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Helicopter Money - is it time?

David G

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It is my own impression that we were a bit too timid, too frugal, when we constructed our fiscal stimulus in response to the Bush Recession. It's hard to know for certain because it seems historically that recessions springing from the financial sector - as this one did - tend to be stubborn. Slower to recover. But, worldwide, and in the U.S. - the recovery is less than robust. And it may be winding down without getting entirely over the hump.

So it it time for more?

The Economist explains: Why central banks are talking about throwing money from helicopters | The Economist
 

Lutherf

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Absolutely!!!

This time we need to do it right. Just imagine what 15-20 Trillion dollars of spending would do for our economy!! We'd all be rich, I tell you. RICH!!!!!
 

David_N

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The world is lacking aggregate demand. The cure is simple...
 

David_N

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Absolutely!!!

This time we need to do it right. Just imagine what 15-20 Trillion dollars of spending would do for our economy!! We'd all be rich, I tell you. RICH!!!!!

Doesn't take long for people to jump into threads spewing nonsense.
 

Redress

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Absolutely!!!

This time we need to do it right. Just imagine what 15-20 Trillion dollars of spending would do for our economy!! We'd all be rich, I tell you. RICH!!!!!

You think ~50k is rich?
 

OrphanSlug

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We have been needing a better economic policy for a very long time now. The American Recovery and Reinvestment Act of 2009 was not good enough (or effective enough.)

All that time since wasted when aggregate demand could have been addressed with better fiscal spending. Start with infrastructure and technology, and go from there.
 

David_N

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You think ~50k is rich?

It's actually sad what is happening to the world right now. We're facing a problem, a lack of demand and a failure to effectively utilize available resources. We have people from the right and left shouting from the top of their lungs that currency issuers can't afford to spend anymore and need to increase taxation to "fund" spending, which doesn't do much to solve the demand problem. In order to get future growth, private sector debt will have to skyrocket. Unless the government decides to spend more.
 

David_N

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We have been needing a better economic policy for a very long time now. The American Recovery and Reinvestment Act of 2009 was not good enough (or effective enough.)

All that time since wasted when aggregate demand could have been addressed with better fiscal spending. Start with infrastructure and technology, and go from there.
It's sad to think about. So much wasted potential output. Pitiful growth worldwide. Have you seen this yet Orphan?
Destabilizing an Unstable Economy | Levy Economics Institute
Essentially, future growth will require a large increase in private sector debt. That always ends well.. God help us.
 

OrphanSlug

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It's sad to think about. So much wasted potential output. Pitiful growth worldwide. Have you seen this yet Orphan?
Destabilizing an Unstable Economy | Levy Economics Institute
Essentially, future growth will require a large increase in private sector debt. That always ends well.. God help us.

Ja, I read the PDF report. The conclusion seems sound.

The cost of time lost since 2009 in combination with "high income inequality, high external deficits, and the fiscal conservatism that has conquered Washington" has placed us on an unstable course. The only choice now is higher deficits to handle the fiscal stimulus that should have been stacked on 2009's efforts through at least 2012 (by the graphs in that PDF, especially the stress on consumer debt.)

Turns out Republicans are right, but also responsible. We have a lackluster "recovery," but because of Republican efforts to not work with anything Obama. That will have clear economic consequence. More unstable bubble and pop economics caused by private debt and greater wealth divide.
 

fmw

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It is my own impression that we were a bit too timid, too frugal, when we constructed our fiscal stimulus in response to the Bush Recession. It's hard to know for certain because it seems historically that recessions springing from the financial sector - as this one did - tend to be stubborn. Slower to recover. But, worldwide, and in the U.S. - the recovery is less than robust. And it may be winding down without getting entirely over the hump.

So it it time for more?

The Economist explains: Why central banks are talking about throwing money from helicopters | The Economist

Obviously not. It is time to start bringing jobs home from abroad and time to clean up the trade deficit.
 

