Since 2009, real federal spending has been flat...

[ShcShc11 0]

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Since 2009, real federal spending has been flat. The huge deficits were a result of the unexpected crisis and decisions, before that calamity, to sustain rapid rises in real spending while giving away fiscal receipts.

Yet another legacy of the crisis has been a huge rise in the consolidated financial surplus of the private sector (balance between income and spending, as shares of GDP). The fiscal deficit is the mirror image of this increased private prudence. The risk is that accelerated fiscal stringency, at a time of zero interest rates, will depress the economy more than improve the fiscal outcomes. This is because fiscal multipliers are particularly high in such circumstances, as the International Monetary Fund has argued. The time to tighten fiscal policy will be when the economy is strong.

http://www.ft.com/intl/cms/s/0/dd2d89f4-63c0-11e2-af8c-00144feab49a.html#axzz2Is8aIczs


Good article by Wolf on Financial Times.

Mini-summary:
There is a sharp movement from financial deficit to financial surplus in the PRIVATE sector that is directly attributable to the Federal spending.

...
I admire that we care so much for the well-being of the country, but its clear enough that today's private sector surplus would not have been achieved without the public sector during the post-2008 collapse.

For anyone who still believes that deficit is our main concern should at the very least read the article.

Cheers! Shc

[lawrocket 3]

Indeed. Been flat. Just like terminal velocity.

My wife is hotter than your wife.

[davjohns 1]

I was trying to come up with the words, but don't think I can improve on yours. Bravo.

I know it just wouldnt be right to kill all the stupid people that we meet..

But do you think it would be appropriate to just remove all of the warning labels and let nature take its course.

[ShcShc11 0]

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Indeed. Been flat. Just like terminal velocity.

You can look at the numbers too. :)

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I was trying to come up with the words, but don't think I can improve on yours. Bravo.

I think EU and Belgium is a prime example where public contraction (through a badly managed and badly conceived system) is showing EXACTLY why it is a bad idea to contract during zero-bound economy.

The private sector is shrinking there. Even the Germans are feeling the private contraction IN SPITE of the EU subsidizing their exports through the Euro currency.


Cheers! Shc

[lawrocket 3]

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I think EU and Belgium is a prime example where public contraction (through a badly managed and badly conceived system) is showing EXACTLY why it is a bad idea to contract during zero-bound economy.

The private sector is shrinking there.

The private sector shrinks when its tax liabilities increase. Government spending cuts and tax increases provide a double squeeze because the government does less and private enterprise does less.

Still, I compare it to a junkie. In order to make real fixes you gotta bottom out. You have to make sure that you have the agreement of all the enablers to let it happen. The junkie withdrawing goes through pain and anguish, but so long as the quick fix isn’t given the long-term solution ends up. It also takes discipline and maintenance.

Politically, there is never a good time to send a nation into DTs. It would take political suicide to do it.

My wife is hotter than your wife.

[lawrocket 3]

http://news.yahoo.com/spains-unemployment-jumps-record-26-02-pct-092333918--finance.html

SPain's unemployment at 26.02%. When I read that I figured, "Tax increases and spending cuts." And what did I see?

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Battling to reduce a swollen deficit and avoid a bailout, the year-old conservative government has made major financial and labor reforms and applied severe austerity measures such as cutbacks in wages and spending as well as tax increases.

Yep. It's government taking a bigger piece of a smaller pie versus a smaller piece of a larger one.

My wife is hotter than your wife.

[airdvr 210]

I don't want to sign up for FT, but I'm calling BS. The porkulus bill was in the beginning of 2009.

Please don't dent the planet.

Destinations by Roxanne

[winsor 236]

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Since 2009, real federal spending has been flat. The huge deficits were a result of the unexpected crisis and decisions, before that calamity, to sustain rapid rises in real spending while giving away fiscal receipts.

