I’d be interested to hear a healthy debate from both side.
briansd1
July 19, 2011 @
3:35 PM
Here’s an interesting very Here’s an interesting very timely article from a scholar at the conservative but non-partisan American Enterprise Institute.
A sagging economy requires what we call countercyclical policy, stimulus to counter a downturn and provide a boost. The need for countercyclical policy became apparent in the 1930s, after the opposite response to economic trouble caused a dizzying collapse; its application early in Franklin Roosevelt’s presidency succeeded in pulling the United States out of the Depression (until a premature tightening in 1937-38 pulled us back down into it).
Countercyclical policy is what every industrialized country in the world employed when the credit shock hit in late 2008, to avoid a global disaster far more serious than the one we faced. Under a balanced-budget amendment, however, no countercyclical policy could emanate from Washington. Spending could not grow to combat the slump. And while the Obama stimulus did not jump-start a robust economic recovery, any objective analysis would find that absent the $800 billion stimulus, the economy would have spiraled down much further.
State balanced-budget requirements make the option of a federal balanced-budget amendment dangerous. When state revenue declines during economic downturns, state spending on unemployment and Medicaid increases. To balance their budgets, states have to raise taxes and/or cut spending, the opposite of what is needed to emerge from a fiscal funk. This is the economic equivalent of the medieval practice of bleeding to cure any ailment, including anemia. In 2009, the fiscal drag from the states amounted to roughly $800 billion; in effect, the stimulus from Washington merely replaced the blood lost by the state-level bleeding.
Keynes isn’t going to work Keynes isn’t going to work going forward as we have already fully monetized the future.
briansd1
July 12, 2011 @
12:14 PM
If you look at housing, in If you look at housing, in America we definitely have Keynesian policies.
Housing is one of the most socialistic sectors of the economy. Generous government support is thrown at housing, from loan guarantees, to tax subsidies, to road building.
We’ve made housing affordable for the majority of Americans (with a higher proportion of subsidies aimed at the middle and upper-middle class). That created economies of scale, encouraged consumption and economic growth.
Compared to other developed, rich countries (and even developing poor countries), overall in America we have the lowest cost of housing as a proportion of income. Generally, our houses are cheaper, roomier, more comfortable with more amenities than houses anywhere in the world.
We enjoy our standard of living thanks to government policies began under Franklin D. Roosevelt.
an
July 12, 2011 @
1:41 PM
Brian, are we talking about Brian, are we talking about the same housing market that got way unaffordable in 2005, causing tons of people to lose their life savings, and causing this economic crisis? I guess these people who lost their life saving should be thanking for the opportunity.
briansd1
July 12, 2011 @
1:53 PM
AN wrote:Brian, are we [quote=AN]Brian, are we talking about the same housing market that got way unaffordable in 2005, causing tons of people to lose their life savings, and causing this economic crisis? I guess these people who lost their life saving should be thanking for the opportunity.[/quote]
I would say the bubble occurred not because of keynesian policies, but because the PRIVATE too-big-to-fail institutions implicitly believed that we would bail them out. They were correct.
The lack of regulations, allowed private players to create synthetic financial instruments that put our financial system at risk.
But still, even in 2005/2006 American house prices, proportional to income, were generally still cheaper than houses around the world.
an
July 12, 2011 @
2:01 PM
briansd1 wrote:I would say [quote=briansd1]I would say the bubble occurred not because of keynesian policies, but because the PRIVATE too-big-to-fail institutions implicitly believed that we would bail them out. They were correct.
The lack of regulations, allowed private players to create synthetic financial instruments that put our financial system at risk.
But still, even in 2005/2006 American house prices, proportional to income, were generally still cheaper than houses around the world.[/quote]
What make them think that they’ll be bailed out? If the government follow’s Hayek’s theories, then business knows they won’t be bailed out. So, if you blam companies for take risks because they know they’ll be bailed out, then you should blame government for giving them that idea that they’ll be bailed out. You might blame lack of regulations but I blame the low interest rate after 9/11 and Greenspan pushing ARM loans. Don’t blame the drug addict, blame the drug dealers. I guess when it comes to blame, some of us blame the drug dealers while others blame the drug addicts.
Why are you comparing housing price against the rest of the world when the rest of the world are following Keynes’s theory as well.
briansd1
July 12, 2011 @
2:37 PM
AN wrote:
Why are you [quote=AN]
Why are you comparing housing price against the rest of the world when the rest of the world are following Keynes’s theory as well.[/quote]
You need a frame of reference to judge success or failure.
I’m not saying all housing policies were good. But some were excellent.
Take the 30y mortgage. You take it for granted now, but without government policies it would not have happened. You’d still have mortgages that were callable on the whims of the lenders.
an
July 12, 2011 @
4:55 PM
briansd1 wrote:You need a [quote=briansd1]You need a frame of reference to judge success or failure.
I’m not saying all housing policies were good. But some were excellent.
Take the 30 mortgage. You take it for granted now, but without government policies it would not have happened. You’d still have mortgages that were callable on the whims of the lenders.[/quote]
If there’s no 30 years mortgage, I wouldn’t take nearly as big of a risk on housing as I have. But when government give incentives, people will take advantage of it. Only stupid people will pass up free money or in the case of 30 years mortgage, money that come with very low risks and costs. I don’t take it for granted one bit but I’m definitely taking advantage of it. What happen if government spend $0 to incentivize home ownership, do you think price will still be high? Especially when there’s less people buying homes? What happen to price when demand decrease? Bush was raving about how home ownership increase during his watch up to 2005.
briansd1
July 13, 2011 @
8:38 AM
AN, I’m not an ideologue so I AN, I’m not an ideologue so I don’t believe in all or nothing.
But I do believe that government needs to provide momentum to certain sectors. Once certain industries reach critical mass, the manufacturers can lower the margin and still make good profits.
Government support for housing provided the economies to scale necessary to provide good housing for the majority of the population. That doesn’t mean that subsidies need to be continued forever.
San Diego was a military town dependent on government spending. But we are now a diversified region. San Diego would not have reached critical mass as a big city without government spending and all the private contractors and suppliers the government attracted.
From housing to medical research to the Internet, and a host of industries, government support was essential.
