Catastrophic Treasury Auction Results Yesterday!!!

[Lukey]

I don't know what kind of a game you are trying to run here but where I came from (B.S. Economics, 1975, Summa Cum Laude) all deficit spending is "stimulus" and we've been running it at a rate of over a trillion $ a year for the past six or eight years. If it hasn't "worked" by now, it ain't gonna work. And again, tax cuts without offsetting spending cuts is NOT supply side - it's Keynesian!

 

[degsme]

I don't know what kind of a game you are trying to run here but where I came from (B.S. Economics, 1975, Summa Cum Laude) all deficit spending is "stimulus"

Then you'd best give back that degree because they didn't teach you much about Econ.

Deficit spending is simply deficit spending.

Stimulus spending is spending designed to address a Demand/Liquidity trap.



Stimulus spending MIGHT require deficits, or it might not.

Defiict spending MIGHT address a demand/liquidity trap - or, like with Reagan, it might just be a political ploy to "starve the beast".

 

[Lukey]

Then you'd best give back that degree because they didn't teach you much about Econ.

Deficit spending is simply deficit spending.

Stimulus spending is spending designed to address a Demand/Liquidity trap.



Stimulus spending MIGHT require deficits, or it might not.

Defiict spending MIGHT address a demand/liquidity trap - or, like with Reagan, it might just be a political ploy to "starve the beast".

LOL! If it works, it's "stimulus" and if it doesn't it's just government waste? That's BS and you know it. The government cannot (technically) "stimulate" the economy by spending less than it takes in (i.e. running a surplus). That dog won't hunt! You progressives have tried to redefine what "stimulus" is because it got such a bad name when it was used before. Classic stimulus was (and still is) deficit spending.

 

[degsme]

LOL! If it works, it's "stimulus" and if it doesn't it's just government waste?

Nope. Context of WHEN it is used is what makes the difference. Government spending in a robust economy (regardless of whether it is deficit or not) tends to have little or no SHORT TERM stimulus effect because Fiscal Multiplier for Government goes down to 1.5-2.0 in robust economies, which is about equal to private sector FM... QED, Reagan's and GWB's deficit spending had no stimulative effects - and the data shows this. (there is a long term - 20-30 year stimulative effect from basic research - as the boom of the 80s and 90s showed from the investments made in the 60s and 70s)

Government spending in a crash and/or recovery has HIGH short term stimulative effect because
1) there is a Liquidity/Demand Trap
2) FM for Government spending exceeds private sector (2.0-3.0)
And this is true whether it is defict or savings or tax based. And again the data of the last 120+ years supports this.

This context goes back to the non-linearity of Real World functions I referred you to over and over and overa again

FACTS MATTER lukey...

The government cannot (technically) "stimulate" the economy by spending less than it takes in (i.e. running a surplus).

how not? if that spending would not bue done by the private sector - such as in the current recovery corporations sitting on cash - it is stimulative. For example, Corporate taxation could be raised to 50% of profits. This would collect $1.5 Trillion (the private sector has $3 Trillion in retained earnings since the crash). If the Feds then spent $1 Trillion, this would add about $1.5 Trillion to the GDP, reduce unemployment by about 1% and increase long term GDP growth by about 2%.

That is the quintessential definition of a "stimulus".


A "stimulus" is defined by actual short term stimulation of the economy.

 

[Lukey]

Nope. Context of WHEN it is used is what makes the difference. Government spending in a robust economy (regardless of whether it is deficit or not) tends to have little or no SHORT TERM stimulus effect because Fiscal Multiplier for Government goes down to 1.5-2.0 in robust economies, which is about equal to private sector FM... QED, Reagan's and GWB's deficit spending had no stimulative effects - and the data shows this. (there is a long term - 20-30 year stimulative effect from basic research - as the boom of the 80s and 90s showed from the investments made in the 60s and 70s)

Government spending in a crash and/or recovery has HIGH short term stimulative effect because
1) there is a Liquidity/Demand Trap
2) FM for Government spending exceeds private sector (2.0-3.0)
And this is true whether it is defict or savings or tax based. And again the data of the last 120+ years supports this.

This context goes back to the non-linearity of Real World functions I referred you to over and over and overa again

FACTS MATTER lukey...



how not? if that spending would not bue done by the private sector - such as in the current recovery corporations sitting on cash - it is stimulative. For example, Corporate taxation could be raised to 50% of profits. This would collect $1.5 Trillion (the private sector has $3 Trillion in retained earnings since the crash). If the Feds then spent $1 Trillion, this would add about $1.5 Trillion to the GDP, reduce unemployment by about 1% and increase long term GDP growth by about 2%.

