For the last time, cutting taxes and spending is Keynesian. It's the other side of the coin. If your government taxes too much and spends too much cutting taxes and spending is the fastest way to inject money into the system. If your government doesn't do those things, than cash injection is the best way to go.

are there any industrialized nations that aren't being propped up at the moment?

And for the last time, you cannot force people to spend money they dont have by giving more money to rich people.

Take this money and directly hire people for government projects. Do something useful with them. watch them spend their new pay proping up the economy.

Giving more money to rich people just gives them a reason to hold onto it because they arent being taxed heavily on it. they will not invest it in anything long term because the rates are too low. They also wont purchase much because you risk devaluing the dollar even more by printing again and again ...

Eddie Adams from Torrance: It's almost as if cutting spending during a recession was a bad idea... who knew?

You mean pulling money out of an economy that was contracting due to not enough people spending money could have a negative effect? STOP THE PRESSES. AND START THE OTHER PRESSES.

FlashHarry: WTF Indeed: For the last time, cutting taxes and spending is Keynesian

in good times, when coffers are flush, cutting spending and raising taxes is crucial. this is something we haven't grasped since the 50s.

but now, however, in the throes of a tenuous recovery, it's time to open the spigots while keeping taxes low. this is what's known as short-term deficit spending. and it is a necessity.

Pretty much. It is not really a question on what one is a failure over the other. It is more of a question on WHEN to switch from one idea to the other.

They're not printing anything. They're authorizing the creation of digital credit which will be consumed/stolen by the banks who are trying to fill in the black holes that are their balance sheets.

The cash economy will feel no impact whatsoever.

TrainingWheelsNeeded: are there any industrialized nations that aren't being propped up at the moment?

Switzerland?

DamnYankees: Because People in power are Stupid: The money supply is subject to supply and demand as is every fungible object. If the demand is high then the value of money goes up. If it's low then it goes down.

Exactly right. This is why in recessions you essentially need to expand the money supply - you need to make money less valuable, so people are less interesting in holding on to it and hoarding it.

In other words, inflate it. Now that I own a lot of gold, that sounds like a terrific idea to me.

jjorsett: Now that I own a lot of gold, that sounds like a terrific idea to me.

You could do worse. The theory of increasing the money supply during a recession is solid. The problem with America is that it's been doing it in all the wrong ways -- flooding banks with low-interest loans that get turned around and loaned back to the federal government. Banks aren't reserve-constrained so they don't even need the capital to issue private loans, but they aren't in a hurry to issue private loans anyway because the risk is worse than the free money they're getting from the government, and loan demand is down because Americans aren't interested in taking on more debt. So all this really does is dilute the share of wealth among wage-earning Americans. In other words, like any broken 3rd-world country, there's enough to go around but what's needed doesn't get to where it's needed. The money's all just sloshing around among the 1%, and the lack of places to invest due to lack of demand means it just chases commodities. . . like gold.

The best way to expand the money supply is with deficit-financed infrastructure spending, as the money is pushed directly into the hands of American workers as income instead of debt and the government gets an RoI on its investment. But thanks to a senile rentier class controlling half the media, the country is politically hostile to what it needs most.

Basically, investing in gold is a gamble that America will stay broken. It's a cynical bet, but looking at D.C. it's looking more and more like we're just gonna keep doubling down on the derp. The thing is, I doubt many goldbugs actually understand what's going on, as most of them cite the expansion of the money supply itself as the problem. It isn't.

TrainingWheelsNeeded: are there any industrialized nations that aren't being propped up at the moment?

Only the ones that have fallen and can't get up.

struct: Wait, they're not really doing anything about austerity right? This is monetary policy, their spending hasn't changed.

Yeah, the policy in the UK is relatively mild austerity (basically fark the poor to protect the rich) but also to use monetary policy to keep inflation as high as they can get away with* (bad for anyone with £ denominated assets that don't appreciate with inflation (e.g. anyone holding UK government bonds), good for anyone with £ denominated debts - e.g. people with mortgages, also bad for anyone with a job with little market leverage e.g. poorer non-union workers in dead end unskilled industries, and also businesses in competitive marketplaces where hiking prices is difficult).

At least they aren't as bad as the GOP over here and aiming to cut taxes on the rich to rub everyones noses in who does and doesn't pay for rich bankers mistakes, but they are pretty far along that spectrum.

