The Ecomony will not Recover until the Government Spends MORE Money!!

Alright, I have been saying this for over two years now. The economy will continue to have high unemployment, we will probably go in to another recession, and the economy will not have any significant growth until the Government spends more money. Just by basic mathematics, if you understand how an economy works, you would come to the same conclusion. But let's see some common fallacies that you hear from the right...

1) We already wasted $800b on a failed stimulus.
- This is false, the stimulus did in fact help out aggregate data, and as it was spent unemployment started to decrease. However, it simply was not big enough. It was almost a third tax cuts, and only $200b+ in direct Government spending. The country lost $17 trillion in wealth and was spending $2.6 trillion less than before. If you can possibly show me how $800b makes up for these losses, then math has a problem.

2) We are bankrupt
- This is false, we are not and never will be bankrupt. They said we were bankrupt in 1937 when we had $41b in debt. Always ask yourself this question... how does a country with a made up currency run out of that made up currency? It can't, and it won't. These are just more ridiculous fallacies that have been perpetuated for decades.

3) We can't keep borrowing from the future
- This is false, we don't borrow from the future because that would be impossible, we actually invest in the future. If you want your children and grandchildren to have horrible lives, then keep asking the Government to cut spending

4) We have to pay the debt back
- This is false. Over a 3rd of the national debt matures every year, and we pay it with no problems. The national debt is nothing more than a recycled loan that comes from the sky and never ever have to be paid off. That would require the Government taking back all the money they have given us.

5) The Government spending less gives the private sector more
- This is false. You pay the same amount of taxes regardless of how much the Government spends. When the Government spends less, the private sector has less. Which is why they don't do it, and why the last time they tried it (1937), it lead us right back in to a depression.

6) The Fed has already pumped trillions in to the economy
- This is false. The Fed can't pump money in to the economy. They can pump reserves in to the banking system. Since banks can't lend reserves but only trade them amongst each other, all it does is target the Feds interest rates. Those trillions of dollars simply sit in an account at the Fed.

7) Inflation is out of control
- This is false. In fact deflation is a bigger concern in the future than inflation. If you understand basic fundamental economics and can understand data, you can see why inflation is not a big problem and that we actually need more inflation.



Basically, the right/conservatives/libertarians have a fundamental misunderstanding of our monetary system. The Government plays the most important role in the monetary system. The Fed, banks, and the private sector are all dependent on the Governments actions. The Government simply needs to spend more money, and this is my 100% guarantee that the economy will go in to a recession/depression if Romney/Ryan cut spending like they say. Mathematically it is impossible not to be in a recession. Which is why Mitt Romney said...

If you understand the logic behind why he is saying this, then you'll understand why you can't cut spending to target a balanced budget and get positive results.

 

I don't see "spending money" as the only way to improve the US economy.

I see "utilizing the money more effectively" as a way to boost the economy without affecting the money supply.

Quite possibly the Pentagon already knows this but they desire a poor economy in order to reach strong draft results for an impending conflict. Just a thought.

 

$1 trillion infrastructure stimulus. Would create millions of jobs and rebuild America. That's as effective and solid use of money as you can get. Unfortunately if Romney wins we will spend that $1 trillion on a war with Iran rather than at home building an amazing country. Human capital is the most valuable commodity in the world... there is absolutely no reason to waste them.

 

Someone should read that at the Democratic National Convention and promise 8 million more government jobs by 2016.

 

Instating a fair-accross-the-board tax as percentage of income would lower that percentage to 20% for everybody... Corporations too since they are "people".., and dramatically boost the US economy.

As it is now, common people pay 30-35% while many corporations and US Government employees pay nothing. It does not seem like a fair burden of economic suffering.

 

It seems like it should work, mathematically. But it would need some kind of twist or angle to work politically.

 

That's the problem. That's why they even downgraded our country because our politicians were seriously threatening to choose to default. Our political system and lack of education in this country is absolutely killing us right now. This country could be unstoppable if we dropped our 18th century ideologies on how money works.

 

OP, you mean all those people who told me for years that money doesn't grow on trees was wrong?

 

this has been tried before and it worked out really well..ask anyone from main land china..the could now buy two bowls of rice a week instead of just one to feed their family

 

Well, just for the sake of the argument... where do you think our money comes from?

