Is the US economy in recession?

[Kidlicious]

What budget? There was no budget passed in 2010, Kid.

You are the MASTER TROLL!

[Ben Kenobi]

Even if I were to give you the point - do you believe a cut of 60 billion dollars, once, in 50 years, is evidence that cutbacks to spending will be significant and sustained? Given that Obama spent far more than he took in for 2010 despite spending less the previous year?

He clearly didn't cut enough, which is why spending, according to your source, went right back up the next year and the year after, as if the temporary blip never happened. Probably because it didn't.

[Kidlicious]

Even if I were to give you the point - do you believe a cut of 60 billion dollars, once, in 50 years, is evidence that cutbacks to spending will be significant and sustained? Given that Obama spent far more than he took in for 2010 despite spending less the previous year?

He clearly didn't cut enough, which is why spending, according to your source, went right back up the next year and the year after, as if the temporary blip never happened. Probably because it didn't.

That wasn't my claim. Seriously stop. Just stop.

[Ben Kenobi]

That wasn't my claim.

Kid, I know you're worried about a depression. I'm worried about a depression. Spending short term will catch up to us and is catching up to us. We can't keep running these high deficits year after year. Can we at least agree on this? If the cuts aren't made now - the cuts will come later.

[Kidlicious]

Kid, I know you're worried about a depression. I'm worried about a depression. Spending short term will catch up to us and is catching up to us. We can't keep running these high deficits year after year. Can we at least agree on this? If the cuts aren't made now - the cuts will come later.

Sure. You might consider that tax reciepts as a percentage of GDP haven't been this low since 1950 (actually going up slightly last year).

[Jaguar]

What is the empirical data that you speak of? What about 1979 when Volker promised to do whatever is necessary to get inflation under control and it had no significant effect on people's expectations? Inflation was brought under control only by crushing demand.

Crushing demand is precisely the cost of bringing inflation under control. Volker said he was going to do it, and he did it.

The problem with your theory is that people don't just hold cash for investment purposes. They hold cash out of necessity. A business that fears a decrease in demand is going to hold cash as long as they have that fear. A worker uses similar reasoning. If they fear losing their job they are going to hold on to their cash.

None of this is inconsistent with standard mainstream macroeconomic theory of aggregate demand, which I believe to be true.

[Kidlicious]

Crushing demand is precisely the cost of bringing inflation under control. Volker said he was going to do it, and he did it.

The point is that people didn't expect what they were expected to expect. If Volker said he was going to do everything necessary to bring inflation under control then why did people keep paying higher prices?

None of this is inconsistent with standard mainstream macroeconomic theory of aggregate demand, which I believe to be true.

The point is that if they continue to demand cash it's going to take more effort to make them spend it. The more effort used increases the risk of negative effects.

[Ben Kenobi]

You might consider that tax reciepts as a percentage of GDP haven't been this low since 1950

Which is why spending has to return to the 1950 levels. Common sense. I've said it before here - that the Truman budget is the model for how to turn things around in America. It worked for Harry Truman, why wouldn't it work again?

[Jaguar]

The point is that people didn't expect what they were expected to expect. If Volker said he was going to do everything necessary to bring inflation under control then why did people keep paying higher prices?

They didn't. I'm not sure what universe you live in, but I live in this one:

The point is that if they continue to demand cash it's going to take more effort to make them spend it. The more effort used increases the risk of negative effects.

What are the negative effects? Seriously, I'm curious.

[Kuciwalker]

they are complex

[MrFun]

Not raise the minimum wage 25%.

Yes - let's force more working poor people onto welfare. That will help our economy.

[MrFun]

Or he could write up random subsidies to political allies and label it a "jobs bill" so credulous idiots like yourself will assume he's actually doing something useful.

Cause we all know that Republicans would never, ever try to pass random subsidies for their allies. No sir!

[Kidlicious]

They didn't. I'm not sure what universe you live in, but I live in this one:

Before the fed targeted the money supply, Volker threatened to do whatever is necessary to get inflation under control. Prices didn't actually start to come down until the fed actually did target the money supply.

The point is that if they continue to demand cash it's going to take more effort to make them spend it. The more effort used increases the risk of negative effects.

What are the negative effects? Seriously, I'm curious.

Inflation, loss in confidence of the fed, and lowered expectations.

[Jaguar]

Before the fed targeted the money supply, Volker threatened to do whatever is necessary to get inflation under control. Prices didn't actually start to come down until the fed actually did target the money supply.

None of this is inconsistent with what I believe. His threats had to be credible, first.

Inflation, loss in confidence of the fed, and lowered expectations.

Inflation? Ha! You think that QE leads to higher nominal spending! The evidence, though, is overwhelming that aggregate supply curves are closer to horizontal than to vertical when there's a lot of slack in the economy, so that higher nominal spending will come mostly in the form of new output, rather than inflation.

[Kuciwalker]

Yes - let's force more working poor people onto welfare. That will help our economy.

It certainly won't hurt it like a 25% rise in mandatory wages in the middle of high unemployment.