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ResponsiblyIrresponsible
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5/28/2015 2:30:00 PM
Posted: 1 year ago
Let's discuss something.. It could be:

(i) taxes
(ii) Treasury market illiquidity
(iii) liftoff
(iv) monetary regime changes
(v) the role, if anything, of fiscal policy

.. or, you know, virtually anything.

Any takers?
~ResponsiblyIrresponsible

DDO's Economics Messiah
lannan13
Posts: 23,029
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5/28/2015 2:39:38 PM
Posted: 1 year ago
At 5/28/2015 2:30:00 PM, ResponsiblyIrresponsible wrote:
Let's discuss something.. It could be:

(i) taxes
(ii) Treasury market illiquidity
(iii) liftoff
(iv) monetary regime changes
(v) the role, if anything, of fiscal policy

.. or, you know, virtually anything.

Any takers?
-~-~-~-~-~-~-~-Lannan13'S SIGNATURE-~-~-~-~-~-~-~-

If the sky's the limit then why do we have footprints on the Moon? I'm shooting my aspirations for the stars.

"If you are going through hell, keep going." "Sir Winston Churchill

"No one can make you feel inferior without your consent." "Eleanor Roosevelt

Topics I want to debate. (http://tinyurl.com...)
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ResponsiblyIrresponsible
Posts: 12,398
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5/28/2015 2:42:00 PM
Posted: 1 year ago
At 5/28/2015 2:39:38 PM, lannan13 wrote:
(ii) Treasury market illiquidity

Sure.

Here's some good stuff on it - and I'm going to finish these right now, because at the moment I've only read one of three.

http://www.bloomberg.com...
http://www.wsj.com...
http://www.wsj.com...
~ResponsiblyIrresponsible

DDO's Economics Messiah
lannan13
Posts: 23,029
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5/28/2015 3:14:41 PM
Posted: 1 year ago
At 5/28/2015 2:42:00 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 2:39:38 PM, lannan13 wrote:
(ii) Treasury market illiquidity

Sure.

Here's some good stuff on it - and I'm going to finish these right now, because at the moment I've only read one of three.

http://www.bloomberg.com...
http://www.wsj.com...
http://www.wsj.com...

Well what is market illiquatey in the first place?
-~-~-~-~-~-~-~-Lannan13'S SIGNATURE-~-~-~-~-~-~-~-

If the sky's the limit then why do we have footprints on the Moon? I'm shooting my aspirations for the stars.

"If you are going through hell, keep going." "Sir Winston Churchill

"No one can make you feel inferior without your consent." "Eleanor Roosevelt

Topics I want to debate. (http://tinyurl.com...)
-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~
ResponsiblyIrresponsible
Posts: 12,398
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5/28/2015 3:46:32 PM
Posted: 1 year ago
At 5/28/2015 3:14:41 PM, lannan13 wrote:
At 5/28/2015 2:42:00 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 2:39:38 PM, lannan13 wrote:
(ii) Treasury market illiquidity

Sure.

Here's some good stuff on it - and I'm going to finish these right now, because at the moment I've only read one of three.

http://www.bloomberg.com...
http://www.wsj.com...
http://www.wsj.com...

Well what is market illiquatey in the first place?

Basically, liquidity is the degree to which you can to buy or sell an asset without materially moving the price. An illiquid market means that large trades magnify price moves.
~ResponsiblyIrresponsible

DDO's Economics Messiah
Lee001
Posts: 3,168
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5/28/2015 4:16:08 PM
Posted: 1 year ago
At 5/28/2015 2:30:00 PM, ResponsiblyIrresponsible wrote:
Let's discuss something.. It could be:

(i) taxes
(ii) Treasury market illiquidity
(iii) liftoff
(iv) monetary regime changes
(v) the role, if anything, of fiscal policy

.. or, you know, virtually anything.

Any takers?

How Obama can get us out of debt?
"Condoms are societal constructs created by the government to restrain 'Murican freedom!"-SolonKR

"But I jest and digress (sick rhymes, yo); every boob is equal in the eyes of the Lord."- SolonKR

"Oh Hey, Seeing Artichokes Makes Me Want to Have Sex."- SolonKR

"Yep, but anyone who touches my hair immediately ascends to the heavens..You're already an angel, so touching my hair can do nothing <3" -SolonKR

My hubby Hayd <3 <3
ResponsiblyIrresponsible
Posts: 12,398
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5/28/2015 4:29:09 PM
Posted: 1 year ago
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).
~ResponsiblyIrresponsible

DDO's Economics Messiah
ResponsiblyIrresponsible
Posts: 12,398
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5/28/2015 4:38:30 PM
Posted: 1 year ago
I should add that, in an ideal scenario, we wouldn't need to go into debt to salvage the economy amid a severs systemic banking crisis, but alas that's the hand we've been dealt. If the Fed were to be more aggressive at easing policy, either adopting some form of a nominal-income or price-level target (though the latter has its issues), there would be less of a need to ease fiscal policy to lean on a substantial output gap.
~ResponsiblyIrresponsible

DDO's Economics Messiah
Lee001
Posts: 3,168
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5/28/2015 5:34:40 PM
Posted: 1 year ago
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*
"Condoms are societal constructs created by the government to restrain 'Murican freedom!"-SolonKR

"But I jest and digress (sick rhymes, yo); every boob is equal in the eyes of the Lord."- SolonKR