That is the quintessential definition of a "stimulus".


A "stimulus" is defined by actual short term stimulation of the economy.

Stop calling this crap "facts!" You can't prove a lick of it! "Fiscal multipliers" and "non-linearity" and "liquidity trap" - it's all pieces of a left wing pipe dream for the government to control the economy and equalize outcomes. And every time we let them do that we end up with Solyndra or ethanol and another trillion $ in debt. None of it makes a lick of sense.

Stimulus is when the government spends more than it takes in - period! Classic Keyensian theory says the government should run surpluses during expansions and deficits during recessions. The left has perverted that because they never liked the idea of running surpluses - so they came up with a new theory where they can "theoretically" justify constant "stimulus"/deficits because it keeps the economy growing and that increases tax receipts which can be used to repay the debt. But, as with any social science, when we put people in charge of making the theory work it becomes something else (can you say Greece?).

And, btw, thanks for the LOL! "Stimulus" is any government spending that would not be done by the private sector? Bwahahahahahaha! I have another definition for that - fraud waste and abuse!!!

 

[degsme]

Stop calling this crap "facts!" You can't prove a lick of it!

Yeah I can.

Fiscal Multipliers are even used by "conservative" economists. The notion that because you don't like having a measure that disputes your claims - necessarily means that money is only exchanged once per year, or that there is no way to measure the velocity of money, or that in a recession the driving force is a lack of demand - is just nonsense.

Instead what you want us to accept is Von Mises dogma that has ZERO evidentiary offering behind it - and in fact which insulates itself from the Real World by claiming that because the real world is complicated, its not worth trying to measure what is going on.

So your definitions are basically made up shiit.

Stimulus is not "when government spends more than it takes in - period". At the most simple, your own "deferred taxes" concept refutes that. YOUR reasoning here is that The Governemnt cannot possibley "spend more than it takes in" because eventually it has to take it in (this isn't true, but it is what your "logic" claims). Thus it is impossible for The Governemnt to engage in deficit spending... But wait, you assert the government does deficit spending.... but that means there is no tax reduction.... but but but

This logic is so ouroborean that it is best described by F. Scott Fitzgerald's derisive sneer: "The sign of a 'first rate mind' is the ability to simultaenously hold two diametrically opposed concepts".

Hint - that is not a compliment.

 

[Lukey]

Yeah I can.

Fiscal Multipliers are even used by "conservative" economists. The notion that because you don't like having a measure that disputes your claims - necessarily means that money is only exchanged once per year, or that there is no way to measure the velocity of money, or that in a recession the driving force is a lack of demand - is just nonsense.

Instead what you want us to accept is Von Mises dogma that has ZERO evidentiary offering behind it - and in fact which insulates itself from the Real World by claiming that because the real world is complicated, its not worth trying to measure what is going on.

So your definitions are basically made up shiit.

Stimulus is not "when government spends more than it takes in - period". At the most simple, your own "deferred taxes" concept refutes that. YOUR reasoning here is that The Governemnt cannot possibley "spend more than it takes in" because eventually it has to take it in (this isn't true, but it is what your "logic" claims). Thus it is impossible for The Governemnt to engage in deficit spending... But wait, you assert the government does deficit spending.... but that means there is no tax reduction.... but but but

This logic is so ouroborean that it is best described by F. Scott Fitzgerald's derisive sneer: "The sign of a 'first rate mind' is the ability to simultaenously hold two diametrically opposed concepts".

Hint - that is not a compliment.

Well I might suggest that the sign of a "first rate mind" is being able to correctly spell simultaneously. And what you are referring to is the "velocity of money" and yes, that exists. But the left has perverted it in an attempt to justify their premise that government spending, no matter what, helps the economy. It just isn't enough, absent good economic policy (read: helpful to free markets) to "Fix" a troubled economy (as we have seen time and again and most recently with the Obama "stimulus" that even he no longer refers too because it is a target for derision).

 

[degsme]

Well I might suggest that the sign of a "first rate mind" is being able to correctly spell simultaneously.

When internet spelling nazi is the best you got... its kinda pathetic.

And what you are referring to is the "velocity of money" and yes, that exists.

Then Fiscal Multipliers exist. But you said they did not. Which is it?

But the left has perverted it in an attempt to justify their premise that government spending, no matter what, helps the economy.

Want some oats with all that straw? Try again.

absent good economic policy (read: helpful to free markets)

But even you have admitted you don't actually want a free market. You want a market that is regulated. just regulated in the way YOU BELIEVE it should be regulated.

Whereas I want a FAIR market that is regulated based on empirical data and which fully reflects COGS in the transaction price.

the Obama "stimulus" that even he no longer refers too because it is a target for derision).