What about the patent system to protect intellectual property? That’s an arbitrary government construct. We could have a free-for-all, couldn’t we?
an
July 13, 2011 @
10:05 AM
Brian, like you, I’m not an Brian, like you, I’m not an ideologue either. I don’t believe in free for all. I do believe government have its place. But unlike you, I think a lot of places the government currently spend money on is not needed. Many times, they pick the wrong winner and end up wasting a lot of money. Although many complain about GE not paying any taxes (me included), many fail to see that the reason they’re not paying any taxes is because government is giving them all of these tax credits and deductions for green energy, that allow them to end up not paying any taxes. Same with the ethanol subsidies or the oil and gas subsidies. In general, I think it would be better to not offer any subsidies and just have very low tax rates. That will allow the market to determine which technology is more viable. Government can still have spending to do Manhattan type projects that will spur future technologies (kinda like what they did w/ the internet or space exploration). I don’t believe in central planning. I don’t believe that a select few really know what everyone want or needs, so they shouldn’t make decisions that would pick winners and losers just because that winner have more connections or give more money to the politicians.
briansd1
July 13, 2011 @
10:29 AM
AN wrote:Although many [quote=AN]Although many complain about GE not paying any taxes (me included), many fail to see that the reason they’re not paying any taxes is because government is giving them all of these tax credits and deductions for green energy, that allow them to end up not paying any taxes. Same with the ethanol subsidies or the oil and gas subsidies. In general, I think it would be better to not offer any subsidies and just have very low tax rates. That will allow the market to determine which technology is more viable. [/quote]
All the more reasons to close corporate tax lơopholes such as deductions for corporate jets.
BTW, Keynes was right. There is a place for government. The government ought to spend and invest in infrastructure during recessions and cut back during economic bơoms. Makes sense.
Spending on infrastructure projects during recessions provides much needed jobs, cushions the economy and provides the impetus for a rebound. Taxpayers also get more value for the money.
If you want to buìld a house, labor and materials are cheaper during a recession.
No one deny that we need to No one deny that we need to close tax loop holes. But we need to close them ALL and lower the tax rate (which includes those green projects tax subsidies, you know, the one that allow GE to pay no taxes). Not just pick and chose the one you dislike.
Hayek also believe government has its role too. He doesn’t believe in anarchy. However, he doesn’t believe that government spending create growth. So far, with over $1T, we still have 9%+ unemployment. Should we be pumping in $5T instead? Government takes money from Paul to pay Peter, so during a recession, where both Paul and Peter are hurting, government should take less from both.
WRT Ethanol subsidies, according to NPR, most Senate Republicans are willing to get rid of at least one tax break. linky
briansd1
July 13, 2011 @
12:00 PM
AN wrote:No one deny that we [quote=AN]No one deny that we need to close tax loop holes. But we need to close them ALL and lower the tax rate (which includes those green projects tax subsidies, you know, the one that allow GE to pay no taxes). Not just pick and chose the one you dislike.[/quote]
Sounds like an all or nothing statement.
Do you want to prosecute all crimes or none?
Prosecutors have the discretion to go after the gravest crimes. They pick and choose.
You pick your battles and deal the the most serious problems. Sometimes you want to deal with problems that can most easily be solved first.
In your house, you may wish to repair the easiest small things first and wait until later for a major remodel — perhaps until you have the budget and after your wife can deal with the mess a remodel creates.
briansd1
July 13, 2011 @
1:21 PM
AN wrote: Hayek also believe [quote=AN] Hayek also believe government has its role too. He doesn’t believe in anarchy. However, he doesn’t believe that government spending create growth. So far, with over $1T, we still have 9%+ unemployment. Should we be pumping in $5T instead?
[/quote]
The $700 billion stimulus was nearly $300 billioin in tax cuts, and nearly $150 billion aid to states which despite that have been laying off their employees.
It wasn’t the work project that we needed. We need a industrial policy that puts people back to work (iddle people are wasted resources).
Today, Government’s revenue as a share of the economy is the lowest since 1950. So why is the economy not more robust than when government was taking in a larger share?
BTW, businesses are not holding back because of regulations (which have remained the same). Businesses are holding back because they don’t have enough customers.
[quote=AN]
Government takes money from Paul to pay Peter, so during a recession, where both Paul and Peter are hurting, government should take less from both.[/quote]
You make it sound like money was taken out of Paul’s pocket to pay Peter, so there’s a zero sum gain, or even a negative effect because of government bureaucracy. Perhaps you listen too much to talk radio.
In fact, that’s not how it works.
The government goes to the bond market and borrows capital to put it work. During a recession, capital remains iddle and the government can put that capital to work.
Right now, the markets are willing go lend money to the government at very low rates because they see a very low risk, and because they cannot earn a higher return elsewhere.
The great majority of economists will tell you that government should not cut back and reduce spending during a downturn, or during times of high unemployment. It’s an opportunity for governement to create jobs an invest in infrastructure.
an
July 13, 2011 @
2:48 PM
briansd1 wrote:Today, [quote=briansd1]Today, Government’s revenue as a share of the economy is the lowest since 1950. So why is the economy not more robust than when government was taking in a larger share? [/quote]
Where did you get this statement from? According to Wiki, it’s not true:http://en.wikipedia.org/wiki/File:U.S.-Tax-Revenues-As-GDP-Percentage-(75-05).JPG
[quote=briansd1]The government goes to the bond market and borrows capital to put it work. During a recession, capital remains iddle and the government can put that capital to work.
Right now, the markets are willing go lend money to the government at very low rates because they see a very low risk, and because they cannot earn a higher return elsewhere.
The great majority of economists will tell you that government should not cut back and reduce spending during a downturn, or during times of high unemployment. It’s an opportunity for governement to create jobs an invest in infrastructure.[/quote]
By this logic, we should be borrowing several hundred trillion of dollars right?You seem to fail to account to inflation. Inflation is the hidden tax. When government dilute their currency, everybody hurt.
The great majority of economists buys into the Keynesian economic theory. This is debating who’s theory is better, not who’s is more popular.
briansd1
July 13, 2011 @
3:58 PM
AN wrote:briansd1 [quote=AN][quote=briansd1]Today, Government’s revenue as a share of the economy is the lowest since 1950. So why is the economy not more robust than when government was taking in a larger share? [/quote]
Where did you get this statement from? According to Wiki, it’s not true:http://en.wikipedia.org/wiki/File:U.S.-Tax-Revenues-As-GDP-Percentage-(75-05).JPG
[/quote]
We are talking about Federal tax revenue and Federal policy here.
The state and local government are cutting back, as they should IMO. But their timing is wrong (that why the Federal government should step-in and temporarily fill the gap). The state and local governments don’t have the budgetary flexibility of the Federal government.
