Well whoa darn! Obama has failed - already?

[Mystik01]

1st off, it is government spending that generate the economy. When running a business, one of THE most important reports run is the Statement of Cash Flow. Why? It shows how much money is moving. A company that doesn't move money is a company that will fail. Stimulis packages are supposed to throw excess money into the country in hopes that it will create jobs and generate a great deal of money flow which will cause a rise in the economy. The greatest stimulis packages ever were The New Deal initiated by FDR. With so many Americans out of work, he created jobs with the TVA when the Unemployment rate was 25%. The New Deal in conjunction with WWII created arguably the greatest economic boom in US history.

 

 

 

Now about Bush. He has "prevented" terror in America by inadvertantly bringing the war over to them. With the invasion of Iraq, insurgents who are mostly al-qaeda are busy fighting our troops. Now as a former soldier myself, I would agree that terrorists using "terror" against our troops is far better than terror against our citizens and my family. If I had a choice between seeing a soldier hurt or an innocent American, I would choose the former. And with our troops over in Iraq and Afghanistan, the resources of the terrorists seem to be dwindling. Gotta love accidental successes.

[raven_gaurd0]

The New Deal by FDR was done in an age directly after WWI and right before WWII. War does wonders for a countries economy, but the Iraq 'War' has never escalated above that of a spat-like military engagement. You bring casualties up to 20 million, like the Kremlin suffered, and then you can talk war-scale. Besides, the world has changed infinitely. This 'New New Deal' is hardly what our economy needs, I think.

[Quoi_Tu]

Inflation, I agree, is unlikely, as the debt isn't being printed in paper. It's all credit. I wonder how that all works, actually? I'm not an economist, of course.

 

 

 

As for the Bush bailout, I meant both. The stimulus checks of 2008 didn't work because the people didn't spend it, and that's their fault for only spending it on paying off debts. As for TARP, there are plenty of 'bailout' pieces of the stimulus plan, such as sending money off to private corporations, as was illustrated on the Pie charts I sent.

 

 

 

I don't think that A stimulus plan is bad; I think that this partisan, agenda-based stimulus bill is bad. Do you see where I'm coming from? I'd be all for a 3 trillion spending bill that sheer-jolted the economy through force-buying or something, but that's far too socialist for anybody but Russia's taste.

 

The Federal Reserve (The Fed) deposits money into the banks reserves electronically.

 

 

 

Well, a fair amount of people did spend the checks, but the plan didn't have the effect Bush wanted. The first half of TARP was primarily loans to failing banks, and the pie charts referred to the Obama stimulus plan not TARP. So, TARP is separate from the Obama plan and was passed during the Bush administration.

 

 

 

The bill is suprisingly bipartisan with a mix of infrastructure spending and tax cuts and it should have appealed to the Republicans, but politics got in the way (it always does). It's not a partisan, agenda-based bill, that's just the pundits babbling.

[magekillr]

b. I am worried about inflation

 

 

 

Why?

 

 

 

I forget if the stimulus is officially 1 trillion or 800 something billion, lets just say 800 billion for the sake of discussion. The Us is in effect printing 800 billion dollars for an 800 billion dollar spending project/stimulus. Printing 800 billion new bills has a way of causing inflation, granted with the whole world in economic trouble it wont be as bad of inflation. The other problem is that talking like the economy is going doomsday hurts markets based on emotional speculation.

 

 

 

I'd rather have very minimal negative GDP that's expected by 2019 from this bill than lose any growth that could be gained from it (which is expected to be as high as 1.4 to 4.2% increase in GDP). The thing is, the losses from a crunching economy and no growth are far greater than any GDP loss that we'll lose 10 years from now due to inflation.

[Quoi_Tu]

The New Deal by FDR was done in an age directly after WWI and right before WWII. War does wonders for a countries economy, but the Iraq 'War' has never escalated above that of a spat-like military engagement. You bring casualties up to 20 million, like the Kremlin suffered, and then you can talk war-scale. Besides, the world has changed infinitely. This 'New New Deal' is hardly what our economy needs, I think.

 

We were back to pre-Great Depression levels by 1939, before the war started. The war also put the US into a lot of debt (over 100% of GDP) and almost halted consumer spending and raised savings rates to record highs (high savings aren't neccessarily bad, just listing what happened). War is bad for an economy; end of story.

