Because conditions are much different this time. Your last arguments for spending and taxes after the 2008 crisis are the exact opposite of what you want to do now.
Any ‘stimulus’ applied to an economy short of labor and material is idiotic. Ramping up government programs just after the biggest one-time spending spree in history, paid for with printed money as inflation increases, is reckless and risks financial destruction worse than global warming. Adding massive new entitlements when the current ones are going broke is fiscal insanity. Trying to ram this through when more than half the country opposes it and you have no margin in the House and Senate is political suicide.
Last time we had this debate, you argued that spending was important because of slack demand and idle resources. Now you are saying spending is important even though demand is through the roof and there aren’t enough resources. Which one is it?
Oh, and I realize you think this issue is closed. There are other people lurking who may not agree, so feel free to bow out if you are tired of justifying the insanity.
You’re parroting all the standard conservative conventional wisdom. You won’t be surprised to hear that I think that’s all bullshit. And it’s not just about spending to help the economy, broadly speaking – it’s about specific spending on child care, health care, etc., that will encourage people to start businesses and other activities that help the economy because they won’t need to spend all their time and money caring for loved ones. Someone might have a great idea for a business, but they’re scared to start it because they need to stay in their shitty job to pay for child care, or they need to stay home for child care, or to take care of an elderly parent, or whatever. If that stuff is paid for, then now they can start a business, hire others, and help the whole economy.
The Scandinavian model shows that this kind of spending really can work for the economy broadly, as well as helping individuals who need help. That’s what I think we should do – be more like Denmark, Canada, etc.
It’s no surprise that Republican advice for Democrats continues to be, as always, “for God’s sake, don’t do anything!”
It shouldn’t be a surprise that we don’t want to follow that ridiculous advice. We should try to do Democratic legislative priorities when we have the power to do so. Otherwise, what’s the point of getting into office?
This isn’t ‘Republican advice’. This is basic economics.
What do you think will happen when businesses can’t find labor and there are material shortages, and then the government pops up with a trillion dollars of spending to build,all kinds of stuff? Will it make the situation better or worse?
What do you think happens if you quadruple the money supply while the basket of stuff available to buy with it stays the same or shrinks? Any idea what happens when more dollars chase the same number of goods?
What do you think will happen if the government prints a bunch of money to spend on progressive wish list items, and another Covid variant comes along and we need to lock down again and give out relief money?
Who do you think will be paying back the 4.7 trillion the Democrats want to print? I’ll give uou a hint: Everyone with savings. Including everyone with a 401(k) or a pension of any sort that doesn’t have a 100% Cola. Which is almost everyone.
You claim to be all about science, but when it comes to economics you ignore everything economists know and throw in with some snake oil hustler like the idiot who came up with MMT.
Please justify your desire for this spending while not invalidating your justification for Obama’s spending. Because in both cases you want more spending, but the conditions this time are the polar opposite of what they were in 2008.
Here’s Obama’s chair ofmthe Cohncil of Economic Advisors and former Treasury Secretary:
Here’s a fun graph of the money supply, straight from the Federal Reserve. Look at what has happened in the last two years:
The reason why that gigantic lump pf cash didn’t kick off before is because the moneynsupply is the aggregate amount of momey multiplied by velocity, and velocity crashed with thenpandemic:
What the Democrats want to do while the economy is overheating is to pump up the money supply even more, then kickstart velocity with government projects. What would you expect to happen?
This is not ‘Republican’ economics. It’s just economics.
This is also not the Democratic bills. I’m not sure what would happen if your fantasy world bills pass, but the real world bills will help people get child care, health care, etc., which will help more businesses be started, create jobs, etc.
President Biden campaigned on investing big on infrastructure and these social programs. People voted for these policies. They poll very well among the public. Why on earth would it be wise to pull back before the mid terms? The best thing for the mid terms is for the Democrats to be able to run on delivering a) Covid Relief, b) Bipartisan Infrastructure and c) Reconciliation. A has been done. B and C are pending and it is two senators holding it up. The rest of the party is ready to move forward.
I don’t have time to do a point-by-point this time. Suffice it to say that inflation is real and whilst the causes and factors contributing to it are transitory, the lack of an immediate solution means that de facto inflation is going to be persistent. But we’re not talking stagflation as others (El-Erian, for instance) have suggested - growth is still at 4-5% so the growth part is robust. People want to spend; it’s the supply chain logjam that is the problem. That can be resolved, is in the process of being resolved. Just not soon enough.
I could be guilty of mischaracterizing Summers’ piece above but I’ve read Summers’ comments in the past and he seems to be (like Joe Manchin and the GOP) arguing that inflation is being caused by money supply, as if to say that the stimulus has caused the inflation. He’s doing this because frankly he doesn’t want his taxes raised and he wants to torpedo the proposed stimulus, and I just don’t agree with that shit at all. We’re looking at slower growth next year. A lot of what’s being proposed in stimulus is stuff that’s going to go right after inequality in the working poor and working middle classes. It’s not UBI, which is essentially what we’ve had the past year and change. I absolutely agree that it’s time to taper and it is probably time to raise interest rates as well - modestly, slowly. But it’s past time for lower-income bracket stimulus.