OrphanSlug

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Obviously not. It is time to start bringing jobs home from abroad and time to clean up the trade deficit.

I do not think many people realize the literal bomb that would drop on the economy if done in haste. It took a very long time to develop this economic model that we run (as in several generations,) and it would take an effort that would be entirely rooted in alternate economic distortion to "start bringing jobs home from abroad and time to clean up the trade deficit."

Besides, best I can tell from the applicable threads on this no one has put together a reasonable economic argument that having a trade deficit is always inherently and monumentally bad.
 

Fenton

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It is my own impression that we were a bit too timid, too frugal, when we constructed our fiscal stimulus in response to the Bush Recession. It's hard to know for certain because it seems historically that recessions springing from the financial sector - as this one did - tend to be stubborn. Slower to recover. But, worldwide, and in the U.S. - the recovery is less than robust. And it may be winding down without getting entirely over the hump.

So it it time for more?

The Economist explains: Why central banks are talking about throwing money from helicopters | The Economist

8 years later and youre still blaming Bush ? Wow
 

Fenton

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Doesn't take long for people to jump into threads spewing nonsense.

The thread is nonsense. The proposed solution is nonsense.

Your post that claims the world lacks aggregate demand is nonsense.

Borrowing, printing and spending our way to prosperity is nonsense.
 

Fenton

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All he said was "Bush Recession." I don't believe he meant to blame Bush entirely, do you?

Of course thats what he meant. It wasn't the " Bush recession " to begin with and 8 years into a Obama economy hes not blaming the current President
 

David_N

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The thread is nonsense. The proposed solution is nonsense.

Your post that claims the world lacks aggregate demand is nonsense.

Borrowing, printing and spending our way to prosperity is nonsense.

You claim the thread is nonsense without providing a reason as to why you believe that. You do know that economists and central banks are discussing the idea of "helicopter money?" It's a valid solution, after all, what else is left! Quantitative easing, negative interest rates, near zero/zero interest rates.. None of this is working. Look at the recent GDP growth for the united states:
0.5% due to americans "controlling spending" and slowed demand. Consumer spending drives economies after all! The world faces a similar issue, and economists from both sides will agree. "Borrowing." So a currency issuer creates a bond, debits a reserve account to mark up a securities account, and we die from "borrowing." It's been this way for decades, and it works.
"Printing." All money is funny money. Banks create money from thin air, governments create money from thin air. Printing is the engine of prosperity after all!
 

David_N

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Of course thats what he meant. It wasn't the " Bush recession " to begin with and 8 years into a Obama economy hes not blaming the current President
The current economy is depressed thanks to a pathetic stimulus and a economy reliant on private sector debt.
 

PoS

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The thread is nonsense. The proposed solution is nonsense.

Your post that claims the world lacks aggregate demand is nonsense.

Borrowing, printing and spending our way to prosperity is nonsense.

Yup. Its Keynesian nonsense. In their upside down world if the government isnt spending then it must be doing badly. This is why a lot of countries arent doing very well because they follow this nonsense.
 

DA60

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The current economy is depressed thanks to a pathetic stimulus and a economy reliant on private sector debt.

Really?

Then this is apparently SO obvious to you...then you should be able to provide a link(s) to unbiased, factual/statistical proof from UNBIASED SOURCES that had the 'stimulus' been large enough that the economy would be better off right now?
 

calm

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Nobody wants American Dollars anymore because of QE and other financial powers are purchasing SDR's from the IMF rather than U.S. Dollars. Both China and Russia are buying huge quanities of gold as well.

Plus; nobody wants computer hardware manufactured in America because of Snowden.

What's left but the printing press?

And finally; the only reason there are not huge riots on American Streets is because the visible minorities are keeping their powder dry because of not wanting to destroy the first black presidency.

When Obama leaves office, all hell is gonna break loose because it was the visible minorities who have suffered the most from the Financial Terrorists on Wall Street.

Calm
 
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David_N

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Really?

