Drive much?
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Jörgen Sigvardsson wrote:
And own a driver's license
I can't imagine that not having one would stop him; nor would not being insured, either.
Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.
Their you go, now you got the right idea.
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John Carson wrote:
"difficult problems can take more than a week or two's thought" in order to emphasise the relatively short amount of time available relative to the scale of the problem, not to attempt to document exactly how long they have been thinking about it.
I can't help thinking that once Obama realised the Presidency would be won or lost on the economy and not Iraq, he should have directed his advisors to get to work.
John Carson wrote:
My understanding is that, in his previous job, Geitner was involved in the first half of the TARP program, so his involvement and thought certainly extends over months at least.
He held what is arguably the second most important position in the Federal Reserve system. That would have, it seemed to me, made him uniquely qualified to have detailed plans of actions ready to go in a relatively short time.
John Carson wrote:
As the other side of this coin, one of the most powerful arguments against government intervention is that the government lacks much of the information held by private individuals.
But Geitner as the head of the quasi-public, quasi-private bank that headed the FR system in New York, the financial capital of the US, if not the world, should have been more able to know what he knew and more importantly, know what he didn't know and start finding out.
John Carson wrote:
Thus one reason for delay in coming up with a plan is that the government is only gradually accumulating information about the financial position of the banks and related institutions.
And yet Paulson and Geitner got Congress to spend almost a trillion dollars providing cash without that knowledge; then Obama got a stimulus bill passed by a Congress that -- to a man - had not read what was in the bill. If the government lacks the information necessaryu to act - why is there such a rush to act? I get a kick out of the pressure being applied to Japan to come up with its own jumpstart spending. The 90's gave that country more experience in dealing with prolonged deep recessions than anybody else - and more reason to question whether neo-Keynesian economics work. But why, if the US, UK, Australia, etc don't have a foggy clue about what to do and are still gathering information as you suggest they are, are they attempting to spend most of the
Oakman wrote:
But Geitner as the head of the quasi-public, quasi-private bank that headed the FR system in New York, the financial capital of the US, if not the world, should have been more able to know what he knew and more importantly, know what he didn't know and start finding out.
You seem to be assuming that he didn't. I don't think the fact that Geitner is showing public caution means anything more than that he is faced with a difficult problem and is deliberating about it carefully.
Oakman wrote:
And yet Paulson and Geitner got Congress to spend almost a trillion dollars providing cash without that knowledge; then Obama got a stimulus bill passed by a Congress that -- to a man - had not read what was in the bill. If the government lacks the information necessaryu to act - why is there such a rush to act?
I don't think the stimulus bill requires as much information as the financial rescue plan. Be that as it may, I think the answer to your question is that a judgement was made that a poorly designed intervention was better than none at all because of the dramatic deterioration in economic conditions. It was "emergency room medicine", if you like. I think that they now want the second installment of the financial rescue plan to have some of the thought go into it that ideally should have gone into the first installment.
Oakman wrote:
I get a kick out of the pressure being applied to Japan to come up with its own jumpstart spending. The 90's gave that country more experience in dealing with prolonged deep recessions than anybody else - and more reason to question whether neo-Keynesian economics work. But why, if the US, UK, Australia, etc don't have a foggy clue about what to do and are still gathering information as you suggest they are, are they attempting to spend most of the earnings not of me, but of my grandchildren?
Throughout most of the 90s, Japan grew and was not in recession. It merely failed to match the much higher growth rates of earlier decades. Japan had a long export-driven boom in the 70s and 80s (much to the detriment of the US car and consumer electronics industries --- and Australia's car industry, for that matter) and then faced increased competition from places like Taiwan and Korea in the 1990s. I think you are making too much out of the fact that Geitner wanted a little more time to develop the
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Oakman wrote:
But Geitner as the head of the quasi-public, quasi-private bank that headed the FR system in New York, the financial capital of the US, if not the world, should have been more able to know what he knew and more importantly, know what he didn't know and start finding out.
You seem to be assuming that he didn't. I don't think the fact that Geitner is showing public caution means anything more than that he is faced with a difficult problem and is deliberating about it carefully.
Oakman wrote:
And yet Paulson and Geitner got Congress to spend almost a trillion dollars providing cash without that knowledge; then Obama got a stimulus bill passed by a Congress that -- to a man - had not read what was in the bill. If the government lacks the information necessaryu to act - why is there such a rush to act?
I don't think the stimulus bill requires as much information as the financial rescue plan. Be that as it may, I think the answer to your question is that a judgement was made that a poorly designed intervention was better than none at all because of the dramatic deterioration in economic conditions. It was "emergency room medicine", if you like. I think that they now want the second installment of the financial rescue plan to have some of the thought go into it that ideally should have gone into the first installment.
