I agree. Demand creates jobs. So, two questions...
How do we "stimulate" demand?
How did the U.S. economy get out of the Great Depression?
I don't agree necessarily that "demand" creates jobs. I think in some cases, it's a chicken and an egg type situation between supply and demand. In a sense, ideas create jobs, I'd argue... and with that the supply aspect is probably more important.
As far as demand goes, I don't think we should stimulate it. I believe our government has tried to "prop-up" demand with the past stimulus, and although it may work temporarily, it always crashes back. On net, I think it makes matters worse.
The goal on the demand side should be to set the table and make it easy for consumers to spend again, once they feel comfortable. Not to try to force them to. I think the former makes consumers actually feel more comfortable and I do think psychology matters here.
For the Great Depression my answer would be that it took a hell of a lot of time. In my opinion, more time than it should have due to our policies.
I believe during a recession like the current one, the best move is to do what companies did. Our government should have done the same. The goal should be to cut back severely once the recession sets in, not expand. That way, you decrease spending with the recession.... will this hurt more? Yes. But, the duration of pain will be lessened. Look at the Great Depression for proof that Keynesian stimulus only prolongs recessions.
I'd rather be punched hard in the face and maybe even knocked out "once", then be repetitively punched in the stomach for years and years.
1. You can have all the supply and ideas in the world, though, and without the ability to pay there is no demand. So I would argue the ability for consumers to pay, sparks innovation, ideas and supply. If you've got money, someone will supply something for you to buy. Supply can affect demand, but I would say that it all begins with the ability to pay.
2. I don't see how you can prove stimuli prolonged the depression. Too many variables and ifs. Many would say the stimuli used in the Great Depression wasn't strong enough, so its hard to argue that stimuli as a theory was a failure, but for the sake of argument, perhaps the way it was utilized was. That's why I put a lot of disclaimers in my original response and said I might support a well targeted, well analyzed and committed approach.
"First they ignore you, then they ridicule you, then they fight you, then you win ."
1. You can have all the supply and ideas in the world, though, and without the ability to pay there is no demand. So I would argue the ability for consumers to pay, sparks innovation, ideas and supply. If you've got money, someone will supply something for you to buy. Supply can affect demand, but I would say that it all begins with the ability to pay.
You need jobs in order to have money. Hence, once could argue supply creates its own demand. Moreover, one could say supply is more important.
2. I don't see how you can prove stimuli prolonged the depression. Too many variables and ifs. Many would say the stimuli used in the Great Depression wasn't strong enough, so its hard to argue that stimuli as a theory was a failure, but for the sake of argument, perhaps the way it was utilized was. That's why I put a lot of disclaimers in my original response and said I might support a well targeted, well analyzed and committed approach.
I completely disagree. Do me a favor and read a bit of Hayek or Friedman. They'll explain it better than I can in a short message.
The "not strong enough" claim is also being used now. It will never be "stong enough" because it never works... and F's us over everytime. I'll end it like this: this is a fundamental disagreement in two economic ideologies (The Keynesians vs. The Classicals/Monetarists/Austrians --- or everyone else). I side with the latter.
In a way, our disagreement comes down to these two videos (for those who prefer videos to reading the actual sources):
No stimulus. It does not work. Why do we have to cut our spending when times are tough, but our gov't gives itself a larger budget and raises? That is just bad economics.
The stimulus just falsely props up businesses that would otherwise fail. My company will grow when there is a real demand, and not false money, making it grow.
respectfully disagree here, tax credits for hiring is not a bailout, failing business's, especially SMB do not hire if they are failing, they do the exact opposite and then cut more n more to stay liquid. if your hiring, you are either experiencing increased demand or project increased demand due to hiring i.e. increase in sales, R & D, etc.
if your company only grows when there is 'real' demand, that's a business to get out of. in my line of business, we can grow by:
1. taking market share away from competition, i.e. hire salespeople
2. innovate & invest to extract new types of customers
3. raise our prices
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1. You can have all the supply and ideas in the world, though, and without the ability to pay there is no demand. So I would argue the ability for consumers to pay, sparks innovation, ideas and supply. If you've got money, someone will supply something for you to buy. Supply can affect demand, but I would say that it all begins with the ability to pay.