 

 

 

I'd rather have very minimal negative GDP that's expected by 2019 from this bill than lose any growth that could be gained from it (which is expected to be as high as 1.4 to 4.2% increase in GDP). The thing is, the losses from a crunching economy and no growth are far greater than any GDP loss that we'll lose 10 years from now due to inflation.

 

What do you mean negative GDP?

[Mystik01]

The New Deal by FDR was done in an age directly after WWI and right before WWII. War does wonders for a countries economy, but the Iraq 'War' has never escalated above that of a spat-like military engagement. You bring casualties up to 20 million, like the Kremlin suffered, and then you can talk war-scale. Besides, the world has changed infinitely. This 'New New Deal' is hardly what our economy needs, I think.

 

 

 

That is exactly why a stimulus package is needed. A New Deal type stimulus would be a bit much, i was just drawing it as an example. Money pumped into the country stimulates growth. Past stimulus packs did nothing that would actually stimulate the economy. Giving everyone a few hundred bucks to buy an LCD TV does nothing for the economy. But using that money to create government infrastructure jobs does wonders. Give a man a fish he will eat for a day, teach him how to fish, he will eat for a lifetime. Dont give out money, use to to make people money.

[raven_gaurd0]

The New Deal by FDR was done in an age directly after WWI and right before WWII. War does wonders for a countries economy, but the Iraq 'War' has never escalated above that of a spat-like military engagement. You bring casualties up to 20 million, like the Kremlin suffered, and then you can talk war-scale. Besides, the world has changed infinitely. This 'New New Deal' is hardly what our economy needs, I think.

 

We were back to pre-Great Depression levels by 1939, before the war started. The war also put the US into a lot of debt (over 100% of GDP) and almost halted consumer spending and raised savings rates to record highs (high savings aren't neccessarily bad, just listing what happened). War is bad for an economy; end of story.

 

 

 

 

The Spanish-American-Fillipino War of 1898 earned America millions despite grave spending buying the Phillipines from Spain. We made a lot, and I mean a lot, of money from that war.

[Quoi_Tu]

The New Deal by FDR was done in an age directly after WWI and right before WWII. War does wonders for a countries economy, but the Iraq 'War' has never escalated above that of a spat-like military engagement. You bring casualties up to 20 million, like the Kremlin suffered, and then you can talk war-scale. Besides, the world has changed infinitely. This 'New New Deal' is hardly what our economy needs, I think.

 

We were back to pre-Great Depression levels by 1939, before the war started. The war also put the US into a lot of debt (over 100% of GDP) and almost halted consumer spending and raised savings rates to record highs (high savings aren't neccessarily bad, just listing what happened). War is bad for an economy; end of story.

 

 

The Spanish-American-Fillipino War of 1898 earned America millions despite grave spending buying the Phillipines from Spain. We made a lot, and I mean a lot, of money from that war.

 

If you think in terms of business, war (especially these days, before 20th cent. may be an exception) has costs that have no return. A country creates the job of soldier and pays a citizen to do it. That citizen does not creat a product that the country then turn around and sells, that citizen helps kill other countries citizens whether in defense or not. War is not a good business model. We surely haven't gained anything economic from Iraq or Afganistan; we've only lost.

[magekillr]

What do you mean negative GDP?

 

 

 

A February 4, 2009, report by the Congressional Budget Office said that while the stimulus would increase economic output and employment in the short run, the GDP would, by 2019, have an estimated net decrease between 0.1% and 0.3% (as compared to the CBO estimated GDP baseline).

 

 

 

http://cbo.gov/ftpdocs/96xx/doc9619/Gregg.pdf

 

 

 

I'm saying that the short term gains, which are SIGNIFICANT, are more effective than long term losses, which are less than 10% of the short term gains.

 

 

 

Here's a good way to show why the stimulus is better:

 

 

 

Scenario 1:

 

5

 

7

 

9

 

11

 

12

 

15

 

Scenario 2:

 

8

 

9

 

10

 

11

 

12

 

14

 

 

 

People saying it's bad are the ones looking at the final number in scenario 1, without adding up all the numbers together to realize that scenario 2 produces a much bigger number (because taking the sum is the proper way to interpret policy). The stimulus package is going to be effective because it allows high shorter term growth for slight long term trade-offs.

 

 

 

One final summary so people understand:

 

 

 

Instead of the bottom dropping out of the economy now, it'll merely fail to grow as fast for a few years later on with the passage of the stimulus. So instead of people starving without jobs, you'll have them not being able to buy a 27 inch TV and instead having to settle for a 25 inch.