Oakman wrote:
I get a kick out of the pressure being applied to Japan to come up with its own jumpstart spending. The 90's gave that country more experience in dealing with prolonged deep recessions than anybody else - and more reason to question whether neo-Keynesian economics work. But why, if the US, UK, Australia, etc don't have a foggy clue about what to do and are still gathering information as you suggest they are, are they attempting to spend most of the earnings not of me, but of my grandchildren?
Throughout most of the 90s, Japan grew and was not in recession. It merely failed to match the much higher growth rates of earlier decades. Japan had a long export-driven boom in the 70s and 80s (much to the detriment of the US car and consumer electronics industries --- and Australia's car industry, for that matter) and then faced increased competition from places like Taiwan and Korea in the 1990s. I think you are making too much out of the fact that Geitner wanted a little more time to develop the
John Carson wrote:
I don't think the fact that Geitner is showing public caution means anything more than that he is faced with a difficult problem and is deliberating about it carefully.
Then he shouldn't show up in Congress having been touted by others, including the President, as having "the plan," should he?
John Carson wrote:
It was "emergency room medicine", if you like
But, since I know one, I can assure you that Emergency Room specialists are highly trained generalists who have had years and years of experience dealing with the kinds of problems they face. It is hard to believe that Paulson and Geitner - both intimately involved in getting us into this mess, by the way - have had the experience in fixing these problems that would permit them to assume the mantle of ER specialist.
John Carson wrote:
Throughout most of the 90s, Japan grew and was not in recession
Throughout most of the nineteen thirties, the US economy grew but that was not of much comfort to the tens of thousands who remained underemployed.
John Carson wrote:
The US national debt is currently around 10 trillion, most of which was run up during the Bush Administration.
I was pointing out the growth of the debt from 2004 onwards - once it became clear that Rumsfeld intended on miring us down in Iraq for more than six months. However, Obama is not required to attempt to best his predecessor's record and do it in four years, to boot.
John Carson wrote:
Relative to GDP, the US debt is not out of line with that of other developed countries
I don't know why you think this would comfort me. Since the year 2000, the ratio in the US has increased from roughly 40% to roughly 60%. On a straight line projection, that would mean 90% by 2018 - and in things like this, straight line is the conservative projection, n'est-ce pas?
John Carson wrote:
but the IMF has also had some experience dealing with domestic financial crises.
Unfortunately, the IMF is still dependent on the G7 to provide the vast majority of their funding. As such they are still coming back to the same wells to fill their bucket. And the water is running out. As long as the IMF's answer is to get from to rich
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John Carson wrote:
I don't think the fact that Geitner is showing public caution means anything more than that he is faced with a difficult problem and is deliberating about it carefully.
Then he shouldn't show up in Congress having been touted by others, including the President, as having "the plan," should he?
John Carson wrote:
It was "emergency room medicine", if you like
But, since I know one, I can assure you that Emergency Room specialists are highly trained generalists who have had years and years of experience dealing with the kinds of problems they face. It is hard to believe that Paulson and Geitner - both intimately involved in getting us into this mess, by the way - have had the experience in fixing these problems that would permit them to assume the mantle of ER specialist.
John Carson wrote:
Throughout most of the 90s, Japan grew and was not in recession
Throughout most of the nineteen thirties, the US economy grew but that was not of much comfort to the tens of thousands who remained underemployed.
John Carson wrote:
The US national debt is currently around 10 trillion, most of which was run up during the Bush Administration.
I was pointing out the growth of the debt from 2004 onwards - once it became clear that Rumsfeld intended on miring us down in Iraq for more than six months. However, Obama is not required to attempt to best his predecessor's record and do it in four years, to boot.
John Carson wrote:
Relative to GDP, the US debt is not out of line with that of other developed countries
I don't know why you think this would comfort me. Since the year 2000, the ratio in the US has increased from roughly 40% to roughly 60%. On a straight line projection, that would mean 90% by 2018 - and in things like this, straight line is the conservative projection, n'est-ce pas?
John Carson wrote:
but the IMF has also had some experience dealing with domestic financial crises.
Unfortunately, the IMF is still dependent on the G7 to provide the vast majority of their funding. As such they are still coming back to the same wells to fill their bucket. And the water is running out. As long as the IMF's answer is to get from to rich
Oakman wrote:
Then he shouldn't show up in Congress having been touted by others, including the President, as having "the plan," should he?
You seem to me to be inordinately concerned with marketing details.
Oakman wrote:
I can assure you that Emergency Room specialists are highly trained generalists
After I wrote it, I thought that "battle field medicine" might be a better metaphor. Perhaps you will tell me that those people are pretty hot as well. In any event, the point is not my ability to come up with a good metaphor. The point is that the situation was urgent and there was no time to come up with a perfect plan. Obama put it well (albeit nor originally): we shouldn't let the perfect be the enemy of the good.
Oakman wrote:
Throughout most of the nineteen thirties, the US economy grew but that was not of much comfort to the tens of thousands who remained underemployed.
