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I think it's a stretch to lay this on Keynes, or any economist. The government caused this financial breakdown (not a regular business cycle recession) with their domination and destruction of the mortgage industry, so why on earth would further mad spending by government solve it?
"normally?"Does she mean "nominally?" That's not quite right either.
Hey! Hey! Hey! Hey! Hey! It's another clownJust another clown for the clown show. dumdumdumdumdum dummydumdumdumdumdum dummy
Bottom line from Zero Hedge:...there will be about $40 billion in actual, real spending cuts until the next, $16.7 trillion debt ceiling limit is hit some time in Q1 2013, at which point it will have to be raised to $20+ trillion.$40B in cuts??? Pathetic!The Republicans promised that they would not raise the debt ceiling unless the budget was brought back to reality.Instead, they caved. Their promises turned out to be empty.And in the process, the Republicans proved that they are just as much for big-government as the Democrats are. And then both parties dress up the agreement, then the leaders dress themselves up in nice suits and come out and say that they have "succeeded in cutting spending". What an outrageous lie! What a crock!Keynes is alive and well, as robust as ever. You can expect Democrats to want that. But the Republican traitors? They tell the public that they are cutting spending while they are burning cash as an offering to their patron god, the Mighty Keynes.The members of the House should vote this agreement down. Default is preferable to political fraud.
Milton Friedman once said "in one sense, we are all Keynesians now; in another, no one is a Keynesian any longer." What did he mean by that?
Is Durbin saying that Keynesianism is finally shovel-ready?
If only that were true. Durbin is a liar. He is dishonest. He should be called on it all the time, because he is without honor. In an interview today on “FOX News Sunday,” Senate Majority Whip Dick Durbin falsely claimed that Democrats have not passed a budget in 823 days because they have been unable to muster 60 votes for passage.Durbin’s claim is incorrect for three reasons. First, budget law states that budget resolutions are privileged, meaning they cannot be filibustered, only require a simple majority vote for passage, and can be brought up by the majority party (which controls the Senate floor schedule) at any time. Second, for a large portion of last year, Democrats controlled 60 seats in the Senate, and still chose not to pass a budget plan for the nation. Finally, Senate Democrats have not even written or introduced a budget plan this year, much less passed one out of the Senate.As noted in the article linked above, surely Senator Durbin knows the applicable sentate rules. Yet he openly lied hoping to get away with it.
Even Keynes said government spending in excess of 20% of GDP was unsustainable.
We need more people in DC who are like the Wisc legislators...willing to make a tough vote even if means they are going to be voted out of office. And the spending they are looking at "cutting"....really is meaningless unless they deal with the biggies....Medicare/caid, social security, defense, and find a better why to spend on education.
And how about a simplified tax where we get rid of most of the deductions. I continue to be surprised at how many people cheat on their taxes (via fraudulent deductions) and are proud of it.
Milton Friedman once said "in one sense, we are all Keynesians now; in another, no one is a Keynesian any longer." What did he mean by that?I'll take a stab at this.Until the 1930s, I don't think there was a presumption that stabilizing the economy was a primary function of the government. The General Theory changed all that.OTOH, Keynesianism v.1.0, which placed no importance on monetary policy, was discarded by the early 1960s, I believe, in favor of a hybrid view.
Eh. In the long-run, we're all dead.
Looks like Senator Durbin is on the Kennedy diet.The Senate gym's steam room is not enough of workout to counter the booze calories.
If he actually said that, then we're misinterpreting Keynes... but theyv'e been misinterpreting Keynes throughout.Some gov't spending can help in certain situations, but certainly not all siturations and certainly not ruinous spending.
@S, I'm glad that my ancestors didn't see things that way.
We can only hope we're so lucky.Keynesianism never worked; it didn't stop the Great Depression, and after WWII, when nearly all the global industrial plant had been flattened except for in the US, US GDP in real dollars from 1950 to 1960 averaged only 3.5%. Hell, even the damned Soviets averaged 5.2% in GDP growth over the same period. Keynesianism didn't work during the most ideal time for it to work in the US, and Soviets showed that if you had functional industrial plant without international competition, you could enact the most anti-market policies possible, imprison people left and right, and still grow your economy by 5%.Keynesianism is the third biggest economic joke ever, following Communism and Socialism.The things people fall for...
