patrick.net

thunderlips11 says

What official position does Krugman hold in the US Government since the Recession began?

He is the official spewer of meme...

thunderlips11 says

Organizations spend more than they earn all the time.

There is a difference between going in debt to invest in new productive endeavors that will bring new revenues in the future, and going in debt to finance your life style: on-going expenses, pensions, etc... Companies that do the later fragilize their positions and will eventually go bankrupt unless they change their ways.

thunderlips11 says

Aggregate Demand Theory states that just because somebody produces it, doesn't mean it'll be sold

The theory is that if you have idle production capacity this can be used if you have more spending, and spending can be created arbitrarily by government spending. This ignores what happens when production capacity is outside the country. You can't simply spend more and hope it will do much good to your economy if you just buy more Chinese stuff. It's not like this would by itself create factory jobs in Greece. It wouldn't. (unless of course quitting global trade).

After a spending boom, when you spent far more than you earned, you need to go back to reality and align what you spend with what you earn. This means an economic contraction, which in the case of Greece was severe, but this is normal and expected. It just highlight how artificial the boom was.

thunderlips11 says

countries like Greece depend on Tourism and Ag exports, which are already suboptimal due to the high value of the Euro, so it's difficult for them to begin to "produce".

The real economy is independent of the currency value. Prices adjust both ways. People adjust how much they ask to align with what they can get.

The key point seldom discussed in the US, it that this is not just about tight government spending. A lot of German requirements are move to modernize the country's economy. If don't even have a tax collection department, then maybe you ought to have one, and people don't like to pay taxes but maybe they should. Maybe they need to take steps to make companies more efficient. A lot of the "pain" in Greece is precisely being forced to change old bad habits. Without it Greece will never be able to prosper.

This is where monetary stimulus is just masking the bad structures. It just allows the country to not change, not adjust to reality, never do anything to become more efficient. It remove all incentives for change. Yes you can print money and spend it. And yes that is "demand" (for the Chinese). But no country ever prospered out of this in the long term. You are far better off by confronting your problems and adjusting to the reality.

thunderlips11 says

As discussed on another thread, "Lucky" or "Hard Working" countries like Germany got all kinds of deals the Greeks never got.

[Shrug] You can debate endlessly about who had it tougher in the past.
To God, all things are good.

I would also remind that in the 2000's Germany took tough steps to moderate wage growth and improve its competitiveness, and was considered "the sick man of Europe", while other countries were spending debt money and having it easy. So there is a time for others to adjust.

Also remember Greece is getting help amounting to a Marshall plan. It already had a good chunk of its debt cancelled. It's not like other countries are just killing Greece. They are also helping it.

What Heraclitusstudent fails to realize is the culture is not the problem.

With a current account surplus some other country has a deficit to balance the trade.

If Greece agrees to take loans from Germany or Goldman or whoever they are forced to be the deficit country.

The only real solution if for them to simply quit taking the cheap money.

But to not think Germany is not complicit in this is absurd.

indigenous says

If Greece agrees to take loans from Germany or Goldman or whoever they are forced to be the deficit country.

The loans are balancing what remains of the deficit after the Greek are forced to take tough actions toward re-balancing and cutting the deficit.

Saying they are "forced to run a deficit" fails to describe the reality.

Heraclitusstudent says

Saying they are "forced to run a deficit" fails to describe the reality.

OK they were seduced, like Rin is seduced by his partners.

indigenous says

bob2356 says

Well that proves beyond the shadow of a doubt you have no idea of any kind what keynes ideas were.

Bullshit, the practical reality is exactly what I said.

I have not read general theory, but that does not mean I can not empirically see the affects Krugman has on the US economy and the Japanese economy.

If you don't know what his ideas are then how in the world do you know his ideas are being implemented? Do you actually read what you write. What does krugman have to do with it?

bob2356 says

If you don't know what his ideas are then how in the world do you know his ideas are being implemented? Do you actually read what you write. What does krugman have to do with it?

I just listen to what Krugman says, a self described Keynesian, he is the master mind behind Abenomics. Krugman has everthing to do with it, how can you not know that?