Yes, so the trick is to not let unemployment rise to 25% in the first place. Hence the urgency. That is my point.
Oakman wrote:
On a straight line projection, that would mean 90% by 2018 - and in things like this, straight line is the conservative projection, n'est-ce pas?
I don't think there is anything intrinsically conservative about a straight line projection. Debt was going down under Clinton. These things are matters of choice, not natural law.
Oakman wrote:
Unfortunately, the IMF is still dependent on the G7 to provide the vast majority of their funding. As such they are still coming back to the same wells to fill their bucket. And the water is running out. As long as the IMF's answer is to get from to rich to give to the poor, they are no answer for what ails the major powers.
I am not flying a big flag for the IMF. They are not going to be the saviour in all this. However, you are choosing to focus on one aspect of what it does and ignoring its general role in establishing and promoting regimes of financial regulation. That role gives it some relevant experience that could be tapped. That is all I am claiming.
John Carson
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Oakman wrote:
Then he shouldn't show up in Congress having been touted by others, including the President, as having "the plan," should he?
You seem to me to be inordinately concerned with marketing details.
Oakman wrote:
I can assure you that Emergency Room specialists are highly trained generalists
After I wrote it, I thought that "battle field medicine" might be a better metaphor. Perhaps you will tell me that those people are pretty hot as well. In any event, the point is not my ability to come up with a good metaphor. The point is that the situation was urgent and there was no time to come up with a perfect plan. Obama put it well (albeit nor originally): we shouldn't let the perfect be the enemy of the good.
Oakman wrote:
Throughout most of the nineteen thirties, the US economy grew but that was not of much comfort to the tens of thousands who remained underemployed.
Yes, so the trick is to not let unemployment rise to 25% in the first place. Hence the urgency. That is my point.
Oakman wrote:
On a straight line projection, that would mean 90% by 2018 - and in things like this, straight line is the conservative projection, n'est-ce pas?
I don't think there is anything intrinsically conservative about a straight line projection. Debt was going down under Clinton. These things are matters of choice, not natural law.
Oakman wrote:
Unfortunately, the IMF is still dependent on the G7 to provide the vast majority of their funding. As such they are still coming back to the same wells to fill their bucket. And the water is running out. As long as the IMF's answer is to get from to rich to give to the poor, they are no answer for what ails the major powers.
I am not flying a big flag for the IMF. They are not going to be the saviour in all this. However, you are choosing to focus on one aspect of what it does and ignoring its general role in establishing and promoting regimes of financial regulation. That role gives it some relevant experience that could be tapped. That is all I am claiming.
John Carson
John Carson wrote:
You seem to me to be inordinately concerned with marketing details.
And you seem to forget that in politics, perception is reality.
John Carson wrote:
Obama put it well (albeit nor originally): we shouldn't let the perfect be the enemy of the good.
I made much the same argument when the original TARP was being voted on. To my chagrin, I discovered that the purposes for which we were told it was needed, were outmoded even before the vote was taken. Then I discovered that much of the original distribution was forced on unwilling banks in an attempt to cover up the one or two that Paulson was actually targeting. Then I saw banks use the money not to lend, but to provide bonuses for their senior staff. Now, once again, we are being told that the purposes for which the original TARP was requested are after all valid reason to print another trillion dollars. The entire Gulf War II was funded by Bush using emergency appropriations and anyone who questioned them was labeled as unpatriotic. Now, emergency appropriations are being used to fund all sorts of things, some of which seem at best unwise and at worst more likely to cause economic problems than to fix them - and everyone who thinks that examining the bill before voting on it is labeled as the enemy of the good. When Obama used that old saw, I was reminded of another: look before you leap.
John Carson wrote:
Yes, so the trick is to not let unemployment rise to 25% in the first place. Hence the urgency. That is my point.
'Twould be a great point to make - if only the majority of the money in the stimulus plan was slated to be spent within the next few months. But at the rate the US is hemoraging jobs, we will have hit that 25% long before we are able to spend the "emergency" allocations.
John Carson wrote:
Debt was going down under Clinton.
The truth is that, correcting for inflation, the National Debt remained almost absolutely steady between the end of WWII and 1982. It then increased every year except the first two years of the Bush Regime. (And he made up for this momentary lapse, in spades.) It is true that under Clinton the rate of increase declined. But we never ended one year when we did not owe more than we did when we started it, in constant dollars.
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John Carson wrote:
You seem to me to be inordinately concerned with marketing details.
And you seem to forget that in politics, perception is reality.
John Carson wrote:
Obama put it well (albeit nor originally): we shouldn't let the perfect be the enemy of the good.