That’s not just Summers’ opinion - it is the consensus view of economists. I remember when Democrats used to care about the consensus view of mainstream scientists and economists.
The prime cause of inflation is the increase in the momey supply without a commensurrate increase in goods and services. You can have temporary price increases on certain goods due to supply chain disruptions or spikes in demand due to special circumstances. Technically, that is not inflation. Inflation is a general rise in prices across the economy.
Since we all love simple analogies (remember the baby-sitter analogy we heard endlessly to support the first stimulus?), An analogy would be this: We start an economy by giving everyone $1,000. They will bid with each other and set prices on available goods accordingly. Now if we give everybody another $1000, there is twice as much money chasing the same basket of goods. Now each dollar is worth half as much, and everyone will simply bid twice as much for everythjng. That’s inflation.
“Inflation is, everywhere and always a monetary phenomenon”
Milton Friedman, Nobel Prize Winner
The question today is not whether inflation is being caused by goosing the money supply, but how much of the price increases we are facing are actually inflation, and how much is due to temporary factors like supply chain disruption, screwed up energy policy, bitcoin mining or whatever. And that isn’t clear.
What is clear, though, is that if you print seven trillion dollars and give it to the government to hand out to people to spend, you WILL get inflation if they actually spend it, unless the money supply has already shrunk and the printing just brings it back. That’s what Quantitative Easing was supposed to do - shore up the money supply when a recession causes it to shrink. But when the money supply is already at an historical high and GDP is growing, printing and spending money will cause inflation.
And so everyone is clear on who this hurts: Pretty much every Democratic constituency other than rich bankers, Wall Street people and major asset holders. All the people you want to help with these giant spending programs will instead be hurt when inflation eats away their savings, their pensions, and their incomes as they lag inflation. The asset holding classes will be fine.
If interest rates rise to combat the inevitable inflation, it really hurts the poorer strata of society and will make real estate even less affordable. I’ve lived through an era of 17% interest rates. It really sucks. Also, rising interest rates with the current global debt load would be ruinous.
You are playing with fire by screwing with the monetary system in unprecedented ways. The result could dwarf the economic damage from global warming.
What fantasy world are you living in? The spending being proposed is paid for, largely by taxes on the wealthy and corporations. And it’s over 10 years, and in aggregate still a lot smaller than planned military spending.
It’s pretty clear you’re not actually familiar with the details of the proposals you’re criticizing.
Short answer is, yes, there’s a combination of money supply via stimulus, but that stimulus was essentially a form of UBI, which I oppose. There was also pent-up demand, which has nothing to do with the infrastructure bills being discussed in congress. The stimulus that’s being kicked around in congress is a combination of hard infrastructure and social infrastructure, some of which comes in the form of tax cuts for the working class, paid leave, and other perks that would give the working class more room to breathe – that’s not going to add to inflation pressure, nor will failure to pass the stimulus relax inflation pressure.
Summers is a fake democrat who doesn’t want tax increases - I get his agenda. But he’s not the only economist and the economic consensus acknowledges that the current inflation is not the result of a stimulus bill that has yet to be passed.
The inflation is already baked in from the 7 trillion of printed dollars you’ve already distributed as Covid relief. The 450 billion per year or so these bills would cost is on top of that, and yes, it’s not going to have as large an effect. But it will make the situatiin worse.
As for paying for it all with taxes in the rich - I understand that’s the current spin of the day, but it either won’t happen or it will hurt GDP and lower revenues anyway.
I have posted this many times before, but the U.S. has never managed to get government tax revenue out of the 17-21% of GDP range - even when personal tax rates were as high as 91% and corporate and dividend taxes much higher than they are now. So why should now be any different?
We aren’t allowed to bet on this board any more, but let’s put a marker down here and if these bills pass, let’s see how much tax revenue actually went towards paying for them
Would you like to quiz me? I know quite a lot about them. I just don’t swallow Democratic spin without evidence.
This past Friday, Biden was in Connecticut for a dedication of the Dodd Center for Human Rights. Included in his remarks praising Chris Dodd was this:
But do you know my measure? … People who tell me they care about people and then disrespect the waitress or a waiter. People who tell me they care about how, in fact, people are entitled to be treated with dignity and walk by someone at a shoeshine stand and doesn’t say “hello.” People who do not do the just simply decent things for ordinary people. That’s the real measure.
Mentioning disrespect for a waitress seems bizarre here. It’s surely impossible Biden is unaware of Chris Dodd’s truly nasty 1985 “waitress sandwich” incident with Teddy Kennedy.
Why would he drop this into his remarks? Am I missing something?
His WoTs are grammatically sound. He seems to be articulate and writes with an air of authority, supplying links and graphics to support his Randian points. The fact that it is theoretical nonsense with little basis in broad real-world dynamics outside of the trading floor is why he gets responses. The bullshit sounds convincing, so it needs to be called out for its sociopathic deficiencies. If the topic is number games, it might make sense, but if the matter is social in nature (the foundation of the economy), there are huge cracks that have been spreading abysmally for the past few decades.