My View: Recession or Not?

Problem with that notion is that the problem is so big now that another stimulus isn't going to buy us a few months of phony GDP growth like it did last time. We'll just keep stimulating until the economy wears off of that artificial high, or until people come to their senses.

 

its because also of uncertainty that more people are holding on to their money ,plus the 14 million + out of work takes into account also.
Stimulus isnt going to work,neither is another round of QE3,sadly that is what Obama may be planning.Europes economic troubles are effecting us,sending shockwaves to our economy as well.When they tank,we tank,when we tank,they tank.
We need the Feds to LAY off,loosen some of their job killing regulations,we need more manufacturing in the U.S.,and Washingtons policies,all the red tape is preventing that.

 

No it isn't, the problem is no different than 2 years ago. And there is no "artificial high". People buying goods with stimulus money is real growth. Might not turn in to sustained growth but nevertheless it is real growth.

Recessions are nothing more complex than people saving more than before.

 

Might also be they are tired horses and cannot respond to further whipping.

 

actually this is false.......you need people to save to create a pool of capital that businesses can use and expand...this in turn creates "REAL" employment!

 

yup.....the savings rate in the US desperately needs to increase!

 

I guess the unemployment and the net lost that went along with it was "real growth" too right? When government spends money, of course you are going to get increase in GDP, but it's far from anything real.

GDP was steady increasing at 1.3 percent each quarter. Now it's barely budging. If that's not an artificial high I don't know what is.

 

How is it not real? Are you saying incomes of public sector employees are not real?

 

Money that public sector employees spend is money they earn.

Government spends money that I earn and so far it's wasted most of the money on subsidies which produced nothing so I would say no it's not real growth.

 

When was the last time you paid for deficits?

And what if the money you earn came from the public sector?

Say you own a restaurant and tons of your customers are local military members and teachers. Did you "earn" that money, or is that Govt money?

 

I don't pay anything. Taxes are taken from me.

It doesn't so who cares.

 

But not to pay for deficits. So an increase in spending does not mean you will pay more taxes

How do you know? There are over 22 million public sector employees. That is 22 million customers spending money in this economy. So how do you know you do not have any public sector money?

 

I don't get to choose where my tax dollars go. As a matter of fact, no one does. My money is spent by whoever is setting the agenda in Washington.

Money has no owners. Only spenders. I put a 50 dollar bill in the bank I'm sure I'll never see the same 50 again.

 

I'm just saying that your money does not go to deficits. You have a fixed tax %... so no matter what the Government spends you will be taxed the same amount. Basically more spending != more taxes.

That has no bearing on reality. It doesn't matter if it is the same $50 bill. All that matters is you have $50. My point is there are 22 million members of society going around buying up real goods and services from the private sector with public sector money. So what is the difference between a military member buying a product and a Wal-Mart cashier buying a product?

 

The 90s wouldn't be a good example of that explanation would it?

That's basically what I just said.

Nothing but I'm not talking about government employees. I'm talking about Government.

Here is my assessment:

The government hires of people to dig up holes all across the country. Then the government hires people to fill them back up again.

Sure they're are jobs and the government pays them to do it, but in the end you have nothing to show for it.

 

What?

You were talking about the physical bill. I'm talking about accounting entries. If the almost $4 trillion deposited in to public sector employees accounts gets spent. The economy is now being flooded with public sector wealth. And then as the years go buy, that money is still floating through the economy. I didn't want to get this far in to the argument since I know you won't understand it. But the point is, all the money we have comes from the Government.

You are missing the key point. It isn't what the person does for the job, although it helps, it is what they do with the money. It is no different than some pirates that found a ton of gold in the gold standard. They didn't do anything "productive" other than find money. But that money ended up leading to all sorts of wealth creation. So what is the difference as long as the money is spent and starts circulating around the economy?

 

I'm blaming everyone!

 

The 90s. What paid off the deficit in the 90s if tax dollars never go towards the deficit.

No I was pretty much just talking about money in general. Money has no owners. Only spenders. Money saved today will always be spent tomorrow.

I do understand and it's rather silly.

It's pretty much no different from saying that $1 Food Stamps Generate $1.82 of growth to the economy. Let's assume for now that this is true. Where would this $1 dollar come from? The tax payer most likely. It only means $1 was taken away from growth and then spent for sake of phony GDP. Nothing is being created.

Where the money comes from also matters a great deal.