I made much the same argument when the original TARP was being voted on. To my chagrin, I discovered that the purposes for which we were told it was needed, were outmoded even before the vote was taken. Then I discovered that much of the original distribution was forced on unwilling banks in an attempt to cover up the one or two that Paulson was actually targeting. Then I saw banks use the money not to lend, but to provide bonuses for their senior staff. Now, once again, we are being told that the purposes for which the original TARP was requested are after all valid reason to print another trillion dollars. The entire Gulf War II was funded by Bush using emergency appropriations and anyone who questioned them was labeled as unpatriotic. Now, emergency appropriations are being used to fund all sorts of things, some of which seem at best unwise and at worst more likely to cause economic problems than to fix them - and everyone who thinks that examining the bill before voting on it is labeled as the enemy of the good. When Obama used that old saw, I was reminded of another: look before you leap.
John Carson wrote:
Yes, so the trick is to not let unemployment rise to 25% in the first place. Hence the urgency. That is my point.
'Twould be a great point to make - if only the majority of the money in the stimulus plan was slated to be spent within the next few months. But at the rate the US is hemoraging jobs, we will have hit that 25% long before we are able to spend the "emergency" allocations.
John Carson wrote:
Debt was going down under Clinton.
The truth is that, correcting for inflation, the National Debt remained almost absolutely steady between the end of WWII and 1982. It then increased every year except the first two years of the Bush Regime. (And he made up for this momentary lapse, in spades.) It is true that under Clinton the rate of increase declined. But we never ended one year when we did not owe more than we did when we started it, in constant dollars.
Oakman wrote:
perception is reality
That is what Republicans think. :)
Oakman wrote:
I made much the same argument when the original TARP was being voted on. To my chagrin, I discovered that the purposes for which we were told it was needed, were outmoded even before the vote was taken. Then I discovered that much of the original distribution was forced on unwilling banks in an attempt to cover up the one or two that Paulson was actually targeting. Then I saw banks use the money not to lend, but to provide bonuses for their senior staff. Now, once again, we are being told that the purposes for which the original TARP was requested are after all valid reason to print another trillion dollars. The entire Gulf War II was funded by Bush using emergency appropriations and anyone who questioned them was labeled as unpatriotic. Now, emergency appropriations are being used to fund all sorts of things, some of which seem at best unwise and at worst more likely to cause economic problems than to fix them - and everyone who thinks that examining the bill before voting on it is labeled as the enemy of the good. When Obama used that old saw, I was reminded of another: look before you leap.
I don't have any problem with people arguing about what should be done. I am a big fan of Joseph Stiglitz (Nobel prize winner, among other things) who I think knows more about issues of information problems and incentives in financial markets than anyone on the planet. Stiglitz is very critical of the original TARP and has been critical of almost everything that has been done to deal with the economic crisis. He is nevertheless a strong believer in the need to intervene and do so boldly. I would love to see him have more input into the Administration's decisions.
Oakman wrote:
'Twould be a great point to make - if only the majority of the money in the stimulus plan was slated to be spent within the next few months. But at the rate the US is hemoraging jobs, we will have hit that 25% long before we are able to spend the "emergency" allocations.
I too would like to see more happening quickly. It is unclear whether the Administration's position on this is driven by economics or politics.
Oakman wrote:
The truth is that, correcting for inflation, the National Debt remained almost absolutely steady between t
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Oakman wrote:
perception is reality
That is what Republicans think. :)
Oakman wrote:
I made much the same argument when the original TARP was being voted on. To my chagrin, I discovered that the purposes for which we were told it was needed, were outmoded even before the vote was taken. Then I discovered that much of the original distribution was forced on unwilling banks in an attempt to cover up the one or two that Paulson was actually targeting. Then I saw banks use the money not to lend, but to provide bonuses for their senior staff. Now, once again, we are being told that the purposes for which the original TARP was requested are after all valid reason to print another trillion dollars. The entire Gulf War II was funded by Bush using emergency appropriations and anyone who questioned them was labeled as unpatriotic. Now, emergency appropriations are being used to fund all sorts of things, some of which seem at best unwise and at worst more likely to cause economic problems than to fix them - and everyone who thinks that examining the bill before voting on it is labeled as the enemy of the good. When Obama used that old saw, I was reminded of another: look before you leap.
I don't have any problem with people arguing about what should be done. I am a big fan of Joseph Stiglitz (Nobel prize winner, among other things) who I think knows more about issues of information problems and incentives in financial markets than anyone on the planet. Stiglitz is very critical of the original TARP and has been critical of almost everything that has been done to deal with the economic crisis. He is nevertheless a strong believer in the need to intervene and do so boldly. I would love to see him have more input into the Administration's decisions.
Oakman wrote:
'Twould be a great point to make - if only the majority of the money in the stimulus plan was slated to be spent within the next few months. But at the rate the US is hemoraging jobs, we will have hit that 25% long before we are able to spend the "emergency" allocations.
I too would like to see more happening quickly. It is unclear whether the Administration's position on this is driven by economics or politics.