*See for example the Bank of England inflation projections for the last few years, where they constantly have been claiming a massive drop in inflation is just around the corner, and therefore keeping interest rates so low and more QE is required, but they have underestimated inflation 6 times in a row - which suggests either they are incompetent or they are deliberately skewing their predicitions (if they were just inaccurate, at least sometimes the predictions should really be overestimating inflation after that many attempts)

Legalised government theft of my labour. My meagre savings get inflated away and spendthrift dickheads get low low interest rates on their debt. I end up subsiding their massive consumption. I get the bill for their decade-long party. Fark this shiatty country. I wish the Germans had won and were running this place.

WTF Indeed: For the last time, cutting taxes and spending is Keynesian. It's the other side of the coin. If your government taxes too much and spends too much cutting taxes and spending is the fastest way to inject money into the system. If your government doesn't do those things, than cash injection is the best way to go.

Econ 101.

Get to a later class and you then learn of the multiplier effect. Cutting taxes isn't as efficient at raising demand as direct spending is. People and businesses tend to sit on huge piles of money in a recession (increase savings). And low an behold consumer and capital savings has shot through the roof the past 5 years.

Lord Summerisle: Legalised government theft of my labour. My meagre savings get inflated away and spendthrift dickheads get low low interest rates on their debt. I end up subsiding their massive consumption. I get the bill for their decade-long party. Fark this shiatty country. I wish the Germans had won and were running this place.

We could always go back to a monarchical gold system standard where your value was arbitrarily decided by the king (and other nobles) perception of your social status, and not a government beholden to a people which errs on the side of equality.

Honestly, the only reason your labor is worth anything is because every citizen (aka the government) acknowledges it. Hence government backed monetary supply and policy. Monetary policy can't therefore be "stealing" the value of your labor. It's the thing that gives it any intrinsic value in the first place.

You would have learned that if you didn't sleep through Econ or History.

Sorry, you're not king of the USA, nor ever will be. We got past that sort of thinking 400 years ago.

TyrantII: Monetary policy can't therefore be "stealing" the value of your labor. It's the thing that gives it any intrinsic value in the first place.

You're correct in that monetary policy alone doesn't de-value anything except, well, money. Wages and prices should rise in parallel with inflation, so the only people who get burned are those stupid enough to sit on cash. . .

But therein lies a different but related problem. Western monetary policy isn't just run through banks for no goddamn reason; western finance is run through the same damn banks. As it's not a secret that the banks always get first helping at the equity trough, a lot of small, risk-averse investors (basically anyone prudent enough to own equity at all that isn't rentier class) are hoarding shiat like yen and gold, which means their money isn't moving through the market as either demand or capital.

I'm not a "eat the rich" sort of guy, but history has repeatedly shown that if you coddle them, the world goes to shiat because their first and only goal is to stay rich despite spending a lot and not working. That invariably requires taking from the productive members of society, who in response will hunker down, and that hunkering slows down the economy. Except it's pretty much only America where these same hunkers take to the streets and demand more aristocracy.

dragonchild: Wages and prices should rise in parallel with inflation

Er, because rising wages and prices IS inflation. Derp.

Eddie Adams from Torrance: It's almost as if cutting spending during a recession was a bad idea... who knew?

Anyone who has looked at the history of the Great Depression?

dragonchild: dragonchild: Wages and prices should rise in parallel with inflation

Er, because rising wages and prices IS inflation. Derp.

dragonchild: dragonchild: Wages and prices should rise in parallel with inflation

Er, because rising wages and prices IS inflation. Derp.

Forget to sign into your alt?

TyrantII: Lord Summerisle: Legalised government theft of my labour. My meagre savings get inflated away and spendthrift dickheads get low low interest rates on their debt. I end up subsiding their massive consumption. I get the bill for their decade-long party. Fark this shiatty country. I wish the Germans had won and were running this place.

We could always go back to a monarchical gold system standard where your value was arbitrarily decided by the king (and other nobles) perception of your social status, and not a government beholden to a people which errs on the side of equality.

Honestly, the only reason your labor is worth anything is because every citizen (aka the government) acknowledges it. Hence government backed monetary supply and policy. Monetary policy can't therefore be "stealing" the value of your labor. It's the thing that gives it any intrinsic value in the first place.

You would have learned that if you didn't sleep through Econ or History.

Sorry, you're not king of the USA, nor ever will be. We got past that sort of thinking 400 years ago.