You need jobs in order to have money. Hence, once could argue supply creates its own demand. Moreover, one could say supply is more important.
2. I don't see how you can prove stimuli prolonged the depression. Too many variables and ifs. Many would say the stimuli used in the Great Depression wasn't strong enough, so its hard to argue that stimuli as a theory was a failure, but for the sake of argument, perhaps the way it was utilized was. That's why I put a lot of disclaimers in my original response and said I might support a well targeted, well analyzed and committed approach.
I completely disagree. Do me a favor and read a bit of Hayek or Friedman. They'll explain it better than I can in a short message.
The "not strong enough" claim is also being used now. It will never be "stong enough" because it never works... and F's us over everytime. I'll end it like this: this is a fundamental disagreement in two economic ideologies (The Keynesians vs. The Classicals/Monetarists/Austrians --- or everyone else). I side with the latter.
In a way, our disagreement comes down to these two videos (for those who prefer videos to reading the actual sources):
So if you stimulate production, and create supply, people are put to work and then have money to buy goods and services?
Ha ha... I'm not saying to "stimulate" anything at all, man. I'm against stimulus.
But to clarify, when people decide to supply a good (for instance, let's say they come up with a good idea for a new good that will be kinda cool) they may decide to hire a person or two, thinking there's a big market for it. You don't "stimulate" this type of thing... other than creating an environment where's it's possible to happen. But, this is how jobs are created. Government doesn't do this.
But I want to make sure that it's to the right places.
I want infrastructure. I want new bridges, I want high-speed rails, I want more jobs that can't be out-sourced like fixing things that need to be fixed and building things that will improve American lives. We need to stop patting ourselves for being the "greatest country in the world," admit we're not even close and do something about it. Maybe bring highest-speed internet to the whole country, invest in inner-city schools and projects that mean something.
Not just gifts to huge corporations with nothing to stop them from just donating it back to lobbyists.
This.
and 3rd this ! :thumbup: ....except the greatest country thing cause we are
Godfather.
There are some things that America is the best at, and some things they're not (I'm a dual citizen Canada/USA). I think a well thought out stimulus can do a lot of good for a country. Imagine high speed rail in the USA, something like 250/300 kph. Not only does this create jobs when it's built, it creates new commerce opportunities, making travel cheaper and more convenient, AND more environmentally friendly than planes. From Ottawa (because I know the distances, but pick any two US cities within 5-6 hours), if I could get to Toronto in an hour and a bit by train, I'd much rather do that then the 45 minute flight or 5 hour drive.
This is the type of money that needs to be spent.
Believe me, when I was growin up, I thought the worst thing you could turn out to be was normal, So I say freaks in the most complementary way. Here's a song by a fellow freak - E.V
0
unsung
I stopped by on March 7 2024. First time in many years, had to update payment info. Hope all is well. Politicians suck. Bye. Posts: 9,487
Yes, but we shouldn't be forced to pass a stimulus spending bill to improve infrastructure.
So if you stimulate production, and create supply, people are put to work and then have money to buy goods and services?
Ha ha... I'm not saying to "stimulate" anything at all, man. I'm against stimulus.
But to clarify, when people decide to supply a good (for instance, let's say they come up with a good idea for a new good that will be kinda cool) they may decide to hire a person or two, thinking there's a big market for it. You don't "stimulate" this type of thing... other than creating an environment where's it's possible to happen. But, this is how jobs are created. Government doesn't do this.
Exactly. The "market for it", be it in the present or future, actual or perceived, aka demand, is the reason goods and services are supplied, and why jobs are created to produce/perform them. And without the ability to consume, there is no real demand, and no need to produce.
Put some money in my pocket, and watch me demand goods and services, and in turn and watch suppliers respond to the new demand.
"First they ignore you, then they ridicule you, then they fight you, then you win ."
