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First Quarter GDP Revised Down To 1.8%

Gimmesometruth said:
Weird, you name some mysterious "cyclical" thingy and then procede to say that legislation won't work.....and that legislation was not passed!
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Part of it is a natural ebb and flow of the economy and the natural reprucussions of various bubbles. Some aspects of this are things that are going to essentially have to be worked out largely through the market and there's no real legislaitve fix to magically correct it imho.

Part of it is the extremely split government we have currently, causing uncertainty in the population while also making it difficult for any kind of concerted economic vision to be clearly paved ahead.

Part of it is that, imho, much of the legislation that has been passed hasn't really provided any kind of useful means of some sort of significant moderate to long term stimulative affect on the econcomy.

Legislation absolutely can have impact on an economy, without a doubt. But I don't particularly feel that legislation is the singular or even MOST important factor into the equation. And that while I don't think we can singularly "legislate" our way out of the economic issues this country is facing, that doesn't mean I don't think legislation can't have an impact of some sort.

To the rest of your drivel that is nothing but attempts to place words in my mouth, I suggest you use what I actually SAY not the strawmen you erect yourself. My statement was a divided government, not specific to congress alone.
 

While recessions always have many causes, the critical one is the income gap. Every recession over the past 100 years was preceded by an increase in the income gap. The bigger the gap, the bigger the recession. The causality is well-known -- the top brackets tend to make risky investment in nonproductive "bets" like hedgefunds (working people don't). The more money they have the more likelihood of a bubble forming. In the Bush Meltdown it was CDSs in REITs.

The huge income gap during the Bush Administration (the biggest since before the Depression struck) wasn't a coincidence. It was the result of bad legislation -- tax cuts for the superwealthy and deregulation of CDSs, table top mortgage brokers, and the financial industry in general. Some of that deregulation happened before Bush slouched onto the scene, but it was part and parcel of the conservative economic agenda.

In any case, bad public policy contributed to the bubble and the meltdown, so we need countervailing policy to fix it. The stimulus helped avert a true meltdown. But we need more stimulus in this economy to produce more jobs to get us over the hump.
 
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This coming from a poster who cannot even bring himself to quote me entirely.

There is no "natural flow" to an economy, an economy is not a part of nature.

The divide in our govt that is stopping further legislative action (fiscal action) is within Congress.
 

Exactly. There are certainly unpredictable and unforeseeable events that can contribute to a recession (shocks like oil embargoes, for instance). But most recessions predictably follow an increase in the income gap, and that is usually the result of bad conservative legislation promoting some discredited market evangelist ideology.

If Gore had won the election (well he did, didn't he), I'm convinced we would not have gotten the foolhardy tax cut for the superwealthy Bush cooked up and I expect CDSs would have faced scrutiny and regulation. That would have prevented the Meltdown.
 

I think we give too much credit to the effects of technical economic actions such as legislation and Fed money supply manipulations, and far too little credit to the effects of leadership. FDR drove the nation to resolve to overcome the depression - to work together, to drive forward no matter how hard, to overcome hardship. Then he teamed with Winston Churchill to do the same for the free world. That is the only way to "fix the economy" and it will not happen anytime soon (no matter what technical economic actions we may try) because electioneering by "divide and conquer" has replaced unifying national leadership for the last 30+ years.

The 20th century was blessed with a few exceptional leaders in the Presidency - Teddy Roosevelt, FDR, Eisenhower, JFK, (and marginally Reagan). These were people that had vision; people that enhanced the national pursuit of happiness; people that caused the population to rally to overcome a challenge... The important things that they did had nothing to do with legislation or monetary policy. They understood that econonomic activity is a reflection our collective psychology. Economic growth results from enthusiasm at the top that flows out to creators and producers in the population. That is trickle down theory that actually works.

In other posts we see that the national debt as a % of GDP strongly spiked during WWII. That is because FDR incited the nation to buy War Bonds for the purpose of "saving the world". It was just one of the enormous sacrifices that nation made together. Those War Bonds spiked the national debt with the promise that the debt burden would be relieved when the goal was achieved. Eisenhower made sure that FDR's promise was kept even though he initiated the nation's largest infrastructure project ever - the interstate highway system. Kennedy did the same even though he created the man on the moon program.

Today we borrow money as a matter of habit. There is no unifying cause with a defined conclusion that we are pursuing with the borrowed money - and hence there is no promise to pay back the loan when "success" is achieved
 

The tax cut you are obsessed with only amounts to $85B which is a drop in the bucket. Basically it would have paid for the sequester which amounted to nothing, no one save a few pilots have even noticed it happened.
 
