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Nickelless
Administrator
USA
5580 Posts |
 Posted - 01/20/2009 : 01:52:10
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WASHINGTON — The $825 billion stimulus proposal that Democrats unveiled last week may encounter stiff opposition from conservatives on Capitol Hill. But it isn't meeting significant resistance from conservative economists.
While economists might quibble with specifics, the vast majority agree that some kind of massive government spending plan is necessary.
"Most conservative economists are all for it," said Mark Zandi, a founder of Moody's Economy.com who advised GOP presidential candidate John McCain.
The reason is fairly straightforward. With economic uncertainty higher than at any time since the Great Depression, consumers and businesses are more reluctant to resume spending than in previous downturns.
Spending cuts can set off a vicious economic cycle, with dropping demand leading to layoffs, which lead to even more declines in demand.
Conventional economic theory holds that the only institution that can halt that cycle is the federal government, by substituting its demand for goods and services for the diminished demand of the private sector.
Even Martin Feldstein, a professor of economics at Harvard University who served as chief economic adviser to President Ronald Reagan and is considered the dean of conservative economists, has expressed support for a stimulus plan.
"Countering a deep economic recession requires an increase in government spending to offset the sharp decline in consumer outlays and business investment that is now under way," Feldstein wrote in The Wall Street Journal last month. "Without that rise in government spending, the economic downturn would be deeper and longer."
Republican lawmakers are uncomfortable with government spending programs, usually preferring tax cuts. But so far, Republicans have not demanded new tax cuts. One reason is that while permanent tax cuts can foster long-term growth, in the short term most economists agree they create less economic demand than direct government spending.
Economists explain the debate this way: When the government spends $1 to buy an item or a service, economic output (or gross domestic product) automatically goes up by $1. And then it goes up a bit more, because whoever gets that $1 spends at least part of it buying supplies or paying workers, who in turn use it to buy food, gas or medical care. So $1 of direct government spending becomes roughly $1.57 of GDP, according to projections by economic advisers to President-elect Barack Obama.
Tax cuts work differently. If a person gets a tax cut of $1, there is no guarantee that he or she will spend it, so it has no immediate effect on GDP. Business tax cuts, however, can help capital spending and job creation once an economic recovery begins.
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Ardent Listener
Administrator
USA
4841 Posts |
Posted - 01/20/2009 : 07:10:42
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| How about tax rebates or refunds upon proof that you bought durable goods? How about the federal goverment paying the sales tax for you to your state? Lots of ways to cut taxes to encourage economic growth in my opinion. |
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Think positive. |
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El Dee
Penny Hoarding Member
USA
547 Posts |
Posted - 01/20/2009 : 09:41:52
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Ahh, the voodoo magic of government spending.
Where does the government get the imaginary $1.00 to directly spend?
Get used to stagflation, Pres. Obama. |
Trust the government? Ask an Indian. |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 01/20/2009 : 17:13:04
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An advisor to John McCain and a Harvard egghead hardly qualify as "Conservative" ecomomists, IMHO.
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 01/20/2009 : 22:23:53
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Yea... Anyone that thought John McCain was a Conservative was a left wing nut. I really think him and Senator Clinton were pretty close on the issues. Don't forget McCain had to stay somewhat on the right voting wise due to being from AZ, and Clinton had to stay on the left being from New York.... if they didn't need the voters of those states.... they might have met in the middle.
On the stimulus plan... tax rebates don't work that well as most are saved. There is a Economic theory that i can't remember the name of that says people spend what they are going to spend and the government doesn't have much control over it. I am not saying I agree with it, but I think it is true in part. A lot of people aren't going to go spend a check just because they have it, but some will.
You can investment spend or what they so call investment spend, but it is slow. I am not sure you can say it works or not. It enters the system so slowly that it could be just time and not that plan that made the changes.
The problem has to do with supply/demand. We have to much inventory, and full production is greater than demand. You need to get rid of the inventory and increase demand. That is a very tall order when most people are max out on debt. There is no untapped reserves like the early 2000s.
Here is my plan.
1. Keep the banking system a float. It is going to end up being defacto owned by the U.S. government. Slowly move the failing banks into BOA, JPM, C, WFC, and maybe one or two others. Insert capital with the failing bank to get repaid with interest at some point. This should be fair to all and hopefully net cost little. The other option of letting them go under is awful to the system and will cost the taxpayers a ton through the FDIC losses.