"With our thoughts we make the world"
0
brianlux
Moving through All Kinds of Terrain. Posts: 42,435
It still makes sense to me to stimulate the economy in new ways rather stay on the treadmill to nowhere.
What about:
--Creating more true-green jobs (in other words NOT sending Fijian water half way around the world) would be a good start. Pretty much everybody agrees that renewable energy is the only viable choice for our future.
--Getting more people involved in local business-- especially agriculture because when the oil runs low we'll need more small farms. Plus healthy food= healthy people= less illness= more productive, happy people.
--Need more jobs? Let's put people to work getting our rail system back on track--to at least what it was in the early 1900's which was far more superior and inefficient than what we run today. Put people to work building walkable communities-- the suburbs are doomed- they are the slums and eventually the ghost towns of the future.
--Stop taxing small business owners so unfairly (we pay a much higher percentage than most people do, especially corporate heads) and rebuild town centers to encourage small local businesses, and create walkable communities to allow more people to work closer to home.
We're overdue for getting off this dead-end treadmill to oblivion. It's time to start thinking outside the box, and create something positive and healthy.
"Pretty cookies, heart squares all around, yeah!" -Eddie Vedder, "Smile"
Exactly. The "market for it", be it in the present or future, actual or perceived, aka demand, is the reason goods and services are supplied, and why jobs are created to produce/perform them. And without the ability to consume, there is no real demand, and no need to produce.
Put some money in my pocket, and watch me demand goods and services, and in turn and watch suppliers respond to the new demand.
What comes first the job or the income? I say the job, you say the money. That's why I originally said it's a chicken and the egg sort of thing. I understand your argument, and I think you understand mine... but, I don't think we'll come to a consensus.
Regardless, your approach to "put money in my pocket" has holes in it, especially right now (given the debt issue... but i won't even mention that). The reason it has holes in it is simple.. that money comes from tax payers pockets. When government takes money away from one (or a group) and redistributes it to another (or another group), there's a deadweight loss associated with that action. For instance, the government needs to pay the employees and pay for their equipment (etc) who do the actual redistribution. Moreover, since in some cases we may not even have the money there in gov't, we'd have to pay interest on the money that we give to to you (or a group). My point of view is that, although you "may" be able to argue you can take it away from a group that won't necessarily spend it immediately and give it to those who would... that $1 is no longer a $1.... it's now less because of the deadweight loss or interest costs. Moreover, that money would have otherwise been saved (or invested) by that one group (increasing capital available) for those people in the private market who would take loans to start new businesses, etc.
So, I disagree because 1) the money comes from someone else 2) if it doesn't, it's borrowed 3) there's either deadweight loss or interest payments for the government associated with stimulus 4) because of this the money is reduced by going through the government 5) taking money away from those who may be saving (or investing) is effectively taking it away from capital investment (a major tool that actually grows economies).
There's more, but I don't want to continue typing....
Exactly. The "market for it", be it in the present or future, actual or perceived, aka demand, is the reason goods and services are supplied, and why jobs are created to produce/perform them. And without the ability to consume, there is no real demand, and no need to produce.
Put some money in my pocket, and watch me demand goods and services, and in turn and watch suppliers respond to the new demand.
What comes first the job or the income? I say the job, you say the money. That's why I originally said it's a chicken and the egg sort of thing. I understand your argument, and I think you understand mine... but, I don't think we'll come to a consensus.
Regardless, your approach to "put money in my pocket" has holes in it, especially right now (given the debt issue... but i won't even mention that). The reason it has holes in it is simple.. that money comes from tax payers pockets. When government takes money away from one (or a group) and redistributes it to another (or another group), there's a deadweight loss associated with that action. For instance, the government needs to pay the employees and pay for their equipment (etc) who do the actual redistribution. Moreover, since in some cases we may not even have the money there in gov't, we'd have to pay interest on the money that we give to to you (or a group). My point of view is that, although you "may" be able to argue you can take it away from a group that won't necessarily spend it immediately and give it to those who would... that $1 is no longer a $1.... it's now less because of the deadweight loss or interest costs. Moreover, that money would have otherwise been saved (or invested) by that one group (increasing capital available) for those people in the private market who would take loans to start new businesses, etc.