"Oh Hey, Seeing Artichokes Makes Me Want to Have Sex."- SolonKR

"Yep, but anyone who touches my hair immediately ascends to the heavens..You're already an angel, so touching my hair can do nothing <3" -SolonKR

My hubby Hayd <3 <3
ResponsiblyIrresponsible
Posts: 12,398
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5/28/2015 5:36:03 PM
Posted: 1 year ago
At 5/28/2015 5:34:40 PM, Lee001 wrote:
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*

I don't think I said anything particularly complex... honestly, a lot of that can be taken out of any Macro 101 text. The key point is that politicians are uniquely unqualified, as a whole, to opine on these issues.
~ResponsiblyIrresponsible

DDO's Economics Messiah
lannan13
Posts: 23,029
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5/29/2015 12:07:17 PM
Posted: 1 year ago
At 5/28/2015 5:36:03 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 5:34:40 PM, Lee001 wrote:
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*

I don't think I said anything particularly complex... honestly, a lot of that can be taken out of any Macro 101 text. The key point is that politicians are uniquely unqualified, as a whole, to opine on these issues.

It's called not everyone has one of those in their back pocket.
-~-~-~-~-~-~-~-Lannan13'S SIGNATURE-~-~-~-~-~-~-~-

If the sky's the limit then why do we have footprints on the Moon? I'm shooting my aspirations for the stars.

"If you are going through hell, keep going." "Sir Winston Churchill

"No one can make you feel inferior without your consent." "Eleanor Roosevelt

Topics I want to debate. (http://tinyurl.com...)
-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~
ResponsiblyIrresponsible
Posts: 12,398
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5/29/2015 12:13:25 PM
Posted: 1 year ago
At 5/29/2015 12:07:17 PM, lannan13 wrote:
At 5/28/2015 5:36:03 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 5:34:40 PM, Lee001 wrote:
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*

I don't think I said anything particularly complex... honestly, a lot of that can be taken out of any Macro 101 text. The key point is that politicians are uniquely unqualified, as a whole, to opine on these issues.

It's called not everyone has one of those in their back pocket.

That's funny: I thought almost everyone had iphones. Maybe they don't store them in their back pockets, but they're at least readily accessible.
~ResponsiblyIrresponsible

DDO's Economics Messiah
lannan13
Posts: 23,029
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5/29/2015 12:15:04 PM
Posted: 1 year ago
At 5/29/2015 12:13:25 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:07:17 PM, lannan13 wrote:
At 5/28/2015 5:36:03 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 5:34:40 PM, Lee001 wrote:
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*

I don't think I said anything particularly complex... honestly, a lot of that can be taken out of any Macro 101 text. The key point is that politicians are uniquely unqualified, as a whole, to opine on these issues.

It's called not everyone has one of those in their back pocket.

That's funny: I thought almost everyone had iphones. Maybe they don't store them in their back pockets, but they're at least readily accessible.

I have a flip phone.
-~-~-~-~-~-~-~-Lannan13'S SIGNATURE-~-~-~-~-~-~-~-

If the sky's the limit then why do we have footprints on the Moon? I'm shooting my aspirations for the stars.

"If you are going through hell, keep going." "Sir Winston Churchill

"No one can make you feel inferior without your consent." "Eleanor Roosevelt

Topics I want to debate. (http://tinyurl.com...)
-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~-~
ResponsiblyIrresponsible
Posts: 12,398
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5/29/2015 12:17:29 PM
Posted: 1 year ago
At 5/29/2015 12:15:04 PM, lannan13 wrote:
At 5/29/2015 12:13:25 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:07:17 PM, lannan13 wrote:
At 5/28/2015 5:36:03 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 5:34:40 PM, Lee001 wrote:
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*

I don't think I said anything particularly complex... honestly, a lot of that can be taken out of any Macro 101 text. The key point is that politicians are uniquely unqualified, as a whole, to opine on these issues.

It's called not everyone has one of those in their back pocket.

That's funny: I thought almost everyone had iphones. Maybe they don't store them in their back pockets, but they're at least readily accessible.

I have a flip phone.

Can you access the internet on said phone?
~ResponsiblyIrresponsible

DDO's Economics Messiah
lannan13
Posts: 23,029
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5/29/2015 12:18:16 PM
Posted: 1 year ago
At 5/29/2015 12:17:29 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:15:04 PM, lannan13 wrote:
At 5/29/2015 12:13:25 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:07:17 PM, lannan13 wrote:
At 5/28/2015 5:36:03 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 5:34:40 PM, Lee001 wrote:
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*

I don't think I said anything particularly complex... honestly, a lot of that can be taken out of any Macro 101 text. The key point is that politicians are uniquely unqualified, as a whole, to opine on these issues.

It's called not everyone has one of those in their back pocket.

That's funny: I thought almost everyone had iphones. Maybe they don't store them in their back pockets, but they're at least readily accessible.

I have a flip phone.

Can you access the internet on said phone?

No.
-~-~-~-~-~-~-~-Lannan13'S SIGNATURE-~-~-~-~-~-~-~-

If the sky's the limit then why do we have footprints on the Moon? I'm shooting my aspirations for the stars.

