People Are Finally Figuring Out: Austerity is Stupid

"Which PLANET the funds for more investments are coming to the US Treasury from?"

Huh? Are you suggesting that third parties are 'investing' in U.S. Treauries? Are you suggesting that they should not be 'investing' in U.S. Treasuries? Are you commenting on an intention to invest funds elsewhere that are for some reason coming to U.S. Treasuries? I suppose the reference to 'Which Planet' is just 'where'; like, which planet are you coming from with this comment. It is clear in the data that many somebodies are buying U.S. treasuries; if not from this planet they all have access to dollars none the less. I would not call that funds flow investment though.

Before you can expect anyone to respond to a sincere request for an answer you have to frame the question in a gramatically cognizable form.

WTF are you talking about?
 
Covertiblilty, I read all the articles and papers you linked to in your comment. The Washington Blog had a lot going on in it that could be commented on...the reasoning and facts were terrific. However, it has nothing to do with fiscal stimulus and the concept of a 'money multiplier' for spending. References in the blog were to the MI multiplier or the M2 multiplier...these are cocepts of the data wonks at the St. Louis fed and they have nothing to do with the idea of fiscal spending multiplier. The St. Louis Fed defines the MI multiplier as M1/Adjusted Monetary Base. The difference between M1 and AMB is a narrow distinction of changes concerning required reserves...so, the ratio changes when the amount of required reserves changes by an increase in demand deposits or a change in regulation. What you measure here in your dated observation of an M1 money multiplier of .95 or .786 as recently as 2010 (This is old stuff), is the change in bank portfolios where aggregate assets were contracting and deposits were increasing....particularly in the demand category that requires the largest reserve (longer term deposit instruments contracting and demand deposits increasing). This tells you a lot about collapsing demand for debt, contracting investment...but it tells you nothing about the fantasy of a 'money multiplier' resulting from fiscal spending. Properly understood it is describing collapsing 'velocity,' or 'deleveraging' in the private sector...which is the same thing.

The Romer papers and speeches I have read in the past....but in defference to the time you took to post them, I re-read them to refresh recollection. It is clear that the Romers were only studying the effect of tax increase on GDP. It is also clear Chistina readily admits that she could not structure an econometric analysis that could show the multiplier effects she wanted to express. She admits she could not control for omitted variables and the complexity of the discrete variables she would need to regress. So, she did an historical and subjective analysis to theorize that tax increase dampens investment. She really has no idea what any multiplier would be as she cannot do a proper study. I don't know where she comes up with the claim that each 1% increase in GDP Tax produces a 3% decline in GDP. I don't see the basis for that in her paper or her speech. This brings up the problem with using GDP as your basis for multiplier in the first place...as I have said before teh GDP is made up of Government Spending and Consumption in the first place...so, an historical analysis that shows government spending increases GDP in the short run should be thought of as a tautology. You have all these academics then studying what kind of government spending increases the GDP the most and through historical analyis finding that defense spending goes more directly into GDP...big Whoop there! Whenever anyone pretending to do an economic study tells you they are goin to historical data for thier model then you can be assured they are just conforming thier model assumptions to fit the history. In this case it is worse because the interpretation of the history and building a data base from it is entirely contrived and subjective.

As I suggested in my comment there is no econometric study that can show that spending creates a sustainable money multiplier in the economy. If you just use common sense you would know that you cannot create wealth simply by spending money on consumption; you have to torture yourself with academic nonsense to think that you could.

Please see here an article by David Goldman and Reuven Brenner on the problems with the Keynesian construct and stimulus spending...Brass and Jem might appreciate it too...

http://www.firstthings.com/article/2010/09/the-keynes-conundrum
 
Dude WTF is between your head! Your Republican economics has shattered the US economy and is still bent on totally crashing it.

Throw some logical arguments rather than twisting the words and facts. SHAME!
 
this is serious academic work. You have disciplined you mind to work for you. Even when posting on elitetrader.

I salute you. Plus I am reading your link now.




Quote from Ed Breen:

Covertiblilty, I read all the articles and papers you linked to in your comment. The Washington Blog had a lot going on in it that could be commented on...the reasoning and facts were terrific. However, it has nothing to do with fiscal stimulus and the concept of a 'money multiplier' for spending. References in the blog were to the MI multiplier or the M2 multiplier...these are cocepts of the data wonks at the St. Louis fed and they have nothing to do with the idea of fiscal spending multiplier. The St. Louis Fed defines the MI multiplier as M1/Adjusted Monetary Base. The difference between M1 and AMB is a narrow distinction of changes concerning required reserves...so, the ratio changes when the amount of required reserves changes by an increase in demand deposits or a change in regulation. What you measure here in your dated observation of an M1 money multiplier of .95 or .786 as recently as 2010 (This is old stuff), is the change in bank portfolios where aggregate assets were contracting and deposits were increasing....particularly in the demand category that requires the largest reserve (longer term deposit instruments contracting and demand deposits increasing). This tells you a lot about collapsing demand for debt, contracting investment...but it tells you nothing about the fantasy of a 'money multiplier' resulting from fiscal spending. Properly understood it is describing collapsing 'velocity,' or 'deleveraging' in the private sector...which is the same thing.