If you find wealth and start circulating it it's fine. It wasn't taken from anyone else. You're using Private Sector money as Public Sector money to spend. You're circulating money around, but you have nothing to show for it. You have nothing out of it, except for increased GDP which you could have done by just printing money.

 

I'm talking about deficit spending.

This has no bearing on money creation. Savers of money have to get the money from somewhere. And for net savings to increase more money has to be created.

It is the only thing that matters in this discussion. The point is money comes from the Government.

I'm talking about deficit spending, which doesn't come from the public sector. And even if it is just from spending. What does it matter in a macroeconomic sense if you spend your tax dollars or some welfare recipient spends your tax dollars? Either way the money is spent and either way it is someones income.

You are acting as if money only gets spent once.

 

They're the same thing generally.

Never said it did but its clear you don't understand what I'm trying to say.

While that may be true the Government still has very control on the economic. In positive terms anyway.

It's a cycle that goes nowhere. I work, spend money, pay taxes. You give unemployment or welfare to spend money. Except the different is he doesn't work or pay taxes. What is the benefit in this? He's not producing anything and he isn't doing anything productive. He's spending the same person's money. He is not contributing anything to the economy except higher GDP (whoopdy doo).

It this is what grows the economy it would have been easier to just give everyone $100,000 to go look for their own job for a year.

 

Your tax dollars are not used for deficit spending

I don't because it doesn't make sense

????

He also ends up with no money... so someone must have it.

No that is a cop out. You can't go from an $800 stimulus and compare it to $31 trillion. You want to spend to meet maximum productivity. You want to bridge the gap between savers.

 

Then what was used for the deficit in the 90s?

Money doesn't truly belong to anyone in a philosophically sense.

You said money comes from the government. Does the Government control the economy?

The government has it. And they're going to give it back to him.

How is that a cop out? They spent $800 billion on the stimulus. It was designed for job creation. It cost almost it cost $200,000 per job. They could have easily give me that money for 1 job for me or given $100,000 to selective people to go look for a job for 1 year? If the whole point is just to spend money what difference does it make? They could have spent it, invested it, started a business whatever.

 

There wasn't a deficit in 3 years in the late 90s. So nothing was used because there wasn't a deficit.

Very true, so what does it matter if a public sector employee or a private sector employee earns an income or spends money?

They control the available assets for the economy to function. And they control fiscal policy which is a form of inflation control. There are 5 entities that work to create this economy.

1) The Country (Represented by the Government)
2) The Treasury (the Govts accountant)
3) The Fed (The countries bank)
4) The banks
5) The private sector

Notice how we are at the bottom of the totem pole. There is so much that goes on above us in terms of money creation that the private sector controls very little in our economy.

But where do they get it from? People earning an income
Where do people earn an income from? People who spend money
What do public sector employees do? Spend money

Well look at the facts. $500 billion of the stimulus was for tax cuts. That money was not spent for jobs. Only $300 billion of the entire stimulus went to job creation. So in a realistic sense a $300 billion job bill is really a drop in the bucket when it comes to how much this economy lost in terms of wealth.

 

There was in the early and mid 90s. It didn't disappear on it's own so what was used to pay for it if your tax dollars don't go towards the deficit?

Government has to spend money to keep the government programs and institutions running. The money just doesn't go to the salary. The money spent to keep the program running is wasted because it produces very little if anything at all.

Even if public sector workers use their wages to spend on the economy part of that money is taxed. It goes right back into the government never to be spend on the economy.

Without the private sector there wouldn't be any of those things.

And what do we have to show for it?

Tax incentives are not tax cuts. And tax cuts is not spending. And does it really matter if it were $300 or $800 billion? It was still money wasted.

 

I don't think you are understanding what deficits are. There were deficits all throughout the 90s but 3 years. And no, your tax dollars did not go to fund the deficits in the 90s either

The money goes to someone, somewhere, who is a human that buys crap. That's all that matters in a macro sense when money is spent. Do we want a job performed as well that benefits society? Yes. But the spending of money by the Government performs two functions ever since we left the gold standard.

But it's a cycle. The point is money never actually disappears. Public sector money instantly becomes private sector money the second it is spent. Now the private sector pays their taxes just like the public sector, and the cycle continues. But with deficits there are more dollars circulating which causes higher tax revenues and higher GDP's.

The public sector consists of humans who use dollars just like the private sector

The largest economy in the history of mankind and a bunch of spoiled citizens who complain about the stupidest (*)(*)(*)(*).

Tax incentives still require income. Direct Government spending does not require someone who has income, it goes to someone who doesn't. Which is why it is much more effective.