WhyNotWhyNot said:
Today we borrow money as a matter of habit. There is no unifying cause with a defined conclusion that we are pursuing with the borrowed money - and hence there is no promise to pay back the loan when "success" is achieved
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Which is why their claims of Keynesian economics is nothing more than their excuse to spend, spend, spend.
 
blaxshep said:
The economy is being artificiality held up, inflated, by QE and Keynesian Economics and when it ends the bubble will burst.

Don't know why you can't understand that.
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QE doesn't spend other people's money. QE is not inflationary. QE brings down the long end of the yield curve by purchasing of assets. It's not a "distortion" of the economy because no such dichotomy as "natural vs. distorted" exists. Yes, it drives money out of bonds and into stocks and other investments, but that isn't a bubble. The flow of capital into an asset class doesn't mean that a bubble exists. A bubble has very specific circumstances

You're just proselytizing, you can't elaborate on your points because they have no substance.

What does "being artificially held up" even mean? What does "held up" mean and how is this "artificial"? What bubble is there that's going to burst?

Keynesian economics haven't been implemented at all. QE isn't Keynesian.
 
blaxshep said:
Give it a rest, the reason our peers are ailing is because they all followed the same failed Keynesian economics,.
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Falsehood. Keynesian calls for spending increases during bad times and spending decreases during good times. austerity is the antithesis of "Keyenistic" economics.

blaxshep said:
the only deficit Obama has reduced is his own record spending deficit which was 3x the Bush Average.,.
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Falsehood and Spin. President Obama was handed a 1.4 trillion dollar deficit and the use of averages only diverts from the surplus Bush was handed and the trillion dollar deficits he left behind.

blaxshep said:
Do let us know when Obama gets the deficit down below even that of Bush (minus the last year, which is for reasons of your propaganda the only year of 8 you want to recognize)..,.
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Falsehood and Spin. I do not deny the deficits Bush had. What your falsehoods and spin fail to account for is that Bush didn't hand President Obama his average deficit. He handed Presdient Obama a 1.4 trillion dollar deficit.

blaxshep said:
What is happening is quite clear to all of us with our heads not up our ... The Fed is tapering because they are out of other people's money and the reality that austerity is a result of deficit spending not a choice, is finally hitting home.
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Falsehood, Spin, Cluelessness and Insult. Precisely because you have your head up your .... is why you think the fed is 'tapering'. The fed is only talking about tapering. So are in we in austerity or "Keyenistic" spending. Pick one. And what is 'finally hitting home'? the hyperinflation? collapse of the dollar? collapse of the market? cats and dogs living together? Please be specific.
 
blaxshep said:
The tax cut you are obsessed with only amounts to $85B which is a drop in the bucket. Basically it would have paid for the sequester which amounted to nothing, no one save a few pilots have even noticed it happened.
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Whoosh! Right over your head. Focus on income back and report back in.
 
Vern said:
Falsehood. Keynesian calls for spending increases during bad times and spending decreases during good times. austerity is the antithesis of "Keyenistic" economics.
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You are correct. Keynesian theory calls for spending increases in bad times (recession) and decreased spending in inflationary (maybe not good but better) times. I have yet to get an answer for this question despite asking it several times, so I'll repeat it for you.

What do Keynesian's do in an inflationary recession like we had in the early '70s and '80s?
 
froggigger said:
What do Keynesian's do in an inflationary recession like we had in the early '70s and '80s?
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I'll assume you are referring to the 81 recession. That recession was caused by tight monetary policy to get rid of inflation. the recession started with the fed raising rates and ended when the fed lowered rates.

If thats not what you are referring to then thats why you shouldnt ask questions. You should make clear straight forward points like I do.
 

The "stagflation" myth doesn't in any way discredit Keynesian economic theory. In fact, in a way it vindicated Keynesian ideas. The oil supply shock is what caused the deep recession, and the Fed's choice was between high inflation and higher inflation, but still the normal rules applied: higher interest rates mean lower inflation and more unemployment, while lower interest rates meant lower unemployment and higher inflation. In other words, the crisis was real in origin, not monetary, so the problem must be resolved in real terms; monetary policy can't fix it.

The problem wasn't with Keynesian economics (their rules held, in fact) but rather the massive supply shocks caused by the oil crises of the 70's. Putting the 70's into the context of Keynesianism vs. Austrian or whatever other type of economic ideology completely misses the point, which is that the problem wasn't any economic ideology but rather the supply shocks in a very ubiquitous and necessary good.

No economic ideology could have navigated those years to prevent the crises that occurred. Hell, under Reagan they dropped interest rates and increased gov't spending so maybe Reagan was a secret Keynesian?
 
Khayembii Communique said:
Now now, we can't have Republican presidents asserting Keynesian values. That would be too confusing.
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The cognitive dissonance would likely drive them mad. Republicans are already having trouble accepting the fact that Keynesianism is anti-socialist/Marxist.
 