"If you are going through hell, keep going." "Sir Winston Churchill

"No one can make you feel inferior without your consent." "Eleanor Roosevelt

Topics I want to debate. (http://tinyurl.com...)
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ResponsiblyIrresponsible
Posts: 12,398
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5/29/2015 12:19:09 PM
Posted: 1 year ago
At 5/29/2015 12:18:16 PM, lannan13 wrote:
At 5/29/2015 12:17:29 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:15:04 PM, lannan13 wrote:
At 5/29/2015 12:13:25 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:07:17 PM, lannan13 wrote:
At 5/28/2015 5:36:03 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 5:34:40 PM, Lee001 wrote:
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*

I don't think I said anything particularly complex... honestly, a lot of that can be taken out of any Macro 101 text. The key point is that politicians are uniquely unqualified, as a whole, to opine on these issues.

It's called not everyone has one of those in their back pocket.

That's funny: I thought almost everyone had iphones. Maybe they don't store them in their back pockets, but they're at least readily accessible.

I have a flip phone.

Can you access the internet on said phone?

No.

Oh, well that is unfortunate.

Nevertheless, you're on the internet now, so you have access to this cool thing called "Google." Or you could, you know, ask me, lol.
~ResponsiblyIrresponsible

DDO's Economics Messiah
tejretics
Posts: 6,083
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5/29/2015 12:22:32 PM
Posted: 1 year ago
At 5/29/2015 12:19:09 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:18:16 PM, lannan13 wrote:
At 5/29/2015 12:17:29 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:15:04 PM, lannan13 wrote:
At 5/29/2015 12:13:25 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:07:17 PM, lannan13 wrote:
At 5/28/2015 5:36:03 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 5:34:40 PM, Lee001 wrote:
At 5/28/2015 4:29:09 PM, ResponsiblyIrresponsible wrote:
At 5/28/2015 4:16:08 PM, Lee001 wrote:
How Obama can get us out of debt?

Lol.

There are a few problems with that....

(1) The debt *is* not an issue, at least not right now. Every capitalist country, sans maybe one or two (and those economies, to my knowledge, are structured totally differently), have debt. The issue to look at isn't public debt in absolute terms, but as a percent of GDP. A growing economy, or a rising denominator, shrinks the ratio such that servicing that debt becomes much easier. There's no evidence that debt intolerance is presently an issue, and obviously there's zero risk of default risk because our debt is nominally denominated in a currency we issue - which, it bears mentioning, is *not* the case in Greece, and is the primary reason that people who cite Greece don't now what they're talking about (and, of course, Greece spent a lot during good times, but obviously times in the U.S. right now are far from good).

(2) Let's not forget where that debt came from: nothing more than profligacy under Bush in the early 2000s in the form of a prescription drug program, tax cuts, and two wars, and indirectly through a recession that he could've prevented had he - and, to be fair to him, his predecessor - not deregulated so viciously. Obviously deficits rise during recessions: that's called an endogenous change to fiscal policy.

(3) I think you're confusing debt and deficit - the debt is a stock variable of liabilities accrued by every president. The deficit is a flow variable Obama has direct control over - or, at least, *more* direct control over, since obviously he can't wave a magic wand and pass a budget. The *deficit* has come down significantly under Obama. As much as Fox refuses to admit it, it actually came down by more than half, which is, to me, actually *too* fast when the economy is still depressed, absent a monetary regime change, because that would make servicing existing debt even harder. Spending money now to prevent problems down the road is actually a necessary move.

(4) It's true, even factoring in the myriad of deficit reduction Obama has already signed into law, that cyclically adjusted budget deficits - what the deficit would be if the unemployment gap were zero - are still higher. That isn't a function of profligacy, but of rising healthcare costs. Obama has actually already addressed that to a large extent with the ACA, though obviously that isn't enough. It's nearly impossible, of course, for him to actually address that at this point given GOP intransigence (and, for that matter, economic illiteracy).

*mind-blown*

I don't think I said anything particularly complex... honestly, a lot of that can be taken out of any Macro 101 text. The key point is that politicians are uniquely unqualified, as a whole, to opine on these issues.

It's called not everyone has one of those in their back pocket.

That's funny: I thought almost everyone had iphones. Maybe they don't store them in their back pockets, but they're at least readily accessible.

I have a flip phone.

Can you access the internet on said phone?

No.

Oh, well that is unfortunate.

Nevertheless, you're on the internet now, so you have access to this cool thing called "Google." Or you could, you know, ask me, lol.

Lolol.

Why are Jeb Bush's stances on environmentalism so mixed up? And why is globalization a good idea?
"Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe." - Frederick Douglass
ResponsiblyIrresponsible
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5/29/2015 12:24:59 PM
Posted: 1 year ago
At 5/29/2015 12:22:32 PM, tejretics wrote:
Why are Jeb Bush's stances on environmentalism so mixed up?

I think he's too smart to actually think that climate change is a hoax, though he knows that won't sell in a GOP primary.

And why is globalization a good idea?

A lot of reasons, but from an economic standpoint, free trade is generally a boon to growth. The comparative-advantage story generally holds: "do what you do best and trade for the rest."
~ResponsiblyIrresponsible

DDO's Economics Messiah
tejretics
Posts: 6,083
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5/29/2015 12:26:28 PM
Posted: 1 year ago
At 5/29/2015 12:24:59 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:22:32 PM, tejretics wrote:
Why are Jeb Bush's stances on environmentalism so mixed up?

I think he's too smart to actually think that climate change is a hoax, though he knows that won't sell in a GOP primary.

Not global warming alone, also his stances on greenhouse emissions, that so contradict his pro-AGW stance.


And why is globalization a good idea?

A lot of reasons, but from an economic standpoint, free trade is generally a boon to growth. The comparative-advantage story generally holds: "do what you do best and trade for the rest."

