Is the US economy in recession?

[Kidlicious]

Simple - I believe that private enterprise should be less not more fettered by government. You believe the opposite - that there should be more and not fewer employed by the government and supported by we the people.

You're not concerned that Obama is spending without the consent of Congress?

http://en.wikipedia.org/wiki/Fiscal_multiplier

[Kidlicious]

The first order of business in all forms of democracies is that of Supply. That Obama is spending without the constraint of Congress is no different than how King George ran things. Even King George was better. England hasn't had an absolute monarch since the days of Charles II.

No. Trying to stimulate supply in a recession is the worst strategy you could possibly try to use.

Likelihood of Being Spent Immediately



Unemployment benefits and food stamps have very high multipliers--1.73 and 1.64 respectively, according to a 2008 Moody's study. This is because those who live paycheck to paycheck or are unemployed spend money as fast as they receive it. The money then creates a ripple effect, paying the salaries of grocery clerks and paying the trucker who delivers the food to the store, and finally the farmers who grow the food. The more that the government dollar passes through hands that will quickly pass it on again, the higher the multiplier effect.


Accelerated Depreciation



An example of an economic stimulus that has a low multiplier effect is a tax break for buying new equipment. Moody's identified the multiplier of such a stimulus as 0.34, because it would take so long for the dollar to change hands.



Read more: Multiplier Effect & Food Stamps | eHow.com http://www.ehow.com/about_5410682_mu...#ixzz287phVMPI

http://www.ehow.com/about_5410682_mu...od-stamps.html

[Ben Kenobi]

Fiscal multipliers don't take debt into account, Kidicious. As debt increases - the marginal cost of further borrowing increases - up to the point where the debt growth is self-sustaining.

The US at 60 percent of GDP vs the US at 120 debt to GDP is a much different case.

[Ben Kenobi]

Trying to stimulate supply in a recession is the worst strategy you could possibly try to use.

Christ Kid - here's a nickel. Buy yourself an education.

"The process by which the Government submits its projected annual expenditures for parliamentary approval is called "Supply"

http://www.parl.gc.ca/About/House/compendium/web-content/c_g_financialprocedures-e.htm

[Kidlicious]

Fiscal multipliers don't take debt into account, Kidicious. As debt increases - the marginal cost of further borrowing increases - up to the point where the debt growth is self-sustaining.

The US at 60 percent of GDP vs the US at 120 debt to GDP is a much different case.

They shouldn't take debt into consideration. The fiscal multiplier estimates the increase in economic activity in the short run. The increase in debt in the short run is minimal, so nothing like increasing the debt to GDP ratio in the fashion that you are estimating.

[Kidlicious]

Christ Kid - here's a nickel. Buy yourself an education.

"The process by which the Government submits its projected annual expenditures for parliamentary approval is called "Supply"

http://www.parl.gc.ca/About/House/co...ocedures-e.htm

So you are talking about the US and using a term they only use in Canada, and you are telling me to get educated?

[Ben Kenobi]

only use in Canada

Man, he digs the hole even deeper. It's almost like he doesn't have a clue about what he's talking about.

[Ben Kenobi]

They shouldn't take debt into consideration.

When it puts your efficiency ratio into the negative - yes, it should be taken into consideration. Is it worth it to borrow money short term to pay for everyday incidental expenses? No. What ends up happening is that eventually your debt servicing costs outweigh what you're taking in and you are bankrupt.

The fiscal multiplier estimates the increase in economic activity in the short run. The increase in debt in the short run is minimal, so nothing like increasing the debt to GDP ratio in the fashion that you are estimating.

The increase in the debt to GDP ratio comes as the result of making the poor economic decision of spending more than you have every year. If the dollar you borrow costs you a 1.72 in debt and debt servicing costs, is the ratio you speak of sufficient?

[Kidlicious]

When it puts your efficiency ratio into the negative - yes, it should be taken into consideration. Is it worth it to borrow money short term to pay for everyday incidental expenses? No. What ends up happening is that eventually your debt servicing costs outweigh what you're taking in and you are bankrupt.

Stop the strawman crap immediately. I'm not saying to stimulate the economy indefinitely.

The increase in the debt to GDP ratio comes as the result of making the poor economic decision of spending more than you have every year. If the dollar you borrow costs you a 1.72 in debt and debt servicing costs, is the ratio you speak of sufficient?

And you are under the impression that we borrow money at 72% interest?

[Ben Kenobi]

Stop the strawman crap immediately. I'm not saying to stimulate the economy indefinitely.

I ask again - aren't you concerned then that Obama has spent for the last FOUR YEARS without a budget approved by congress?

And you are under the impression that we borrow money at 72% interest?

I'm talking the marginal cost. What that very last dollar will cost you to spend is more than the first dollar you spend. This is why budget cutbacks are so useful - because it hacks off the margins, and you save money. As you progressively borrow - yes, that last dollar could cost you 1.72.

Here's how.

Say you spend 100 percent of what you take in. You've got no debt resistance anywhere along that spending. Now, say you spend 110 percent of what you take in. That extra ten percent - say it ends up costing you 5 percent to pay it back over the entire amount, not just the 10 percent you're spending. That last 10 percent will have a 50 percent ratio even though your overall borrowing costs were only 5 percent. And that's if you pay it promptly.