Keynesian economics have to do with the role of national governments and the central banks in smoothing out the business cycle.
One of the problems with Europe now is that they have a central bank but neither central government or central treasury.
[quote=AN]
By this logic, we should be borrowing several hundred trillion of dollars right?
[/quote]
No. It means not doing tax cuts, but hiring people and putting them back to work (not necessarily as Federal employees with all the benefits).
[quote=AN]
You seem to fail to account to inflation. Inflation is the hidden tax. When government dilute their currency, everybody hurt.
[/quote]
There is no inflation when there’s a recession. It’s the best time to print money.
[quote=AN]
The great majority of economists buys into the Keynesian economic theory. This is debating who’s theory is better, not who’s is more popular.[/quote]
Well, people on the right are Keynesians too. Otherwise, they’d believe in doing nothing. But they believe that tax cuts and reducing spending (fiscal policy) is the way to go.
an
July 13, 2011 @
7:51 PM
Do you think adding money Do you think adding money into the system won’t raise inflation? Unless I’m not not understanding their theories correctly, Keynesian = higher taxes and more government spending and Hayek = low taxes and less government spending. Hayek don’t believe in doing nothing.
Maybe you can explain this question for me. Republicans are supposed to be the party of rich people and big business, and Democrats are for the poor people, right? We also know through history that the bigger the government interventions, the bigger the boom and bust. Which benefits rich people and big business, since they have the capitals to take advantage of the boom, right? That’s why people are complaining that the gap between the rich and poor are growing. Why then aren’t Republicans for Keynesian economic, and democrats for Hayekian economic?
briansd1
July 13, 2011 @
10:30 PM
AN wrote: Republicans are [quote=AN] Republicans are supposed to be the party of rich people and big business, and Democrats are for the poor people, right? [/quote]
No.
Democrats are not for poor people. Democrats are for the everyday, average person. Democrats are for equity and providing everyone with a decent, minimal standard of living.
Democrats have more compassion for poor people and those who could use a helping hand.
[quote=AN] We also know through history that the bigger the government interventions, the bigger the boom and bust. [/quote]
No, we don’t know that.
If you read history, you’ll find out that before the Federal Reserve, and before Keynes, the booms and busts were much bigger.
an
July 13, 2011 @
11:42 PM
briansd1 wrote:Democrats are [quote=briansd1]Democrats are not for poor people. Democrats are for the everyday, average person. Democrats are for equity and providing everyone with a decent, minimal standard of living.
Democrats have more compassion for poor people and those who could use a helping hand. [/quote]
Funny, that’s exactly what the Republicans claim too.
[quote=briansd1]If you read history, you’ll find out that before the Federal Reserve, and before Keynes, the booms and busts were much bigger.[/quote]
Was the boom bigger than the Japanese boom before their lost 2 decades? Which is still going on right now? Do you happen to have links to data? I’d like to analyze it myself. Would be fun to advance my knowledge.
briansd1
July 14, 2011 @
10:21 AM
AN wrote: Was the boom bigger [quote=AN] Was the boom bigger than the Japanese boom before their lost 2 decades? Which is still going on right now? Do you happen to have links to data? I’d like to analyze it myself. Would be fun to advance my knowledge.[/quote]
You should read about the boom and busts of the 19th century throught the Great Depression. Banks used to issue their own notes; and before the FDIC there there frequent panics and runs on banks.
Imagine recessions without the social safety net.
an
July 14, 2011 @
1:29 PM
briansd1 wrote:AN wrote: Was [quote=briansd1][quote=AN] Was the boom bigger than the Japanese boom before their lost 2 decades? Which is still going on right now? Do you happen to have links to data? I’d like to analyze it myself. Would be fun to advance my knowledge.[/quote]
You should read about the boom and busts of the 19th century throught the Great Depression. Banks used to issue their own notes; and before the FDIC there there frequent panics and runs on banks.
Imagine recessions without the social safety net.[/quote]
AFAIK, Hayek doesn’t not support anarchy or no social safety net. If I’m wrong, please prove me wrong. Again, do you have data to back up your points besides tell me to look back to 19th century.
briansd1
July 14, 2011 @
1:44 PM
AN wrote:
AFAIK, Hayek [quote=AN]
AFAIK, Hayek doesn’t not support anarchy or no social safety net. If I’m wrong, please prove me wrong. Again, do you have data to back up your points besides tell me to look back to 19th century.[/quote]
A social safety net is Keynesian by definition.
Unemployment benefits kick in during recessions. It’s a way for the government to intervene and provide money to the unemployed and to smooth out the ecomomic cycle. It’s actually that kind of government support that works best because it kicks in automatically without legislators having anyting to do. Social safety net benefits are automatic fiscal stabilizers.
briansd1 wrote:A social [quote=briansd1]A social safety net is Keynesian by definition.
Unemployment benefits kick in during recessions. It’s a way for the government to intervene and provide money to the unemployed and to smooth out the ecomomic cycle. It’s actually that kind of government support that works best because it kicks in automatically without legislators having anyting to do. Social safety net benefits are automatic fiscal stabilizers.
Here’s an excerpt if you don’t want to read through the whole thing:
“Second, Hayek was not an apostle of laissez-faire. He believed in a strong, but limited, state. Government had a duty to provide a social safety net. Above all, it had the task to devise and enforce the rules of competition. Hayek’s position is close to the Chinese concept of wu wei, which is roughly translated as “active inactivity.””
briansd1
July 13, 2011 @
10:43 PM
AN wrote: Unless I’m not not [quote=AN] Unless I’m not not understanding their theories correctly, Keynesian = higher taxes and more government spending and Hayek = low taxes and less government spending. Hayek don’t believe in doing nothing.[/quote]
They way I understand them, it’s not quite like that. Hayek’s theories don’t necessarily contradict Keynes’ work, or vice versa.
It’s important to say, however, that Republicanism is a kooky hodgepodge of ideas. Republicanism does not equate Hayek (e.g. on the military, on the gold standard, on social conservatism).
an
July 13, 2011 @
11:45 PM
briansd1 wrote:
They way I [quote=briansd1]
They way I understand them, it’s not quite like that. Hayek’s theories don’t necessarily contradict Keynes’ work, or vice versa.
It’s important to say, however, that Republicanism is a kooky hodgepodge of ideas. Republicanism does not equate Hayek (e.g. on the military, on the gold standard, on social conservatism).[/quote]
You’re right, they’re not, the party that fit the Hayek bill would be Libertarian.
