenge you to find where that growth will come from.
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
wrichcirw
Posts: 11,196
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1/30/2013 9:44:02 PM
Posted: 3 years ago
At 1/30/2013 7:44:31 PM, Subutai wrote:
At 1/30/2013 6:25:03 PM, wrichcirw wrote:
At 1/30/2013 3:12:56 PM, Subutai wrote:
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...

Unlike what most Keynesians claim, austerity measures do not reduce the amount of economic growth. In fact, the only other alternative, increasing taxes, is a lot more destructive than spending cuts.

False dichotomy. The real dichotomy is austerity measures, or no austerity measures. Instead of increasing taxes, one can just engage in deficit spending, which is what Keynes advocates.

It's cut spending or raise taxes. There's really no other effective way to reduce debt. And Keynes's advocation for deficit spending doesn't work, which is the point I have been trying to make.

Again, false dichotomy. It's deficit reduction or no deficit reduction. You can cut spending or raise taxes to cut the deficit, or you can just wholly ignore deficit reduction, i.e. Keynes.

If you're saying that deficit spending doesn't work, I'll just say we agree to disagree then. In the short term, deficit spending makes sense. The real question is what exactly is the "short term".

In fact: "I"ve studied every 3-year peace-time period since the U.S. founding in 1790, and in cases when federal spending declined, real GDP over the same years grew by 11%, on average, not materially different from the average growth rate recorded in periods of rising spending. Government spending cuts have not been bearish for growth. From 1840 to 1843 U.S. federal spending was cut by 51% while real GDP grew by 11%; from 1866 to 1896 spending declined 38% as GDP grew by 9%; from 1874 to 1877 spending fell 20% as GDP advanced by 9%; from 1899 to 1902 spending dropped by 20%, but GDP rose by 13%; finally, between 1921 and 1924 spending decreased 43%, yet GDP climbed by 23%. No 3-year spending cut has occurred since 1949, and since then, GDP growth has slowed."[1]

There really is no correlation between reduced spending and economic lethargy.

I read a study by Christine Romer on this correlation. The logic was essentially that austerity measures equate to consumers delaying big ticket purchases. Such delays result in decreased factory output and thus less profits. With less profits, more firms go bankrupt, leading to job losses, and thus steeper austerity measures, and even more decreased output. This was the Great Depression.

I can try to dig up this report if anyone wants it (will take a while).

Like I said in my quote, spending cuts correlate with spending growth. It's the cold hard facts, not some theory.

(I think you meant economic growth, and only in correlation with lower taxes).

Romer states facts too to support her thesis. The theory is her conclusion from the facts. If you want, I will bring up an academic paper, vs. your blog entry.

What is so magical about the "3 year period"? Anyone can use arbitrary periods to justify their case. I could say we've had an AMAZING STOCK MARKET since May 2009, but obviously there would be something wrong with my conclusion in how it represents the economy or the corporate sector.

Sources:

[1]: http://www.forbes.com...
At 8/9/2013 9:41:24 AM, wrichcirw wrote:
If you are civil with me, I will be civil to you. If you decide to bring unreasonable animosity to bear in a reasonable discussion, then what would you expect other than to get flustered?
OhioGary
Posts: 68
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1/30/2013 10:25:38 PM
Posted: 3 years ago
At 1/30/2013 2:43:21 PM, darkkermit wrote:
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...

There's no economic law that states that a decrease in spending means that the economy must fall as well. From 1993-2007, Canada decreased its spending, yet saw its economy grow:

http://www.cato.org...

Canada benefitted greatly from NAFTA and other policies that gave Canada exports. Someone has to buy something; that's how an economy works. http://www.tradingeconomics.com...

Also, Canada started experiencing deflation during that period.
http://krugman.blogs.nytimes.com...

Deflation is a bigger problem than low levels of inflation. Lower prices will stave off demand, which then lowers production, and puts the economy in a slump. Yet, that seems to be where we are headed. Hold on to your hats, then.