Yet another legacy of the crisis has been a huge rise in the consolidated financial surplus of the private sector (balance between income and spending, as shares of GDP). The fiscal deficit is the mirror image of this increased private prudence. The risk is that accelerated fiscal stringency, at a time of zero interest rates, will depress the economy more than improve the fiscal outcomes. This is because fiscal multipliers are particularly high in such circumstances, as the International Monetary Fund has argued. The time to tighten fiscal policy will be when the economy is strong.

http://www.ft.com/intl/cms/s/0/dd2d89f4-63c0-11e2-af8c-00144feab49a.html#axzz2Is8aIczs


Good article by Wolf on Financial Times.

Mini-summary:
There is a sharp movement from financial deficit to financial surplus in the PRIVATE sector that is directly attributable to the Federal spending.

...
I admire that we care so much for the well-being of the country, but its clear enough that today's private sector surplus would not have been achieved without the public sector during the post-2008 collapse.

For anyone who still believes that deficit is our main concern should at the very least read the article.

Cheers! Shc

Thanks for the reference to the article.

The author, faced with the concern that some are yet unconvinced that economists are blithering idiots, has taken it upon himself to remove all doubt.

Bravo!

[Bertt 0]

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The private sector shrinks when its tax liabilities increase

How does that explain the considerable shrinkage in the private sector in 2008 ( you know, the year Lehman Brothers went bankrupt and the stock market dropped about 50% - that shrinkage) ?

You don't have to outrun the bear.

[lawrocket 3]

Because there is more than one way to fuck up private enterprise. It's like saying "but what about cancer?" in response to the point that obesity is causing chronic illness and death.

My wife is hotter than your wife.

[ShcShc11 0]

In all honesty, what I want to do is lay out a more accurate picture of what is really happening with the economy since its full of 1984-esque stereotypes.

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The private sector shrinks when its tax liabilities increase. Government spending cuts and tax increases provide a double squeeze because the government does less and private enterprise does less.

I have nothing against lawrocket, but this is what`s
awful in our current ways of thinking the economy. Its reduced to generalized comments / stereotypes.


1) The theory itself is not necessarily false, but it is very very elementary (its like learning basic additions before calculus). It is always necessary to take into account what happened since 2009. And I highly doubt any reputable would look at September 2008 and say: ''In order to save the economy and the financial sector, we have to bring tax to 0%''.

Even with 0% tax, it wouldn`t have saved the economy for the post Sept-2008 era.


2) There are even downright evidence that notion might be false EVEN during normal-rate employment. Bush 2001-2007 is a prime example about this. But this is whole other story...


If not Wolf, look at Jan Hatzius of Goldman Sachs who suggested the same.

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SPain's unemployment at 26.02%. When I read that I figured, "Tax increases and spending cuts." And what did I see?

Do you really want to discuss about EU woes

1) the EU post-2008 era is the perfect example that supports my assertions. See any of my previous posts for the lengthy discussions/details about it.

2) Spain having Euro as a currency is like a country being pegged to a foreign currency OR a country pegged to the gold standard.
-> Wiki any country that used to be with the gold standard, see their symptoms/consequences and you'l realize they are eerily similar.

Another good example would be National Socialist economy 1934-1938. See book by Adam Tooze. Summary: National Socialist leaders did not want to devalue their currency creating this super-void of foreign currency that nearly bankrupted the regime in 1934.


Cheers! Shc

[kallend 2,151]

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Because there is more than one way to fuck up private enterprise. .

The UK seems to have it figured out:

www.bloomberg.com/news/2013-01-25/u-k-economy-shrinks-more-than-forecast-as-triple-dip-risk-looms.html

...

The only sure way to survive a canopy collision is not to have one.

[Bertt 0]

So do you have an example of a time when the U.S. economy shrank because tax liabilities increased?

You don't have to outrun the bear.

[lawrocket 3]

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So do you have an example of a time when the U.S. economy shrank because tax liabilities increased?

No. Because my rule is "increase tax liabilities and decrease government spending." Because the latter has not occurred, my rule is fine.

I think that is something shc missed, as well.

My wife is hotter than your wife.