Care to elaborate on what you mean by Hayek & Keynes not contradicting? What do they have in common?
briansd1
July 14, 2011 @
10:35 AM
AN wrote: Keynesian = higher [quote=AN] Keynesian = higher taxes and more government spending and Hayek = low taxes and less government spending. [/quote]
It’s not quite that way. You can have low taxes but more government involvement in directing the economy (Dubai, Singapore, etc.., even China).
an
July 14, 2011 @
1:26 PM
briansd1 wrote:AN wrote: [quote=briansd1][quote=AN] Keynesian = higher taxes and more government spending and Hayek = low taxes and less government spending. [/quote]
It’s not quite that way. You can have low taxes but more government involvement in directing the economy (Dubai, Singapore, etc.., even China).[/quote]
What does that have anything to do w/ Keynes or Hayek economic theories?
briansd1
July 14, 2011 @
1:30 PM
AN wrote:
What does that have [quote=AN]
What does that have anything to do w/ Keynes or Hayek economic theories?[/quote]
Those economies I listed have low taxes, but high government intervention. Singapore and Dubai are very business friendly despite the heavy hand of government.
an
July 14, 2011 @
6:15 PM
briansd1 wrote:AN wrote:
What [quote=briansd1][quote=AN]
What does that have anything to do w/ Keynes or Hayek economic theories?[/quote]
Those economies I listed have low taxes, but high government intervention. Singapore and Dubai are very business friendly despite the heavy hand of government.[/quote]
Again, what does that have anything to do w/ Hayek vs Keynes’s economic theories? So you showed some countries that implement some of Hayek’s theories and some of Keynes’s theory. I don’t think there’s a single country that implement all of one’s theory.
briansd1
July 15, 2011 @
9:39 AM
If you look at the all the If you look at the all the modern, advanced countries, including the USA, you’d see that Keynesian policies are what got them to prosperity. That’s especially true when you look at prosperity being shared by the vast majority of the population.
There’s a lot more evidence that Keynesian policies work.
faterikcartman
July 20, 2011 @
11:59 PM
Well, with history on Hayek’s Well, with history on Hayek’s side and clearly against Keynes, yet almost 50% of votes going for Keynes, I say we’re screwed!
briansd1
July 21, 2011 @
12:25 PM
faterikcartman wrote:Well, [quote=faterikcartman]Well, with history on Hayek’s side and clearly against Keynes, yet almost 50% of votes going for Keynes, I say we’re screwed![/quote]
If you look at industrial policies of Japan, Korea, Taiwan, China, etc… can you seriously say that a hands-off approach is better?
Without government led industrial policies, those countries would still be poor like the Philippines that followed the American model.
Economic development in America very much had the guiding hands of government.
The Internet developed early in America because 1) the government provided the initial investments and 2) the FCC mandated that the bell companies provide unlimited local dial-up.
You need a combination of public and private initiatives, not one without the other.
danthedart
August 4, 2011 @
5:04 PM
Keynes = lower taxes AND Keynes = lower taxes AND higher spending during recession
but
higher taxes and lower spending during boom
danthedart
August 4, 2011 @
5:04 PM
double double
desmond
August 4, 2011 @
5:16 PM
Hayek by far: Is there any [img_assist|nid=15192|title=Hayek by far|desc=Is there any doubt?|link=node|align=left|width=74|height=100]
LAAFTERHOURS
August 4, 2011 @
7:17 PM
desmond wrote:Hayek by far: [quote=desmond][img_assist|nid=15192|title=Hayek by far|desc=Is there any doubt?|link=node|align=left|width=74|height=100][/quote]
Finally! someone agrees with my earlier post 🙂
moneymaker
August 4, 2011 @
9:31 PM
Gotta agree those are 2 very Gotta agree those are 2 very compelling interests.
GH
August 4, 2011 @
10:28 PM
Since it can be Since it can be mathematically proven there is insufficient currency in circulation to pay off but a fraction of the debts in existence today it is clear we are headed for total economic collapse unless sufficient currency is introduced into the system to repay the half a quadrillion dollars in debt which is floating around the world. I did say quadrillion and not trillion dollars.
Yeah I know inflation and all that, but did you REALLY think all that money could be borrowed without penalty?
So I doubt either will work. The money should never have been loaned to begin with.
Arraya
August 4, 2011 @
10:41 PM
GH wrote:Since it can be [quote=GH]Since it can be mathematically proven there is insufficient currency in circulation to pay off but a fraction of the debts in existence today it is clear we are headed for total economic collapse unless sufficient currency is introduced into the system to repay the half a quadrillion dollars in debt which is floating around the world. I did say quadrillion and not trillion dollars.
Yeah I know inflation and all that, but did you REALLY think all that money could be borrowed without penalty?
So I doubt either will work. The money should never have been loaned to begin with.[/quote]
You point out something very fundamental about the dynamics of our debt-based monetary design, there is insufficient currency in circulation to pay off but a fraction of the debts
What that essentially means is the interest owed on debt needs consistent money creation for it to be paid off. And money is created through debt creation.
So if not enough debt is created bankruptcies will ensure, it’s built into the system.
but you miss the point with your last statement The money should never have been loaned to begin with
If the money was never loaned out there would be nothing to pay off the existing debt and hence collapse would ensure.
The system has no choice, for it’s own survival, than to keep creating money – and the way that is done is through debt issuance.
It’s a grow or die system.
GH
August 4, 2011 @
10:56 PM
Arraya][quote=GH wrote:
The [quote=Arraya][quote=GH]
The system has no choice, for it’s own survival, than to keep creating money – and the way that is done is through debt issuance.
It’s a grow or die system.[/quote]
We are all out of credit which leaves ONLY the prospect of default. Widespread default leaves ONLY the prospect of economic collapse…
The fact is that onerous as it may seem, without introducing currency into our economic system we are all going down hard. Banks will not loan any more because they are rightly concerned we will not be able to repay them with interest. Worse, we tried loaning excessively during the bubble and this blog was born.
The fact is whoever prints money needs to balance the debt with currency and the piper needs to finally be paid. I doubt this will happen, so it is my prediction the economy will collapse and that collapse will send the planet into a massive depression which may last many years. Finally order may be restored and life will go on, but be assured this is not something we can avoid. Either tens of trillions of dollars need to be printed or we face total economic collapse and most likely in the next 5 years.