[magekillr]

War is horrible for the economy, debt, and obviously civilian loss, but it's great for a few contractors and cronies (Halliburton, Black Water, Lockheed). Please stop telling people that war spending is "good" for the economy. If FDR could have spent just as much money as he did on the war effort, and people produced and sold infrastructure (if that's possible) instead of guns and tanks, we would have spent a lot of money, but we would be able to see the returns on our investment. This is why infrastructure and long term = good.

[Quoi_Tu]

Oh, I thought you meant we'd have a negative GDP, which seemed awfully severe, but you meant growth. Got it.

[Dalcyte]

What is this talk about war bein bad for an economy?

 

Silly goose, war is great for economies, but bad for people who die and don't get that economy.

 

War creates a large demand for goods, which creates jobs. Yay jobs. Plus the spoils of war and economic benefits.

 

 

 

Mage, you're very right on infrastructure and why most people believe that the stimulus will be good. A lot of people talk about how these companies need to be punished for stupid transactions...this is silly. While these companies screwed up sure, you can't just screw everyone over by saying "they messed up, they shouldn't get money". These companies drive our economy, and if they go under, so does everyone else.

[i_love_burritos]

Bad, idea to stimulate "raw" infrastructure.

 

 

 

Economics Lesson:

 

 

 

Infrastructure comes under one of four factors of prodcution.

 

These being Land, Labour, Capital and Enterprise.

 

 

 

Capital means, produced means of production. Anything that assists that in productions of consumer goods and services.

 

 

 

Capital, is also know as "I" in economics, is eqivalent to investment.

 

Investment, usually creates growth after 3 or 4 economic cycles.

 

We need direct injections of Labour, NOW.

[Zierro]

Be fair and give him his 100 days. If he doesn't do anything useful after 100 days, then you can moan all you want.

[Hawks]

Well, considering Japan has had many nearly identical stimulus plans which haven't worked... And that these taxes will now be levyed on the grandchildren and probably great-grandchildren of the generation making this decision... And that the proven way to go during a recession is lower taxes, lower government spending, I'd say, yeah, he's failed already. But in my mind he failed before he took office... Having a Treasury secretary who's got tax problems isn't very smart either. Also, giving tax cuts to people who don't pay federal taxes isn't a tax cut, it's free money. :evil:

[Quoi_Tu]

Well, considering Japan has had many nearly identical stimulus plans which haven't worked... And that these taxes will now be levyed on the grandchildren and probably great-grandchildren of the generation making this decision... And that the proven way to go during a recession is lower taxes, lower government spending, I'd say, yeah, he's failed already. But in my mind he failed before he took office... Having a Treasury secretary who's got tax problems isn't very smart either. Also, giving tax cuts to people who don't pay federal taxes isn't a tax cut, it's free money. :evil:

 

The bold is just wrong.

 

 

 

Also, what stimulus plans that Japan has used are you thinking about? Because our plan is nothing like the multi-trillion dollar infrastructure spending of the 1990's in Japan when they were in a period of deflation and a liquidity trap (a different situation than ours).

 

 

 

And those people receiving free money have been shown to spend more (which helps the economy) than wealthier people receiving the same amount.

[magekillr]

I like this chart:

 

 

 

year/revenues/spending/growth GDP/unemployment rate

 

1929 -- -- -- 3.2% < Hoover era, Great Depression begins

 

1930 4.2%, 3.4%, - 9.4%, 8.7

 

1931 3.7 ,4.3, - 8.5, 15.9

 

1932 2.9, 7.0, -13.4, 23.6

 

1933 3.5, 8.1, - 2.1, 24.9 < FDR, New Deal begins; contraction ends March

 

1934 4.9, 10.8, + 7.7, 21.7

 

1935 5.3, 9.3, + 8.1, 20.1

 

1936 5.1, 10.6, +14.1, 16.9

 

1937 6.2, 8.7, + 5.0, 14.3 < recession begins, first major drop in government expenditures

 

1938 7.7, 7.8, - 4.5, 19.0 < recession ends, June

 

1939 7.2, 10.4, + 7.9, 17.2

 

1940 6.9, 9.9

 

1941 7.7 ,12.1

 

1942 10.3 ,24.8

 

1943 13.7 ,44.8

 

1944 21.7 ,45.3

 

1945 21.3 ,43.7

 

 

 

Kinda defeats the whole, "Government should be saving, people should be saving, and the government should be giving people tax cuts" argument from Libertarians and some conservatives.