 

This libertarian has been listening and agreeing with you for two years. We have to stimulate this system to get back to growth. The best way to stimulate is probably infrastructure unless your targeting a certain industry (cash for clunkers).
Our economic system needs a continual demand of debt, if the Banks are not coming up with new ways to in-debt the people (derivatives, dotcoms, student loans etc), the Gov needs to step in and create it. We need to move into the next bubble. Lets hope that growth will stay for a while this next time.

Is this the system you want to feed? That is what you advocate. A system that centralizes power in a few hands, concentrates wealth, creates class conflict, undermines our Gov, forces artificial growth, and destroys our environment. There is almost 7 billion on the planet, an atmosphere full of co2, and a world that is in debt. I think it is time to start thinking of a better system with sound money in the hands of the people.

 

I think we can agree on somethings. I however disagree about what you mean by "sound money in the hands of the people". There is no such thing as "sound money". In fact money has been more stable in the past 75 years than it ever has been. What people confuse sound money for is if money is backed by gold or some other metal, so $1 is always backed by a certain amount of gold therefore $1 never loses value. But then I always ask the question, what backs gold? Or what backs another commodity?

Then you run in to the same dilemma. I'm not saying this system is perfect, but what I'm saying is the alternatives to this system that we know of are the reasons we created this system in the first place. They have many flaws that cause significant problems to real people and families. America is spoiled, our system has produced the largest and most robust economy in the history of mankind. I think we have a pretty good idea about what we are doing when it comes to the monetary system.

I also disagree about debt. At the end of the day, debt just comes from thin air and when it's repaid it just disappears. But since it comes from thin air, you can always replace money created from thin air with more money created from thin air. The way we run our system based off debt, is really the way the Fed controls the monetary system and kind of the trigger to influence or subdue economic growth. I think once people understand the inner workings of our system, it starts to make a lot of sense why they do what they do.

So at least we can agree on the need to stimulate!!

 

I once read an article about something called a "foundation economy." Can't find it again. But basically it said that since we've proven that trickle-down doesn't work but trickle-up does, the government should put new money into the system through welfare. That way the spending power at least passes through more hands.

 

$5,000,000,000,000.00 later.........

......the mind numb still believe we can spend our way out of this.



If 5 trillion of Democrat Stimulus was a massive complete and utter FAIL...which it was.....surely 10 Trillion will work.......
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LOL!!! Did you really just post a graph of the civilian employment/population ratio?? Now that is funny. And I see you failed to touch on a single point I made. Typical Republican data cherry picking.

 

Cherry picking....lol........the truth hurts doesnt it.....
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So your response of a post saying the economy will not "recover" until it spends more money is to show a low employment/population %? Hahahahaha, you just made me laugh. Thanks for that!

 

The OP specifically says "Ecomony"... Read the title.

OF COURSE the Ecomony will only improve by spending money... Preferably Eco-friendly mony.

 

LOL! I didn't even realize that. Good catch.

But I guarantee you I am not wrong.

 

I know your not wrong... However the US Government already spent money in the wrong way.

You suggested how they should spend money. I believe your are more correct in your method than the US Government was in their "give it to the rich and let them loan and drain out more money from the economy through interest" policies.

However I believe the US Government could spend the money they are already wasting MORE EFFECTIVELY and produce a superior result. Just my $2 dollars.

 

Me thinks you need to understand what a libertarian is. it's not what you happen to think at the moment because you say so. You are a classic big govt liberal who wants central govt.

 

you nailed it. In fact, people only need 1 house so all second and third homes etc should be given to those who rent or are homeless. We also do not need our paychecks. Nope, we should be given by the central govt only what we need until such time as the central govt feels we can be personally responsible again. I'm with you. If all of the wealth, savings and income were routed back to the govt then life would be sweet. We would see such an uptick in productivity and competitiveness the likes you've never seen.

I still marvel today at the inventions and ingenuity which still are pumped out of Cuba, Greece, North Korea, Venezuela, Spain, Ecuador and others

 

Typical response from someone who has no clue what I'm talking about! Guarantee you are a Republican or a Libertarian.

 

WRONG...

It is the working people who must do the spending, it must be from their salaries not money given back to them from the government called "stimulus."

The proper term is Consumer Spending.
ONLY increased and sustainable Consumer Spending can save the economy.

When the goverment Taxes one group of people and then gives that same money to another group to spend, no INCREASE has taken place.

 

You do not understand what the velocity of money is... next!