WTF, first of all with regard to the comments you inserted within my preface to the pasted article in post #124:
By "spin", I hope you are referring to the spin typically offered by Krugman under virtually any set of circumstances. As we have discussed in the past, you are correct to note that Keynes is often misunderstood, inasmuch as he advocated running surpluses -- or at least balanced budgets -- in normal times. But please recall that he also strongly opposed creating
structural deficits of a nature that return to balance is extremely difficult for political or other reasons. And, of course, that's where we are now.
And you mentioned the advocacy of "huge" government spending in bad times. I have a bit of a problem with the word "huge." It suggests that almost no effort to "stimulate" the economy by fiscal means would be too great. Supporters of this doctrine cannot point to a single instance where it's boosted the prosperity of a nation, and there are plenty of instances where it has simply failed. Look at Japan, for instance. It has been mired in slow growth for 20 years, despite the fact that it has tripled its debt/GDP ratio to a level of about 2.3/1 in repeated attempts to stimulate its economy.
If Krugman thinks the deficits beginning to develop back in 2003 were likely to produce some severe economic dislocations and consequences, then he must think large deficits can eventually destroy prospects for economic growth, ipso facto. Therefore, he cannot possibly think the idea of running deficits several times that large isn't fraught with risks. He may think it's necessary to stimulate the economy, but he cannot possibly imagine that it will be an action that will not produce adverse long-term consequences. You can't have it both ways.
The reason for these obviously irreconcilable statements, of course, is that Krugman, who used to be a respected economist, is now simply a political hack supporting liberal causes. You will see that if you read all his columns and blogs.
As for your statement that I have a "side", since there are only two parties from which to choose, the only "side" I'm on is the one of fiscal discipline and responsibilty. Therefore, I cannot support the candidates that have been offered by either of our dysfunctional major parties. I have voted for the Libertarian candidate in the last six presidential elections, since libertarians are closest to my views. Yes, they are a little far "out there" on some issues; if fact, too much for my tastes. And they may never get a bigger slice of the vote than the tiny one they get now. But I would at least like to see a bigger seat at the table for those of us who favor limited Constitutional government. Idealistic and crazy? Maybe. But that's the way I feel about it.
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Originally Posted by WTF
I have a huge problem with Obama. I am for Bowles-Simpson. But my guess is that Obama does not want to wind up like Jimmy Carter, which is put in all the difficult steps and let the next President get all the glory.
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I have a viewpoint on this that may differ from most.
Carter's biggest problem was that he waited until his term was about two-thirds over before making any tough decisions. (Such as putting Volcker in the Fed chair in August of 1979). He spent his first couple of years making the problem far worse, and in 1978 actually appointed a Fed chairman (Miller) who was even worse than his predecessor (Burns). That stoked an already serious inflation problem and precipitated the dollar crisis of 1978.
One might note that even during that time (1977-78) we were seeing decent period-over-period GDP growth and job ceation, although it was against the backdrop of destructive monetary policy. That should point out how ridiculous it is to credit Obama's economic policies with last month's 250K NFP print. At least until the next crisis or recession occurs, you still can always have what appears to be some growth, since producers always want to produce, sellers always want to sell, etc.
The key point I would make here is that Carter should have undertaken aggressive inflation-fighting measures right away in early 1977. Remember, inflation had been a fairly serious problem for years before Carter took office, although it didn't reach crisis proportions until 1978-79. Delaying aggressive action until 1979 made the ensuing recession much worse than if the problem had been confronted two years earlier. If we had taken the medicine up front, we might have had a cyclical recovery by 1978 or 1979, and inflation would have been a thing of the past. In that scenario, I think Carter would probably have been re-elected.
By the same token, I think Obama should have confronted the problems he initially faced in a more serious way. Instead of a blatantly political agenda, we needed an economc growth and recovery agenda. Instead of just pouring out money with an ill-considered and mostly wasted $800 billion fiscal "stimulus" package, we needed to devote scarce resources
wisely to such thinks as
needed infrastructure maintenance and development , not just porky projects designed to pay off favored constituencies. If we had combined
temporary support for the economy with a
real fix for the financial sytem (which Dodd-Frank manifestly was not), a
credible glidepath toward deficit reduction (such as Simpson-Bowles or anyting similar, and
real tax reform, I think the outlook today would be much better than it is.
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Originally Posted by WTF
My main point and I have said it many times is this: Do we have the form of government to fix something before it becomes a crisis? I have stated many times that I think not. Therefore I do not believe any President will do anything until both parties think they have to.
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No, I do not think we do, so that's why I think we will have a very serious fiscal crisis. That's already baked into the cake. It's a matter of when, not if. Obama obviously has no intention of making any tough decisions. But in the event that Romney wins the election, I doubt that he will either. He would probably start right out from day one running for re-election.
The problem is that these are not normal times, so "normal" politicians will no longer do. We need to government equivalent of a corporate turnaround expert; someone willing to step on some toes and break some china. And I mean
almost everyone's toes. We can't possibly keep the promises we've made and maintain tax cuts for everyone. It's simple arithmetic. I know that doesn't comport with Fast Gunn's "alternate reality" view, but that's simply the way it is.
Quote:
Originally Posted by WTF
That is the side I am on. I realize you know way more details but you seem to get stuck in those details as if they will be fixed. IMHO they will not be until we hit crisis mode. That is how this form of government seems set up.
Do you disagree with that?
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The only point with which I disagree is your statement that I get "stuck in those details as if they will be fixed." As I've said before, I don't think anything at all will be fixed until we experience a very severe crisis.
Otherwise I think you're spot on.