Translation:The depression we are about to enter was not caused by the massive debt that the Dems put on us for the last 2 -1/2 years, but by theoretical spending cuts will not happen for years.Got it.
US GDP growth in real dollars from 1950 to 1960 averaged only 3.5%.
Is PBJ here? What happened to the super-secret plan that Obama told to FOX News and nobody else?Where is this mysterious plan?
Thanks Chip @11:23
Tim, I'm no Keynesian, but I don't think you want to cite the 1950s as a heyday of the doctrine in Washington. It didn't really become DC orthodoxy until JFK's administration, and real gdp grew at 4.2% from 1960-1970. In per-capita terms, average annual gdp growth was 1.1% higher in the '60s than in the '50s.We discovered in the '70s that those policies were ultimately unsustainable, but it would have been hard to argue against them as of the late '60s.There's no good excuse for buying into that idiocy today, of course.
I am more interested in what David Vitter, Jeff Sessions and Samby Chambliss have to say.The South will Rise Again....we just need to all pray more.
What did Thad Cochran, huge porker from Mississippi say? I hope he didn't mention that his state is the stupidest and fattest and ugliest?Where's Lamar in all this?What kind of name is Lamar for a man?Ron Johnson, what do you say? Ron Johnson? Hello? Are you there? We love you!And South Carolina? We love you most. Yes, you are on the bottom of the education and employment ladder but that is good, very good, education is bad, very bad.Give us a Mississippi or South Carolina Senator posting now whore!
7M--Your question to pbj reminded me of this:GLENDOWER: I can call spirits from the vasty deep.HOTSPUR: Why, so can I, or so can any man;But will they come when you do call for them?
The South will Rise Again....we just need to all pray more.I used to think so too. First it was because Sweet Home Alabama. That Skynrd dude no like talk about Neil Young, just like these dudes you mention no like talk about Obama. A southern man don't need him around, anyhow... But Gosh-darn-eee they love their Confederate flag. Anyway, I was all with the whole neofascist program until I found out that Creedence wasn't actually Southern; they were from L.A.! So fuck that!
Ah.He says that like it's a bad thing!Seriously, I read the subject line and thought, "No, don't give it away!" But the cat is out of the bag.I'd like to suggest to Durbin (who is from a State going gangbusters compared to the others) that reducing government spending, doesn't reduce spending AT ALL. It reduces *government* spending. All of the money. All of it, still gets spent. It still enters the economy, but it does so with more flexibility.
Sweet Home Alabama
As happy as I'd be to know this is true, Durbin just acknowledged, this morning, he didn't even know how many votes it would take to get the agreement through the Senate.Why trust his word on anything?
What I was actually looking for:Keynes vs. HayekReason TV discussion.
The comments over there are scary.
That first one was Leningrad Cowboys, because you can never have too much Leningrad Cowboys.
Well, there's FUN in funeral for a reason.The deal gives obama what he wants ... an increase till AFTER January 2013. With committees that will cut. OR, if they can't, then automatic deductions, across the board. Including all the entitlements. And, the military. Etc.If I had to guess? I think there are gonna be primary fights for every single election, ahead.And, political dead bodies. Bare knuckles. Elbows. And, kicks to assorted private parts.It's not over until we vote.And, we haven't even seen a list of candidates that impress enough people to see anyone as a clar winnah!What can happen?Well, what if the "raised ceiling" pisses off people ... more than the "cuts?"What if what happened looked like wrestling? Which is fake and phony. But it's not baseball. Where if you cheat you won't get into Baseball's Hall of Fame.If this was poker? Piddling stakes. Where you learn to wear more clothing than you need ... so when you lose a hand ... even down to your underpants ... you still have a thong below that level.We ain't seen nothin' yet.
Okay. But how do you explain Obama's dithering? Why didn't he come up with a plan a year ago? To this day, the donkeys have not put a plan on the table.It is risible.
"Why didn't he come up with a plan a year ago?"He had a plan - to fund his cronies as long as he can get away with it.