2. Do some investments spending that makes sense, but no pet projects. I mean update the government buildings and other needed improvements, but don't create stuff out of thin air. Just move up needed projects.
3. The Federal Reserve needs to go crazy with the printing. I mean print money and start buying assets. Not paper, but assets. Start buying steel, copper, zinc, silver, gold, nickel, oil, coal, and whatever that doesn't go bad. Store it under an army base like Fort Knox. This gives us something for the money, increases the money supply, creates demand for those items, and then the flow through effect.
4. Some kind of plan has to be put in place to help let debt default. It needs to not reward those that got into the debt though. Here is my plan for the home loans. Say someone owes $200k, but can only afford $900 a month. 900 a month would cover $150K loan for 30 years. So now the defacto own government banks with a new law to allow this.... let the government rewrite the mortgage to a 30 year 6% $150K loan with the $900 a month payment (from the bank) and a 30 year 6% no payment 50,000 loan (to the old lender, but they get the $150K cash from the new government bank loan). The borrower gets to keep the house, the lender still is owed their money, and housing inventory doesn't get worse. That non payment loan is likely never going to get repay, but everyone still comes out better. Better to have $150K cash and a $50K note that might be worth something, than a defaulted $200k loan in today's housing market.
We need something to increase demand and wipe out debts. The best way to do that is defaults and inflation. The problem is defaulting is deflationary, so the printing press needs to be full swing. If we have hard assets for the money, then we can always sell the assets (at higher prices) and remove the money later ----assuming inflation gets to bad later on.
-SWUSC
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`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Delawhere Jack
1000+ Penny Miser Member
USA
1680 Posts |
Posted - 01/21/2009 : 17:47:54
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quote:
Originally posted by swusc
Yea... Anyone that thought John McCain was a Conservative was a left wing nut. I really think him and Senator Clinton were pretty close on the issues. Don't forget McCain had to stay somewhat on the right voting wise due to being from AZ, and Clinton had to stay on the left being from New York.... if they didn't need the voters of those states.... they might have met in the middle.
On the stimulus plan... tax rebates don't work that well as most are saved. There is a Economic theory that i can't remember the name of that says people spend what they are going to spend and the government doesn't have much control over it. I am not saying I agree with it, but I think it is true in part. A lot of people aren't going to go spend a check just because they have it, but some will.
You can investment spend or what they so call investment spend, but it is slow. I am not sure you can say it works or not. It enters the system so slowly that it could be just time and not that plan that made the changes.
The problem has to do with supply/demand. We have to much inventory, and full production is greater than demand. You need to get rid of the inventory and increase demand. That is a very tall order when most people are max out on debt. There is no untapped reserves like the early 2000s.
Here is my plan.
1. Keep the banking system a float. It is going to end up being defacto owned by the U.S. government. Slowly move the failing banks into BOA, JPM, C, WFC, and maybe one or two others. Insert capital with the failing bank to get repaid with interest at some point. This should be fair to all and hopefully net cost little. The other option of letting them go under is awful to the system and will cost the taxpayers a ton through the FDIC losses.
2. Do some investments spending that makes sense, but no pet projects. I mean update the government buildings and other needed improvements, but don't create stuff out of thin air. Just move up needed projects.
3. The Federal Reserve needs to go crazy with the printing. I mean print money and start buying assets. Not paper, but assets. Start buying steel, copper, zinc, silver, gold, nickel, oil, coal, and whatever that doesn't go bad. Store it under an army base like Fort Knox. This gives us something for the money, increases the money supply, creates demand for those items, and then the flow through effect.
4. Some kind of plan has to be put in place to help let debt default. It needs to not reward those that got into the debt though. Here is my plan for the home loans. Say someone owes $200k, but can only afford $900 a month. 900 a month would cover $150K loan for 30 years. So now the defacto own government banks with a new law to allow this.... let the government rewrite the mortgage to a 30 year 6% $150K loan with the $900 a month payment (from the bank) and a 30 year 6% no payment 50,000 loan (to the old lender, but they get the $150K cash from the new government bank loan). The borrower gets to keep the house, the lender still is owed their money, and housing inventory doesn't get worse. That non payment loan is likely never going to get repay, but everyone still comes out better. Better to have $150K cash and a $50K note that might be worth something, than a defaulted $200k loan in today's housing market.