July 11, 2011 @ 11:34 PM
Here are a couple of fun
Here are a couple of fun videos:
http://youtu.be/d0nERTFo-Sk
http://youtu.be/GTQnarzmTOc
I’d be interested to hear a healthy debate from both side.
July 19, 2011 @ 3:35 PM
Here’s an interesting very
Here’s an interesting very timely article from a scholar at the conservative but non-partisan American Enterprise Institute.
July 19, 2011 @ 6:07 PM
Salma all the way 🙂
Salma all the way 🙂
July 11, 2011 @ 11:58 PM
Keynes isn’t going to work
Keynes isn’t going to work going forward as we have already fully monetized the future.
July 12, 2011 @ 12:14 PM
If you look at housing, in
If you look at housing, in America we definitely have Keynesian policies.
Housing is one of the most socialistic sectors of the economy. Generous government support is thrown at housing, from loan guarantees, to tax subsidies, to road building.
We’ve made housing affordable for the majority of Americans (with a higher proportion of subsidies aimed at the middle and upper-middle class). That created economies of scale, encouraged consumption and economic growth.
Compared to other developed, rich countries (and even developing poor countries), overall in America we have the lowest cost of housing as a proportion of income. Generally, our houses are cheaper, roomier, more comfortable with more amenities than houses anywhere in the world.
We enjoy our standard of living thanks to government policies began under Franklin D. Roosevelt.
July 12, 2011 @ 1:41 PM
Brian, are we talking about
Brian, are we talking about the same housing market that got way unaffordable in 2005, causing tons of people to lose their life savings, and causing this economic crisis? I guess these people who lost their life saving should be thanking for the opportunity.
July 12, 2011 @ 1:53 PM
AN wrote:Brian, are we
[quote=AN]Brian, are we talking about the same housing market that got way unaffordable in 2005, causing tons of people to lose their life savings, and causing this economic crisis? I guess these people who lost their life saving should be thanking for the opportunity.[/quote]
I would say the bubble occurred not because of keynesian policies, but because the PRIVATE too-big-to-fail institutions implicitly believed that we would bail them out. They were correct.
The lack of regulations, allowed private players to create synthetic financial instruments that put our financial system at risk.
But still, even in 2005/2006 American house prices, proportional to income, were generally still cheaper than houses around the world.
July 12, 2011 @ 2:01 PM
briansd1 wrote:I would say
[quote=briansd1]I would say the bubble occurred not because of keynesian policies, but because the PRIVATE too-big-to-fail institutions implicitly believed that we would bail them out. They were correct.
The lack of regulations, allowed private players to create synthetic financial instruments that put our financial system at risk.
But still, even in 2005/2006 American house prices, proportional to income, were generally still cheaper than houses around the world.[/quote]
What make them think that they’ll be bailed out? If the government follow’s Hayek’s theories, then business knows they won’t be bailed out. So, if you blam companies for take risks because they know they’ll be bailed out, then you should blame government for giving them that idea that they’ll be bailed out. You might blame lack of regulations but I blame the low interest rate after 9/11 and Greenspan pushing ARM loans. Don’t blame the drug addict, blame the drug dealers. I guess when it comes to blame, some of us blame the drug dealers while others blame the drug addicts.
Why are you comparing housing price against the rest of the world when the rest of the world are following Keynes’s theory as well.
July 12, 2011 @ 2:37 PM
AN wrote:
Why are you
[quote=AN]
Why are you comparing housing price against the rest of the world when the rest of the world are following Keynes’s theory as well.[/quote]
You need a frame of reference to judge success or failure.
I’m not saying all housing policies were good. But some were excellent.
Take the 30y mortgage. You take it for granted now, but without government policies it would not have happened. You’d still have mortgages that were callable on the whims of the lenders.
July 12, 2011 @ 4:55 PM
briansd1 wrote:You need a
[quote=briansd1]You need a frame of reference to judge success or failure.
I’m not saying all housing policies were good. But some were excellent.
Take the 30 mortgage. You take it for granted now, but without government policies it would not have happened. You’d still have mortgages that were callable on the whims of the lenders.[/quote]
If there’s no 30 years mortgage, I wouldn’t take nearly as big of a risk on housing as I have. But when government give incentives, people will take advantage of it. Only stupid people will pass up free money or in the case of 30 years mortgage, money that come with very low risks and costs. I don’t take it for granted one bit but I’m definitely taking advantage of it. What happen if government spend $0 to incentivize home ownership, do you think price will still be high? Especially when there’s less people buying homes? What happen to price when demand decrease? Bush was raving about how home ownership increase during his watch up to 2005.
July 13, 2011 @ 8:38 AM
AN, I’m not an ideologue so I
AN, I’m not an ideologue so I don’t believe in all or nothing.
But I do believe that government needs to provide momentum to certain sectors. Once certain industries reach critical mass, the manufacturers can lower the margin and still make good profits.
Government support for housing provided the economies to scale necessary to provide good housing for the majority of the population. That doesn’t mean that subsidies need to be continued forever.
San Diego was a military town dependent on government spending. But we are now a diversified region. San Diego would not have reached critical mass as a big city without government spending and all the private contractors and suppliers the government attracted.
From housing to medical research to the Internet, and a host of industries, government support was essential.
What about the patent system to protect intellectual property? That’s an arbitrary government construct. We could have a free-for-all, couldn’t we?
July 13, 2011 @ 10:05 AM
Brian, like you, I’m not an
Brian, like you, I’m not an ideologue either. I don’t believe in free for all. I do believe government have its place. But unlike you, I think a lot of places the government currently spend money on is not needed. Many times, they pick the wrong winner and end up wasting a lot of money. Although many complain about GE not paying any taxes (me included), many fail to see that the reason they’re not paying any taxes is because government is giving them all of these tax credits and deductions for green energy, that allow them to end up not paying any taxes. Same with the ethanol subsidies or the oil and gas subsidies. In general, I think it would be better to not offer any subsidies and just have very low tax rates. That will allow the market to determine which technology is more viable. Government can still have spending to do Manhattan type projects that will spur future technologies (kinda like what they did w/ the internet or space exploration). I don’t believe in central planning. I don’t believe that a select few really know what everyone want or needs, so they shouldn’t make decisions that would pick winners and losers just because that winner have more connections or give more money to the politicians.