Oakman wrote:
The truth is that, correcting for inflation, the National Debt remained almost absolutely steady between t
John Carson wrote:
That is what Republicans think
If there is a politician alive who thinks otherwise, I am unaware of him or her.
John Carson wrote:
He is nevertheless a strong believer in the need to intervene and do so boldly
I agree in large part. I am not sure that it will do any good, to tell the truth, but I think we are on a downward spiral that demands action, if the country - and the world - is to survive in a form that you and I would recognize. However, it has become clear to me that the Democrats see this crisis as an opportunity (Rahm Emmanuel's words, not mine) to advance an agenda that is likely to be as unhelpful as doing nothing.
John Carson wrote:
It is unclear whether the Administration's position on this is driven by economics or politics.
From my vantage point it seems that politics holds sway - and that is not what I wanted to believe or started out believing. Obama, Pelosi and Reid have, without help from the Republicans, convinced me that they either do not understand or do not care about America's present course.
John Carson wrote:
If "intergovernmental holdings" are included
How can they not be, at least once Reagan started budgeting Social Security as income?
John Carson wrote:
Total debt peaked at 121.7% of GDP in 1946 and got down as low as 32.6% in 1981.
But most of that decline occurred in 1947 and 1948. Thereafter, even during the Korean War, our debt/GDP ratio hovered between the low you site and highs around 39%. Then, with Reagan and ever since - in constant dollars, the percentage has increased every year, perhaps slightly less during Clinton's terms than Bush 1's, but not enough to celebrate his financial acumen they way some folks do. Now it is up to 60% - It certainly appears that it will be much higher by the end of this year. Which is why I suggest that a straight line projection is conservative. If we extend the curve out that has existed for the last 40 years, we reach WWII levels by the end of Obama's first term - and then what? In 1946, it was obvious the the US was an economic powerhouse, capable not only of paying off it's own debt, but simultaneously making extremely large loans on extremely favorable terms to most of Europe. To say that is not the case to
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John Carson wrote:
That is what Republicans think
If there is a politician alive who thinks otherwise, I am unaware of him or her.
John Carson wrote:
He is nevertheless a strong believer in the need to intervene and do so boldly
I agree in large part. I am not sure that it will do any good, to tell the truth, but I think we are on a downward spiral that demands action, if the country - and the world - is to survive in a form that you and I would recognize. However, it has become clear to me that the Democrats see this crisis as an opportunity (Rahm Emmanuel's words, not mine) to advance an agenda that is likely to be as unhelpful as doing nothing.
John Carson wrote:
It is unclear whether the Administration's position on this is driven by economics or politics.
From my vantage point it seems that politics holds sway - and that is not what I wanted to believe or started out believing. Obama, Pelosi and Reid have, without help from the Republicans, convinced me that they either do not understand or do not care about America's present course.
John Carson wrote:
If "intergovernmental holdings" are included
How can they not be, at least once Reagan started budgeting Social Security as income?
John Carson wrote:
Total debt peaked at 121.7% of GDP in 1946 and got down as low as 32.6% in 1981.
But most of that decline occurred in 1947 and 1948. Thereafter, even during the Korean War, our debt/GDP ratio hovered between the low you site and highs around 39%. Then, with Reagan and ever since - in constant dollars, the percentage has increased every year, perhaps slightly less during Clinton's terms than Bush 1's, but not enough to celebrate his financial acumen they way some folks do. Now it is up to 60% - It certainly appears that it will be much higher by the end of this year. Which is why I suggest that a straight line projection is conservative. If we extend the curve out that has existed for the last 40 years, we reach WWII levels by the end of Obama's first term - and then what? In 1946, it was obvious the the US was an economic powerhouse, capable not only of paying off it's own debt, but simultaneously making extremely large loans on extremely favorable terms to most of Europe. To say that is not the case to
Oakman wrote:
From my vantage point it seems that politics holds sway - and that is not what I wanted to believe or started out believing. Obama, Pelosi and Reid have, without help from the Republicans, convinced me that they either do not understand or do not care about America's present course.
I don't have any doubt that they are all trying to help the economy recover. The stakes (economic, political...you name it) are much too high for them not to. I also have a high level of confidence that they will succeed in stabilizing the economy. My doubts are more at the margins; about what compromises of strictly economic objectives are being made for other reasons. I think that the economy will recover slower than it might and at a greater cost in spending than necessary.
Oakman wrote:
But most of that decline occurred in 1947 and 1948. Thereafter, even during the Korean War, our debt/GDP ratio hovered between the low you site and highs around 39%. Then, with Reagan and ever since - in constant dollars, the percentage has increased every year, perhaps slightly less during Clinton's terms than Bush 1's, but not enough to celebrate his financial acumen they way some folks do.