Then this is apparently SO obvious to you...then you should be able to provide a link(s) to unbiased, factual/statistical proof from UNBIASED SOURCES that had the 'stimulus' been large enough that the economy would be better off right now?
Yes, really. We're living in a country with depressed demand. We're not the only ones.

Here's one of my favorite economists discussing what the stimulus, at the bare minimum, should have been:
http://www.nytimes.com/2009/01/09/opinion/09krugman.html
Bear in mind just how big the U.S. economy is. Given sufficient demand for its output, America would produce more than $30 trillion worth of goods and services over the next two years. But with both consumer spending and business investment plunging, a huge gap is opening up between what the American economy can produce and what it’s able to sell.
To close a gap of more than $2 trillion — possibly a lot more, if the budget office projections turn out to be too optimistic — Mr. Obama offers a $775 billion plan. And that’s not enough.

Now, fiscal stimulus can sometimes have a “multiplier” effect: In addition to the direct effects of, say, investment in infrastructure on demand, there can be a further indirect effect as higher incomes lead to higher consumer spending. Standard estimates suggest that a dollar of public spending raises G.D.P. by around $1.50.

But only about 60 percent of the Obama plan consists of public spending. The rest consists of tax cuts — and many economists are skeptical about how much these tax cuts, especially the tax breaks for business, will actually do to boost spending. (A number of Senate Democrats apparently share these doubts.) Howard Gleckman of the nonpartisan Tax Policy Center summed it up in the title of a recent blog posting: “lots of buck, not much bang.”

The bottom line is that the Obama plan is unlikely to close more than half of the looming output gap, and could easily end up doing less than a third of the job.
 

David_N

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Yup. Its Keynesian nonsense. In their upside down world if the government isnt spending then it must be doing badly. This is why a lot of countries arent doing very well because they follow this nonsense.
Yup. Its Keynesian nonsense
You mean the "nonsense" that virtually every country runs back to when their economy enters a recession?
In their upside down world if the government isnt spending then it must be doing badly.
What Keynesian says this? Keynesians support tax cuts and increased spending when the economy is going downward/not growing, not when the economy is booming.
This is why a lot of countries arent doing very well because they follow this nonsense.
Name them and let's discuss them.
 

Fenton

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The current economy is depressed thanks to a pathetic stimulus and a economy reliant on private sector debt.

Wow, see?

Nonsense from a guy who thinks its Govt job to influence demand directly.

Weve tried unprecedented fiscal and monetary stimulus since 2008. We've added Trillions of dollars in new debt since 2008 and the economy is still on life support

Japan tried fiscal stimulus in the 90s and Abenomics, it didn't work. It doesn't work because it papers over the real issues that have led to stagnantion and eventually the money runs out.
 

MrWonka

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So it it time for more?

Helicopter money would be fine, but I'm not sure if you can realistically give out enough of it to matter much. I mean when Bush gave out the $600 stimulus it was something, but the reality is when you have 30k worth of debt, that's like one months payment. I think the better solution would be to do a general restructuring of debt in this country to insure people can reasonably pay off their ****.

My solution would be to set up a system that would make it illegal to acquire certain amounts of debt at certain interest levels and have all current debt restructured to fit that structure. For example, I would make it illegal to..

Have more than $1000 worth of debt at a rate above 20%.
Have more than $5000 worth of debt at a rate above 15%
Have more than $10k above 9%
Have more than $20k above 6%

I would also eliminate payday loans entirely.

We could toy with the exact numbers and rates if needed, but the idea would be to insure people aren't getting in over their head with debt so they can reasonably pay it down, and make sure that predatory lenders aren't taking advantage of those who either don't understand how interest works or get tempted to live to highly above their means in the first place.

I would also replace student loan debt with a voluntary tax based on the price of the school you chose, and the number of years you went to it. Charging a % of income rather than a flat amount would insure that young people wouldn't be too screwed even if they didn't find the great job they were looking for coming right out of college.
 
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