And is that a bad thing?wv gatergstWhat the University of Florida fans feel when they lose to Florida State.
The Dems did not come up with a budget because it would have been in black and white for all to see and realize that these people can't balance their own checkbooks and should not be trusted with ours.You can get away with bits and pieces and no accountability until ...it's tea time.(I heard the Balanced Budget Amendment is still in the plan in some form?)
Well, Alan, Willie Sutton died in prison.And, Truman said, if you want a friend in DC, get a dog.The old way politicians did business? It's changing. It's like the word "fuck" which was never said out loud. Never said in the presence of a woman.And, now, at Amazon you can buy a children's book: "Shut the f#ck up and go to sleep."Parents became realists.Why can't politicians?The WHIG party disintegrated. I guess you could say it got folded into the republican party. But Henry Clay got so compromised ... he couldn't get elected dog catcher, before he died.We will muddle through. As bodies of politicians fall out of windows.My question about obama still stands. Because I think he's gonna face a primary challenge, ahead. He's not sailing to victory ... to be defeated.Yes. I remember LBJ. I remember that he had senators by the balls. Then, he became president. And, made "elementary" errors in judgement. Especially about "who was smart." And, who was not.I remember that Goldwater lost in 1964. And, in 1968 LBJ ran back to his ranch in Texas. (Then, he died the day of, or a day later, of Nixon's 2nd inaugural. Where he won against McGovern, in a landslide.)Politics can change within two years time. Which is as long as it took Nixon to sign his resignation letter. Obama dithers. This was not a poker game. Just a stupid war. (Like Libya.) Done for no sane reason ... The man's bad luck, I tell ya.
We are fucked. FUCKED I SAY!!!
And then there's Zevon's take:Sweet Home AlabamaPlay that dead band's songTurn those speakers up full blastPlay it all night longThe only song I know of that contains the word "brucellosis" ...
"John Maynard Keynes lies a moldering in his grave ..."Can we drive a stake through 'im, just to be sure?
If this budget still has us paying the NEA, the bastards haven't gotten the message yet.WV: Nutskin.
"The depression we are about to enter was not caused by the massive debt that the Dems put on us for the last 2 -1/2 years...."Correct. We have been brought to this catastrophe by the rapacious depredations of the financial institutions and elites, who succeeded in having government regulation of their activities gutted or stripped away entirely over the past few decades, and who have looted the wealth of the people at will. Exacerbating this has been the tax cuts for the wealthy and the ongoing and multiplying wars without end or purpose that we find now to be our permanent state of affairs and which suck up tax dollars which could be used for actually useful purposes.This has been facilitated by both Democratic and Republican administrations and Congresses over these decades, because both parties are boot-licking servants of the plutocratic oligarchy.
We have been brought to this catastrophe by the rapacious depredations of the financial institutions and elites, who succeeded in having government regulation of their activities gutted or stripped away entirelyYou couldn't name 2 regulations that were "stripped away" In fact, there has never been more regulation of the finance industry than there is at present.Watching you continue to make these imbecilic comments is boring.
This is the beginning of the end.'Mark my words.
Plumbers.The People need an outside source to fix our problems.Having to rely on the original source to straighten things out is suicide.May the election cycle of 2012 bring a withering harvest to Washington.Primaries, secondaries and tertiaries.Vote every last one of the raping bastards OUT.
Both parties killed Keynes ideals a long time ago. One major assumption Keynes relied on that is no longer applicable is that debt financed government spending would be temporary. When the economy bounced back, not only would the government stop borrowing, it would use the added taxes generated by the recovery to repay the outstanding debt. Second, he wanted the debt to finance long term infrastructure projects that would provide economic benefits long into the future, like roads, bridges, canals, railroads, power plants, etc. He never advocated using debt to finance transfer payments to deadweight non-economically productive members of society such as the retired or unemployed -- let alone take over car companies, insurance companies, Fannie Mae, Freddie Mac, or buy $700 billion of preferred stock in banks, etc. Finally, when he proposed his theory, government was only about 10% of GDP, not the 25% it currently is. So when the government intervened when it was a much smaller part of the overall economy, it would have a more powerful impact on the private sector.What's being practiced now in the name of Keynes is a gross perversion. Authentic Keynesianism died a long time ago.
