Obama - Why is the Economy Growing so Slowly?

The questions will end as soon as you produce some kind of logically consistent and objective explanation for your assertions. The fact that they seem never ending is just an indication of your inability to do just that.

You don't need to tell me what the output gap is, I know what it is, I'm asking you why that's the best measure for optimal growth. It's a perfectly legitimate question so answer it.

And what is a "drastic" increase in prices? You see, your problem is that you continually use imprecise, overly vague terms that could mean anything. My science education compels me to rigorously define terms, so that is what I am attempting to do. "Healthy" inflation and "drastic" price increases are just vague BS terms that have no quantitative or objective meaning.

 

This is what I mean. Before we even step in to any other questions. What is your objective to economics? Like what do you think the goal of a planned economy should be? What measurements do you use to determine if the economy is doing well or not? What do you think is a healthy rate of inflation? What do you think is a healthy rate of growth and why?

 

What don't you understand about this? YOU started this thread. YOU staked out a position and made numerous assertions. Therefore YOU are expected to defend YOUR position. Stop dodging and deflecting and answer my questions or stop starting threads like this if you can't stand the heat.

 

So you are never going to answer any questions? Typical of a loser conservative.

 

Again, what don't you understand about this?

YOU started this thread and YOU made the claims, therefore the onus falls upon YOU to substantiate and defend your argument. Instead of doing that, you are dodging and dancing around my challenges like a little coward. You pretend to be so smart and superior but you can't even grasp the basic tenets of argumentation. You can't even understand that it's your responsibility to defend your position and that I don't have any obligation to answer your questions because I haven't staked out a position in this thread. I am merely challenging YOU to defend YOUR position, which you obviously cannot do. The only explanation is that you have some kind of personality or learning disorder that renders you incapable of mature discussion. If I had to guess, it'd be narcissistic personality disorder.

 

I made my claim and defended it. Just because you don't accept the answer because you already have already made up your mind on what you think is right is not my problem. You do this in every argument. You ask incredibly complex questions and the second you do not get the answer you want, you just claim victory. I don't even think you are trying to argue a point, I just think you are trying to win the battle of who is the best useless debater. If you want to know how they figure out or the theory behind targeting inflation or targeting levels of growth look it up on Google. There is plenty of reading material there for you to learn the details. Otherwise you will always be the loser who simply questions everyone with out ever having any answers. Like I said, you are exactly like my 5 year old nephew. "Why, why, why, why". Time to man up and grow a pair.

 

You guys can deny it all you want. But there is no getting around the facts. Obama has increased Govt spending by the lowest amount in his first term of any President in the past 40 years. That's not making an argument, that is actual mathematical fact.

Another mathematical fact is that Obama has reduced public sector employment by the highest amount in the past 40 years. He has reduced more Govt jobs than Reagan and Bush.

He is literally the most fiscally conservative President that we have had in the past 40 years. What's funny, is you guys are so brainwashed and so dumb that this will not even register in your brains. Regardless of what anyone says or what anyone believes the facts speak for themselves. Keep spinning gerbils!

 

Because President Cheney screwed it up so bad, it will take decades to straighten it all out. But if PinkSlip gets in, Cheney and company will be right back in the thick of things. Isn't that wonderful???

 

why is the economy not growing as fast as some want?

recovery takes time, simple as that, remember the banks and major corps were failing when Obama took office

also though republicans are not helping by trying to hurt consumer confidence as that plays a part too

also every job the corps (people) send over seas, is less taxes the government gets and less spending power the people have, foreign outsourcing in calling America's economy

 

Do you believe that increased government spending can cause sustainable economic growth?

 

Of course I believe it. But the reason I believe it is because of our monetary system. Not all monetary systems are the same. But based on our system of fiat money, I believe 100% that Govt spending is a necessity for economic growth valued in our own currency. And it's not just a made up theory. There is some evidence to this.

You can see the direct correlation between GDP and bank lending and Govt expenditures. One thing I notice from this graph is the Govt should have spent A LOT more after the banking system almost collapsed leaving the banks hard pressed to lend back in to the economy.

 

You do this in every thread. You stake out a position and when challenged to actually defend your position you whine and cry like a little baby about how "complex" your opponents are making things for you.

Yes, I realize that defending idiotic positions with no basis in logic or fact must be a "complex" undertaking for you, but that doesn't absolve you of your responsibility to actually answer questions and respond to challenges.

An you're the one who wants people to speak for themselves so stop being such a coward and defend your position using your own words instead of relying on google to do you arguing for you.

If you really think you've defended your position, then explain how you know that closing the output gap is the optimal amount of money to spend and then explain how to determine the difference between healthy and unhealthy inflation. Oh wait, you can't explain it because you have no idea what you're talking about...

 

I already explained them. The optimal amount is related to what they feel is their growth objective. Economics is a balancing act. You want to have just as much money in the economy as needed to produce sustainably more amount of goods and just enough inflation to give incentive to those who do not put their money under the mattress.

This is very simple stuff to comprehend. Gathering all the data and putting the pieces is complex, but "why" they do this is really easy. The fact you can't even grasp why they do this speaks volumes to your ignorance.

 

I hope you don't mean "target rate of GDP growth."

 

That's exactly what I mean. But I would put "real" in there also if we were getting specific.

