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1   marco   2013 Sep 24, 11:43pm  

By the way .... there is no Nobel Prize for economics. None.

Krugman received some obscure award in economics "dedicated to the memory" of Nobel.

Just for clarification.

2   smaulgld   2013 Sep 24, 11:45pm  

The depressed economy is not ALL about austerity.

Austerity impacts government spending and government employment which to his point we know employment is down.

The real problem with the economy is not how much or little money is pumped in through taxes, stimulus or QE but rather the structure of the economy and where it goes.

Currently it does not go to create jobs it goes to create trading profits and appreciation of housing prices.

An easy fix would be for the government to spend more money to create jobs and to hire more TSA, military, FBI, CIA, and post office personnel but that does nothing really to fix the economy. But it would lower the unemployment rate.

3   spydah_hh   2013 Sep 24, 11:47pm  

smaulgld says

An easy fix would be for the government to spend more money to create jobs and to hire more TSA, military, FBI, CIA, and post office personnel but that does nothing really to fix the economy. But it would lower the unemployment rate.

But that's only a temporary solution, not something viable for long term and like you said it wouldn't fix the economy. In fact it'll only make things worst as the government will simply spend more money it doesn't have.

4   smaulgld   2013 Sep 24, 11:51pm  

There is a good comment on the blog noting that the 1% would have it better if there were less austerity. This is true because the ultra rich receive enormous government subsidies-on per capital basis far more than the poor do in welfare.

The real issue is not how much money the government spends but how and where it spends it.

Krugman thinks always spending more is the answer but we have seen money thrown at many problems for naught. We spend more on education today than 30 years ago and schools are worse.

I wish Krugman would include in his macro analysis a factor that includes mismanagement/waste of funds or superior management/value for dollar.

His assumption are that a government dollar spent is a government dollar spent without giving any analysis as to how it is allocated and spent. That's macro economics but its too blunt to give a clear picture.

5   smaulgld   2013 Sep 24, 11:56pm  

spydah_hh says

But that's only a temporary solution, not something viable for long term and like you said it wouldn't fix the economy. In fact it'll only make things worst as the government will simply spend more money it doesn't have.

Agree I wasn't advocating doing that-but it appears that Krugman is. If his premise is he can fix unemployment if you just gave him the money. He is right- he will fix it in a way that he thinks is suitable. He will have more government spending on jobs and projects that he selects.

He would have the government spend more money in the way he sees fit.
And if he is the arbiter of the measurement of whether it is fixed, he can fix it. He will have more people employed by the government providing services and projects that he thinks are in the country's best interest.
So he can't ever be wrong, especially if he never gets the money, because he can always argue if you just gave me the money or 3X more it would work.

6   smaulgld   2013 Sep 25, 12:02am  

marco says

By the way .... there is no Nobel Prize for economics. None.

Krugman received some obscure award in economics "dedicated to the memory" of Nobel.

Just for clarification.

ALL Nobel Prize winners receive "The Sveriges Riksbank Prize in Economics Sciences in Memory of Alfred Nobel"

Krugman won his in 2008
http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2008/

He won the same prestigious prize as other Nobel Laureates in Economic and other fields.

Krugman did not "received some obscure award in economics "dedicated to the memory" of Nobel." that is how the prize is described!
http://www.nobelprize.org/nobel_prizes/economic-sciences/

7   smaulgld   2013 Sep 25, 12:10am  

smaulgld says

He won the same prestigious prize as other Nobel Laureates in Economic and other fields.

Krugman did not "received some obscure award in economics "dedicated to the memory" of Nobel." that is how the prize is described!

http://www.nobelprize.org/nobel_prizes/economic-sciences/

Krugman won the same prize Stiglitz http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/2001/
Milton Friedman won http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1976/ and Hayek won http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1974/

Krugman does not have some watered down version of the Nobel prize in economics

9   finehoe   2013 Sep 25, 2:34am  

marco says

By the way .... there is no Nobel Prize for economics. None.


Krugman received some obscure award in economics "dedicated to the memory" of
Nobel.


Just for clarification.

From their website:

"The Prize in Economic Sciences in Memory of Alfred Nobel is awarded by the Royal Swedish Academy of Sciences, Stockholm, Sweden, according to the same principles as for the Nobel Prizes that have been awarded since 1901."

http://www.nobelprize.org/nobel_prizes/economic-sciences/

Hardly "obscure".

Just for clarification.

10   smaulgld   2013 Sep 25, 4:47am  

Not that it matters. I take every argument and give it merit based on how it is presented, not who presents it.