July 13, 2011 @ 10:29 AM
AN wrote:Although many
[quote=AN]Although many complain about GE not paying any taxes (me included), many fail to see that the reason they’re not paying any taxes is because government is giving them all of these tax credits and deductions for green energy, that allow them to end up not paying any taxes. Same with the ethanol subsidies or the oil and gas subsidies. In general, I think it would be better to not offer any subsidies and just have very low tax rates. That will allow the market to determine which technology is more viable. [/quote]
All the more reasons to close corporate tax lơopholes such as deductions for corporate jets.
Ending ethanol subsidies is a start:
http://www.bloomberg.com/news/2011-07-07/farm-state-senators-agree-to-end-ethanol-breaks-feinstein-says.html
BTW, Keynes was right. There is a place for government. The government ought to spend and invest in infrastructure during recessions and cut back during economic bơoms. Makes sense.
Spending on infrastructure projects during recessions provides much needed jobs, cushions the economy and provides the impetus for a rebound. Taxpayers also get more value for the money.
If you want to buìld a house, labor and materials are cheaper during a recession.
In my opinion, the markets and government work hand in hand.
If government actions were wasteful and ultimately useless, the “self-adjusting” markets (where information and all present and future value are already priced-in) would not respond to government action.
http://www.washingtonpost.com/business/markets/us-stock-futures-up-after-china-reports-growth-slowing-only-slightly-ahead-of-bernanke-speech/2011/07/13/gIQAvf0GCI_story.html
http://www.washingtonpost.com/business/bernanke-fed-prepared-to-take-new-action-if-recovery-falters/2011/07/13/gIQAJdhNCI_story.html
July 13, 2011 @ 11:28 AM
No one deny that we need to
No one deny that we need to close tax loop holes. But we need to close them ALL and lower the tax rate (which includes those green projects tax subsidies, you know, the one that allow GE to pay no taxes). Not just pick and chose the one you dislike.
Hayek also believe government has its role too. He doesn’t believe in anarchy. However, he doesn’t believe that government spending create growth. So far, with over $1T, we still have 9%+ unemployment. Should we be pumping in $5T instead? Government takes money from Paul to pay Peter, so during a recession, where both Paul and Peter are hurting, government should take less from both.
WRT Ethanol subsidies, according to NPR, most Senate Republicans are willing to get rid of at least one tax break. linky
July 13, 2011 @ 12:00 PM
AN wrote:No one deny that we
[quote=AN]No one deny that we need to close tax loop holes. But we need to close them ALL and lower the tax rate (which includes those green projects tax subsidies, you know, the one that allow GE to pay no taxes). Not just pick and chose the one you dislike.[/quote]
Sounds like an all or nothing statement.
Do you want to prosecute all crimes or none?
Prosecutors have the discretion to go after the gravest crimes. They pick and choose.
You pick your battles and deal the the most serious problems. Sometimes you want to deal with problems that can most easily be solved first.
In your house, you may wish to repair the easiest small things first and wait until later for a major remodel — perhaps until you have the budget and after your wife can deal with the mess a remodel creates.
July 13, 2011 @ 1:21 PM
AN wrote: Hayek also believe
[quote=AN] Hayek also believe government has its role too. He doesn’t believe in anarchy. However, he doesn’t believe that government spending create growth. So far, with over $1T, we still have 9%+ unemployment. Should we be pumping in $5T instead?
[/quote]
The $700 billion stimulus was nearly $300 billioin in tax cuts, and nearly $150 billion aid to states which despite that have been laying off their employees.
It wasn’t the work project that we needed. We need a industrial policy that puts people back to work (iddle people are wasted resources).
Today, Government’s revenue as a share of the economy is the lowest since 1950. So why is the economy not more robust than when government was taking in a larger share?
BTW, businesses are not holding back because of regulations (which have remained the same). Businesses are holding back because they don’t have enough customers.
[quote=AN]
Government takes money from Paul to pay Peter, so during a recession, where both Paul and Peter are hurting, government should take less from both.[/quote]
You make it sound like money was taken out of Paul’s pocket to pay Peter, so there’s a zero sum gain, or even a negative effect because of government bureaucracy. Perhaps you listen too much to talk radio.
In fact, that’s not how it works.
The government goes to the bond market and borrows capital to put it work. During a recession, capital remains iddle and the government can put that capital to work.
Right now, the markets are willing go lend money to the government at very low rates because they see a very low risk, and because they cannot earn a higher return elsewhere.
The great majority of economists will tell you that government should not cut back and reduce spending during a downturn, or during times of high unemployment. It’s an opportunity for governement to create jobs an invest in infrastructure.
July 13, 2011 @ 2:48 PM
briansd1 wrote:Today,
[quote=briansd1]Today, Government’s revenue as a share of the economy is the lowest since 1950. So why is the economy not more robust than when government was taking in a larger share? [/quote]
Where did you get this statement from? According to Wiki, it’s not true:http://en.wikipedia.org/wiki/File:U.S.-Tax-Revenues-As-GDP-Percentage-(75-05).JPG
[quote=briansd1]The government goes to the bond market and borrows capital to put it work. During a recession, capital remains iddle and the government can put that capital to work.
Right now, the markets are willing go lend money to the government at very low rates because they see a very low risk, and because they cannot earn a higher return elsewhere.
The great majority of economists will tell you that government should not cut back and reduce spending during a downturn, or during times of high unemployment. It’s an opportunity for governement to create jobs an invest in infrastructure.[/quote]
By this logic, we should be borrowing several hundred trillion of dollars right?You seem to fail to account to inflation. Inflation is the hidden tax. When government dilute their currency, everybody hurt.
The great majority of economists buys into the Keynesian economic theory. This is debating who’s theory is better, not who’s is more popular.
July 13, 2011 @ 3:58 PM
AN wrote:briansd1
[quote=AN][quote=briansd1]Today, Government’s revenue as a share of the economy is the lowest since 1950. So why is the economy not more robust than when government was taking in a larger share? [/quote]
Where did you get this statement from? According to Wiki, it’s not true:http://en.wikipedia.org/wiki/File:U.S.-Tax-Revenues-As-GDP-Percentage-(75-05).JPG
[/quote]
We are talking about Federal tax revenue and Federal policy here.
http://economix.blogs.nytimes.com/2009/10/20/federal-revenues-at-lowest-share-of-gdp-since-1950/
The state and local government are cutting back, as they should IMO. But their timing is wrong (that why the Federal government should step-in and temporarily fill the gap). The state and local governments don’t have the budgetary flexibility of the Federal government.
Keynesian economics have to do with the role of national governments and the central banks in smoothing out the business cycle.
One of the problems with Europe now is that they have a central bank but neither central government or central treasury.