No - it was the target of a successful but dishonest campaign to discredit it. But IT WORKED - and it worked better than predicted. Even the GOP controlled CBO scores it that way.

FACTS MATTER
poltiical spin? not so much.

 

[Lukey]

When internet spelling nazi is the best you got... its kinda pathetic.


Then Fiscal Multipliers exist. But you said they did not. Which is it?



Want some oats with all that straw? Try again.


But even you have admitted you don't actually want a free market. You want a market that is regulated. just regulated in the way YOU BELIEVE it should be regulated.

Whereas I want a FAIR market that is regulated based on empirical data and which fully reflects COGS in the transaction price.

No - it was the target of a successful but dishonest campaign to discredit it. But IT WORKED - and it worked better than predicted. Even the GOP controlled CBO scores it that way.

FACTS MATTER
poltiical spin? not so much.

LOL! After your recent fiasco as the internet "definition nazi" I find that exceedingly rich. The "velocity of money" exists. But it isn't constant. It varies over time. To attempt to peg a "fiscal multiplier" is a false premise as it depends on what is going on in the economy. If the economy is sluggish, the velocity of money slows down (precisely when you are suggesting these "fiscal multipliers" will themselves perk up the economy). That's not how the economy works and that's why "stimulus" has such a bad name - the only way you can show it works is by running it through a "fiscal multiplier" (that may well be below 1 when you are implementing your stimulus) and then applying a (much higher) fixed fiscal multiplier that likely well exceeds the (actual) current measure of the velocity of money. This is quite emblematic of the way the left typically justifies its economic policies that clearly do not work. The only thing that works is to remove impediments to the velocity of money and that clearly involves free market friendly policies. Then the private economy will perk itself up without the expansion of government that clearly becomes more or less self defeating as it crowds out private economic activity (which is exactly what we have seen over the course of the past four years). And I don't need any esoteric economic studies to back that up - it's just common sense.

 

[degsme]

LOL! After your recent fiasco as the internet "definition nazi" I find that exceedingly rich.

Word MEANINGS are very different than spelling. If spelling confuses a meaning you can ask. But using Liberal - as a definition for Conservative - that is laughable.

The "velocity of money" exists. But it isn't constant. It varies over time.

Hmm... who was asking about "perpetual motion"? And who was asking about "non-linearity of economic functions"?????

To attempt to peg a "fiscal multiplier" is a false premise as it depends on what is going on in the economy. If the economy is sluggish, the velocity of money slows down

Not necessarily. Varies from sector to sector and spending type to spending type.

That's why Fiscal Multipliers for Government spending on Unemployemnt range from a high of about 2.5 during a crash to a low of about 1.3 during a booming economy... yes and?

that's why "stimulus" has such a bad name - the only way you can show it works is by running it through a "fiscal multiplier" (that may well be below 1 when you are implementing your stimulus) and then applying a (much higher) fixed fiscal multiplier that likely well exceeds the (actual) current measure of the velocity of money.

Nope. It is a "stimulus" because the type of spending selected (unemployement, Infrastructure construction, social safetynet services) is of the form that has an INCREASE in velocity of money during downturns.

Compared to "tax cuts increasing investment" in a booming economy DECREASES the velocity of money since it reduces the incentive to earn additional profits on the money.

The fact is that "stimulus" FM's are Measured via observation and decorrelation. Not through the abstracted magic that is Von Mises reasoning about economics. That is what makes them "proven"... they are not "run through a fiscal multiplier" - they are actually empirically measured.

Then the private economy will perk itself up without the expansion of government that clearly becomes more or less self defeating as it crowds out private economic activity (which is exactly what we have seen over the course of the past four years).

Name a private sector spending/investment role that the government has "crowded out" in the last 4 years... just one.

FACTS MATTER.
Von Mises hypothesis that are counterfactual? not at al

 

[Lukey]

Word MEANINGS are very different than spelling. If spelling confuses a meaning you can ask. But using Liberal - as a definition for Conservative - that is laughable.




Hmm... who was asking about "perpetual motion"? And who was asking about "non-linearity of economic functions"?????


Not necessarily. Varies from sector to sector and spending type to spending type.

That's why Fiscal Multipliers for Government spending on Unemployemnt range from a high of about 2.5 during a crash to a low of about 1.3 during a booming economy... yes and?



Nope. It is a "stimulus" because the type of spending selected (unemployement, Infrastructure construction, social safetynet services) is of the form that has an INCREASE in velocity of money during downturns.

Compared to "tax cuts increasing investment" in a booming economy DECREASES the velocity of money since it reduces the incentive to earn additional profits on the money.

