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The Third Depression

nytimes.com

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Re: The Third Depression

#31

Post by robryan »

Retric wrote: post #4

I suspect the real problem is the evaporation of superficial jobs. We have become a nation devoted to our wants, but when things look bad people quickly cut back on such things. A tiny fraction of our population are "farmers" but with the over abundance of food produced and the only way to make money is to either suck on the governments subsidies or create specialty locally grown, free range, Organic etc goods. I thi…

Or use advances in technology to find jobs, probably mostly in the way of finding ways to use unskilled people effectively. Theres no doubt their is an endless amount of work out there that could be done to make life better, it's just that it's probably uneconomical to undertake currently.

Maybe the answer is part welfare state, except that the government assign positions to people collecting welfare.

Re: The Third Depression

#32

Post by hnal943 »

arijo wrote: post #8
lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

Would you care to explain why printing money is a bad solution for the current scenario? And since economics is not a science who decides what is good economics? And what about criminalizing speculation against sovereign debt - that is the root cause of what is happening in europe right now.

How would you legally define "speculation?" How could you prove it is different from normal investment? Do you think anyone would buy the debt of a nation that threatened to throw you in jail if you did so in a way they didn't like? What would prevent such a government from jailing its debtors simply to get out of a situation such as what is happening in Europe?

Re: The Third Depression

#33

Post by SkyMarshal »

lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

He's right that the real threat is deflation, not inflation. But printing money isn't the solution. A defaulting and clearing of billions, maybe trillions, of unsustainable debt in the system is required.

That will either happen chaotically, orderly, or governments will bankrupt themselves trying to prop it up and avoid it. Looks like the US is hell-bent on the latter, in no small part because most large creditors have deep captured the government itself.

Re: The Third Depression

#34

Post by exit »

Retric wrote: post #4

I suspect the real problem is the evaporation of superficial jobs. We have become a nation devoted to our wants, but when things look bad people quickly cut back on such things. A tiny fraction of our population are "farmers" but with the over abundance of food produced and the only way to make money is to either suck on the governments subsidies or create specialty locally grown, free range, Organic etc goods. I thi…

people working below minimum wage are "employed" in name only.

Re: The Third Depression

#35

Post by j_baker »

SkyMarshal wrote: post #33
lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

He's right that the real threat is deflation, not inflation. But printing money isn't the solution. A defaulting and clearing of billions, maybe trillions, of unsustainable debt in the system is required. That will either happen chaotically, orderly, or governments will bankrupt themselves trying to prop it up and avoid it. Looks like the US is hell-bent on the latter, in no small part because most large creditors ha…

"A defaulting and clearing of billions, maybe trillions, of unsustainable debt in the system is required."

Seriously? What you propose would be the economic equivalent of a nuclear winter. You can't cure a disease by killing the patient.

Besides that, it could even come back to bite us. Think of how many other countries are indebted to us. If we can default on our debts, why can't they?

Re: The Third Depression

#36

Post by orblivion »

lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

> Balanced-budget orthodoxy? Man, the guy's got huge cojones, at least.

The tone he takes about other economists is a little scary, really. "We've made all this great Right progress. But here come these people who are trying to destroy all of it, daring to go back to the clearly discredited old ways of Wrong-Think."

I'll say it again, I suspect this man is a paid propagandist.

Re: The Third Depression

#37

Post by bjnortier_hn »

arijo wrote: post #8
lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

Would you care to explain why printing money is a bad solution for the current scenario? And since economics is not a science who decides what is good economics? And what about criminalizing speculation against sovereign debt - that is the root cause of what is happening in europe right now.

Speculation against sovereign debt is the root cause?

Have you considered profligate government spending? Using currency swaps to hide deficits with the help of Goldman Sachs? It wasn't speculators who pushed Greece's deficit up to 13%. "Speculators" is the straw man of European politicians, who don't want to admit blame (not something confined to European politicians).

Then there is also the fact that when traditionally high interest-rate countries like Spain and Ireland entered the Eurozone, cheap financing was available for the first time. This resulted in a housing/construction boom and then crash. All the taxes from property development and services evaporated, which makes it harder to service debt.

Re: The Third Depression

#38

Post by j_baker »

lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

This is a strawman argument. Krugman isn't trying to say that the debt isn't important. What he's been saying is that normal fiscal policy doesn't apply in the current crisis: http://www.nytimes.com/2008/11/14/opinion/14krugman.html?_r=...

In particular, there's a reason interest rates are adjusted regularly: in different economic situations, you need different interest rates. Were interest rates too low before the current crisis? Probably. That's mostly academic now though. What matters is what interest rates should be at now. And our economy is in totally different shape since before the crisis. What made sense then isn't necessarily good policy now.

Re: The Third Depression

#39

Post by [deleted] »

cia_plant wrote: post #10
lionhearted wrote: post #2

I click the article. I see it's Krugman. Before I read further, I say, "Ah, Krugman. I bet his solution is to print money." > ...governments are obsessing about inflation when the real threat is deflation, preaching the need for belt-tightening when the real problem is inadequate spending. That's Krugman's answer for everything. Dot-com crash? Create more money: 2001 Krugman: “During phases of weak growth there are a…

I'm glad to finally find someone who knows exactly what caused the housing bubble and subsequent crash. Could you explain it to me? I find the whole matter very confusing myself, although I've read a lot about it. So: low interest rates caused the housing bubble. Could you explain how that happened exactly?

[deleted]

Re: The Third Depression

#40

Post by hnal943 »

kiba wrote: post #13
jswinghammer wrote: post #7

Considering that his Keynesianism has basically destroyed Japan's future (while at the same time he faults them for not borrowing enough) I'd hope he'd proceed with a bit more caution. The basic problem he has is that he doesn't really understand why we're here. When debt chases bad assets it's a disease that has to be cleared. He ignored some pretty serious depressions in his analysis as well. The panic of 1819 come…

Our fear of short term pain might be the worst part of the modern political system. When people realize that they can vote themselves more money, they will. Government will then promise more than it can deliver and proceed to spend money like no tomorrow just like what happens to Greece and California. But it's heresy to suggest that democratic institutions should be scrapped altogether. Everyone thinks democracy equ…

When people realize that they can vote themselves more money, they will.

I would agree had you said "When people think that they can vote themselves..." because who are they kidding? There is no "Obama Money." The government's money comes from the people, as the residents of Greece and California are discovering.

I suppose you can vote yourself more money if you can vote and yet pay no taxes, which might be the true problem. Perhaps in order to have a say in the direction of the country, you need to have skin in the game.

I don't think that chucking democracy is really the right reaction. I stand with Winston Churchill: "Democracy is the worst form of government, except for all those other forms that have been tried from time to time."

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