So, I disagree because 1) the money comes from someone else 2) if it doesn't, it's borrowed 3) there's either deadweight loss or interest payments for the government associated with stimulus 4) because of this the money is reduced by going through the government 5) taking money away from those who may be saving (or investing) is effectively taking it away from capital investment (a major tool that actually grows economies).
There's more, but I don't want to continue typing....
I think you understand what I'm saying but I am going to spell it out. I'm saying it is possible the FED can issue more dollars, sell it to the government with interest, just like always, and invest that money in the country (infrastructure, etc.) with hopes of seeing a return on that investment in the form or increased tax revenues, that exceeds the principle and interest of the original money created.
Okay, so...how is this any different from what the private sector does all the time? They get loans from banks in hopes their profits on their ventures will exceed their loans and the costs associated with them. I feel like in the bolded section you are saying money in the private sector is somehow different in that there is not interest or deadweight costs.
Also, my proof that money/the ability to pay/demand can and often does come before jobs and supply is simply the word "loans".
"First they ignore you, then they ridicule you, then they fight you, then you win ."
What comes first the job or the income? I say the job, you say the money. That's why I originally said it's a chicken and the egg sort of thing. I understand your argument, and I think you understand mine... but, I don't think we'll come to a consensus.
Regardless, your approach to "put money in my pocket" has holes in it, especially right now (given the debt issue... but i won't even mention that). The reason it has holes in it is simple.. that money comes from tax payers pockets. When government takes money away from one (or a group) and redistributes it to another (or another group), there's a deadweight loss associated with that action. For instance, the government needs to pay the employees and pay for their equipment (etc) who do the actual redistribution. Moreover, since in some cases we may not even have the money there in gov't, we'd have to pay interest on the money that we give to to you (or a group). My point of view is that, although you "may" be able to argue you can take it away from a group that won't necessarily spend it immediately and give it to those who would... that $1 is no longer a $1.... it's now less because of the deadweight loss or interest costs. Moreover, that money would have otherwise been saved (or invested) by that one group (increasing capital available) for those people in the private market who would take loans to start new businesses, etc.
So, I disagree because 1) the money comes from someone else 2) if it doesn't, it's borrowed 3) there's either deadweight loss or interest payments for the government associated with stimulus 4) because of this the money is reduced by going through the government 5) taking money away from those who may be saving (or investing) is effectively taking it away from capital investment (a major tool that actually grows economies).
There's more, but I don't want to continue typing....
I think you understand what I'm saying but I am going to spell it out. I'm saying it is possible the FED can issue more dollars, sell it to the government with interest, just like always, and invest that money in the country (infrastructure, etc.) with hopes of seeing a return on that investment in the form or increased tax revenues, that exceeds the principle and interest of the original money created.
Okay, so...how is this any different from what the private sector does all the time? They get loans from banks in hopes their profits on their ventures will exceed their loans and the costs associated with them. I feel like in the bolded section you are saying money in the private sector is somehow different in that there is not interest or deadweight costs.
Also, my proof that money/the ability to pay/demand can and often does come before jobs and supply is simply the word "loans".
The private sector is different because:
1) The money the private sector obtains is from a private bank, who obtained funds from a depositor. Not the Fed, who just prints money (and can owe money to foreign countries).
2) Also, there's no redistribution (no deadweight loss) associated with the private sector investing in capital projects. They don't need to take from one group and redistribute it to another (then pay for this to take place via capital and labor) like the govt
There's more to it... but, regardless of what I say I don't think you'll agree.
What comes first the job or the income? I say the job, you say the money. That's why I originally said it's a chicken and the egg sort of thing. I understand your argument, and I think you understand mine... but, I don't think we'll come to a consensus.