What does free trade have to do with globalization? :P
"Where justice is denied, where poverty is enforced, where ignorance prevails, and where any one class is made to feel that society is an organized conspiracy to oppress, rob and degrade them, neither persons nor property will be safe." - Frederick Douglass
ResponsiblyIrresponsible
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5/29/2015 12:28:22 PM
Posted: 1 year ago
At 5/29/2015 12:26:28 PM, tejretics wrote:
At 5/29/2015 12:24:59 PM, ResponsiblyIrresponsible wrote:
At 5/29/2015 12:22:32 PM, tejretics wrote:
Why are Jeb Bush's stances on environmentalism so mixed up?

I think he's too smart to actually think that climate change is a hoax, though he knows that won't sell in a GOP primary.

Not global warming alone, also his stances on greenhouse emissions, that so contradict his pro-AGW stance.

Oh, I haven't read into it.


And why is globalization a good idea?

A lot of reasons, but from an economic standpoint, free trade is generally a boon to growth. The comparative-advantage story generally holds: "do what you do best and trade for the rest."

What does free trade have to do with globalization? :P

What doesn't free trade have to do with globalization? Lol

I mean, obviously globalization is much broader, but the heart of globalization is opening up foreign markets for trade.
~ResponsiblyIrresponsible

DDO's Economics Messiah
Fly
Posts: 2,044
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6/8/2015 2:14:00 PM
Posted: 1 year ago
As far as I can tell, this forum has never been all that alive. It lacks the element of controversy that the more hot button forums have. Also, this seems to be a "blind trying to lead the blind" sort of subject matter on this site. It amounts to one person's word against another's, if true discussion on economics ever does materialize. Making matters worse is that posters here tend to post and then walk away, whether they get responses or not.

One of the few shining exceptions is yourself, RI. The "problem" with your posts is that you are so knowledgeable and educated on economic theory that you write over people's heads here. What might be freshman or sophomore basics to you amount to doctoral thesis material for the rest of us...

To quote Homer Simpson: "Can ya dumb it down a notch, Doc?"
"You don't have a right to be a jerk."
--Religion Forum's hypocrite extraordinaire serving up lulz
Romanii
Posts: 4,851
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6/8/2015 5:13:24 PM
Posted: 1 year ago
At 5/28/2015 2:30:00 PM, ResponsiblyIrresponsible wrote:
Let's discuss something.. It could be:

(i) taxes
(ii) Treasury market illiquidity
(iii) liftoff
(iv) monetary regime changes
(v) the role, if anything, of fiscal policy

.. or, you know, virtually anything.

Any takers?

Lol no one wants to discuss economics with you cuz they only have two choices:

1) agree with you, which isn't very conducive to a two-way discussion

2) disagree with you and get pwned by your unquestionable economic messiah powers
ResponsiblyIrresponsible
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6/8/2015 5:16:27 PM
Posted: 1 year ago
At 6/8/2015 5:13:24 PM, Romanii wrote:
At 5/28/2015 2:30:00 PM, ResponsiblyIrresponsible wrote:
Let's discuss something.. It could be:

(i) taxes
(ii) Treasury market illiquidity
(iii) liftoff
(iv) monetary regime changes
(v) the role, if anything, of fiscal policy

.. or, you know, virtually anything.

Any takers?

Lol no one wants to discuss economics with you cuz they only have two choices:

1) agree with you, which isn't very conducive to a two-way discussion

2) disagree with you and get pwned by your unquestionable economic messiah powers

Lmfao.....
~ResponsiblyIrresponsible

DDO's Economics Messiah
ResponsiblyIrresponsible
Posts: 12,398
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6/8/2015 5:17:57 PM
Posted: 1 year ago
At 6/8/2015 2:14:00 PM, Fly wrote:
One of the few shining exceptions is yourself, RI. The "problem" with your posts is that you are so knowledgeable and educated on economic theory that you write over people's heads here. What might be freshman or sophomore basics to you amount to doctoral thesis material for the rest of us...

To quote Homer Simpson: "Can ya dumb it down a notch, Doc?"

I appreciate this. I try to make what I say accessible to a "lay audience" (and I don't mean that in a disparaging manner, though obviously not everyone has formal training in economics), but admittedly I don't often do a good job. I'll try my best heretofore, though.
~ResponsiblyIrresponsible

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Romanii
Posts: 4,851
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6/8/2015 5:22:42 PM
Posted: 1 year ago
At 6/8/2015 5:16:27 PM, ResponsiblyIrresponsible wrote:
At 6/8/2015 5:13:24 PM, Romanii wrote:
At 5/28/2015 2:30:00 PM, ResponsiblyIrresponsible wrote:
Let's discuss something.. It could be:

(i) taxes
(ii) Treasury market illiquidity
(iii) liftoff
(iv) monetary regime changes
(v) the role, if anything, of fiscal policy

.. or, you know, virtually anything.

Any takers?

Lol no one wants to discuss economics with you cuz they only have two choices:

1) agree with you, which isn't very conducive to a two-way discussion

2) disagree with you and get pwned by your unquestionable economic messiah powers

Lmfao.....

That said, I do have a question... have you ever argued with a fellow student or economist who supports fiscal stimulus? How did it go?
ResponsiblyIrresponsible
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6/8/2015 5:42:44 PM
Posted: 1 year ago
At 6/8/2015 5:22:42 PM, Romanii wrote:
That said, I do have a question... have you ever argued with a fellow student or economist who supports fiscal stimulus? How did it go?

