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The Third Depression

nytimes.com

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Re: The Third Depression

#21

Post by bjnortier_hn »

yequalsx wrote: post #11
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…

It is definitely true that borrowing money is quite cheap for the U.S. right now. Long term rates are low. The question is how much long term borrowing we can do now without causing structural problems to the economy. After WWII our debt was quite high as a percent of GDP. High tax rates on the wealthy lowered the debt steadily until the Reagan administration. WWII was a massive government spending spree that got us…

I'm not convinced that reasonable comparisons can be made to the circumstances surrounding WWII. WWII was a far-from-equilibrium economic situation, and decisions around debt are very different from more "normal" economic situations.

Re: The Third Depression

#22

Post by yequalsx »

kiba wrote: post #18
yequalsx wrote: post #11

Earlier quoted context omitted.

It is definitely true that borrowing money is quite cheap for the U.S. right now. Long term rates are low. The question is how much long term borrowing we can do now without causing structural problems to the economy. After WWII our debt was quite high as a percent of GDP. High tax rates on the wealthy lowered the debt steadily until the Reagan administration. WWII was a massive government spending spree that got us…

WWII is a counterexample. This does not mean that more stimulus must necessarily make the economy better Heard of the broken window fallacy? In any case, the shift to war productions cause the population some misery. You got rationing of essential foodstuff and the like. You can't buy anything you like. There was almost certainly no R&D money spent on consumer research. Never mind the fact that all the men went to wa…

Your response would be relevant if it addressed the point I made about using WWII as an example and if it lacked the sarcasm. WWII was a massive spending program by the government. It is credited amongst Austrian economists and Keynesians as the reason we got out of the depression. Therefore it is an example of how government spending can get a country out of a depression. It is incorrect to believe that government expenditures can never get us out of a depression. Is is also incorrect to believe that government expenditures can always get us out of a depression.

Re: The Third Depression

#23

Post by RyanMcGreal »

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?

This is my take: http://raisethehammer.org/blog/1111/the_finance_crisis_in_ei...

Re: The Third Depression

#24

Post by miked »

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?

So: low interest rates caused the housing bubble. Could you explain how that happened exactly?

Many things caused the housing bubble, but printing money (causing low interest rates) was a huge part of it. It works like this: when something becomes cheaper, more people purchase it. Interest payments are a huge part of the cost of buying a house. When they get a lot cheaper...

People forgot that interest rates can't stay cheap forever. And when money gets expensive again, housing prices tank.

This, BTW, is a great insider account by someone who was in the trenches. A confession from a home ownership advocate http://www.ft.com/cms/s/2/f64a9e36-9da3-11de-9f4a-00144feabd...

Re: The Third Depression

#25

Post by yequalsx »

bjnortier_hn wrote: post #21
yequalsx wrote: post #11

Earlier quoted context omitted.

It is definitely true that borrowing money is quite cheap for the U.S. right now. Long term rates are low. The question is how much long term borrowing we can do now without causing structural problems to the economy. After WWII our debt was quite high as a percent of GDP. High tax rates on the wealthy lowered the debt steadily until the Reagan administration. WWII was a massive government spending spree that got us…

I'm not convinced that reasonable comparisons can be made to the circumstances surrounding WWII. WWII was a far-from-equilibrium economic situation, and decisions around debt are very different from more "normal" economic situations.

It's an example of how government expenditures can lead to conditions that foster economic growth and out of a depression. That was my only point regarding WWII. The mantra, "government spending is always bad" is, itself, quite bad. The mantra, "government spending is always good" is equally bad.

Re: The Third Depression

#29

Post by kiba »

yequalsx wrote: post #22
kiba wrote: post #18

Earlier quoted context omitted.

WWII is a counterexample. This does not mean that more stimulus must necessarily make the economy better Heard of the broken window fallacy? In any case, the shift to war productions cause the population some misery. You got rationing of essential foodstuff and the like. You can't buy anything you like. There was almost certainly no R&D money spent on consumer research. Never mind the fact that all the men went to wa…

Your response would be relevant if it addressed the point I made about using WWII as an example and if it lacked the sarcasm. WWII was a massive spending program by the government. It is credited amongst Austrian economists and Keynesians as the reason we got out of the depression. Therefore it is an example of how government spending can get a country out of a depression. It is incorrect to believe that government e…

It is credited amongst Austrian economists

That is clearly uncharacteristic of the Austrian school. I never heard of an Austrian economist saying that's the reason we got out of the depression. I have heard the Austrians arguing just the opposite.

You will need to produce your claim that Austrian economists believe it to be so.

Beside, nobody can detect sarcasm on the internet. There's no body language to detect.

Addendum: Argument from authority is what you're arguing for getting out of the depression? The Keynesian and Austrians believe that World War 2 got us out of the depression therefore it is true is what you're arguing. That's unconvincing.

Re: The Third Depression

#30

Post by davidw »

kiba wrote: post #9
davidw wrote: post #3

Earlier quoted context omitted.

> That's Krugman's answer for everything. Increase spending. Just like articles from reason.org or cato or mises invariably decide the problem is too much government. Which is why articles like this are best left to other sites.

It doesn't matter to me if they always decide a certain solution to certain problems, as long as they are right. Now, I am not against regulations per se(at least in the broad sense), but the kind of regulations that corporations brought and pay for. Government regulators can be brought, or sometime the regulatory framework cause a lot of economic distortion, often to the benefit of oligopolies or monopolies. Sometim…

> It doesn't matter to me if they always decide a certain solution to certain problems, as long as they are right.

It doesn't seem obvious that anyone is "always right", and the discussions tend to go 'round and 'round...

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