Regardless, your approach to "put money in my pocket" has holes in it, especially right now (given the debt issue... but i won't even mention that). The reason it has holes in it is simple.. that money comes from tax payers pockets. When government takes money away from one (or a group) and redistributes it to another (or another group), there's a deadweight loss associated with that action. For instance, the government needs to pay the employees and pay for their equipment (etc) who do the actual redistribution. Moreover, since in some cases we may not even have the money there in gov't, we'd have to pay interest on the money that we give to to you (or a group). My point of view is that, although you "may" be able to argue you can take it away from a group that won't necessarily spend it immediately and give it to those who would... that $1 is no longer a $1.... it's now less because of the deadweight loss or interest costs. Moreover, that money would have otherwise been saved (or invested) by that one group (increasing capital available) for those people in the private market who would take loans to start new businesses, etc.
So, I disagree because 1) the money comes from someone else 2) if it doesn't, it's borrowed 3) there's either deadweight loss or interest payments for the government associated with stimulus 4) because of this the money is reduced by going through the government 5) taking money away from those who may be saving (or investing) is effectively taking it away from capital investment (a major tool that actually grows economies).
There's more, but I don't want to continue typing....
I think you understand what I'm saying but I am going to spell it out. I'm saying it is possible the FED can issue more dollars, sell it to the government with interest, just like always, and invest that money in the country (infrastructure, etc.) with hopes of seeing a return on that investment in the form or increased tax revenues, that exceeds the principle and interest of the original money created.
Okay, so...how is this any different from what the private sector does all the time? They get loans from banks in hopes their profits on their ventures will exceed their loans and the costs associated with them. I feel like in the bolded section you are saying money in the private sector is somehow different in that there is not interest or deadweight costs.
Also, my proof that money/the ability to pay/demand can and often does come before jobs and supply is simply the word "loans".
The private sector is different because:
1) The money the private sector obtains is from a private bank, who obtained funds from a depositor. Not the Fed, who just prints money (and can owe money to foreign countries).
2) Also, there's no redistribution (no deadweight loss) associated with the private sector investing in capital projects. They don't need to take from one group and redistribute it to another (then pay for this to take place via capital and labor) like the govt
There's more to it... but, regardless of what I say I don't think you'll agree.
1. Commercial banks, much like the government, also obtain money via the loans from the FED. Then commercial banks issue loans many times exceeding their deposits (supplied by both the FED and other depositors) to the private sector. So commercial banks essentially "print money" by doing this (in fact the majority of money in circulation is born of this process).
"First they ignore you, then they ridicule you, then they fight you, then you win ."
1. Commercial banks, much like the government, also obtain money via the loans from the FED. Then commercial banks issue loans many times exceeding their deposits (supplied by both the FED and other depositors) to the private sector. So commercial banks essentially "print money" by doing this (in fact the majority of money in circulation is born of this process).
When a commercial bank loan is put forth... new commercial bank money is created. However, when it's paid back, that money disappears from existence. As you know, those loans happen all the time. So, in these terms, the amount of money remains somewhat steady.
And this is not the case when the FED alters the money supply (which admittedly spills downwards through the monetary institutions). They can do so by influencing the discount rate, required reserve ratios and open market operations. In doing so, the can create lasting alterations to the money supply.
My point: There's a huge difference. Pretending that there is not, is in fact pretending.
1. Commercial banks, much like the government, also obtain money via the loans from the FED. Then commercial banks issue loans many times exceeding their deposits (supplied by both the FED and other depositors) to the private sector. So commercial banks essentially "print money" by doing this (in fact the majority of money in circulation is born of this process).
When a commercial bank loan is put forth... new commercial bank money is created. However, when it's paid back, that money disappears from existence. As you know, those loans happen all the time. So, in these terms, the amount of money remains somewhat steady.
And this is not the case when the FED alters the money supply (which admittedly spills downwards through the monetary institutions). They can do so by influencing the discount rate, required reserve ratios and open market operations. In doing so, the can create lasting alterations to the money supply.
My point: There's a huge difference. Pretending that there is not, is in fact pretending.