Sure, I had a 2-on-1 brawl with two fellow pseudo-economists (i.e., people who probably know just as much as I do), both of whom supported it. I think I handily won - and, in fact, from an unofficial vote count taken thereafter by more of our fellow pseudo-economists, I did win - though their points weren't entirely bad.

The conversation pretty much went like this:

My Side

(1) It's unnecessary insofar as the Fed is doing its job - i.e., monetary offset.
(2) Krugman's regression line finding a positive correlation between GDP and government spending was a random assortment of countries that doesn't differentiate between countries w/ and w/o independent monetary regime - and when that's done and we look only at countries which actually can adjust monetary policy, there's actually a pronounced *negative* correlation between spending and growth.
(3) Sequestration hit in early 2013, but growth accelerated
(4) Monetary policy, not WWII, ended the Depression (cited paper by Christina Romer).

Their Responses

(1) That hinges on the Fed being perfectly credible.
(2) That was dropped.
(3) Some nonsense about "animal spirits," which is hogwash because, as I pointed out, the expected sequestration cuts were larger than the actual cuts, and spending decisions by businesses in particular are forward-looking.
(4) That was dropped.

New arguments

(5) Fiscal stimulus can fund things we actually want (to which my retort was, "Sure, of course it can, but that's not *stimulus.* Stimulus is paying people to dig a hole and fill it up again. We can fund education as an end in itself, rather than a means to an end."
(6) Fiscal stimulus is "targeted" (I thought this was a really vague and silly point, since the *effects* of fiscal stimulus - the Keynesian multiplier - are broad-based because they impact real disposable income).

The only reasonable argument they made - and, mind you, there are *many* actual arguments for fiscal stimulus (Summers and DeLong have a great paper on hysteresis effects) - was that monetary offset presumes a perfectly (or nearly perfectly) credible monetary regime. The argument was a proxy for "the Fed need not be able to hit whatever NGDP target it desires." I suppose it's not the *worst* argument they could have raised - they could've used Simon Wren-Lewis argument of "Okay, you're not going to drop the inflation target, so how much QE do you want to offset austerity at the ZLB?" - as though QE is the only mechanism for monetary policy, absent a regime change, at the ZLB. If that were the case, why do people care so much about liftoff? Why have they cared at all since October 2014 when QE came to an end? It's hogwash.

The arguments they could have raised, and should have hammered - and they may have won on these points - were:

(1) As Ben Bernanke just eloquently argued - and everyone reading this should reading this and go check out Bernanke's blog, because he knows a hell of a lot more than I - monetary policy is a blunt instrument for addressing income inequality. For economic reasons (and that's a *whole* other can of worms unto itself) or even for ethical reasons, income inequality is undesirable, so while monetary policy is a horrid palliative, distributional issues can be addressed by fiscal policy.

(2) The Summers and DeLong argument - via ameliorating hysteresis or boosting productivity via, say, education spending or jobs-training programs or even by employing people who were otherwise unemployable (i.e., shifting the LRAS rightward), fiscal stimulus can actually boost an economy's productive capacity and boost trend output, which moves the benchmark rightward such that, for every given GDP growth rate, inflation is X percent lower, so there isn't a need for the Fed to tighten.

(3) The Fed isn't actually going to sabotage a stimulus if it cannot physically, absent a regime change, hit potential - i.e., right now, with a negative Wicksellian real rate. It may tighten earlier, but if fiscal stimulus, which actually *can* return growth to trend, is actually effective, who cares?

(4) It is more targeted in the sense that it can directly address the long-term unemployed, or sectors with elevated levels of financial frictions, or homeowners with a crapton of debt as a way of accelerating the deleveraging process, etc., so it can actually address headwinds that force monetary policy to stay accommodative, though insofar as they move the LRAS, render it a blunt tool.

So, yeah, it may be surprising coming from me, but there actually *is* a role for fiscal stimulus. Optimally, though, it isn't closing an output gap.
~ResponsiblyIrresponsible

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Romanii
Posts: 4,851
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6/8/2015 6:24:34 PM
Posted: 1 year ago
At 6/8/2015 5:42:44 PM, ResponsiblyIrresponsible wrote:
At 6/8/2015 5:22:42 PM, Romanii wrote:
That said, I do have a question... have you ever argued with a fellow student or economist who supports fiscal stimulus? How did it go?

Sure, I had a 2-on-1 brawl with two fellow pseudo-economists (i.e., people who probably know just as much as I do), both of whom supported it. I think I handily won - and, in fact, from an unofficial vote count taken thereafter by more of our fellow pseudo-economists, I did win - though their points weren't entirely bad.

The conversation pretty much went like this:

My Side

(1) It's unnecessary insofar as the Fed is doing its job - i.e., monetary offset.
(2) Krugman's regression line finding a positive correlation between GDP and government spending was a random assortment of countries that doesn't differentiate between countries w/ and w/o independent monetary regime - and when that's done and we look only at countries which actually can adjust monetary policy, there's actually a pronounced *negative* correlation between spending and growth.
(3) Sequestration hit in early 2013, but growth accelerated
(4) Monetary policy, not WWII, ended the Depression (cited paper by Christina Romer).


Their Responses

(1) That hinges on the Fed being perfectly credible.
(2) That was dropped.
(3) Some nonsense about "animal spirits," which is hogwash because, as I pointed out, the expected sequestration cuts were larger than the actual cuts, and spending decisions by businesses in particular are forward-looking.
(4) That was dropped.