11   Shaman   2013 Sep 25, 7:04am  

Obama won the Nobel peace prize before he did a single thing as president. Then he extended the unpopular Afghanistan war another 5(and counting) years and tried to make a case for invading Iran and Syria.
Seems like them Nobel awarding Norwegians aren't all that bright!

12   Heraclitusstudent   2013 Sep 25, 7:21am  

Krugman looks at a situation where the gov still runs a large fiscal stimulus 4 years after the recession, where the interest rates are still at essentially 0% and where the Feds are creating $80+ billions of new money and concludes the bad economy is due to "unprecedented austerity".

He looks at a situation where the country has been running large and persistent account and trade deficits, where the gov debt is at 100%+ of GDP, where household also have high level of debts. But he is convinced that the situation is bad because we didn't spend enough.

There is a point where you have to say Krugman is just crazy.

His Nobel price is not watered down: He got it for the same reason Obama got the Nobel peace price: these prices are often assigned for political reasons only.

13   mell   2013 Sep 25, 7:44am  

Heraclitusstudent says

There is a point where you have to say Krugman is just crazy.

He's a sheister. a crony-capitalist shill pumping voodoo economics so that people don't realize that every burger-flipper does a better service to the nation than him. You don't need any of those parasitic idiots wasting your taxpayer money, this money should go to people how actually deliver tangible goods and services. Unprecedented austerity my ass ;)

14   humanity   2013 Sep 25, 8:21am  

Okay. Yeah I get it.

If the deficit increasing stimulus comes from cutting taxes (especially at the top) then it's worth it and it creates enough jobs to justify it. If it comes from QE, basically funding banks and causing long term rates to be lower than they otherwise would be, that's great.

But if the stimulus comes from increasing spending on productive enterprises such as building infrastructure or funding education, then it's bad...very very bad.

15   humanity   2013 Sep 25, 9:49am  

Heraclitusstudent says

There is a point where you have to say Krugman is just crazy.

There's a point way before that where you read and try to comprehend his point of view.

I wonder how many of the people who disagree with Krugman are intellectually about here:

mell says

He's a sheister. a crony-capitalist shill pumping voodoo economics so that people don't realize that every burger-flipper does a better service to the nation than him.

Kind of amusing really. He can tell us how he feels but he can't tell us why.

16   humanity   2013 Sep 25, 9:55am  

Heraclitusstudent says

Krugman looks at a situation where the gov still runs a large fiscal stimulus 4 years after the recession, where the interest rates are still at essentially 0% and where the Feds are creating $80+ billions of new money and concludes the bad economy is due to "unprecedented austerity".

That's correct. That 80 billion/ month is not government spending. That's the fed. Buying treasuries. The government spending is actually the money on the other side of those transactions. Money that would be borrowed and spent (bonds that would be issued) anyway. The difference is that the interest rates on these bonds is lower than they otherwise would be. And the Fed has all these bonds on their books.

It is uncharted territory, and there will be a cost. How much does the fed lose when they "unwind" those positions ? When do they ? That loss is probably ultimately what gets monetized. (paid for with digitally "printed" funny money). In any case, it's not spending. IT's not part of the Federal budget.

17   mell   2013 Sep 25, 10:06am  

humanity says

The difference is that the interest rates on these bond is lower than they otherwise would be. And the Fed has all these bonds on their books.

Oh, so the Fed is actually a charity organization who does those things for the greater good in coordination with the government and thus counterfeiting is forbidden for the regular guy but ok for the Fed to distribute the fresh fiat to the first-in-line cronies doing their heavenly work for the good of the masses? Beautiful! Come on, don't be daft! ;)

18   mell   2013 Sep 25, 10:09am  

humanity says

Kind of amusing really. He can tell us how he feels but he can't tell us why.

Krugsheister is advocating kicking the can down the road and putting the debt burden on future generations who have no say in it and promoting it as the responsible thing to do - that's the very definition of a sheister!

19   smaulgld   2013 Sep 25, 10:17am  

Quigley says

Obama won the Nobel peace prize before he did a single thing as president. Then he extended the unpopular Afghanistan war another 5(and counting) years and tried to make a case for invading Iran and Syria.

Seems like them Nobel awarding Norwegians aren't all that bright!

Especially calling themselves Norwegians when they are indeed Swedish!

20   smaulgld   2013 Sep 25, 10:18am  

Heraclitusstudent says

reating $80+ billions of new money and concludes the bad economy is due to "unprecedented austerity"

Hard to call that austerity.