[quote=AN]
By this logic, we should be borrowing several hundred trillion of dollars right?
[/quote]
No. It means not doing tax cuts, but hiring people and putting them back to work (not necessarily as Federal employees with all the benefits).
[quote=AN]
You seem to fail to account to inflation. Inflation is the hidden tax. When government dilute their currency, everybody hurt.
[/quote]
There is no inflation when there’s a recession. It’s the best time to print money.
[quote=AN]
The great majority of economists buys into the Keynesian economic theory. This is debating who’s theory is better, not who’s is more popular.[/quote]
Well, people on the right are Keynesians too. Otherwise, they’d believe in doing nothing. But they believe that tax cuts and reducing spending (fiscal policy) is the way to go.
July 13, 2011 @ 7:51 PM
Do you think adding money
Do you think adding money into the system won’t raise inflation? Unless I’m not not understanding their theories correctly, Keynesian = higher taxes and more government spending and Hayek = low taxes and less government spending. Hayek don’t believe in doing nothing.
Maybe you can explain this question for me. Republicans are supposed to be the party of rich people and big business, and Democrats are for the poor people, right? We also know through history that the bigger the government interventions, the bigger the boom and bust. Which benefits rich people and big business, since they have the capitals to take advantage of the boom, right? That’s why people are complaining that the gap between the rich and poor are growing. Why then aren’t Republicans for Keynesian economic, and democrats for Hayekian economic?
July 13, 2011 @ 10:30 PM
AN wrote: Republicans are
[quote=AN] Republicans are supposed to be the party of rich people and big business, and Democrats are for the poor people, right? [/quote]
No.
Democrats are not for poor people. Democrats are for the everyday, average person. Democrats are for equity and providing everyone with a decent, minimal standard of living.
Democrats have more compassion for poor people and those who could use a helping hand.
[quote=AN] We also know through history that the bigger the government interventions, the bigger the boom and bust. [/quote]
No, we don’t know that.
If you read history, you’ll find out that before the Federal Reserve, and before Keynes, the booms and busts were much bigger.
July 13, 2011 @ 11:42 PM
briansd1 wrote:Democrats are
[quote=briansd1]Democrats are not for poor people. Democrats are for the everyday, average person. Democrats are for equity and providing everyone with a decent, minimal standard of living.
Democrats have more compassion for poor people and those who could use a helping hand. [/quote]
Funny, that’s exactly what the Republicans claim too.
[quote=briansd1]If you read history, you’ll find out that before the Federal Reserve, and before Keynes, the booms and busts were much bigger.[/quote]
Was the boom bigger than the Japanese boom before their lost 2 decades? Which is still going on right now? Do you happen to have links to data? I’d like to analyze it myself. Would be fun to advance my knowledge.
July 14, 2011 @ 10:21 AM
AN wrote: Was the boom bigger
[quote=AN] Was the boom bigger than the Japanese boom before their lost 2 decades? Which is still going on right now? Do you happen to have links to data? I’d like to analyze it myself. Would be fun to advance my knowledge.[/quote]
You should read about the boom and busts of the 19th century throught the Great Depression. Banks used to issue their own notes; and before the FDIC there there frequent panics and runs on banks.
Imagine recessions without the social safety net.
July 14, 2011 @ 1:29 PM
briansd1 wrote:AN wrote: Was
[quote=briansd1][quote=AN] Was the boom bigger than the Japanese boom before their lost 2 decades? Which is still going on right now? Do you happen to have links to data? I’d like to analyze it myself. Would be fun to advance my knowledge.[/quote]
You should read about the boom and busts of the 19th century throught the Great Depression. Banks used to issue their own notes; and before the FDIC there there frequent panics and runs on banks.
Imagine recessions without the social safety net.[/quote]
AFAIK, Hayek doesn’t not support anarchy or no social safety net. If I’m wrong, please prove me wrong. Again, do you have data to back up your points besides tell me to look back to 19th century.
July 14, 2011 @ 1:44 PM
AN wrote:
AFAIK, Hayek
[quote=AN]
AFAIK, Hayek doesn’t not support anarchy or no social safety net. If I’m wrong, please prove me wrong. Again, do you have data to back up your points besides tell me to look back to 19th century.[/quote]
A social safety net is Keynesian by definition.
Unemployment benefits kick in during recessions. It’s a way for the government to intervene and provide money to the unemployed and to smooth out the ecomomic cycle. It’s actually that kind of government support that works best because it kicks in automatically without legislators having anyting to do. Social safety net benefits are automatic fiscal stabilizers.
Interesting article on Frum Forum about Keynesian policies in Sweden:
http://www.frumforum.com/is-sweden-really-a-keynesian-success
July 14, 2011 @ 6:11 PM
briansd1 wrote:A social
[quote=briansd1]A social safety net is Keynesian by definition.
Unemployment benefits kick in during recessions. It’s a way for the government to intervene and provide money to the unemployed and to smooth out the ecomomic cycle. It’s actually that kind of government support that works best because it kicks in automatically without legislators having anyting to do. Social safety net benefits are automatic fiscal stabilizers.
Interesting article on Frum Forum about Keynesian policies in Sweden:
http://www.frumforum.com/is-sweden-really-a-keynesian-success%5B/quote%5D
Wrong. Read here for more info. http://www.manhattan-institute.org/html/hayek2006.htm
Here’s an excerpt if you don’t want to read through the whole thing:
“Second, Hayek was not an apostle of laissez-faire. He believed in a strong, but limited, state. Government had a duty to provide a social safety net. Above all, it had the task to devise and enforce the rules of competition. Hayek’s position is close to the Chinese concept of wu wei, which is roughly translated as “active inactivity.””
July 13, 2011 @ 10:43 PM
AN wrote: Unless I’m not not
[quote=AN] Unless I’m not not understanding their theories correctly, Keynesian = higher taxes and more government spending and Hayek = low taxes and less government spending. Hayek don’t believe in doing nothing.[/quote]
They way I understand them, it’s not quite like that. Hayek’s theories don’t necessarily contradict Keynes’ work, or vice versa.
It’s important to say, however, that Republicanism is a kooky hodgepodge of ideas. Republicanism does not equate Hayek (e.g. on the military, on the gold standard, on social conservatism).
July 13, 2011 @ 11:45 PM
briansd1 wrote:
They way I
[quote=briansd1]
They way I understand them, it’s not quite like that. Hayek’s theories don’t necessarily contradict Keynes’ work, or vice versa.