New arguments

(5) Fiscal stimulus can fund things we actually want (to which my retort was, "Sure, of course it can, but that's not *stimulus.* Stimulus is paying people to dig a hole and fill it up again. We can fund education as an end in itself, rather than a means to an end."
(6) Fiscal stimulus is "targeted" (I thought this was a really vague and silly point, since the *effects* of fiscal stimulus - the Keynesian multiplier - are broad-based because they impact real disposable income).

The only reasonable argument they made - and, mind you, there are *many* actual arguments for fiscal stimulus (Summers and DeLong have a great paper on hysteresis effects) - was that monetary offset presumes a perfectly (or nearly perfectly) credible monetary regime. The argument was a proxy for "the Fed need not be able to hit whatever NGDP target it desires." I suppose it's not the *worst* argument they could have raised - they could've used Simon Wren-Lewis argument of "Okay, you're not going to drop the inflation target, so how much QE do you want to offset austerity at the ZLB?" - as though QE is the only mechanism for monetary policy, absent a regime change, at the ZLB. If that were the case, why do people care so much about liftoff? Why have they cared at all since October 2014 when QE came to an end? It's hogwash.

The arguments they could have raised, and should have hammered - and they may have won on these points - were:

(1) As Ben Bernanke just eloquently argued - and everyone reading this should reading this and go check out Bernanke's blog, because he knows a hell of a lot more than I - monetary policy is a blunt instrument for addressing income inequality. For economic reasons (and that's a *whole* other can of worms unto itself) or even for ethical reasons, income inequality is undesirable, so while monetary policy is a horrid palliative, distributional issues can be addressed by fiscal policy.

(2) The Summers and DeLong argument - via ameliorating hysteresis or boosting productivity via, say, education spending or jobs-training programs or even by employing people who were otherwise unemployable (i.e., shifting the LRAS rightward), fiscal stimulus can actually boost an economy's productive capacity and boost trend output, which moves the benchmark rightward such that, for every given GDP growth rate, inflation is X percent lower, so there isn't a need for the Fed to tighten.

(3) The Fed isn't actually going to sabotage a stimulus if it cannot physically, absent a regime change, hit potential - i.e., right now, with a negative Wicksellian real rate. It may tighten earlier, but if fiscal stimulus, which actually *can* return growth to trend, is actually effective, who cares?

(4) It is more targeted in the sense that it can directly address the long-term unemployed, or sectors with elevated levels of financial frictions, or homeowners with a crapton of debt as a way of accelerating the deleveraging process, etc., so it can actually address headwinds that force monetary policy to stay accommodative, though insofar as they move the LRAS, render it a blunt tool.

So, yeah, it may be surprising coming from me, but there actually *is* a role for fiscal stimulus. Optimally, though, it isn't closing an output gap.

Thanks! That was a very informative read
ResponsiblyIrresponsible
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6/8/2015 6:26:06 PM
Posted: 1 year ago
At 6/8/2015 6:24:34 PM, Romanii wrote:
At 6/8/2015 5:42:44 PM, ResponsiblyIrresponsible wrote:
At 6/8/2015 5:22:42 PM, Romanii wrote:
That said, I do have a question... have you ever argued with a fellow student or economist who supports fiscal stimulus? How did it go?

Sure, I had a 2-on-1 brawl with two fellow pseudo-economists (i.e., people who probably know just as much as I do), both of whom supported it. I think I handily won - and, in fact, from an unofficial vote count taken thereafter by more of our fellow pseudo-economists, I did win - though their points weren't entirely bad.

The conversation pretty much went like this:

My Side

(1) It's unnecessary insofar as the Fed is doing its job - i.e., monetary offset.
(2) Krugman's regression line finding a positive correlation between GDP and government spending was a random assortment of countries that doesn't differentiate between countries w/ and w/o independent monetary regime - and when that's done and we look only at countries which actually can adjust monetary policy, there's actually a pronounced *negative* correlation between spending and growth.
(3) Sequestration hit in early 2013, but growth accelerated
(4) Monetary policy, not WWII, ended the Depression (cited paper by Christina Romer).


Their Responses

(1) That hinges on the Fed being perfectly credible.
(2) That was dropped.
(3) Some nonsense about "animal spirits," which is hogwash because, as I pointed out, the expected sequestration cuts were larger than the actual cuts, and spending decisions by businesses in particular are forward-looking.
(4) That was dropped.

New arguments

(5) Fiscal stimulus can fund things we actually want (to which my retort was, "Sure, of course it can, but that's not *stimulus.* Stimulus is paying people to dig a hole and fill it up again. We can fund education as an end in itself, rather than a means to an end."
(6) Fiscal stimulus is "targeted" (I thought this was a really vague and silly point, since the *effects* of fiscal stimulus - the Keynesian multiplier - are broad-based because they impact real disposable income).

The only reasonable argument they made - and, mind you, there are *many* actual arguments for fiscal stimulus (Summers and DeLong have a great paper on hysteresis effects) - was that monetary offset presumes a perfectly (or nearly perfectly) credible monetary regime. The argument was a proxy for "the Fed need not be able to hit whatever NGDP target it desires." I suppose it's not the *worst* argument they could have raised - they could've used Simon Wren-Lewis argument of "Okay, you're not going to drop the inflation target, so how much QE do you want to offset austerity at the ZLB?" - as though QE is the only mechanism for monetary policy, absent a regime change, at the ZLB. If that were the case, why do people care so much about liftoff? Why have they cared at all since October 2014 when QE came to an end? It's hogwash.