The fact is that "stimulus" FM's are Measured via observation and decorrelation. Not through the abstracted magic that is Von Mises reasoning about economics. That is what makes them "proven"... they are not "run through a fiscal multiplier" - they are actually empirically measured.



Name a private sector spending/investment role that the government has "crowded out" in the last 4 years... just one.

FACTS MATTER.
Von Mises hypothesis that are counterfactual? not at al

But you insisted the word I used didn't mean what I repeatedly showed that it indeed meant. You know what I mean now?

Moving on...assuming a higher "fiscal multiplier" in slow economies than robust ones is counter intuitive, and, as experience has shown, people get that. You guys keep waving your arms and saying "it worked, it worked" but people don't see where it worked so you say "well, it would have been worse if we hadn't done it." And people just roll their eyes...

 

[degsme]

Moving on...assuming a higher "fiscal multiplier" in slow economies than robust ones is counter intuitive,

Well when empirical data shows your "intuition" to be wrong, you might consider revising your mental model. Once again your "intuition" is based on Linearity of the Macro factor of Monetary Velocity. Right off the bat this should be a warning to you about your "intuition". Just as nature abhor's a vacuum, it also abhor's a straight line (hell even light doesn't travel in a straight line) aka Linearity.

And that's what is happening here. Yes, in a down economy, by definition the velocity of money is down. But what you ignore is the question of why and in what segments of the economy those changes occur.

The segment of the economy that lives "paycheck to paycheck" and/or which cannot increase their savings rate without adversely affecting their quality of life - HAS NO CHANGE IN THE VELOCITY OF MONEY. What changes is their access to money and the flow of money into that segment of the economy. IE if you are in this segment, and you lose your job, you spend less, but not because of any inherent perceptions about the economy. So while the VoM drops, it drops because of ... a lack of spending, not because of a lack of demand. In fact what you get is "pent up demand" (ie people driving a POS car longer, driving on bald tires) that increased spending would result in ACCELERATED Velocity of Money

At the "disposable income" level of the economy - which in the USA is really only the upper Quintile earners - INDIVIDUAL behaviour - driven by Psychology - is BAD for the overall economy (and thereby implicitly sub-optimal for the indivual) But in essence it is a bit of a "Prisoners' Dillemma": If everyone with disposable income continues to spend and reinvest- the economy recovers quickly. Except that Behavioural Econ tells us taht everyone wants someone else to be the one to "jump in first"...and thus demand ARTIFICIALLY (based on monetary value and potential ROI) lags.

That was Keynes great insight. One that all subsequent econometric research as continued to back up. That in a down economy, if the government "Jumps in First" and does so with a large enough impact, it provides that "demand floor" (Liquidity floor).


And yes, once the economy gets moving again - as in hits its historic averages, or econometrically accelerating employment levels, it is more efficient for government to get back out of the sectors in which markets can operate efficiently. The Data on this goes back about 300 years. And Keynesian "liquidity trap intervention" has worked in the USA for 120+ years.


As for the Obama stimulus - "the people" "don't see where it worked" - because the GOP engaged in a very very succesful and dishonest campaign to POLTIICALLY redefine what "working" meant. That doesn't change the econometric data. The ARRA proposed it would save/create roughly 3 million jobs... CBO scores it at.. Three Million. OMB scores it at 4.5 million.

Meeting your targets means success.

 

[Lukey]

Well when empirical data shows your "intuition" to be wrong, you might consider revising your mental model. Once again your "intuition" is based on Linearity of the Macro factor of Monetary Velocity. Right off the bat this should be a warning to you about your "intuition". Just as nature abhor's a vacuum, it also abhor's a straight line (hell even light doesn't travel in a straight line) aka Linearity.

And that's what is happening here. Yes, in a down economy, by definition the velocity of money is down. But what you ignore is the question of why and in what segments of the economy those changes occur.

The segment of the economy that lives "paycheck to paycheck" and/or which cannot increase their savings rate without adversely affecting their quality of life - HAS NO CHANGE IN THE VELOCITY OF MONEY. What changes is their access to money and the flow of money into that segment of the economy. IE if you are in this segment, and you lose your job, you spend less, but not because of any inherent perceptions about the economy. So while the VoM drops, it drops because of ... a lack of spending, not because of a lack of demand. In fact what you get is "pent up demand" (ie people driving a POS car longer, driving on bald tires) that increased spending would result in ACCELERATED Velocity of Money

At the "disposable income" level of the economy - which in the USA is really only the upper Quintile earners - INDIVIDUAL behaviour - driven by Psychology - is BAD for the overall economy (and thereby implicitly sub-optimal for the indivual) But in essence it is a bit of a "Prisoners' Dillemma": If everyone with disposable income continues to spend and reinvest- the economy recovers quickly. Except that Behavioural Econ tells us taht everyone wants someone else to be the one to "jump in first"...and thus demand ARTIFICIALLY (based on monetary value and potential ROI) lags.