21   humanity   2013 Sep 25, 10:19am  

mell says

humanity says

Kind of amusing really. He can tell us how he feels but he can't tell us why.

Krugsheister is advocating kicking the can down the road and putting the debt burden on future generations who have no say in it and promoting it as the responsible thing to do - that's the very definition of a sheister!

What do you call giving the social security surplus to the rich and the corporations in the form of tax cuts, and off the books spending on wars and medicare part D ?

After all, that's how we got to this place. Well that and GDP (and tax revenues) way below projections.

Funny how all that deficit spending was okay back then (tax cuts for the rich), to be paid for by future generations, but now when real unemployment is still so high, we can't afford deficit spending ?

22   smaulgld   2013 Sep 25, 10:22am  

humanity says

Money that would be borrowed and spent (bonds that would be issued) anyway.

That is actually not true-right now the fed is actually help fund the US government because THEY are the ones buying 60-90% of the newly issued US treasuries and they are willing to print US currency out of thin air to buy them and to receive a ridiculously low interest rate.

The demand for US treasuries is no longer great enough for the US to fund its deficit spending. The Fed and QE fills that void.
To add stimulus spending to the mix would not be a good idea.

23   curious2   2013 Sep 25, 10:23am  

humanity says

deficit spending was okay back then....

Who said that? Oh yes, Dick "deficits don't matter" Cheney and voters, apparently. Deficits do matter, very much in fact, even if voters are distracted by bogeymen. Alas among partisans, deficits are only acknowledged to matter when the other party is in charge, and somehow magically cease to matter when their own party is in charge. That is how a republic sinks into an empire of debt, bankrupting itself gradually and then suddenly.

24   mell   2013 Sep 25, 10:54am  

humanity says

What do you call giving the social security surplus to the rich and the corporations in the form of tax cuts, and off the books spending on wars and medicare part D ?

Crony capitalism.

humanity says

Funny how all that deficit spending was okay back then (tax cuts for the rich), to be paid for by future generations, but now when real unemployment is still so high, we can't afford deficit spending ?

It wasn't ok with me back then either, but nothing has changed on how the money is spent. We still have wars, the invested and leveraged wealthy float with the asset bubbles while inflation and taxes plague the middle class, most of the bailout went to failed banking and insurances who are paying themselves million dollar bonuses again as if nothing happened:

http://www.zerohedge.com/news/2013-09-25/blankfein-explains-doing-gods-work-demands-year-end-bonus

25   humanity   2013 Sep 25, 10:59am  

smaulgld says

That is actually not true-right now the fed is actually help fund the US government because THEY are the ones buying 60-90% of the newly issued US treasuries and they are willing to print US currency out of thin air to buy them and to receive a ridiculously low interest rate.

Why do you say it's not true. It seems like you almost understand what's going on. You just like to make up your own facts like right wingers always do ?

smaulgld says

The demand for US treasuries is no longer great enough for the US to fund its deficit spending. The Fed and QE fills that void.

This is incorrect. They couldn't sell bonds at the same high prices (lowest rates in 60 years). But that's not the same as not being able to fund their debt. How much lower would the bonds be priced ? We don't know. But it's not that much.

26   smaulgld   2013 Sep 25, 11:04am  

there is a huge difference between a crony capitalist and a capitalist who earns his money by providing a good or service that people willingly part with their money to get.

I have no problem in giving the latter a tax break even if it means he makes more money-better that he has it and can invest it in his business so he can continue to serve his customers than to give it to the government so they can send it to some foreign dictator or to fund Solyndra, the NSA or TSA or to provide a farm subsidy or a bail out of the post office.

A crony capitalist who lives off government protection and favors should be taxed at 100% not because I believe the government should have the money but its our money that the government has helped the crony make and we don't share in it.

I don't envy people who make more money than me honestly, or even by luck or inheritance. Taxing them doesn't help me one bit.

27   smaulgld   2013 Sep 25, 11:07am  

humanity says

Why do you say it's not true. It seems like you almost understand what's going on. You just like to make up your own facts like right wingers always do ?

Here I found this at a right wing conspiracy meeting where I learned that the Fed is buying up to 90% of the newly issued US Treasuries that you claim would be "issued anyway"
http://www.bloomberg.com/news/2012-12-03/treasury-scarcity-to-grow-as-fed-buys-90-of-new-bonds.html

28   smaulgld   2013 Sep 25, 11:08am  

humanity says

We don't know. But it's not that much.