The arguments they could have raised, and should have hammered - and they may have won on these points - were:

(1) As Ben Bernanke just eloquently argued - and everyone reading this should reading this and go check out Bernanke's blog, because he knows a hell of a lot more than I - monetary policy is a blunt instrument for addressing income inequality. For economic reasons (and that's a *whole* other can of worms unto itself) or even for ethical reasons, income inequality is undesirable, so while monetary policy is a horrid palliative, distributional issues can be addressed by fiscal policy.

(2) The Summers and DeLong argument - via ameliorating hysteresis or boosting productivity via, say, education spending or jobs-training programs or even by employing people who were otherwise unemployable (i.e., shifting the LRAS rightward), fiscal stimulus can actually boost an economy's productive capacity and boost trend output, which moves the benchmark rightward such that, for every given GDP growth rate, inflation is X percent lower, so there isn't a need for the Fed to tighten.

(3) The Fed isn't actually going to sabotage a stimulus if it cannot physically, absent a regime change, hit potential - i.e., right now, with a negative Wicksellian real rate. It may tighten earlier, but if fiscal stimulus, which actually *can* return growth to trend, is actually effective, who cares?

(4) It is more targeted in the sense that it can directly address the long-term unemployed, or sectors with elevated levels of financial frictions, or homeowners with a crapton of debt as a way of accelerating the deleveraging process, etc., so it can actually address headwinds that force monetary policy to stay accommodative, though insofar as they move the LRAS, render it a blunt tool.

So, yeah, it may be surprising coming from me, but there actually *is* a role for fiscal stimulus. Optimally, though, it isn't closing an output gap.

Thanks! That was a very informative read

Anytime!

BTW, you're currently getting lynched in Shaun's candidacy thread.. you may want to go sort some stuff out.
~ResponsiblyIrresponsible

DDO's Economics Messiah
Fly
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6/8/2015 7:03:12 PM
Posted: 1 year ago
At 6/8/2015 5:42:44 PM, ResponsiblyIrresponsible wrote:
At 6/8/2015 5:22:42 PM, Romanii wrote:
That said, I do have a question... have you ever argued with a fellow student or economist who supports fiscal stimulus? How did it go?

Sure, I had a 2-on-1 brawl with two fellow pseudo-economists (i.e., people who probably know just as much as I do), both of whom supported it. I think I handily won - and, in fact, from an unofficial vote count taken thereafter by more of our fellow pseudo-economists, I did win - though their points weren't entirely bad.

The conversation pretty much went like this:

My Side

(1) It's unnecessary insofar as the Fed is doing its job - i.e., monetary offset.
(2) Krugman's regression line finding a positive correlation between GDP and government spending was a random assortment of countries that doesn't differentiate between countries w/ and w/o independent monetary regime - and when that's done and we look only at countries which actually can adjust monetary policy, there's actually a pronounced *negative* correlation between spending and growth.
(3) Sequestration hit in early 2013, but growth accelerated
(4) Monetary policy, not WWII, ended the Depression (cited paper by Christina Romer).


Their Responses

(1) That hinges on the Fed being perfectly credible.
(2) That was dropped.
(3) Some nonsense about "animal spirits," which is hogwash because, as I pointed out, the expected sequestration cuts were larger than the actual cuts, and spending decisions by businesses in particular are forward-looking.
(4) That was dropped.

New arguments

(5) Fiscal stimulus can fund things we actually want (to which my retort was, "Sure, of course it can, but that's not *stimulus.* Stimulus is paying people to dig a hole and fill it up again. We can fund education as an end in itself, rather than a means to an end."
(6) Fiscal stimulus is "targeted" (I thought this was a really vague and silly point, since the *effects* of fiscal stimulus - the Keynesian multiplier - are broad-based because they impact real disposable income).

The only reasonable argument they made - and, mind you, there are *many* actual arguments for fiscal stimulus (Summers and DeLong have a great paper on hysteresis effects) - was that monetary offset presumes a perfectly (or nearly perfectly) credible monetary regime. The argument was a proxy for "the Fed need not be able to hit whatever NGDP target it desires." I suppose it's not the *worst* argument they could have raised - they could've used Simon Wren-Lewis argument of "Okay, you're not going to drop the inflation target, so how much QE do you want to offset austerity at the ZLB?" - as though QE is the only mechanism for monetary policy, absent a regime change, at the ZLB. If that were the case, why do people care so much about liftoff? Why have they cared at all since October 2014 when QE came to an end? It's hogwash.

The arguments they could have raised, and should have hammered - and they may have won on these points - were:

(1) As Ben Bernanke just eloquently argued - and everyone reading this should reading this and go check out Bernanke's blog, because he knows a hell of a lot more than I - monetary policy is a blunt instrument for addressing income inequality. For economic reasons (and that's a *whole* other can of worms unto itself) or even for ethical reasons, income inequality is undesirable, so while monetary policy is a horrid palliative, distributional issues can be addressed by fiscal policy.

(2) The Summers and DeLong argument - via ameliorating hysteresis or boosting productivity via, say, education spending or jobs-training programs or even by employing people who were otherwise unemployable (i.e., shifting the LRAS rightward), fiscal stimulus can actually boost an economy's productive capacity and boost trend output, which moves the benchmark rightward such that, for every given GDP growth rate, inflation is X percent lower, so there isn't a need for the Fed to tighten.