You need to look at the figures again. Debt was still at 94.1% of GDP in 1950 and had only fallen to 69.5% by 1955. It was 56.1% in 1960, 46.9% in 1965 and 37.6% by 1970. It then fluctuated throughout the 1970s, with a slight overall decline. Then it really took off in the 1980s under the Reagan policies of cutting taxes but not cutting spending. The ratio peaked under Clinton at 67.3%, just above the value he inherited from Bush I, and then Clinton got the ratio down to around 58% (this last number is a little imprecise because fiscal years and presidential years don't exactly coincide). Absolute levels of debt (be they in constant dollars or not) are almost irrelevant. It is debt relative to GDP that measures how much individual taxpayers in the future will be affected by debt.
Oakman wrote:
If we extend the curve out that has existed for the last 40 years, we reach WWII levels by the end of Obama's first term - and then what?
I'm not sure how you are making that extension. I don't have the very latest figures, but from 2000 to 2007, the ratio went from 58.0% to 65.5%, with 67.5% estimated for 2008 in the PDF document I linked to. No doubt the next couple
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Oakman wrote:
From my vantage point it seems that politics holds sway - and that is not what I wanted to believe or started out believing. Obama, Pelosi and Reid have, without help from the Republicans, convinced me that they either do not understand or do not care about America's present course.
I don't have any doubt that they are all trying to help the economy recover. The stakes (economic, political...you name it) are much too high for them not to. I also have a high level of confidence that they will succeed in stabilizing the economy. My doubts are more at the margins; about what compromises of strictly economic objectives are being made for other reasons. I think that the economy will recover slower than it might and at a greater cost in spending than necessary.
Oakman wrote:
But most of that decline occurred in 1947 and 1948. Thereafter, even during the Korean War, our debt/GDP ratio hovered between the low you site and highs around 39%. Then, with Reagan and ever since - in constant dollars, the percentage has increased every year, perhaps slightly less during Clinton's terms than Bush 1's, but not enough to celebrate his financial acumen they way some folks do.
You need to look at the figures again. Debt was still at 94.1% of GDP in 1950 and had only fallen to 69.5% by 1955. It was 56.1% in 1960, 46.9% in 1965 and 37.6% by 1970. It then fluctuated throughout the 1970s, with a slight overall decline. Then it really took off in the 1980s under the Reagan policies of cutting taxes but not cutting spending. The ratio peaked under Clinton at 67.3%, just above the value he inherited from Bush I, and then Clinton got the ratio down to around 58% (this last number is a little imprecise because fiscal years and presidential years don't exactly coincide). Absolute levels of debt (be they in constant dollars or not) are almost irrelevant. It is debt relative to GDP that measures how much individual taxpayers in the future will be affected by debt.
Oakman wrote:
If we extend the curve out that has existed for the last 40 years, we reach WWII levels by the end of Obama's first term - and then what?
I'm not sure how you are making that extension. I don't have the very latest figures, but from 2000 to 2007, the ratio went from 58.0% to 65.5%, with 67.5% estimated for 2008 in the PDF document I linked to. No doubt the next couple
John Carson wrote:
I also have a high level of confidence that they will succeed in stabilizing the economy.
Stablizing the economy for the moment has been done a number of times. Usually by spending money now and promising to pay it back in the future. When Reagan decided to balance the budget via Social Security, he started a process that in non-governmental circles is called kiting checks. Since then every President has cheerfully spent much money on their favorite projects while promising that our children and now our grandchildren would pay, while borrowing additional money to pay off at least the interest on what his predecessor borrowed. As long as Obama, Reid and Pelosi believe that they can continue to spend my grandkids' money to stablisize the economy, we will not have solved the problem, merely postponed the accounting - at the price or insuring that the final bill will have to be paid in blood, sweat, and tears. (To coin a phrase ;) )
John Carson wrote:
You need to look at the figures again
You're absolutely right. I continued to prattle on about the absolute debt in constant dollars, not the ratio to GDP. :-O
John Carson wrote:
Absolute levels of debt (be they in constant dollars or not) are almost irrelevant. It is debt relative to GDP that measures how much individual taxpayers in the future will be affected by debt.
I disagree, since interest on the debt will keep pace with any fluctuations, but it may be moot since there is no question that the ratio has been climbing on an ever increasing curve.
John Carson wrote:
I'm not sure how you are making that extension. I don't have the very latest figures, but from 2000 to 2007, the ratio went from 58.0% to 65.5%, with 67.5% estimated for 2008 in the PDF document I linked to.
I said last 40 years, not last 8. To my mind, the two major changes in the way we managed our economy happened first when Nixon repudiated the gold standard in '74 and then a few years later when Reagan decided that borrowing money he had no idea how he was going to pay back was much more fun than collecting taxes - and would get him re-elected.
John Carson wrote:
Zero debt is not in prospect
I think it is, my friend. I do not believe that the future generations
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John Carson wrote:
I also have a high level of confidence that they will succeed in stabilizing the economy.