We need something to increase demand and wipe out debts. The best way to do that is defaults and inflation. The problem is defaulting is deflationary, so the printing press needs to be full swing. If we have hard assets for the money, then we can always sell the assets (at higher prices) and remove the money later ----assuming inflation gets to bad later on.
-SWUSC
Your ideas might work, but those of us that have lived within our means get screwed with the inflation too, therefore I can't support it. I say let it all fall down, borrowers and lenders both. Greed and stupidity got them in the situation they're in now, and it's been proven over and over that if you bail an idiot out they'll go straight back to the same behavior as soon as they are able.
The overarching theory that the government is supposed to take care of people has got to end. Most people will only learn a lesson if it is painful. Let them learn.
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"Educate and inform the whole mass of the people... They are the only sure reliance for the preservation of our liberty." Thomas Jefferson
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Bluegill
1000+ Penny Miser Member
USA
1964 Posts |
Posted - 01/21/2009 : 20:48:51
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quote:
Originally posted by swusc
Yea... Anyone that thought John McCain was a Conservative was a left wing nut. I really think him and Senator Clinton were pretty close on the issues. Don't forget McCain had to stay somewhat on the right voting wise due to being from AZ, and Clinton had to stay on the left being from New York.... if they didn't need the voters of those states.... they might have met in the middle.
On the stimulus plan... tax rebates don't work that well as most are saved. There is a Economic theory that i can't remember the name of that says people spend what they are going to spend and the government doesn't have much control over it. I am not saying I agree with it, but I think it is true in part. A lot of people aren't going to go spend a check just because they have it, but some will.
You can investment spend or what they so call investment spend, but it is slow. I am not sure you can say it works or not. It enters the system so slowly that it could be just time and not that plan that made the changes.
The problem has to do with supply/demand. We have to much inventory, and full production is greater than demand. You need to get rid of the inventory and increase demand. That is a very tall order when most people are max out on debt. There is no untapped reserves like the early 2000s.
Here is my plan.
1. Keep the banking system a float. It is going to end up being defacto owned by the U.S. government. Slowly move the failing banks into BOA, JPM, C, WFC, and maybe one or two others. Insert capital with the failing bank to get repaid with interest at some point. This should be fair to all and hopefully net cost little. The other option of letting them go under is awful to the system and will cost the taxpayers a ton through the FDIC losses.
2. Do some investments spending that makes sense, but no pet projects. I mean update the government buildings and other needed improvements, but don't create stuff out of thin air. Just move up needed projects.
3. The Federal Reserve needs to go crazy with the printing. I mean print money and start buying assets. Not paper, but assets. Start buying steel, copper, zinc, silver, gold, nickel, oil, coal, and whatever that doesn't go bad. Store it under an army base like Fort Knox. This gives us something for the money, increases the money supply, creates demand for those items, and then the flow through effect.
4. Some kind of plan has to be put in place to help let debt default. It needs to not reward those that got into the debt though. Here is my plan for the home loans. Say someone owes $200k, but can only afford $900 a month. 900 a month would cover $150K loan for 30 years. So now the defacto own government banks with a new law to allow this.... let the government rewrite the mortgage to a 30 year 6% $150K loan with the $900 a month payment (from the bank) and a 30 year 6% no payment 50,000 loan (to the old lender, but they get the $150K cash from the new government bank loan). The borrower gets to keep the house, the lender still is owed their money, and housing inventory doesn't get worse. That non payment loan is likely never going to get repay, but everyone still comes out better. Better to have $150K cash and a $50K note that might be worth something, than a defaulted $200k loan in today's housing market.
We need something to increase demand and wipe out debts. The best way to do that is defaults and inflation. The problem is defaulting is deflationary, so the printing press needs to be full swing. If we have hard assets for the money, then we can always sell the assets (at higher prices) and remove the money later ----assuming inflation gets to bad later on.
-SWUSC
With all do respect, this is utter nonsense that won't work. How do I know, because we are already doing it...
I respectfully ask you to show me a case in recorded history where it ever worked to the betterment of the society when their government adopted these ideas.
We`have already bailed out the banks.
We have earmarked damn near a trillion for "investment spending". This one hasn't actually been implemented yet, but anyone with even remedial thinking skills knows how this will turn out...
The Banking Cartel (FED)has already started printing money as fast as they can.
We are already bailing out stupid borrowers with loan modifications.
Government is not the answer. The more we fight this correction, the more painful it will be.
We are going to get a painful correction, like it or not. It's pain now, or more severe pain later.
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Conservative economists back stimulus plan
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