Ok. Agreed. However isn't all money created at a cost? A dollar is never a dollar whether it is loaned by the FED to the government or downstream banks. That dollar always comes with interest. So let's just say for the sake of argument that when loaned to the government, it is less efficient than when loaned to the private sector. Is it still not possible for the government to invest that money to still turn a profit in the end, just like the private sector would attempt?
"First they ignore you, then they ridicule you, then they fight you, then you win ."
Ok. Agreed. However isn't all money created at a cost? A dollar is never a dollar whether it is loaned by the FED to the government or downstream banks. That dollar always comes with interest. So let's just say for the sake of argument that when loaned to the government, it is less efficient than when loaned to the private sector. Is it still not possible for the government to invest that money to still turn a profit in the end, just like the private sector would attempt?
Ok. For the sake of discussion, I'll agree to that constraint...
I'd say, no... because government is not in the profit business. There will never be a gauge of profitability of government because their revenues are dependent on the public and their spending fluctuates. I think a better way to get at what you're saying is to say that at certain times a government could spend and get more bang for their (or our) buck. So, in other words, get more out of each dollar spent. But, the truth is that's hard (if not impossible) to quantify.
Ok. Agreed. However isn't all money created at a cost? A dollar is never a dollar whether it is loaned by the FED to the government or downstream banks. That dollar always comes with interest. So let's just say for the sake of argument that when loaned to the government, it is less efficient than when loaned to the private sector. Is it still not possible for the government to invest that money to still turn a profit in the end, just like the private sector would attempt?
Ok. For the sake of discussion, I'll agree to that constraint...
I'd say, no... because government is not in the profit business. There will never be a gauge of profitability of government because their revenues are dependent on the public and their spending fluctuates. I think a better way to get at what you're saying is to say that at certain times a government could spend and get more bang for their (or our) buck. So, in other words, get more out of each dollar spent. But, the truth is that's hard (if not impossible) to quantify.
Frederic Bastiat discusses this in an enlightening little collection of essays called "Economic Sophisms", if you're interested. It's fairly short, to boot.
Ok. Agreed. However isn't all money created at a cost? A dollar is never a dollar whether it is loaned by the FED to the government or downstream banks. That dollar always comes with interest. So let's just say for the sake of argument that when loaned to the government, it is less efficient than when loaned to the private sector. Is it still not possible for the government to invest that money to still turn a profit in the end, just like the private sector would attempt?
Ok. For the sake of discussion, I'll agree to that constraint...
I'd say, no... because government is not in the profit business. There will never be a gauge of profitability of government because their revenues are dependent on the public and their spending fluctuates. I think a better way to get at what you're saying is to say that at certain times a government could spend and get more bang for their (or our) buck. So, in other words, get more out of each dollar spent. But, the truth is that's hard (if not impossible) to quantify.
Frederic Bastiat discusses this in an enlightening little collection of essays called "Economic Sophisms", if you're interested. It's fairly short, to boot.
Cool. I'll add it to my list.
"First they ignore you, then they ridicule you, then they fight you, then you win ."
Comments
1. You can have all the supply and ideas in the world, though, and without the ability to pay there is no demand. So I would argue the ability for consumers to pay, sparks innovation, ideas and supply. If you've got money, someone will supply something for you to buy. Supply can affect demand, but I would say that it all begins with the ability to pay.
2. I don't see how you can prove stimuli prolonged the depression. Too many variables and ifs. Many would say the stimuli used in the Great Depression wasn't strong enough, so its hard to argue that stimuli as a theory was a failure, but for the sake of argument, perhaps the way it was utilized was. That's why I put a lot of disclaimers in my original response and said I might support a well targeted, well analyzed and committed approach.
"With our thoughts we make the world"
You need jobs in order to have money. Hence, once could argue supply creates its own demand. Moreover, one could say supply is more important.
I completely disagree. Do me a favor and read a bit of Hayek or Friedman. They'll explain it better than I can in a short message.
The "not strong enough" claim is also being used now. It will never be "stong enough" because it never works... and F's us over everytime. I'll end it like this: this is a fundamental disagreement in two economic ideologies (The Keynesians vs. The Classicals/Monetarists/Austrians --- or everyone else). I side with the latter.