Stablizing the economy for the moment has been done a number of times. Usually by spending money now and promising to pay it back in the future. When Reagan decided to balance the budget via Social Security, he started a process that in non-governmental circles is called kiting checks. Since then every President has cheerfully spent much money on their favorite projects while promising that our children and now our grandchildren would pay, while borrowing additional money to pay off at least the interest on what his predecessor borrowed. As long as Obama, Reid and Pelosi believe that they can continue to spend my grandkids' money to stablisize the economy, we will not have solved the problem, merely postponed the accounting - at the price or insuring that the final bill will have to be paid in blood, sweat, and tears. (To coin a phrase ;) )
John Carson wrote:
You need to look at the figures again
You're absolutely right. I continued to prattle on about the absolute debt in constant dollars, not the ratio to GDP. :-O
John Carson wrote:
Absolute levels of debt (be they in constant dollars or not) are almost irrelevant. It is debt relative to GDP that measures how much individual taxpayers in the future will be affected by debt.
I disagree, since interest on the debt will keep pace with any fluctuations, but it may be moot since there is no question that the ratio has been climbing on an ever increasing curve.
John Carson wrote:
I'm not sure how you are making that extension. I don't have the very latest figures, but from 2000 to 2007, the ratio went from 58.0% to 65.5%, with 67.5% estimated for 2008 in the PDF document I linked to.
I said last 40 years, not last 8. To my mind, the two major changes in the way we managed our economy happened first when Nixon repudiated the gold standard in '74 and then a few years later when Reagan decided that borrowing money he had no idea how he was going to pay back was much more fun than collecting taxes - and would get him re-elected.
John Carson wrote:
Zero debt is not in prospect
I think it is, my friend. I do not believe that the future generations
Oakman wrote:
Stablizing the economy for the moment has been done a number of times. Usually by spending money now and promising to pay it back in the future. When Reagan decided to balance the budget via Social Security, he started a process that in non-governmental circles is called kiting checks. Since then every President has cheerfully spent much money on their favorite projects while promising that our children and now our grandchildren would pay, while borrowing additional money to pay off at least the interest on what his predecessor borrowed.
In present conditions, most of the income that the government borrows wouldn't exist if the government didn't borrow it and spend it. Moreover, if the government is borrowing that income from grandparents, then it will pay the grandparents (or your heirs) back. Accordingly, the grandparents will be free to reimburse their children and grandchildren for the taxes they will have to pay in order to pay the grandparents back. In the meanwhile, the spending may save the jobs of the children and grandchildren --- assuming they are in the workforce.
Oakman wrote:
I disagree, since interest on the debt will keep pace with any fluctuations
Not sure what point you are making.
Oakman wrote:
I said last 40 years, not last 8.
I don't think that helps you. The rate of increase over the last 40 years was not higher than the rate over the last 8.
Oakman wrote:
I think it is, my friend. I do not believe that the future generations will cheerfully accept a crushing load of debt because this generation never believed in paying for what they got.
I am puzzled that you complain about the threat of exploding debt, while apparently taking seriously the prospect that debt will be reduced to zero. It is currently alive generations that get to vote. I don't know when, if ever, the US had zero debt, but it must have been a very long time ago. There is nothing wrong with borrowing to fund long-lived assets that will benefit people in the future. Firms do it all the time. Nor is there anything wrong with borrowing as a counter-cyclical measure when a collapse of confidence means that the private sector will not invest all available savings. Borrowing just to be able to spend without the political pain of taxes is another matter entirely.
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Oakman wrote:
Stablizing the economy for the moment has been done a number of times. Usually by spending money now and promising to pay it back in the future. When Reagan decided to balance the budget via Social Security, he started a process that in non-governmental circles is called kiting checks. Since then every President has cheerfully spent much money on their favorite projects while promising that our children and now our grandchildren would pay, while borrowing additional money to pay off at least the interest on what his predecessor borrowed.
In present conditions, most of the income that the government borrows wouldn't exist if the government didn't borrow it and spend it. Moreover, if the government is borrowing that income from grandparents, then it will pay the grandparents (or your heirs) back. Accordingly, the grandparents will be free to reimburse their children and grandchildren for the taxes they will have to pay in order to pay the grandparents back. In the meanwhile, the spending may save the jobs of the children and grandchildren --- assuming they are in the workforce.
Oakman wrote:
I disagree, since interest on the debt will keep pace with any fluctuations
Not sure what point you are making.
Oakman wrote:
I said last 40 years, not last 8.
I don't think that helps you. The rate of increase over the last 40 years was not higher than the rate over the last 8.
Oakman wrote:
I think it is, my friend. I do not believe that the future generations will cheerfully accept a crushing load of debt because this generation never believed in paying for what they got.