(3) The Fed isn't actually going to sabotage a stimulus if it cannot physically, absent a regime change, hit potential - i.e., right now, with a negative Wicksellian real rate. It may tighten earlier, but if fiscal stimulus, which actually *can* return growth to trend, is actually effective, who cares?

(4) It is more targeted in the sense that it can directly address the long-term unemployed, or sectors with elevated levels of financial frictions, or homeowners with a crapton of debt as a way of accelerating the deleveraging process, etc., so it can actually address headwinds that force monetary policy to stay accommodative, though insofar as they move the LRAS, render it a blunt tool.

So, yeah, it may be surprising coming from me, but there actually *is* a role for fiscal stimulus. Optimally, though, it isn't closing an output gap.

*mind blown*

(So many others were responding thusly to your posts; I figured I'd join in)
"You don't have a right to be a jerk."
--Religion Forum's hypocrite extraordinaire serving up lulz
ResponsiblyIrresponsible
Posts: 12,398
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6/8/2015 7:20:01 PM
Posted: 1 year ago
At 6/8/2015 7:03:12 PM, Fly wrote:
At 6/8/2015 5:42:44 PM, ResponsiblyIrresponsible wrote:
At 6/8/2015 5:22:42 PM, Romanii wrote:
That said, I do have a question... have you ever argued with a fellow student or economist who supports fiscal stimulus? How did it go?

Sure, I had a 2-on-1 brawl with two fellow pseudo-economists (i.e., people who probably know just as much as I do), both of whom supported it. I think I handily won - and, in fact, from an unofficial vote count taken thereafter by more of our fellow pseudo-economists, I did win - though their points weren't entirely bad.

The conversation pretty much went like this:

My Side

(1) It's unnecessary insofar as the Fed is doing its job - i.e., monetary offset.
(2) Krugman's regression line finding a positive correlation between GDP and government spending was a random assortment of countries that doesn't differentiate between countries w/ and w/o independent monetary regime - and when that's done and we look only at countries which actually can adjust monetary policy, there's actually a pronounced *negative* correlation between spending and growth.
(3) Sequestration hit in early 2013, but growth accelerated
(4) Monetary policy, not WWII, ended the Depression (cited paper by Christina Romer).


Their Responses

(1) That hinges on the Fed being perfectly credible.
(2) That was dropped.
(3) Some nonsense about "animal spirits," which is hogwash because, as I pointed out, the expected sequestration cuts were larger than the actual cuts, and spending decisions by businesses in particular are forward-looking.
(4) That was dropped.

New arguments

(5) Fiscal stimulus can fund things we actually want (to which my retort was, "Sure, of course it can, but that's not *stimulus.* Stimulus is paying people to dig a hole and fill it up again. We can fund education as an end in itself, rather than a means to an end."
(6) Fiscal stimulus is "targeted" (I thought this was a really vague and silly point, since the *effects* of fiscal stimulus - the Keynesian multiplier - are broad-based because they impact real disposable income).

The only reasonable argument they made - and, mind you, there are *many* actual arguments for fiscal stimulus (Summers and DeLong have a great paper on hysteresis effects) - was that monetary offset presumes a perfectly (or nearly perfectly) credible monetary regime. The argument was a proxy for "the Fed need not be able to hit whatever NGDP target it desires." I suppose it's not the *worst* argument they could have raised - they could've used Simon Wren-Lewis argument of "Okay, you're not going to drop the inflation target, so how much QE do you want to offset austerity at the ZLB?" - as though QE is the only mechanism for monetary policy, absent a regime change, at the ZLB. If that were the case, why do people care so much about liftoff? Why have they cared at all since October 2014 when QE came to an end? It's hogwash.

The arguments they could have raised, and should have hammered - and they may have won on these points - were:

(1) As Ben Bernanke just eloquently argued - and everyone reading this should reading this and go check out Bernanke's blog, because he knows a hell of a lot more than I - monetary policy is a blunt instrument for addressing income inequality. For economic reasons (and that's a *whole* other can of worms unto itself) or even for ethical reasons, income inequality is undesirable, so while monetary policy is a horrid palliative, distributional issues can be addressed by fiscal policy.

(2) The Summers and DeLong argument - via ameliorating hysteresis or boosting productivity via, say, education spending or jobs-training programs or even by employing people who were otherwise unemployable (i.e., shifting the LRAS rightward), fiscal stimulus can actually boost an economy's productive capacity and boost trend output, which moves the benchmark rightward such that, for every given GDP growth rate, inflation is X percent lower, so there isn't a need for the Fed to tighten.

(3) The Fed isn't actually going to sabotage a stimulus if it cannot physically, absent a regime change, hit potential - i.e., right now, with a negative Wicksellian real rate. It may tighten earlier, but if fiscal stimulus, which actually *can* return growth to trend, is actually effective, who cares?

(4) It is more targeted in the sense that it can directly address the long-term unemployed, or sectors with elevated levels of financial frictions, or homeowners with a crapton of debt as a way of accelerating the deleveraging process, etc., so it can actually address headwinds that force monetary policy to stay accommodative, though insofar as they move the LRAS, render it a blunt tool.

So, yeah, it may be surprising coming from me, but there actually *is* a role for fiscal stimulus. Optimally, though, it isn't closing an output gap.

*mind blown*

(So many others were responding thusly to your posts; I figured I'd join in)

Lol.

I really don't think it fit the bill, but thanks!
~ResponsiblyIrresponsible

DDO's Economics Messiah