THAT you just made up- You can't say what the market would pay

29   humanity   2013 Sep 25, 11:09am  

smaulgld says

right now the fed is actually help fund the US government because THEY are the ones buying 60-90% of the newly issued US treasuries and they are willing to print US currency out of thin air to buy them and to receive a ridiculously low interest rate.

True. And the only reason that the global financial market accept this without going haywire, is that they believe the fed will eventually unwind these positions (selling all these bonds to others) and then taking that money back out of the system.

I believe that they will, possibly with the exception of the amount that they lose, if they have to sell those bonds at higher interest rates (lower prices than what they paid for them). That will be the true amount that this costs us, and the true amount that the money supply gets diluted because of all of this. At least that's my somewhat simplistic assumption.

30   humanity   2013 Sep 25, 11:13am  

smaulgld says

THAT you just made up- You can't say what the market would pay

Neither can you, and yet your statement implied they could not sell them at a reasonable price.
smaulgld says

The demand for US treasuries is no longer great enough for the US to fund its deficit spending

IT's true I don't know. But the global market for comparable securities (that the fed is not buying) would give more than a clue.

31   smaulgld   2013 Sep 25, 11:14am  

humanity says

True.

Thank you for a reasoned response far different than the all too common labeling and name calling on these boards

I am glad you can see that I didn't just make something because I am a right winger prone just to make things up!

32   smaulgld   2013 Sep 25, 11:15am  

humanity says

Neither can you, and yet your statement implied they could not sell them at a reasonable price.

correct we both "made up" opinions on what the prices would be but you would probably agree they would be higher than what the fed "sets" the rate at.

33   humanity   2013 Sep 25, 11:15am  

smaulgld says

I am glad you can see that I didn't just make something because I am a right winger prone just to make things up!

well, actually this...

smaulgld says

The demand for US treasuries is no longer great enough for the US to fund its deficit spending.

is pretty border line.

34   smaulgld   2013 Sep 25, 11:18am  

The demand for US treasuries is no longer great enough for the US to fund its deficit spending.

"

is pretty border line.

"

If the Fed IS the market for treasuries its hard to say what demand is. But we have seen reduced buying by the Japanese and Chinese this year

35   humanity   2013 Sep 25, 11:31am  

The fed is the market at these prices.

I'm aware of how bizarre it is,...that is what they are doing. They are propping up the financial markets in an unprecedented way. And artificially low interest rates are inflationary for gold, real estate and other assets.

MY point simply was that this is not "spending" in the sense of being related to our budget or our budget deficits. In fact, it allows us to finance our current spending at a lower price. So it's the opposite of spending for now.

I believe it's hard to argue that the cost of it is more than what the fed ultimately loses when they unwind their position, which might be years from now.

36   smaulgld   2013 Sep 25, 11:35am  

humanity says

MY point simply was that this is not "spending" in the sense of being related to our budget or our budget deficits. In fact, it allows us to finance our current spending at a lower rate. So it's the opposite of spending for now.

But if the government spends money in excess of what it takes in in taxes, it has to issue bonds to cover the excess.

If the Fed is THE market for bonds, they are in effect helping to fund our deficit spending at a lower than market rates . We would be more retrained in our borrowing if the Fed didn't monetize the debt and our interest payments would be higher.

The concept of creating inflation as if its helpful is ridiculous. The less money you have the higher the percentage of your household budget goes to food, housing and energy which are rising. We would be better off with lower prices!
I

37   Heraclitusstudent   2013 Sep 25, 11:42am  

humanity says

How much does the fed lose when they "unwind" those positions ? When do they ?

They will never unwind these positions.
QE is just a way for base money to catch up with the amount of loans in the economy.

But they will have to stop it at some point. And that means all the imbalances they created will revert toward balance.

38   freak80   2013 Sep 25, 11:47am  

Ummm...gold is tanking...

39   humanity   2013 Sep 25, 12:21pm  

freak80 says

Ummm...gold is tanking...

Would be tanking far worse if the fed wasn't seemingly trying so hard to cause inflation.

40   humanity   2013 Sep 25, 12:27pm  

Heraclitusstudent says

They will never unwind these positions.

I strongly disagree. That's not what they say. And I don't think the market would be as well behaved as it is (especially currency markets) if the perception of the smartest people in finance was that the fed won't unwind those positions.

Also, if they don't unwind them in one way, they must in another, no ?

Do you believe that the U.S. government honers the bonds they sold to the fed, and they pay that money back to the fed ? If so what does the fed do with all of that money then ? Buy more bonds perhaps ?

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