There's also no economic law that states deregulation and low taxes means the economy must fall. Except, that we tried both of those under Hoover, and it caused the Great Depression. And, then we tried them again under Bush, and here we are.
Even Reagan knew that it was not possible to cut all taxes nor was it appropriate to scrap the progressivity of the tax code.
"There ain't no good guy. There ain't no bad guy. There's only you & me & we just diasgree."
malcolmxy
Posts: 2,855
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1/31/2013 1:09:33 AM
Posted: 3 years ago
At 1/30/2013 3:15:18 PM, Subutai wrote:

The president's actions are certainly not the only factor that determine an economy's growth, but he is certainly a significant factor. Obama has passed so many anti-Laissez Faire bills it's not even funny. I know this sounds kind of dumb, but a president has a greater ability to wreck the economy than he is to propel the economy.

that's actually not dumb. It's 100% true.

what are all these anti-whatever laws though? Far as I can tell, he's following right in Bush's footsteps.

also, remember, congress passes laws. president just signs 'em, unless there are specific executive orders you feel he's issued that are really messin' up the pg. if so, which ones?
War is over, if you want it.

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1Percenter
Posts: 782
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1/31/2013 2:37:09 AM
Posted: 3 years ago
Don"t worry everyone, Obama is working hard to pass more stimulus stuff, raise taxes, give amnesty to illegal immigrants, and pass gun control. Our economy will be whipped back into shape in no time!

Great thing we reelected Obama.
1Percenter
Posts: 782
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1/31/2013 2:51:59 AM
Posted: 3 years ago
At 1/30/2013 6:25:03 PM, wrichcirw wrote:
At 1/30/2013 3:12:56 PM, Subutai wrote:
At 1/30/2013 1:58:53 PM, OhioGary wrote:
At 1/30/2013 10:48:05 AM, Subutai wrote:
"The nation's gross domestic product (GDP) shrank for the first time in three and a half years during the fourth quarter, dropping at an annual rate of 0.1%, the Commerce Department said Wednesday. It was the US's worst economic performance since October 2009, and came as economists had been expecting mild growth of around 1%."

http://www.guardian.co.uk...

Obamanomics at work.

The drop in the economy came from a drop in military spending and because of Congressional tom-foolery which stops businesses from investing.

When the Tea Party demands a smaller government and a refusal to compromise, they can't turn around and get mad when that smaller government spends less, the compromise stops the private sector from spending, and economic growth stalls.

http://www.nytimes.com...

Unlike what most Keynesians claim, austerity measures do not reduce the amount of economic growth. In fact, the only other alternative, increasing taxes, is a lot more destructive than spending cuts.

False dichotomy. The real dichotomy is austerity measures, or no austerity measures. Instead of increasing taxes, one can just engage in deficit spending, which is what Keynes advocates.

In fact: "I"ve studied every 3-year peace-time period since the U.S. founding in 1790, and in cases when federal spending declined, real GDP over the same years grew by 11%, on average, not materially different from the average growth rate recorded in periods of rising spending. Government spending cuts have not been bearish for growth. From 1840 to 1843 U.S. federal spending was cut by 51% while real GDP grew by 11%; from 1866 to 1896 spending declined 38% as GDP grew by 9%; from 1874 to 1877 spending fell 20% as GDP advanced by 9%; from 1899 to 1902 spending dropped by 20%, but GDP rose by 13%; finally, between 1921 and 1924 spending decreased 43%, yet GDP climbed by 23%. No 3-year spending cut has occurred since 1949, and since then, GDP growth has slowed."[1]

There really is no correlation between reduced spending and economic lethargy.

I read a study by Christine Romer on this correlation. The logic was essentially that austerity measures equate to consumers delaying big ticket purchases. Such delays result in decreased factory output and thus less profits. With less profits, more firms go bankrupt, leading to job losses, and thus steeper austerity measures, and even more decreased output. This was the Great Depression.

I can try to dig up this report if anyone wants it (will take a while).
Isn't that the problem with borrowing in the first place? Any debt we use to finance production in the present comes at the expense of capital that can be used for production in the future. We need more saving & investments, not spending & consumption. Consumption is driven by our capacity to produce, not vice-versa.

And no austerity measures were taken as a response to the Great Depression.

Sources:

[1]: http://www.forbes.com...
Greyparrot
Posts: 14,325
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1/31/2013 2:56:19 AM
Posted: 3 years ago
At 1/31/2013 2:37:09 AM, 1Percenter wrote:
Don"t worry everyone, Obama is working hard to pass more stimulus stuff, raise taxes, give amnesty to illegal immigrants, and pass gun control. Our economy will be whipped back into shape in no time!