Kushinator said:
It severly reduces the risk of proletarian revolution that is advocated by so many socialists, Marxists, and communists.

Keynesian ism prevents the transition that redefines property rights necessary to achieve this end.
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Are you saying that Keynesianism is anti-socialist because it reduces the risk of revolution necessary to fuel the transition of property rights?

So, in that case the theory would be, In times of economic downturn, take the people's money and give it to the rich so they will hire the unemployed?

A circular trickle down theory? I buy more coke so I can work more hours so I can buy more coke so I can work more hours .....

No wonder it doesn't work.
 

I didn't expect you to like the question because the answer, or more precisely the lack of an answer, wrecks the very basis of Keynesianism. We had a double-digit inflationary recession in 1973-1974. In 1979-1980 and 1981-1982, the inflationary recessions were even more intense. According to Keynesian theory, spending is increased to deal with recessions and slowed to deal with inflationary times. You agreed with that assertion when you said "Keynesian calls for spending increases during bad times and spending decreases during good times". So what do Keynesian's say is the correct course to take when there is a deep recession with bankruptcies and unemployment and inflation at the same time? Spend and stop spending at the same time? The very idea isn't dealt with because it can't exist in a Keynesian world. Let me sum up:

An inflationary recession violates the most fundamental assumptions of Keynesianism. Is that clear straight point good enough for you?
 
froggigger said:
I didn't expect you to like the question because the answer, or more precisely the lack of an answer
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I answered your question directly.


You are clearly confused because what you have said here does exactly the opposite of what you are claiming: it is a vindication of Keynesian ideas, not a refutation.

An inflationary recession violates the most fundamental assumptions of Keynesianism. Is that clear straight point good enough for you?
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The idea of supply shocks causing inflation is in line with Keynsianism. It's called cost-push inflation. Contemporary Keynesianism deals with this by acknowledging that monetary policy is effective at dealing with fluctuations in aggregate demand but ineffective against aggregate supply shocks. Fortunately, nowadays a repeat of what happened in the 70's largely isn't possible.

Bernanke wrote about this in his introductory Macroeconomics book.
 
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OPEC caused the "stagflation" by tripling the cost of oil, an increase that rippled through the whole economy. When inflation is NOT caused by too much money chasing too few goods and the economy is contracting, more spending would be the correct Keynesian action. The Feds drove up interest rates instead and we suffered a longer recession because of it. It did not end until interest rates were lowered AND Reagan increased Govt. spending dramatically..
 
Trillions "invested" and the return is a &^%$# 1.8%

Kush always does this. He'll spend pages wallowing in pretzel logic and obfuscation trying to spit shine a turd.

Reagan cut marginal tax rates from 70%-29% and by this time during his Presidency he had seen GDP growth as high as 9% with a million jobs created in one month.

Oh but the NYT of all places wants to claim he's a Keynesian so let's just continue to flush trillions more down the toilet and expect a different result or something
 
Lets be honest Keynesian theory says that the government should spend in a down economy and make cuts when it is up.

This is NOT how it works in reality. In reality Keynesian economics is just used as an excuse to spend, spend, spend and when the economy is up no cuts are ever made. In fact Keynesian economics is not something a liberal wants to even bring up when the economy is good because they know it would mean making cuts. No matter what the economy is, good or bad, cuts ALWAYS mean grandma is out on the street because of those evil conservatives.

Time to cut the BS.
 
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Reagan was a Keynesian. No arguing that. It still doesn't mean Keynesian theory is valid. Since its inception, Keynesian theory was the end all-cure all in the economics profession. It rode high in Washington under the assumption that modern macroeconomics would bring permanent good times without inflation, not to mention it gave politicians an excuse to spend. Things were humming along until a severe inflationary recession hit in 1973-1974. You said "monetary policy can't fix it", but Keynesianism is all about monetary policy.

Keynesian theory is surprisingly simple at its core. Inflation is caused by overspending, recession by underspending. Of spending, Keynesians believe that consumption is determined by income and is relatively passive. The "proper" amount of spending relies on investment, but investors are erratic and depend on fluctuations in what Keynes called "animal spirits".

Keynes determined that another economic group that is just as active as investors but were rational and scientific, more able to act in the best interests of all. Government. When investors and consumers alike underspend, government should increase spending with deficits, and that will alleviate the recession. When "animal spirits" get too crazy, government should step in and "sop up the excess purchasing power".

It all seemed so valid and simple - until 1973.
 
Kushinator said:
Secret? From his actions alone we must say that Reagan was a true Keynesian.
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Not quite. He initiated several tax reforms to simplify taxes, lower rates, and widen the tax base. His non defense overspending was a compromise with democrats to get those tax cuts, not his intent to help the economy. Krugman just repeats liberal talking points, or maybe liberals repeat him. Either way its half the story and misleading.
 
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