In a way, our disagreement comes down to these two videos (for those who prefer videos to reading the actual sources):
http://www.youtube.com/watch?v=d0nERTFo-Sk
http://www.youtube.com/watch?v=GTQnarzmTOc&feature=mfu_in_order&list=UL
<object height="81" width="100%"> <param name="movie" value="https://player.soundcloud.com/player.swf?url=http://api.soundcloud.com/tracks/28998869"></param> <param name="allowscriptaccess" value="always"></param> <embed allowscriptaccess="always" height="81" src="https://player.soundcloud.com/player.swf?url=http://api.soundcloud.com/tracks/28998869" type="application/x-shockwave-flash" width="100%"></embed> </object> <span><a href=" - In the Fire (demo)</a> by <a href="
respectfully disagree here, tax credits for hiring is not a bailout, failing business's, especially SMB do not hire if they are failing, they do the exact opposite and then cut more n more to stay liquid. if your hiring, you are either experiencing increased demand or project increased demand due to hiring i.e. increase in sales, R & D, etc.
if your company only grows when there is 'real' demand, that's a business to get out of. in my line of business, we can grow by:
1. taking market share away from competition, i.e. hire salespeople
2. innovate & invest to extract new types of customers
3. raise our prices
MGM Grand - Jul 6, 2006
Cox Arena - Jul 7, 2006
New Orleans Jazz and Heritage Festival - May 1, 2010
Alpine Valley Music Theater - Sep 3-4 2011
Made In America, Philly - Sep 2, 2012
EV, Houston - Nov 12-13, 2012
Dallas-November 2013
OKC-November 2013
ACL 2-October 2014
Fenway Night 1, August 2016
Wrigley, Night 1 August 2018
Fort Worth, Night 1 September 2023
Fort Worth, Night 2 September 2023
Austin, Night 1 September 2023
Austin, Night 2 September 2023
So if you stimulate production, and create supply, people are put to work and then have money to buy goods and services?
"With our thoughts we make the world"
:geek:
Ha ha... I'm not saying to "stimulate" anything at all, man. I'm against stimulus.
But to clarify, when people decide to supply a good (for instance, let's say they come up with a good idea for a new good that will be kinda cool) they may decide to hire a person or two, thinking there's a big market for it. You don't "stimulate" this type of thing... other than creating an environment where's it's possible to happen. But, this is how jobs are created. Government doesn't do this.
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This is the type of money that needs to be spent.
Exactly. The "market for it", be it in the present or future, actual or perceived, aka demand, is the reason goods and services are supplied, and why jobs are created to produce/perform them. And without the ability to consume, there is no real demand, and no need to produce.
Put some money in my pocket, and watch me demand goods and services, and in turn and watch suppliers respond to the new demand.
"With our thoughts we make the world"
What about:
--Creating more true-green jobs (in other words NOT sending Fijian water half way around the world) would be a good start. Pretty much everybody agrees that renewable energy is the only viable choice for our future.
--Getting more people involved in local business-- especially agriculture because when the oil runs low we'll need more small farms. Plus healthy food= healthy people= less illness= more productive, happy people.
--Need more jobs? Let's put people to work getting our rail system back on track--to at least what it was in the early 1900's which was far more superior and inefficient than what we run today. Put people to work building walkable communities-- the suburbs are doomed- they are the slums and eventually the ghost towns of the future.
--Stop taxing small business owners so unfairly (we pay a much higher percentage than most people do, especially corporate heads) and rebuild town centers to encourage small local businesses, and create walkable communities to allow more people to work closer to home.
We're overdue for getting off this dead-end treadmill to oblivion. It's time to start thinking outside the box, and create something positive and healthy.
-Eddie Vedder, "Smile"
Godfather.
What comes first the job or the income? I say the job, you say the money. That's why I originally said it's a chicken and the egg sort of thing. I understand your argument, and I think you understand mine... but, I don't think we'll come to a consensus.