The Romer papers and speeches I have read in the past....but in defference to the time you took to post them, I re-read them to refresh recollection. It is clear that the Romers were only studying the effect of tax increase on GDP. It is also clear Chistina readily admits that she could not structure an econometric analysis that could show the multiplier effects she wanted to express. She admits she could not control for omitted variables and the complexity of the discrete variables she would need to regress. So, she did an historical and subjective analysis to theorize that tax increase dampens investment. She really has no idea what any multiplier would be as she cannot do a proper study. I don't know where she comes up with the claim that each 1% increase in GDP Tax produces a 3% decline in GDP. I don't see the basis for that in her paper or her speech. This brings up the problem with using GDP as your basis for multiplier in the first place...as I have said before teh GDP is made up of Government Spending and Consumption in the first place...so, an historical analysis that shows government spending increases GDP in the short run should be thought of as a tautology. You have all these academics then studying what kind of government spending increases the GDP the most and through historical analyis finding that defense spending goes more directly into GDP...big Whoop there! Whenever anyone pretending to do an economic study tells you they are goin to historical data for thier model then you can be assured they are just conforming thier model assumptions to fit the history. In this case it is worse because the interpretation of the history and building a data base from it is entirely contrived and subjective.

As I suggested in my comment there is no econometric study that can show that spending creates a sustainable money multiplier in the economy. If you just use common sense you would know that you cannot create wealth simply by spending money on consumption; you have to torture yourself with academic nonsense to think that you could.

Please see here an article by David Goldman and Reuven Brenner on the problems with the Keynesian construct and stimulus spending...Brass and Jem might appreciate it too...

http://www.firstthings.com/article/2010/09/the-keynes-conundrum
More...
 
Again TOC, again; you seem challenged by language. I am not 'twisting your words'; I just leave them the way you write them...'between' imparts a position and an opposition...stated differently, if you are talking about 'between head'; two heads are better than one.

Here is a good example from literature, T.S. Eliot from "Hollowmen", using the concept of 'between':

Between the conception
And the creation
Between the emotion
And the response
Falls the Shadow

Notice the contrast between two things and not just one.

About twisting your facts...I don't know; I didn't notice that you wrote any facts that could be twisted.

Do you have anything of substance to say? Or are you just about misrepresentation and name calling?
 
Republican I generally do not like but there is a certain breed that I can bash real hard with a rubber baton till the skin starts to peal off. :D
 
Tic Toc, OH, I see you are also about beating; why not give reason a chance? And, seriously, what is with the racial slur against Asian's in your graphic widget?
 
Ed Breen's suggested reading...

Here is a quote putting Krugman's garbage in context.

http://www.firstthings.com/article/2010/09/the-keynes-conundrum

The massive flow of talent and capital to Western shores until 1989 had consequences that economists have not acknowledged, let alone measured. Consider the present debate about taxation. Paul Krugman intoned in a recent New Yorker interview: “I don’t advocate a marginal tax rate of 70 percent, but it’s worth noting that we had rates in that range all through the 1960s and much of the 1970s, without much evidence that effort at top levels was being crippled. So that’s feasible.”

Well, it is not feasible—unless the rest of the world were to move to even higher marginal tax rates, which is not going to happen. The United States was able to sustain that marginal tax rate during the 1970s because it seemed like tax paradise compared to the rest of the world. When the United Kingdom imposed a 90 percent marginal tax rate, its best talent fled to the United States and Canada—the Beatles included. The flow of talent and capital covered for many domestic mistakes within the United States. When America enjoyed a monopoly as a destination for talent and capital, governments were able to impose high tax rates, for capital had few other viable destinations.

Observers such as Paul Krugman believe that the past can be replicated because they do not understand that past, particularly the sources of the Western nations’ good luck. His is the Keynesian mindset: a short-run view of a closed economy. But the American monopoly did not last. Communism collapsed in 1989, and the previously unstable and chaotic countries of Asia turned into economic tigers within a decade. Other parts of what we then called the Third World—a term that rings quaint today—developed political stability and economic success.
 
And here is the point.. which many of us have been saying.
This is the future in a nutshell.

http://www.firstthings.com/article/2010/09/the-keynes-conundrum


The choice is not between stimulus through government spending and austerity but between stagnation and innovation. Government policy must foster independent sources of risk capital. In the 1790s, or the 1930s, or the 1980s, increasing government debt helped to do this, but it is very hard to argue that this is the case in 2010. The policy lever that can best influence risk-taking today is fiscal. Governments should reduce taxes on capital income and eliminate taxes on capital gains entirely.

Spending cuts must be second in the sequence, after tax reductions have generated more risk capital and employment. Cutting spending first will cause a sharp drop in employment, with no collateral benefits through additional deployment of risk capital.

The worst course of action would be for the federal government to arrogate to itself the role of the private institutions slowly established by the efforts of tens of thousands of talented individuals. Restoring conditions for long-lasting prosperity requires risk investments that create assets, which in turn help create seed capital for new entrepreneurs, in a virtuous cycle. Government job creation produces at best temporary incomes, diverting capital from creating assets.
 
Quote from jem:

And here is the point.. which many of us have been saying.
This is the future in a nutshell.

http://www.firstthings.com/article/2010/09/the-keynes-conundrum


The choice is not between stimulus through government spending and austerity but between stagnation and innovation. Government policy must foster independent sources of risk capital. In the 1790s, or the 1930s, or the 1980s, increasing government debt helped to do this, but it is very hard to argue that this is the case in 2010. The policy lever that can best influence risk-taking today is fiscal. Governments should reduce taxes on capital income and eliminate taxes on capital gains entirely.

Spending cuts must be second in the sequence, after tax reductions have generated more risk capital and employment. Cutting spending first will cause a sharp drop in employment, with no collateral benefits through additional deployment of risk capital.

The worst course of action would be for the federal government to arrogate to itself the role of the private institutions slowly established by the efforts of tens of thousands of talented individuals. Restoring conditions for long-lasting prosperity requires risk investments that create assets, which in turn help create seed capital for new entrepreneurs, in a virtuous cycle. Government job creation produces at best temporary incomes, diverting capital from creating assets.
More...

I note that yes ideally we would not cut spending now.
But, for political reasons... it must be cut anytime it can be cut.
Now is the opportunity.
 
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