 

The Fed doesn't target nominal or real GDP. In fact, I remember a few months ago an economist from Goldman Sachs urged the Fed to target a nominal GDP growth path because "nominal GDP is the price level multiplied by real GDP" and is closely related to real GDP. These kinds of claims have been made for decades. However, the Federal Reserve Bank of Kansas did a study on why setting a GDP target would be a terrible idea.

http://www.kc.frb.org/publicat/econrev/pdf/3q94clrk.pdf

 

I didn't say the Fed is in charge of targeting GDP growth. The ultimate goal of all the entities combined though, is to grow the economy. And we value this growth in terms of GDP and mostly real GDP per capita.

Once again, the fact you are arguing about GDP growth as an objective of economic policy is mind boggling. I never knew people like you guys existed until I came to this forum.

 

The GDP is a meaningless aggregate measure when viewed in the absence of any qualitative analysis, as has already been explained. That's a completely different argument. For now, let's assume that GDP growth is a priority.

That study by the Fed reached its conclusion about the lack of ability to conduct GDP growth targeting not based on the monetary policy tools available to the Fed, but on the statistical properties of the GDP and its inherent unpredictability. Example - time series of GDP is chaotic in nature and exhibits random external shocks. By chaotic, what is meant is that any model that attempts to capture the evolution of GDP is sensitive to initial conditions due to its nonlinearity. So even a small error in the input to the model would result in vast errors in the output (this is the nature of nonlinear dynamical systems.)

Based on the Fed's findings, what makes you think that Congress, or whoever you think should be in charge of targeting optimal GDP growth, can actually target an optimal growth rate?

 

Funny that you mention qualitative analysis. Economists Ricardo Hausmann and Cesar A. Hildalgo have a report called the Atlas of Economic Complexity which predicts nations' GDP growth through 2020 using complexity theory-based qualitative analysis:

http://www.cid.harvard.edu/documents/complexityatlas.pdf

 

Like always I break things down in to terms that majority of people can understand. How they calculate optimal growth rates or what process they use to come up with these rates is beyond me. But I understand the theory behind why they would want the economy to steadily grow. That is very easy to grasp.

And since we value growth in terms of GDP... we can start coming to some realistic conclusions. For nominal GDP to grow valued in USD, one of two things must happen... either the velocity of money rises or the qty of money rises. You can break this down in to simple and easy to understand examples. If there is $100 in the economy and that $100 is spent once on final goods and services, you have a qty of 100 and a velocity of 1. If you want the economy to grow to say $110 the next year, there are two possibilities like I said. Either velocity could rise to 1.1 or QTY could rise to 110.

Of course when you are talking about an economy the size and complexity of America there are many other variables and factors that come in to play. And there is an entire world of accounting principles to handle the calculation of GDP. But when all is said and done... this simple example can explain why more money can possibly lead to a higher GDP.

 

Then you should also believe that Bush43 was the most fiscally responsible president since the inception of the Fed, and that Obama is the least, except for, maybe, Harding who happens to have presided over the quickest recovery and healthiest economy of the century.

But I said sustainable growth. It doesn't do any good to show me charts because, as I've said many times, correlation doesn't show causation. I do believe, though, that credit expansion causes economic growth, just not sustainable growth. It causes bubbles, and bubbles can't be inflated ad infinitum. I think Hayek and Mises were right about credit expansion causing mis-allocation of resources due to a mismatch between consumer savings and high order production investment.

Now, you said "Of course I believe it. But the reason I believe it is because of our monetary system." That suggests that you believe it based on a-priori reasoning. But, in other threads, you've spurned a-priori reasoning. I won't challenge you to show me the reasoning by which you support this belief. It's clear to me that you aren't aware of all the premises on which your conclusion is based, and that you don't know how, or if, the conclusion follows from the premises. I just want to respectfully suggest that you learn the rules of logical inference, and apply them to your understanding of economics.

 

I'm not a philosopher. I don't care about these discussions. Bring up policy, bring up Fed actions, bring up charts and graphs and data... and make a point. All these ridiculous conversation that get drilled down in to exact scientific reasoning get annoying. We aren't making arguments that we are going to be submitting for peer review. This is a normal forum where regular people discuss their opinions. Not every single thing that someone says has to have 100 pages of research backing it.

Show me actual data backing your claims. There are many things that can cause mis-allocation of resources. And even though we have all this credit expansion growth and Govt debt growth the economy continues to grow. Start showing your data and explain in laymen terms what you believe is happening and why. These ridiculous arguments that you, Ethereal, and Random_Variable get in to are incredibly mind numbing.

If I knew every question you guys were asking and how to explain it in absolute detail, I would not be here on a forum during the middle of the work day arguing with you guys. Just act like normal people and stop being so weird.

 

Funny thing about that graph. It shifted $410b in spending to Bush even though Obama signed the bill, and it's not inflation adjusted. Put those factors in, and the picture looks much different.

 

That is incorrect. It did not shift stimulus spending to Bush. Please check your facts before you post such false and misleading information.

 

I'm not sure what crazy source you dug that up from, but it is clearly not accurate.

Year - outlays - % chng
2009 3,518.2
2010 3,455.8 -1.8%
2011 3,601.0 4.2%

Source: CBO.gov.

Increases in spending under Obama have averaged 1.2%, nowhere near the 25% figment of imagination in your chart.

And 2012 doesn't look to be much different. 7 months into 2012, spending is $75 billion *lower* than it was last year.

It's the typical kind of fabrication we frequently see from RW propaganda sources.