I am puzzled that you complain about the threat of exploding debt, while apparently taking seriously the prospect that debt will be reduced to zero. It is currently alive generations that get to vote. I don't know when, if ever, the US had zero debt, but it must have been a very long time ago. There is nothing wrong with borrowing to fund long-lived assets that will benefit people in the future. Firms do it all the time. Nor is there anything wrong with borrowing as a counter-cyclical measure when a collapse of confidence means that the private sector will not invest all available savings. Borrowing just to be able to spend without the political pain of taxes is another matter entirely.
John Carson wrote:
In present conditions, most of the income that the government borrows wouldn't exist if the government didn't borrow it and spend it.
Not sure what you mean here - are you talking about printing money? I agree, they're doing a lot of that. But they are also issuing 10 notes to the Chinese as fast as they can sell them. At least at present that money represents real value of some kind - and the taxes needed to pay it back will be paid with money earned from labor. Meanwhile, as I think I mentioned, the interest rate on those notes is up by almost a full percent. That suggests that the market is beginning to question the strength of our promises.
John Carson wrote:
I am puzzled that you complain about the threat of exploding debt, while apparently taking seriously the prospect that debt will be reduced to zero.
I do? Only as a total repudiation of the debt do I see that happening - or a total meltdown of the economy where no country's paper is worth anything. The second, I suspect is more likely than the first, but, as I said, I'm not living my life as if either will happen in my lifetime.
John Carson wrote:
There is nothing wrong with borrowing to fund long-lived assets that will benefit people in the future. Firms do it all the time.
I pretty much agree, but neither Reagan, Clinton, or either Bush really gave us much that would benefit anything but the here and now. If we were suddenly begging, borrowing, or stealing (aka taxing) to fix the badly worn down infrastructure that the US sits on top of like a powder keg, I would be cheering. Even if the majority of the money was going to new bricks and mortar I'd still be more or less in favor. But we are borrowing money to buy too many things with no life span at all. Firms expense those things, or if they don't, they aren't in business very long.
John Carson wrote:
Borrowing just to be able to spend without the political pain of taxes is another matter entirely.
Had Bush demanded that all our chicken-hawk conservatives also pay for the the Iraq war, it would have been over in six months. Had he even had the guts to include it in his budget instead of a five-year-long series of "emergency" appropriations, it wouldn't have lasted more than a year. (Had he also re-instituted the draft rather than destr
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John Carson wrote:
In present conditions, most of the income that the government borrows wouldn't exist if the government didn't borrow it and spend it.
Not sure what you mean here - are you talking about printing money? I agree, they're doing a lot of that. But they are also issuing 10 notes to the Chinese as fast as they can sell them. At least at present that money represents real value of some kind - and the taxes needed to pay it back will be paid with money earned from labor. Meanwhile, as I think I mentioned, the interest rate on those notes is up by almost a full percent. That suggests that the market is beginning to question the strength of our promises.
John Carson wrote:
I am puzzled that you complain about the threat of exploding debt, while apparently taking seriously the prospect that debt will be reduced to zero.
I do? Only as a total repudiation of the debt do I see that happening - or a total meltdown of the economy where no country's paper is worth anything. The second, I suspect is more likely than the first, but, as I said, I'm not living my life as if either will happen in my lifetime.
John Carson wrote:
There is nothing wrong with borrowing to fund long-lived assets that will benefit people in the future. Firms do it all the time.
I pretty much agree, but neither Reagan, Clinton, or either Bush really gave us much that would benefit anything but the here and now. If we were suddenly begging, borrowing, or stealing (aka taxing) to fix the badly worn down infrastructure that the US sits on top of like a powder keg, I would be cheering. Even if the majority of the money was going to new bricks and mortar I'd still be more or less in favor. But we are borrowing money to buy too many things with no life span at all. Firms expense those things, or if they don't, they aren't in business very long.
John Carson wrote:
Borrowing just to be able to spend without the political pain of taxes is another matter entirely.
Had Bush demanded that all our chicken-hawk conservatives also pay for the the Iraq war, it would have been over in six months. Had he even had the guts to include it in his budget instead of a five-year-long series of "emergency" appropriations, it wouldn't have lasted more than a year. (Had he also re-instituted the draft rather than destr
Oakman wrote:
Not sure what you mean here - are you talking about printing money?
No, just standard Keynesian analysis. If people don't want to spend all their income, then they need to find someone to spend it in their place or else demand declines and income falls. They can lend to business for investment or to other consumers for consumption or to government for government spending. In the present climate, there is a reluctance on the part of the private sector to take up other people's savings and spend them, so the government has to. Printing money is a different matter.
Oakman wrote:
I do? Only as a total repudiation of the debt do I see that happening
I said: "Zero debt is not in prospect", meaning that zero debt was very unlikely. You expressed disagreement. Presumably there is some miscommunication at work here.
Oakman wrote:
It appears, more and more, that Obama is doing the same thing that Bush did - but with a whole new set of black holes to shovel money into.
I take a more optimistic view, but we will see how it unfolds in the following years.
John Carson