@Sixty GritDon't Care.Any 'dem landslide' should include a 'repub landslide' right into the crevasse of history.They, one and all, are responsible for bringing this country to the brink of disaster.I do not ascribe to the trappings of party politics. Anyone who does, by default, pens his name to the death certificate of the republic.Putting party before country got us where we are, now.The only thing to save us is the People. The long-slumbering giant. I pray enough will awake to feel the sting of utter rape to do what must be done, that is, a purging of political offices everywhere. With a 'new' kind of citizen-legislator that pledges to stay awhile and GTFO.
Remember when the era of big government was over? Around three years ago, a big-time Democrat friend of mine and I had a long debate about the Keynesian stimulus plan Obama and the Democrats were pushing. He explained how the "multipliers" were going to cause all that money to come back - and then some. I remember saying that the only positive my side had was that Keynesian theories would be put to the test in a most public way. Massive deficits and economic hardship in exchange for the discrediting a bad economic theory. Here's hoping.
PatCA up at the top is closer than we think.I read somewhere FDR wasn't going by Keynes really, but the theories of some professor in MN - and even there he winged it a lot of the way.But, in any case, the Dick from Illinois may be right just this once.If we're lucky.PS Julius, for all his bloviating, is describing the RINOs. The real Republicans are the Tea Partiers.And his faux disapproval is the usual sophistry from the trolls - all they have left.
I think you all are not understanding what Durbin is saying. he is not making the case that the death of Keynesian policies because they failed, but that were stopped to soon!"So here we are in the horns of a dilemma," Durbin said. "In order to avoid the disaster that would occur August 2 if the United States defaulted for the first time in its history, we are being told we have to cut back on government spending and by cutting back on spending, we may also have a negative impact on our economy."This is nothing more than setting up an excuse for the mess we have been in and will be in on November 2012..."hey things would be awesome now but for that debt ceiling bill forced on us by the GOP."I don't think it will work.
Durbin was never interested in Keynes anyway. I do not ever recall Durbin voting to keep a government surplus during good times so there would be money to provide a Keynesian stimulus during bad times. But, even then, Romer and other economist are correct in pointing out tax cuts provide a better stimulus that government spending because we all know about "shovel ready". Perhaps in 1930's and 40's, government spending could come online quickly, but today it cannot.
They must be kidding. This is a joke right? Good one. I mean, who could take all the money from the troops and the geezers and not a penny from Public Broadcasting or study of the size of homosexual dicks?Any GOP presidential candidate who fails to take a stand on this today, is no longer a candidate. What say you, 'Mama Griz'?Boehner must go. Now.
IMO, The major flaw in Keynes argument was that in times of expansion, the political leadership would, as others have pointed out, act as responsible stewards--saving the surpluses. As it turns out the political class doesnt have the discipline that Keyne's theories required. Keynes can be faulted for not recognizing the real nature of the political class. The political class is popular when they give money away--always easy; much more difficult to take money away
MASSIVE cleanup on the set of Morning Joe-STAT!The set is awash in all manner of bodily fluids and sputum!Mika and John Heilman hardest hit!
I can't figure out why all the price increases of the last ten years haven't registered in official inflation figures. Of course, the deficit would be even worse from higher SS COLA increases.If economic activity ever does recover, all the cash the Fed has spewed out since 2008 will inflate some of the huge debt away. Then the higher interest rates needed to stop inflation will cause another recession.Cook wants to blame the capitalists, but it's government that has fucked things up for decades, and it's going to get worse. Somehow, he thinks the too easy credit of the pre-2008 years was actually stealing from the poor, when it was the mortgage investors and taxpayers who took and will take it on the chin.
