The View From 1776

The Daily Socialist - 6/18/10

New York Times propagandist Paul Krugman misunderstands (or deliberately falsifies) events of the 1930s New Deal under liberal-progressive-socialist Franklin Roosevelt.

Posted by .(JavaScript must be enabled to view this email address) on 06/20 at 10:41 PM
  1. Anderson does not apparently believe that the economy is struggling to recover and that it is necessary to get the economic engine going again.

    When you start a cold gasoline engine, it is necessary to open the "choke" to provide a "rich" fuel/air mixture to foster combustion until the engine is warmed up and running. If you close the choke too soon, the engine stalls. If you keep the choke open after the engine has reached operating speed, you get poor engine performance.

    At this point, the economic recovery is just beginning, and we need to keep the "choke" open and give the economic engine a fuel mixture that is on the rich side. When the economy is again humming, and the inflation pressures begin to rise, the fed can adjust the discount rate, up or down, to keep the engine from turning too fast or stalling out.
    Posted by .(JavaScript must be enabled to view this email address)  on  06/21  at  01:44 PM
  2. Mr. Jay:

    There is no such thing as liberal-progressivism's reified "economy."

    It certainly isn't a machine (or engine) that self-appointed intellectual overseers can start, stop, or accelerate according to the whim of their fancied superior intelligences.

    The economy is not a Keynesian abstraction. It is a continually fluctuating vectors of hundreds of millions of individual decisions by billions of people all over the world.

    Your analogy is therefore based on a false paradigm.

    Individuals, consumers and businessmen, are frightened by Democrat/Socialist Party politicians who incessantly hammer private businessmen as criminals who have wantonly wrecked the economy. They are frightened by reckless government polices that freight us and future generations with amounts of government debt that cannot be repaid. They are uncertainly waiting on the sidelines for the full extent of tax increases, from Obamacare to income and inheritance taxes, to become known. Businessmen who face so many unknowns can't plan farther ahead than a few months, hence their reluctance to rehire laid-off workers.

    That's what's stalling economic recovery. Not the failure of Paul Krugman & Co. to set the engine choke properly.
    Posted by .(JavaScript must be enabled to view this email address)  on  06/21  at  02:36 PM
  3. The old Herbert Hoover "do nothing and the economy will eventually come back" is indeed in vogue again with a certain fraction of the electorate. But to aver that government spending has no effect on the economy is foolish. Even if you do not believe in the details of the theories of Keynes, you certainly must grant that if, for instance, the government buys a widget from company "A," the employees of company "A" will then have a paycheck to buy groceries from their local A&P. A&P will then have cash to restock their shelves and buy can of fruit cocktail from Del Monte.

    The workers at Company "A", A&P and Del Monte will all pay income taxes on their wages to offset the cost of the initial widget bought from company "A."

    If, during a recession, the government does not buy the widget from company "A," and company "A" has no sales that month, it may lay off Joe and Sam, who will not be able to buy fruit cocktail. A&P and Del Monte's sales will decline, and everybody will go for unemployment compensation (until the Republicans cut that off, of course.)

    This is not rocket science.
    Posted by .(JavaScript must be enabled to view this email address)  on  06/23  at  10:18 AM
  4. You are correct J. Jay that if we stop the spending that we will have a depression but, we will have that no matter what because the debt based spending makes things worse, not better and the private sector is too small and growing smaller each time the government uses debt base spending to end recessions.

    Hoover, by the way, started programs that were continued under FDR to "stimulate" the economy. One was a dam named after him.

    However, the depression was unavoidable and FDR made it worse, not better by creating spending programs that couldn't be sustained. The fact it took decades for those flaws to be revealed doesn't make them sound or helpful.

    Just like now, total debt is the issue that will cause the depression. It is people, corporations, cities and states, not just the Federal Government, that have to cut spending and get rid of debt through defaults, sadly, more than saving and paying down debt which is impossible in a depression.

    The servicing of debt has gotten to high for most of our society and even the federal government is facing default (or hyperinflaton) to deal with its debt as interest rates rise.

    While the President under the most rosy "growth" projections shows interest on debt consumption rising from the current 8.6% level to 15% by 2014, other analysts are projecting it to be 28% by 2014. Since entitlements consume more than 2/3 of the tax revenues already and will grow due to the number of imports Medicare/Medicaid pays for in our hospitals and clinics and doctor offices.

    Even a 50% cut in defense spending can't balance the budget in a full employment period let alone in a recession, thus, only a depression and massive default on debt at all levels in our society, or a depression with hyperinflation will get debt down to a level we can live with.

    If the government has to buy the widgets to keep the company going then it should fail. That is because it is the private sector that has been destabilized due to the flawed economic and monetary principles we have used since the Great Depression and before in the 20's that caused that failure.

    This President has been doing all the things that will speed up a collapse and depression but, to not do those things would mean a depression now, instead of later. He is acting on the advice he is given and the voters would throw his party out in November if he didn't try to avoid this depression.

    But, remember that very few of the voters understand why our nation is on a course for failure due to the decades of flawed policies based on flawed economic and monetary principles and a debt based growth system that can't be sustained.
    Posted by JanPBurr  on  06/23  at  01:46 PM
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