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Re: Personal wishful thinking vs. Reality
Posted by James [Email] (more from James) on Sun, 8 May 2011 19:25:47
In Reply to: Personal wishful thinking vs. Reality, Reality, Sun, 8 May 2011 12:36:19
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If you took offense to the Darwin comment, I apologize - I meant it in the context of survival of the fittest, which of course is true in any political system as you point out... certainly was not meant to be degrading or a put down... so you are right, it was a silly comment... I don't mean to be off-putting or rude...
Aside from that, fiat money vs sound money is kind of a side issue (monetary policy). I suppose one can look at it however one likes, and a complete picture matters, but as I was saying, I was referring to Keynesianism as purely the fiscal policy side. That pro-Keynesian economists have common monetary policy views doesn't necessarily change that. Clearly we are going around in circles here. That's why I think we are partly arguing semantics.
But I'll comment specifically wrt 2 points:
wrt the "Keynesian Fallacy": "The real economic problem in a recession is not the recession itself but the bubble preceding it."
absolutely. correctly using (Keynesian) cyclic fiscal policy, that bubble would be managed as much as the recession that follows. the magnitude of each would be reduced somewhat as compared to the annually balanced budget case. If the budget is not balanced cyclically however, then the deficit is structural, and that is a big problem! in my view, a budget therefore must be carefully structured with a contingency reserve, and only that may be used for fiscal stimulus (be it direct stimulus or tax based stimulus). The fallacy of your fallacy is it assumes Keynesianism is 1 sided, and is based on examples of governments running structural deficits in the name of Keynesianism. Hence Keynes vs Keynes.
wrt cutting government expenditures in bad times being ok to balance a budget:
nope. not ok. government expenditure is a form of stimulus. tax reduction is a form of stimulus. The downside of expenditure is that, without care, it is (unfairly) targeted (eg GM) rather than broad based like a tax. The upside is that it may be quicker to implement (lags are very important in all of this!). But regardless, if you take away stimulus, you slow the economy. If you slow the economy in bad times, you raise less tax. If you raise less tax, you no longer balance the budget, in spite of cutting expenses in an attempt to balance the budget! That's the policy trap. Same deal whether you raise taxes or cut expenditures... it's the impact of loss of stimulus on the economy that matters.
Conversely, if one lowers taxes (or subsidizes business) in good times, one is exacerbating a bubble. Many people want lower taxes in good times or bad times regardless. Those people need to recognize that they need to give up services accordingly (which to your credit, you do, but not all are like you!) to avoid running a structural deficit.
Hopefully this is clarifying, but I think I am repeating myself again + I feel like I'm treading too close to the edge of acceptability for this bb... so I think this is another agree to disagree moment. ;-)
James...
posted by 67.158.68...
Posts in this Thread:
- Car company bailouts, No Snaab, Thu, 5 May 2011 13:19:51
- GM to add 4,000 jobs, duking it out with Toyota, No Snaab, Wed, 11 May 2011 07:58:09
- Important to see the big picture, Noel, Fri, 6 May 2011 06:16:54
- Doubly Ironic, Reality, Fri, 6 May 2011 07:00:56
- So why don't you tell us, Noel, Fri, 6 May 2011 09:45:54
- He doesn't deal in "reality", No Snaab, Fri, 6 May 2011 11:17:12
- Re: So why don't you tell us, Reality, Fri, 6 May 2011 10:46:21
- You didn't answer the questions, Noel, Fri, 6 May 2011 11:17:54
- Re: You didn't answer the questions, Reality, Fri, 6 May 2011 11:43:04
- Re: You (still) didn't answer the questions, Noel, Fri, 6 May 2011 12:49:13
- He won't answer, No Snaab, Fri, 6 May 2011 14:12:45
- What is Heaven like?, Reality, Fri, 6 May 2011 15:04:00
- less vs more vs balance, James, Fri, 6 May 2011 15:31:40
- Balance is okay, Reality, Fri, 6 May 2011 16:10:30
- What color is the sky in your world?, Noel, Fri, 6 May 2011 16:24:48
- Blue, Black, Grey, White, Orange, Pink, Red,, Reality, Fri, 6 May 2011 16:46:55
- So without the government stepping in, Noel, Fri, 6 May 2011 19:55:24
- Re: Blue, Black, Grey, White, Orange, Pink, Red,, James, Fri, 6 May 2011 18:11:52
- False Choice, Reality, Fri, 6 May 2011 13:33:38
- Re: So why don't you tell us...Been there done that an, Joeychess, Fri, 6 May 2011 10:22:45
- That's fiscally responsible and also well stated yet, Joeychess, Fri, 6 May 2011 08:19:33
- Re: Important to see the big picture...Well said n/m, Joeychess, Fri, 6 May 2011 06:22:03
- Don't kid yourself, BTG88, Thu, 5 May 2011 21:59:15
- Gov't role in today's economy, adl6009
, Thu, 5 May 2011 19:17:20 - Ironic timing, "new" GM is caught stuffing channel, Reality, Thu, 5 May 2011 13:41:26
- Macro econ. vs the guy at the plant, AlS, Thu, 5 May 2011 18:16:21
- Keynesianism is Macro Econ, duh!, Reality, Thu, 5 May 2011 18:27:34
- "I address car topics under a different user name.", Steve T., Fri, 6 May 2011 08:02:22
- Keynes vs. Keynes..., James, Fri, 6 May 2011 06:49:05
- Re: Keynesianism is Macro Econ, duh!, kkelley, Thu, 5 May 2011 20:37:44
- Apparently stuffing the distribution channel works, Paul B., Thu, 5 May 2011 16:33:57
- Re: Ironic timing, "new" GM is caught stuffing channel, kkelley, Thu, 5 May 2011 14:50:16
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