I go back and forth as to the extent that the Democrats in the White House and Congress really believe in Keynesian economics. I think, after listening to Pelosi Thurs. night on the way into D.C., that she really does. And, maybe Obama. He went into office economically illiterate enough to actually believe that if he just shoveled enough government money to his constituents, that we would come smartly out of the recession. And, Pelosi, Krugman, et all. still seem to believe that if we would just shovel more money to their political cronies, we would overcome the recession, and their only failure was that of imagination, imagining how they could just have spent more money.But, Pelosi appears to be dumber than a box of rocks, when it comes to economics, and Krugman lost all credibility when he took that chunk of money to flog Enron stock. The President seems to be more in the Pelosi camp.I have a hard time though believing that so much of our political class is really that economically illiterate, and, yes, stupid. For many of them, I think that they really are cynical enough that they would trade the economic ruin of our country for their own political and financial gain. And, I have always thought of Durbin as being in that category.
As I have said before, "Keynesian economics" are not dead and will not be shown to be in error until some nation somwhere, sometime tries it, and it does not work.Which is not going to happen in any of our lifetimes.And the terms of this "deal" do not matter, since they will not stick to them anyway.What does matter, is that while it is true that you cannot govern the country from the House of Representatives alone, it has been shown that neither can you govern the country without the House.
Ralph L, there hasn't been a COLA for Social Security or Veteran benefits for 2 years. Maybe 3.
Agree with Hagar--this "deal" is smoke and mirrors, obvious because of two things: Reductions occur in the out years (over 10 years as I read it), and yet another commission. Simpson Bowles had some decent proposals, but like all commissions, they are devices to get congress and the executive off the hook, and kick the can down the road.Its bullshit.
They do what they do for political power, nothing more, nothing less.The next election has always been closer than the collapse of the American economy, and getting reelected has always trumped all.Even Obama in this fracas had as his number one goal, his reelection next year.
If economic activity ever does recover, all the cash the Fed has spewed out since 2008 will inflate some of the huge debt away. Then the higher interest rates needed to stop inflation will cause another recession.I don't think that this is properly understood by most Americans, and, in particular, our government. What is really scary though, is that the one place where this should be understood, the Fed, is one that seems to have forgotten the lessons it appeared to have learned in the 1970s. We haven't seen more inflation because the banking system has, to some extent, imploded while the money supply has exploded (i.e. MV=PQ). Lending is down, because of the financial crisis, and that has caused a downward pressure on prices (and, a little on nominal GDP). Maybe the Fed is ready to suck all this excess money out of the economy once lending starts to take off again. But they have a huge amount of it to swallow. Plus, the necessity for all that government borrowing has made removal of that much money from the system even harder to accomplish.So, yes, I fully expect inflation to rear its ugly head before or around the time of the next election. But my only consolation is that it probably couldn't happen to a more deserving Administration. They came into office with promises of Hope and Change. If we just hoped enough, things would change for the better. Some sort of magical thinking, the type that we should overcome by the time that we enter adulthood. But, maybe a lot of Americans never really want to grow up.
Money is funny stuff; it is worthless, except for the value we think it has.And yes, these Democrats do think that if they can just create money and sneak it into the system without our noticing that it is funny money, they can make us all rich!
I bought my house when a 30 year mortgage stood at 14% (refinanced 3-4 times since) and businesses were paying 20% and more for business loans.And it will happen again.
Allen S, that's my point. We had huge commodity and real estate increases, and the CPI barely budged. The last 3 years, everything has risen except real estate, and the CPI still barely budges.
The deal appears done.The nasty little man who tried to crash everything has backed off to await his 2012 re-election bid.But he is toast. Everybody hates him now: The conservatives because he lies about literally everything, and the Progressives because he lies about literally everything.The independents will vote for the anti-Obama candidate. No RINOs need apply.Palin is the only vetted anti-Obama out there. And independents are sick of lies from the money changers of both sides which leaves slippery Mr Perry out.
@Sixty GritYes, unfortunately, almost 50% of us are what I refer to as 'shake-weight' buyers.They are the gullible class, perfect for dems/rinos alike. Those that look TO government, for guidance.I too have a very jaundiced eye and have little respect for those that look to pols for their daily bread.God help us.
But he is toast. Everybody hates him now: The conservatives because he lies about literally everything, and the Progressives because he lies about literally everything.One of the sticking points on the GOP side was the term before this fight was taken up again, i.e. before or after the next presidential election. I got the distinct feeling that the GOP calculus concluded that POTUS had been sufficiently damaged enough that fighting this again before the election was no longer necessary.