Regardless, your approach to "put money in my pocket" has holes in it, especially right now (given the debt issue... but i won't even mention that). The reason it has holes in it is simple.. that money comes from tax payers pockets. When government takes money away from one (or a group) and redistributes it to another (or another group), there's a deadweight loss associated with that action. For instance, the government needs to pay the employees and pay for their equipment (etc) who do the actual redistribution. Moreover, since in some cases we may not even have the money there in gov't, we'd have to pay interest on the money that we give to to you (or a group). My point of view is that, although you "may" be able to argue you can take it away from a group that won't necessarily spend it immediately and give it to those who would... that $1 is no longer a $1.... it's now less because of the deadweight loss or interest costs. Moreover, that money would have otherwise been saved (or invested) by that one group (increasing capital available) for those people in the private market who would take loans to start new businesses, etc.
So, I disagree because 1) the money comes from someone else 2) if it doesn't, it's borrowed 3) there's either deadweight loss or interest payments for the government associated with stimulus 4) because of this the money is reduced by going through the government 5) taking money away from those who may be saving (or investing) is effectively taking it away from capital investment (a major tool that actually grows economies).
There's more, but I don't want to continue typing....
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I think you understand what I'm saying but I am going to spell it out. I'm saying it is possible the FED can issue more dollars, sell it to the government with interest, just like always, and invest that money in the country (infrastructure, etc.) with hopes of seeing a return on that investment in the form or increased tax revenues, that exceeds the principle and interest of the original money created.
Okay, so...how is this any different from what the private sector does all the time? They get loans from banks in hopes their profits on their ventures will exceed their loans and the costs associated with them. I feel like in the bolded section you are saying money in the private sector is somehow different in that there is not interest or deadweight costs.
Also, my proof that money/the ability to pay/demand can and often does come before jobs and supply is simply the word "loans".
"With our thoughts we make the world"
The private sector is different because:
1) The money the private sector obtains is from a private bank, who obtained funds from a depositor. Not the Fed, who just prints money (and can owe money to foreign countries).
2) Also, there's no redistribution (no deadweight loss) associated with the private sector investing in capital projects. They don't need to take from one group and redistribute it to another (then pay for this to take place via capital and labor) like the govt
There's more to it... but, regardless of what I say I don't think you'll agree.
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1. Commercial banks, much like the government, also obtain money via the loans from the FED. Then commercial banks issue loans many times exceeding their deposits (supplied by both the FED and other depositors) to the private sector. So commercial banks essentially "print money" by doing this (in fact the majority of money in circulation is born of this process).
"With our thoughts we make the world"
When a commercial bank loan is put forth... new commercial bank money is created. However, when it's paid back, that money disappears from existence. As you know, those loans happen all the time. So, in these terms, the amount of money remains somewhat steady.
And this is not the case when the FED alters the money supply (which admittedly spills downwards through the monetary institutions). They can do so by influencing the discount rate, required reserve ratios and open market operations. In doing so, the can create lasting alterations to the money supply.
My point: There's a huge difference. Pretending that there is not, is in fact pretending.
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Ok. Agreed. However isn't all money created at a cost? A dollar is never a dollar whether it is loaned by the FED to the government or downstream banks. That dollar always comes with interest. So let's just say for the sake of argument that when loaned to the government, it is less efficient than when loaned to the private sector. Is it still not possible for the government to invest that money to still turn a profit in the end, just like the private sector would attempt?
"With our thoughts we make the world"
Ok. For the sake of discussion, I'll agree to that constraint...
I'd say, no... because government is not in the profit business. There will never be a gauge of profitability of government because their revenues are dependent on the public and their spending fluctuates. I think a better way to get at what you're saying is to say that at certain times a government could spend and get more bang for their (or our) buck. So, in other words, get more out of each dollar spent. But, the truth is that's hard (if not impossible) to quantify.
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"With our thoughts we make the world"
No problem... you as well, I kinda wish more discussions in MT were like our exchange.
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Cool. I'll add it to my list.
"With our thoughts we make the world"