When you let things build up, as the Obama administration has, not only does that 5 percent hit you in year 1, it hits you every other year thereafter. It can be easy for that last 10 percent of extra spending to cost you 100+ percent.

[Kidlicious]

I ask again - aren't you concerned then that Obama has spent for the last FOUR YEARS without a budget approved by congress?

I'm not at all concerned with what has been spent to keep the economy afloat. I give him credit for that.

I'm talking the marginal cost. What that very last dollar will cost you to spend is more than the first dollar you spend. This is why budget cutbacks are so useful - because it hacks off the margins, and you save money. As you progressively borrow - yes, that last dollar could cost you 1.72.

Here's how.

Say you spend 100 percent of what you take in. You've got no debt resistance anywhere along that spending. Now, say you spend 110 percent of what you take in. That extra ten percent - say it ends up costing you 5 percent to pay it back over the entire amount, not just the 10 percent you're spending. That last 10 percent will have a 50 percent ratio even though your overall borrowing costs were only 5 percent. And that's if you pay it promptly.

When you let things build up, as the Obama administration has, not only does that 5 percent hit you in year 1, it hits you every other year thereafter. It can be easy for that last 10 percent of extra spending to cost you 100+ percent.

You're looking at it completely wrong. Where would we be if the economy had fallen into depression? Would we then be more able to pay off our future debt obligations? Would the deficit be smaller now? The answer to both of these questions is no.

Look at the interest rate that we are paying, around 4% for the 10-year Note. One reason we can pay so little is because the money would not otherwise be used as productively elsewhere. If we were paying more in interest you would have a stronger argument, but we would still need to stimulate the economy some how.

[Ben Kenobi]

I'm not at all concerned with what has been spent to keep the economy afloat. I give him credit for that.

I'm not saying to stimulate the economy indefinitely.

US debt to GDP is now very close to it's record high. So how much is enough, Kid? You say you're happy with 4 years of spending like a drunken sailor. Another 4 at this pace will put the US where Greece is now.

Is that what you want?

You're looking at it completely wrong. Where would we be if the economy had fallen into depression?

Newflash - we're in a depression now, Obama's spending isn't helping, but is ensuring that the depression continues. The difference is that you're going to re-elect Hoover because "he did stuff?!" sure, he's doing things - but doing the wrong things! That's why he should be turfed out.

Would we then be more able to pay off our future debt obligations?

Obama's doubled the debt burden without the consent of congress. Revolutions have happened over less. Who's going to have to pay that for the rest of their lives, Kidicious? You? Your chidlren? It's not right that the money Obama is pissing away is going to have to be paid by your kids.

Would the deficit be smaller now? The answer to both of these questions is no.

If Obama hadn't spent a dime - the economy would have recovered two years ago. Like it does with every single other recession. Remember that graph of his - where he promised that unemployment would actually drop? It's still above 8 percent, and that's not including his 30 year low in workforce participation.

Look at the interest rate that we are paying, around 4% for the 10-year Note. One reason we can pay so little is because the money would not otherwise be used as productively elsewhere. If we were paying more in interest you would have a stronger argument, but we would still need to stimulate the economy some how.

http://www.tradingeconomics.com/bonds-list-by-country

US is at 1.43 for their 10 year bonds. I sure hope you aren't managing other people's money.

It's low, but it's not going to stay there with Obama's spending, and the fact that the US has dropped a notch. If he continues spending, you will see the interest rate climb and the US debt getting taken down. Do you know how unthinkable it is for the US, the US to be downgraded from AAA? It's never happened, ever. That is not a sign of prudent fiscal management.

[kentonio]

Better question - has the US ever been OUT of a recession since the Age of Obama began?

Well gee, that would probably depend on whether you cared about what recession actually means or whether you just wanted to instinctively hate on the black man in the oval office.

[Ben Kenobi]

Well gee, that would probably depend on whether you cared about what recession actually means or whether you just wanted to instinctively hate on the black man in the oval office.

Well, considering as you defined the Bush era as a 'recession' with 4 percent unemployment, then yes, we've been in a recession the whole time.

My definition - recession is a period where growth fails to keep up with the increase in the money supply. It was last positive in 2007 with Bush. Since then, you've lost ground every year. That was 5 years ago - which is depression status.

[Kidlicious]

Newflash - we're in a depression now, Obama's spending isn't helping, but is ensuring that the depression continues. The difference is that you're going to re-elect Hoover because "he did stuff?!" sure, he's doing things - but doing the wrong things! That's why he should be turfed out.

Again the fiscal multiplier for temporary increase in food stamps is 1.73 according to a recent study. If you want to go on with your fantasy be my guest.

US is at 1.43 for their 10 year bonds. I sure hope you aren't managing other people's money.

That's very very good for the US govt and tax payers.

It's low, but it's not going to stay there with Obama's spending, and the fact that the US has dropped a notch. If he continues spending, you will see the interest rate climb and the US debt getting taken down. Do you know how unthinkable it is for the US, the US to be downgraded from AAA? It's never happened, ever. That is not a sign of prudent fiscal management.

nonsense.