That is, it will happen again if we get another president with the intestinal fortitude of Reagan and Paul Volcker to restrain the inflation when it catches fire again.If not, we could aslo go the way of the Weimar republic.
ScottM,I got the distinct feeling that the GOP calculus concluded that POTUS had been sufficiently damaged enough that fighting this again before the election was no longer necessary.Exactly. I'd go so far as to say he's toast.
Why would anyone call themselves Dick Durbin??It sounds like a condom for a very small penis.
Just returned from the hardware store, and noticed that gas went up about 10 cents from last week.
Keynesianism says you trade off a tiny bit of overall growth to flatten out fluctuations in the business cycle. I don't think any economist thinks government spending is a long term growth driver. In any case, our budget problems have little to do with Keynes and a lot to do with LBJ.
Just returned from the hardware store, and noticed that gas went up more than 10 cents from last week.That's odd. Just getting back from a small vaca-weekend, I noticed it had dropped about 10 cents. When we left on Friday it was near $3.70 (high for MO) and today is around $3.52.
$3.85 here in WI.
Lordy, Washington was projected to spend close to $60 trillion over the next decade (depends on whose budget you use).This agreement reduces that to about $59 trillion or so. Perhaps $58 if the second part kicks in. We're talking about a 1.5% reduction in projected expenditures.In any case, what can be done today can be undone tomorrow.This is a long long battle that won't be won - or lost - in one skirmish.
I'll bet the spending Keynes envisioned did not entail giving away money to states so that states could paper over their own structural problems, and giving away money to special interests such as unions and their ilk.He probably envisioned spending the money on programs that had more than a snowball's chance in hell of doing some good.Dems still don't realize that the rest of us watched them waste nearly a trillion dollars of our money. We're not about to repeat that. 2010 wasn't about racism. It was about a nationwide disgust with what we watched them do with our money.
I also believe this debacle proves that Obama really believes in his "Keynesian" economics, although he expresses it as constant, runaway spending and expansion of the money supply.Otherwise, there is no explanation for the situation he is in now: a worsening economy despite all his spending, and an angrier citizenry. What did he think would happen??
The only thing that Friedman via Laffer has done is make sure the rich get richer, and the rest of us get scraps: http://bit.ly/RichGetRicher
And yes, I'd have preferred a stimulus about twice the size with a much more favorable spending vs. tax cut slant, particularly on infrastructure.
I think I have it. In hard times, government has to spend to sustain the economy [blamed on John Maynard Keynes]. In flush-with-funds times, we can initiate new, immortal programs.So there is no case for reduced spending, ever.wv:numar = gimmie a numar for dem out years...
In my dreams. In reality not so much.
Synova:That's an excellent point. The purpose of redistributive change through involuntary exploitation is to purchase support. When it is pursued by individuals and groups with "good intentions", it is because they don't know how to help people who momentarily falter, or worse, when they choose to fail; and they are incapable or disinterested in recovering funds through voluntary exploitation (i.e., charitable donations and works).The redistribution of wealth through involuntary exploitation is a principal contributor to progressive corruption. Any programs and policies that depend on involuntary exploitation (e.g., taxes) should be pursued in service to the people (not individuals or groups) and must be accountable.As for the economy, and the market in general, it is the people's. We constitute it and it serves us.Since Conservative principles limit instant gratification, we will continue to fail on tactics, which is why we must have a winning strategy.
Since Conservative principles limit instant gratification, we will continue to fail on tactics, which is why we must have a winning strategy.Elegantly said.
@JSpice said: I'd have preferred a stimulus about twice the size with a much more favorable spending vs. tax cut slant, particularly on infrastructure.Even Obama learned what a crock of shit that strategy is.And his original CEA Chair, Cristina Romer, already knew better. She just chose the path of pure partisan hackery.
Actually... I goofed way way up top there. I confused Durbin with Dorgan with only a little "Huh, he's still a Senator?" thrown in there. I realize these things half a day later with a Homer Simpson-esque "Duh!"
Depending on what happens next he may rise again.
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