That was Keynes great insight. One that all subsequent econometric research as continued to back up. That in a down economy, if the government "Jumps in First" and does so with a large enough impact, it provides that "demand floor" (Liquidity floor).


And yes, once the economy gets moving again - as in hits its historic averages, or econometrically accelerating employment levels, it is more efficient for government to get back out of the sectors in which markets can operate efficiently. The Data on this goes back about 300 years. And Keynesian "liquidity trap intervention" has worked in the USA for 120+ years.


As for the Obama stimulus - "the people" "don't see where it worked" - because the GOP engaged in a very very succesful and dishonest campaign to POLTIICALLY redefine what "working" meant. That doesn't change the econometric data. The ARRA proposed it would save/create roughly 3 million jobs... CBO scores it at.. Three Million. OMB scores it at 4.5 million.

Meeting your targets means success.

But as a cursory reading of Bastiat will teach you, you are only measuring what you can see (and not what isn't seen). So it may indeed LOOK like the velocity of money has (temporarily) perked up in the "paycheck to paycheck" segment of the economy, but what you can't measure is the slowdown in other segments when the more wealthy don't make a productive investment because of their fear of the government interference adversely affecting the overall performance of the economy, or the lack of activity that results from an employer not being able to fill a low wage position because the government is paying generous welfare benefits. You guys get too hung up in your high falutin' models and theories and then you can't see the forest for the trees. Of course, it does make for cool sounding rationales for socialist economic policy to the uninformed...

 

[degsme]

But as a cursory reading of Bastiat will teach you, you are only measuring what you can see (and not what isn't seen).[/quote
Bastiat is wrong. Plain and simple he is wrong. He lacked the mathematical techniques as well as the measurement tools of a digitallly run monetary system. He was fine for his time and his insights on the extremes of protectionism still apply. But his and Von Mises notions of what can and cannot be measured are JUST WRONG.

So it may indeed LOOK like the velocity of money has (temporarily) perked up in the "paycheck to paycheck" segment of the economy, but what you can't measure is the slowdown in other segments when the more wealthy don't make a productive investment because of their fear of the government interference adversely affecting the overall performance of the economy,

Actually you can. And that work has been done. And the claim of that adverse effect simply isn't proven out in empirical data. One of the great examples of this has to do with what percent of GDP is invested in Capital Gains production in the US Economy. Supply siders like you argued exactly your argument in the run up to the 1986 Tax reform. Cap Gains rates and all manner of regulations were stripped aside. But after a period of re-stabilization (where formerly marginal losses became gains and were cashed in) the volume of capital in LTCap Gains as a percent of GDP RETURNED TO THE OLD RATE.

IOW less regulation and less taxation AT THAT OLD THRESHOLD of 35% LTCG and Marginal Income of 50% - HAD NO ADVERSE EFFECT on investment. And the CUTS had a measureable ADVERSE EFFECT on GDP growth. Specifically 30% of every $1 in income tax cuts to theupper quintile earners DISAPPEARED FROM THE ECONOMY>
http://scholar.google.com/scholar?q=david+romer+income+sensitivity+marginal+tax+rates&hl=en&btnG=Search&as_sdt=1,48&as_sdtp=on

or the lack of activity that results from an employer not being able to fill a low wage position because the government is paying generous welfare benefits.

This too has been studied and documented. Unemployment benefits add about 1 week of non-work in a thriving economy and about 1 day of non-work in a sluggish economy http://www.jstor.org/discover/10.2307/2118177?uid=3739960&uid=2&uid=4&uid=3739256&sid=55935408993

Again, the EMPIRICAL DATA REFUTES YOUR CLAIMS.

You guys get too hung up in your high falutin' models and theories

The only one spouting theories here IS YOU..

I'm citing EMPIRICAL DATA. And it REFUTES YOUR THEORY....


Show me data on where we cannot measure the things you claim we cannot measure.

Show me data on what "wealthy don't make productive investments"... particularly in light of the profile of the wealthy that DefeateObama documented in the other thread which showed them to be INEFFICIENT INVESTORS even in times of low government market participation.

Show me data that shows a lack of PRODUCTIVE employment in low wage jobs?


Again, YOU HAVE NO DATA.. you ONLY SPOUT THEORIES...


So stop accusing me of something that ONLY YOU DO.