The fark you on about? By summoning huge amounts of imaginary money into existence they devalue REAL money which represents actual property and labour. Ie the money in my account The only way this is excusable is if the new money is distributed to the people fairly.

TyrantII: Forget to sign into your alt?

No, that was a FTFM.

Honda Civics should become currency. There's certainly enough of them...

DamnYankees: Because People in power are Stupid: The money supply is subject to supply and demand as is every fungible object. If the demand is high then the value of money goes up. If it's low then it goes down.

Exactly right. This is why in recessions you essentially need to expand the money supply - you need to make money less valuable, so people are less interesting in holding on to it and hoarding it.

Which is why a recession turned into The Great Depression. There's a reason people hoard money (and pay down debt) in hard times. Interfering with the process just makes things worse.

Lord Summerisle: The fark you on about? By summoning huge amounts of imaginary money into existence they devalue REAL money which represents actual property and labour. Ie the money in my account The only way this is excusable is if the new money is distributed to the people fairly.

Nah, that money only represents a proportion of the money supply. Furthermore, that money is just as fake as that which they printed up, as it most likely came originally from debt incurred to cover capital costs, or debt incurred for some other reason (credit cards, car notes, etc).

There is no such thing as real money. Indeed, there's no such thing as true property. It's a series of agreements and nothing more.

TyrantII: WTF Indeed: For the last time, cutting taxes and spending is Keynesian. It's the other side of the coin. If your government taxes too much and spends too much cutting taxes and spending is the fastest way to inject money into the system. If your government doesn't do those things, than cash injection is the best way to go.

Econ 101.

Get to a later class and you then learn of the multiplier effect. Cutting taxes isn't as efficient at raising demand as direct spending is. People and businesses tend to sit on huge piles of money in a recession (increase savings). And low an behold consumer and capital savings has shot through the roof the past 5 years.

You assume that falling demand is the cause of a recession. Wrong. Falling demand is a result of (and, eventually, the cure for) a recession. Spending just throws good money after bad, as it usually goes to those sectors of the economy that are "hurt" by the recession (i.e., those industries that were over capitalized in the first place).

winterwhile: DrPainMD: TyrantII: WTF Indeed: For the last time, cutting taxes and spending is Keynesian. It's the other side of the coin. If your government taxes too much and spends too much cutting taxes and spending is the fastest way to inject money into the system. If your government doesn't do those things, than cash injection is the best way to go.

Econ 101.

Get to a later class and you then learn of the multiplier effect. Cutting taxes isn't as efficient at raising demand as direct spending is. People and businesses tend to sit on huge piles of money in a recession (increase savings). And low an behold consumer and capital savings has shot through the roof the past 5 years.

You assume that falling demand is the cause of a recession. Wrong. Falling demand is a result of (and, eventually, the cure for) a recession. Spending just throws good money after bad, as it usually goes to those sectors of the economy that are "hurt" by the recession (i.e., those industries that were over capitalized in the first place).

we sure say the throw away lots of money, zero result, with Obama's pork-u-lus

Ahhh, the wetbrain speaks up.

The UKs problems are down to the following:-

1. Wealth is highly linked to land rather than productivity. People have been convinced that they should invest in housing rather than businesses when housing is mostly about land speculation. That's part of what made the UK "rich" for around a decade, but it was an illusion. The stock market has barely risen in a decade.

2. The last government spent too much and increased the number of government jobs massively. This is the other part of what made the UK "rich" for around a decade - lots of borrowing.

3. Since the government cut jobs (because we're out of money), lots of people are unemployed from the public sector. And in most cases, the private sector won't touch them because the risk of you getting someone who is workshy is much higher than someone from the private sector, or they don't have the skills they need.

None of these problems are helped by "QE" ("printing money" in another name). It simply rebases your numbers. I can take £250 and turn it into binary and get £11111010. £11111010 in binary doesn't buy any more time with a hooker than £250 in decimal does. It just means anyone with savings sees their money decline.

Wealth doesn't come from this bullshiat financial manipulation, or even government creating pointless jobs (the money has to come from somewhere). Wealth comes from people being innovative and working hard. Sadly, that's not the answer most people want. They want to know that they can get rich from owning a house, owning an antique or winning the lottery. And while a few people will, it doesn't make us richer. The sooner the government spells out the fundamentals of work "find something that you can do that someone else will pay for", the better.