Bush Job Creation Promises Failing to Deliver

[Vanguard]

Okay, I finally finished parsing that stupid Wray article. His "error" is obvious really. He completely ignores the effects of macroeconomic policy during recessions.

During the postwar era it has been standard policy to increase Federal deficit spending during recessions ("Keynesian economics"). So obviously recessions are going to follow periods of reduced deficits. Because as soon as we know we are in a recession, we immediately increase deficit spending until we are out of it. Then we reduce our deficits------- until the next recession.

So reduced deficits did not cause recessions. Instead the recessions caused increased deficits. Which subsequently had to be reduced. The recessions only "follow" the reduced deficits because time moves forward.

Stupid really, but if you read Wray's conclusions he is very careful to never make any policy recomendations. His conclusions hinge on purely semantic arguments. Weasel.

[Lawrence of Arabia]

If you have enough water then any additional water would provide much less utility. That is the law of diminishing returns. After your immediate needs are met rational people move to less immediate needs like shelter. After all of your needs are met you move into your desires.

yea, but then how do you calculate what each person needs? how much water, how much housing, how much toilet paper.

[Kidlicious]

Originally posted by Lawrence of Arabia
yea, but then how do you calculate what each person needs? how much water, how much housing, how much toilet paper.

Those things are pretty easy. You calculate the amount of each that the normal person needs and then you multiply that my the number of people.

When you get past needs, on to desires, you need to let each person decide, so you provide them with money to make the decision for themselves.

[Lawrence of Arabia]

Those things are pretty easy. You calculate the amount of each that the normal person needs and then you multiply that my the number of people.

and what happens if a person needs more toilet paper one week because of diahrea. then what? and what about choice? what if i dont want fish, but my neighbor does. how can someone know what i want and give it to me?

[Kidlicious]

Originally posted by Lawrence of Arabia


and what happens if a person needs more toilet paper one week because of diahrea. then what? and what about choice? what if i dont want fish, but my neighbor does. how can someone know what i want and give it to me?

The risk of diahrea can be calculate in.

I should tell you that I'm not a utilitarian. That being said, ideally if you want fish, and fish is cheap to produce, then you should get fish.

[Ned]

Originally posted by Vanguard
This is not clear. But if you repeat it over and over, I'm sure people will start to believe it.

Vanguard, in a world where a significant amount of debt is held offshore, it is almost self evident.

However, I cite an article that demonstrates how surpluses reduce DI.

[Lawrence of Arabia]

I should tell you that I'm not a utilitarian. That being said, ideally if you want fish, and fish is cheap to produce, then you should get fish.

but how much? and what if one person wants more fish than another. how can this be factored in.

[Kidlicious]

Originally posted by Lawrence of Arabia


but how much? and what if one person wants more fish than another. how can this be factored in.

This is getting a little bit old. What are you getting at?

[Kidlicious]

Originally posted by Ned
However, I cite an article that demonstrates how surpluses reduce DI.

But a surplus has never reduced DI.

[Sava]

Originally posted by Kidicious


But a surplus has never reduced DI.

oh pffffttt... Ned won't let a little thing like historical fact disrupt his rhetoric.

[Lawrence of Arabia]

This is getting a little bit old. What are you getting at?

sorry, im trying to understand how you would distribute resources to every single person so that every single person is satisfied. i just cant see a system which can provide exactly what everyone needs without having some sort of property laws and price mechanism, and an open market where each individual can get what they need, and pay how much its worth to them (or at least the firms reservation price)

[Ned]

Originally posted by Kidicious


But a surplus has never reduced DI.

Huh? Please explain.

Example 1: Gov't taxes $1 billion from US taxpayers. Gov't spends none of it. Gov't retires $1 billion in bonds held by foreigners. Foreigners put money in foreign bank to be spent in due course.

It seems to me that the US taxpayer is out $1 billion in DI.

If these words are not right, clearly the US taxpayer no longer has $1 billion. It is now deposited in foreign banks. That hat to reduce US spending on goods and services by $1 billion with corresponding secondary, etc., effects.

[Lawrence of Arabia]

sure, they lost $1 billion, but its a billion that wasnt theirs in the first place, it was simply loaned to them by foreigners. now the foreigners have made a profit on those bonds, and will reinvest some or most of it, and no mater where it goes, it will most likely benefit americans.

[Ned]

Originally posted by Lawrence of Arabia
sure, they lost $1 billion, but its a billion that wasnt theirs in the first place, it was simply loaned to them by foreigners. now the foreigners have made a profit on those bonds, and will reinvest some or most of it, and no mater where it goes, it will most likely benefit americans.

OK, we are making some progress here.

The $1 billion the American public no longer has will not be spent on cars, clothes and cookies. There will be a major falloff in DEMAND, that will have a ripple effect in the so-called business cycle.

Do you disagree with this?

[Vanguard]

Vanguard, in a world where a significant amount of debt is held offshore, it is almost self evident.

Yeah, okay, you have a important point here. The extreme cheapness of money in Japan makes it attractive to sell them bonds. Might as well take advantage of it while we can.

It is not true, however, that borrowing 1 billion dollars is the same thing as adding a billion dollars to your economy. You do have to pay it back. But if you borrow at a really cheap rate, then growth could reduce the amount you have to repay. So you don't gain a billion dollars to your economy, you might gain, say, 50 million dollars.

But that only applies at very low interest rates in country with large amount of capital (ie Japan). And it cannot go on forever. Eventually interest rates or exchange rates will adjust, or the resulting trade deficit will reduce your own economy by the same amount as you gain.

Still it is nice of Japan to give us free stuff.



EDIT: Errr, sorry, scratch this, it's wrong. There may be a grain of truth in it, so I'll leave it in. But we still sell our bonds in dollars at our interest rates. I not sure what happens here exactly.