Great thing we reelected Obama.

It's NOT about the economy, stupid. (what the hell was the last election about anyway?)
malcolmxy
Posts: 2,855
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1/31/2013 4:43:59 AM
Posted: 3 years ago
At 1/31/2013 2:56:19 AM, Greyparrot wrote:
At 1/31/2013 2:37:09 AM, 1Percenter wrote:
Don"t worry everyone, Obama is working hard to pass more stimulus stuff, raise taxes, give amnesty to illegal immigrants, and pass gun control. Our economy will be whipped back into shape in no time!

Great thing we reelected Obama.

It's NOT about the economy, stupid. (what the hell was the last election about anyway?)

Obama - Sweaters, Fireplaces, Lovingly gazing into my eyes
Romney - Big Bird, Effective Automobile Rooftop Pet Transportation, Clumsily tripping over his tongue every time he was about to gain a little traction with the voters.

and some gay stuff I don't wanna talk about.
War is over, if you want it.

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malcolmxy
Posts: 2,855
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1/31/2013 5:17:02 AM
Posted: 3 years ago
At 1/31/2013 2:51:59 AM, 1Percenter wrote:

Isn't that the problem with borrowing in the first place? Any debt we use to finance production in the present comes at the expense of capital that can be used for production in the future. We need more saving & investments, not spending & consumption. Consumption is driven by our capacity to produce, not vice-versa.

And no austerity measures were taken as a response to the Great Depression.

First of all, of course no austerity measures were taken in response to the Great Depression. Austerity Measures were what caused the great depression.

Welcome to HIST 1302 Online
United States History, 1877-

Part II: War, Depression and War, 1914-1945



http://iws.collin.edu...

President Herbert Hoover resisted calls for government intervention on behalf of individuals. He reiterated his belief that if left alone the economy would right itself and argued that direct government assistance to individuals would weaken the moral fiber of the American people. Hoover further believed that during hard times the government should adopt austerity measures, that is, cut spending even further. Forced by Congress to intervene, Hoover did so reluctantly, concerned about both unbalancing the federal budget, and, even more importantly, violating his laissez-faire principles. Hoover's efforts consisted of spending to stabilize the business community, believing that returning prosperity would eventually "trickle down" to the poor majority. The poor majority proved unwilling to wait. Branded by his many detractors as cold and uncaring, Hoover was easily defeated in the presidential election of 1932 by Democrat Franklin D. Roosevelt.

The New Deal was placed into effect to fix all of Hoover's f*ck ups
(why anyone would name an institute after him and get angry when I laugh every time someone cites it as an authority on anything is beyond me...Ya know who Hoover reminds me of, though? Obama...), and it was also put into effect to save the market based economy from itself.

Another way of understanding FDR's Depression-fighting efforts is to analyze the politics of the New Deal. Generally speaking, the overall aim of the New Deal was essentially conservative. The New Deal sought to save capitalism and the fundamental institutions of American society from the disaster of the Great Depression. Within that framework, however, significant differences between New Deal programs existed. The "first" New Deal (1933-35) tended toward a continuation of "trickle down" policies, albeit better-funded and executed more creatively. Even in the early first New Deal, exceptional programs pointed toward the "second" New Deal's tendency toward "Keynesian" economic policies of revitalizing a mass-consumption based economy by revitalizing the masses ability to consume.

On Debt:

Has anyone lived debt-free their entire life?

Is there no good debt?

If you can borrow at an APR of 5.1% (historical annualized rate of the 10 year t-bill) knowing that you were gonna get a return 9.2% (historical annualized rate of return from the S&P 500), wouldn't you be stupid not to borrow the money...AS MUCH MONEY AS YOU COULD?

It's not that easy with a government, but the biggest problem we have right now is people worrying about how horrible X or Y is instead of just living their lives.

Worry about the things you know about. Quit worrying about this. There is an inverse relationship between the amount of fear the population has the future and the success of the S&P (I get that the S&P isn't the economy, but it's something that's been measured for a while, and it is indicative of some things about the economy).

Be happy and let the people who actually know this stuff work at it. Meanwhile, go buy one of them newfangled, fancy Wii dealies. It'll make everyone's life better, for a variety of reasons.
War is over, if you want it.

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