It’s important to say, however, that Republicanism is a kooky hodgepodge of ideas. Republicanism does not equate Hayek (e.g. on the military, on the gold standard, on social conservatism).[/quote]
You’re right, they’re not, the party that fit the Hayek bill would be Libertarian.
Care to elaborate on what you mean by Hayek & Keynes not contradicting? What do they have in common?
July 14, 2011 @ 10:35 AM
AN wrote: Keynesian = higher
[quote=AN] Keynesian = higher taxes and more government spending and Hayek = low taxes and less government spending. [/quote]
It’s not quite that way. You can have low taxes but more government involvement in directing the economy (Dubai, Singapore, etc.., even China).
July 14, 2011 @ 1:26 PM
briansd1 wrote:AN wrote:
[quote=briansd1][quote=AN] Keynesian = higher taxes and more government spending and Hayek = low taxes and less government spending. [/quote]
It’s not quite that way. You can have low taxes but more government involvement in directing the economy (Dubai, Singapore, etc.., even China).[/quote]
What does that have anything to do w/ Keynes or Hayek economic theories?
July 14, 2011 @ 1:30 PM
AN wrote:
What does that have
[quote=AN]
What does that have anything to do w/ Keynes or Hayek economic theories?[/quote]
Those economies I listed have low taxes, but high government intervention. Singapore and Dubai are very business friendly despite the heavy hand of government.
July 14, 2011 @ 6:15 PM
briansd1 wrote:AN wrote:
What
[quote=briansd1][quote=AN]
What does that have anything to do w/ Keynes or Hayek economic theories?[/quote]
Those economies I listed have low taxes, but high government intervention. Singapore and Dubai are very business friendly despite the heavy hand of government.[/quote]
Again, what does that have anything to do w/ Hayek vs Keynes’s economic theories? So you showed some countries that implement some of Hayek’s theories and some of Keynes’s theory. I don’t think there’s a single country that implement all of one’s theory.
July 15, 2011 @ 9:39 AM
If you look at the all the
If you look at the all the modern, advanced countries, including the USA, you’d see that Keynesian policies are what got them to prosperity. That’s especially true when you look at prosperity being shared by the vast majority of the population.
There’s a lot more evidence that Keynesian policies work.
July 20, 2011 @ 11:59 PM
Well, with history on Hayek’s
Well, with history on Hayek’s side and clearly against Keynes, yet almost 50% of votes going for Keynes, I say we’re screwed!
July 21, 2011 @ 12:25 PM
faterikcartman wrote:Well,
[quote=faterikcartman]Well, with history on Hayek’s side and clearly against Keynes, yet almost 50% of votes going for Keynes, I say we’re screwed![/quote]
If you look at industrial policies of Japan, Korea, Taiwan, China, etc… can you seriously say that a hands-off approach is better?
Without government led industrial policies, those countries would still be poor like the Philippines that followed the American model.
Economic development in America very much had the guiding hands of government.
The Internet developed early in America because 1) the government provided the initial investments and 2) the FCC mandated that the bell companies provide unlimited local dial-up.
You need a combination of public and private initiatives, not one without the other.
August 4, 2011 @ 5:04 PM
Keynes = lower taxes AND
Keynes = lower taxes AND higher spending during recession
but
higher taxes and lower spending during boom
August 4, 2011 @ 5:04 PM
double
double
August 4, 2011 @ 5:16 PM
Hayek by far: Is there any
[img_assist|nid=15192|title=Hayek by far|desc=Is there any doubt?|link=node|align=left|width=74|height=100]
August 4, 2011 @ 7:17 PM
desmond wrote:Hayek by far:
[quote=desmond][img_assist|nid=15192|title=Hayek by far|desc=Is there any doubt?|link=node|align=left|width=74|height=100][/quote]
Finally! someone agrees with my earlier post 🙂
August 4, 2011 @ 9:31 PM
Gotta agree those are 2 very
Gotta agree those are 2 very compelling interests.
August 4, 2011 @ 10:28 PM
Since it can be
Since it can be mathematically proven there is insufficient currency in circulation to pay off but a fraction of the debts in existence today it is clear we are headed for total economic collapse unless sufficient currency is introduced into the system to repay the half a quadrillion dollars in debt which is floating around the world. I did say quadrillion and not trillion dollars.
Yeah I know inflation and all that, but did you REALLY think all that money could be borrowed without penalty?
So I doubt either will work. The money should never have been loaned to begin with.
August 4, 2011 @ 10:41 PM
GH wrote:Since it can be
[quote=GH]Since it can be mathematically proven there is insufficient currency in circulation to pay off but a fraction of the debts in existence today it is clear we are headed for total economic collapse unless sufficient currency is introduced into the system to repay the half a quadrillion dollars in debt which is floating around the world. I did say quadrillion and not trillion dollars.
Yeah I know inflation and all that, but did you REALLY think all that money could be borrowed without penalty?
So I doubt either will work. The money should never have been loaned to begin with.[/quote]
You point out something very fundamental about the dynamics of our debt-based monetary design, there is insufficient currency in circulation to pay off but a fraction of the debts
What that essentially means is the interest owed on debt needs consistent money creation for it to be paid off. And money is created through debt creation.
So if not enough debt is created bankruptcies will ensure, it’s built into the system.
but you miss the point with your last statement The money should never have been loaned to begin with
If the money was never loaned out there would be nothing to pay off the existing debt and hence collapse would ensure.
The system has no choice, for it’s own survival, than to keep creating money – and the way that is done is through debt issuance.
It’s a grow or die system.
August 4, 2011 @ 10:56 PM
Arraya][quote=GH wrote:
The
[quote=Arraya][quote=GH]
The system has no choice, for it’s own survival, than to keep creating money – and the way that is done is through debt issuance.
It’s a grow or die system.[/quote]
We are all out of credit which leaves ONLY the prospect of default. Widespread default leaves ONLY the prospect of economic collapse…
The fact is that onerous as it may seem, without introducing currency into our economic system we are all going down hard. Banks will not loan any more because they are rightly concerned we will not be able to repay them with interest. Worse, we tried loaning excessively during the bubble and this blog was born.
The fact is whoever prints money needs to balance the debt with currency and the piper needs to finally be paid. I doubt this will happen, so it is my prediction the economy will collapse and that collapse will send the planet into a massive depression which may last many years. Finally order may be restored and life will go on, but be assured this is not something we can avoid. Either tens of trillions of dollars need to be printed or we face total economic collapse and most likely in the next 5 years.