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Changing the subject...who believes the financial mess is over?
- Thread starter Angelina
- Start date
It's more complicated than just "spending causes problems". People think of the government has a household and that's just a bad analogy cuz its very different; it's more like an investor.
Spending money is actually a type of investment. The government is betting that if it spends enough money, it will get the engine running again which will create more wealth than there was before. The problem with the stimulus is that it targeted a bunch of BS, to be frank. The type of spending that works during recessions is spending on infrastructure and defense manufacturing.
What happened during world war 2 is that the massive amount of spending we put into creating our military industrial complex shot us out of the depression. FDR had previously attempted to stimulate the economy. He was under pressure though, so he inevitably gave in to demands and tried to balance the budget. The effect? A recession admist the depression. However, by 1939, we were building up for war and the war spending drove us out of it.
The problem with government spending during bad economic times is that it's really hard to take the government out once its in. That's why we have our military industrial complex still in place today.
If the stimulus was enough and it actually works, what's probably going to happen in my estimation is that the government's size will increase permanently. This time, the increase will be too much for the government to sustain. some type of collapse will happen after that.
Spending money is actually a type of investment. The government is betting that if it spends enough money, it will get the engine running again which will create more wealth than there was before. The problem with the stimulus is that it targeted a bunch of BS, to be frank. The type of spending that works during recessions is spending on infrastructure and defense manufacturing.
What happened during world war 2 is that the massive amount of spending we put into creating our military industrial complex shot us out of the depression. FDR had previously attempted to stimulate the economy. He was under pressure though, so he inevitably gave in to demands and tried to balance the budget. The effect? A recession admist the depression. However, by 1939, we were building up for war and the war spending drove us out of it.
The problem with government spending during bad economic times is that it's really hard to take the government out once its in. That's why we have our military industrial complex still in place today.
If the stimulus was enough and it actually works, what's probably going to happen in my estimation is that the government's size will increase permanently. This time, the increase will be too much for the government to sustain. some type of collapse will happen after that.
The Ghost with the Most
New member
NO.... In fact... if you look at things right before the Great Depression, we are pretty much right on track.
Right before the hard hit of the Great Depression there was a slight bump in the economy, then it all came crashing down.
Right before the hard hit of the Great Depression there was a slight bump in the economy, then it all came crashing down.
D
Democrats hate facts!
Guest
Not even close!!!!! We're going to lose another 400, 000 jobs when the numbers are released Friday which brings the total to about 3.6 million to 3.8 million since Obama's inauguration. How in the world in the so called "Recession" over?
vertical and dangerous
New member
There's not enough cool-aid in the World for that to be believed!
I think it's definitely trending better, and that it won't get worse than it was any time soon. There are going to be many more hurdles to overcome, unfortunately, (like the inevitable devaluation of the dollar, which if you deal with exchanging money you can already see...) but there is no reason to think this great nation isn't up to the task.... We've already overcome so much in our short history. America really is awesome!
Edit:
avail_skillz... A bit more pedantic than my usual taste... but you explained the situation very well none the less. You won't get best answer... but you probably deserve it.
Verusanct: I understand what you are saying and you seem like a person who has actually bothered to really think about this. I enjoyed reading your answer. Really good stuff! The one thing I would criticize though is that you say something about how it's bad to spend (aka expand government) during tough economic times because it is like to stay expanded... I agree with that.. but I don't think this is necessarily beholden to only tough economic times... I feel government expansion during any level of economic measure is as likely to stay in place as during any other given time. For example, the patriot act was enacted during fine economic times and Obama has kept it enacted. There is no doubt this bill expands government power over the citizenry.
I can't help but imagine that the most likely time for government spending to stop, or reduce... is when people no longer need it. (AKA good economic times) It could be cut out without many people getting upset and no one would lose enough votes for it to be relevant for them to care about, don't you think?
All thing being equal then... doesn't that logically mean the only real time any government should EVER be expanded is when people need it? AKA during tough times? And that we should remain vigilant to remove the assistance once it is no longer necessary?
I guess the #1 question is how do we get to that point!?
Edit:
avail_skillz... A bit more pedantic than my usual taste... but you explained the situation very well none the less. You won't get best answer... but you probably deserve it.
Verusanct: I understand what you are saying and you seem like a person who has actually bothered to really think about this. I enjoyed reading your answer. Really good stuff! The one thing I would criticize though is that you say something about how it's bad to spend (aka expand government) during tough economic times because it is like to stay expanded... I agree with that.. but I don't think this is necessarily beholden to only tough economic times... I feel government expansion during any level of economic measure is as likely to stay in place as during any other given time. For example, the patriot act was enacted during fine economic times and Obama has kept it enacted. There is no doubt this bill expands government power over the citizenry.
I can't help but imagine that the most likely time for government spending to stop, or reduce... is when people no longer need it. (AKA good economic times) It could be cut out without many people getting upset and no one would lose enough votes for it to be relevant for them to care about, don't you think?
All thing being equal then... doesn't that logically mean the only real time any government should EVER be expanded is when people need it? AKA during tough times? And that we should remain vigilant to remove the assistance once it is no longer necessary?
I guess the #1 question is how do we get to that point!?
avail_skillz
New member
Our government has spent its way out many times before. Its a simple fact that consumer based economies are dependent on cash flow.
Are you following with your limited knowledge of economics, so far?
Cash flow from the consumer creates increased demand. Still following?
Demand is what gives good and services their value.
got that?
Put it together now..... cash flow creates demand which gives goods and services their values.
Now when goods and services have value, meaning they are changing from the hand that produces them to the hands that demand them, it creates demand for labor.
Hope I didn't confuse you now, with too many "demands".
Now when demand for labor increases because the current labor force of an employer can't handle the demand for their product, they hire people creating jobs.
hope you are still with me. this should be easy to follow, since now we are going into the only part of economics that right-wingers seem to understand.... but anyway.
The employer increases labor force when demand is too high for his current labor force to keep up with creating even more jobs.
then the whole process repeats iteself over and over again..... well until some nut case decides to go to war in an oil producing region driving fuel prices up whie pushing minimum monthly payments on revolving credit accounts up.
if you could spend money and get 20% back from everyone who spent that money you gave them and then get 20% back from everyone they give it to all the way through the entire cycle you could spend money and end up with more to.
Are you following with your limited knowledge of economics, so far?
Cash flow from the consumer creates increased demand. Still following?
Demand is what gives good and services their value.
got that?
Put it together now..... cash flow creates demand which gives goods and services their values.
Now when goods and services have value, meaning they are changing from the hand that produces them to the hands that demand them, it creates demand for labor.
Hope I didn't confuse you now, with too many "demands".
Now when demand for labor increases because the current labor force of an employer can't handle the demand for their product, they hire people creating jobs.
hope you are still with me. this should be easy to follow, since now we are going into the only part of economics that right-wingers seem to understand.... but anyway.
The employer increases labor force when demand is too high for his current labor force to keep up with creating even more jobs.
then the whole process repeats iteself over and over again..... well until some nut case decides to go to war in an oil producing region driving fuel prices up whie pushing minimum monthly payments on revolving credit accounts up.
if you could spend money and get 20% back from everyone who spent that money you gave them and then get 20% back from everyone they give it to all the way through the entire cycle you could spend money and end up with more to.
It's not even close to being over. Top economists who have been interviewed lately have said it will be at least another 10 years before we are completely out of the red...if we manage to avoid any further disasters, that is. Overhauling health care in the manner Obama wants would only add to our misery. Where is the money to get it started going to come from? Heavy taxes on working class Americans? Borrowing MORE money from China?