Paul Krugman argues for a robust stimulous package
Paul Krugman is encouraging the incoming Obama administration to be bold and enact a robust stimulous program to get the economy back and running. http://www.nytimes.com/2008/12/01/opinion/01krugman.html Obvisiouly not all government spending is the same and if it’s invested wisely can reap future benefits. Nonetheless this type of talk makes me nervous in light of our already ballooning federal debt. What do you think?
Send the President-Elect and his cabinet nominees, the US Senate and House member this: Crash Course Chapter 12: Debt
In today’s paper there was an article in which Wisconsin Governor Jim Doyle (along with several other governors) is calling of a stimulous package totalling 1 trillion dollars! http://www.jsonline.com/news/statepolitics/37007519.html With lots of money being doled out to individual states, of course. In the short term this could be beneficial i suppose, but I don’t see how so much additional spending on top of our already staggering debt will lead to anything other than hyperinflation (by a necessary devaluling of the currancy) and eventual collapse.
This is the same guy who won the Nobel Prize in Economics…it’s obvious the people awarding that prize were drinking Kool-Aid at the time.
I don’t know a ton about Krugman except to notice that his analyses of foreign policy are more insightful than his economic ones. At the very least, he seems like one of these mainstreamers who hasn’t yet changed his economic language. So he still speaks of turnarounds and rebounds and growth produced by stimulus. His recent comments make me feel much more than nervous.
krugman openly admits his adoration of john maynard keynes, therefore the fact he supports government economic stimulus packages during an economic downturn is not surprising. from his dec. 19th speech to the national press corps he states that all things being equal he would prefer we spend the stimulus on needed infrastrucutre, schools, up and coming industries but most importantly we should spend, spend, spend to the tune of $1Trillion. that means govt should spend for the sake of spending to keep this motor running, how convenient for politicians. no need to make the hard choices necessary to change our dysfunctional economy. no wonder he is the preferred front running voice for economists in washington, he speaks their language.
of course this type of stimulus program has been initiated on a large scale twice (that i know of), once during the great depression in the form of the ‘new deal’ and once during japans ‘lost decade’. in neither case was the stimulus a salve for the economic malaise, but it can be argued that a further downturn was prevented from the stimulus. is this the best outcome the economic stimulus package can offer us?
i would prefer we not travel this road again and hope that we allow quasi-natural-market forces to make the appropriate changes… but my voice is muted by the fact that our government is one that is polarized towards spending. now that washington has its mind made up and it has its 2008 nobel prize winner paul krugman to sell the idea to the doped masses, we can only continue to watch the calamity unfold.
A note about debt … at about 4:00 into Chapter 12 (Debt) Chris mentions "good debt"- Investment Debt.
Although I haven’t (but surely intend to) scrutinized how our new President intends to "stimulate" the economy, were it to be in the form of "Investment Debt" ie. monies for productive endeavors like rebuilding our infrastructure or somehow helping efforts to reduce energy consumption then that would be a good thing, imo.
I’d be curious to know Chris’s opinion on the American Monetary Act (http://www.monetary.org) since that’s exactly how it proposes we (the U.S.) introduce money into the economy.. eliminating the Fed, putting it’s economy management functions under the Treasury Department, and diseminating the money sort of "bottom-up" by spending directly to service providers rather than the current "top-down" (loans through banks) method.
If I’m not mistaken Congressman Kucinich has entered The American Monetary Act for consideration in the House, or might be doing so shortly. This idea does go against the Austrian school philosophy and is somewhat Keynesian, but I think it’s a good start and a practical one. Thoughts?
Note- After I wrote this I checked and found out that the measure Cogressman Kucinich has introduced is much less "radical" than replacing the Fed, but is another good first step, imo. It (his bill- HR 7620 "Transparency In The Creation Of WealthAct of 2008") proposes legislation that the Fed account for in which of 9 areas any newly created debt is intended to be used. Something that the (the Fed) previously have not been very specific about.
I was wondering, who is going to pay back this new debt? We can’t pay back the debt we have now.
Perhaps you’re implying what I’ve been thinking a lot about recently: that while there can be a distinction made between so-called "good debt" (rebuilding bridges) and "bad debt" (Tomahawk cruise missiles), in the end it’s still debt and all of the problems and complications surrounding it are still present.
My biggest concern with any kind of infrastructural stimulus is that it will be the "old paradigm" that gets rebuilt. Why go further into debt (which ever kind it is) resuscitating a dying model — highways, bridges, etc. These are simply the veins and arteries of the internal combustion, fossil fuel model, which is about to expire. At least focus on rail, water-way and mass transit systems.
Thank you… Yes, something like that. Point being we are still digging the debt hole and seems the first thing we should do is quit digging.
And the Tomahawks … I would much rather have our subs launch a few Tomahawks (reach out and touch someone) on actionable intelligence than risk the lives of our service members by having to put boots on the ground. Unless we could figure out a way to throw bridges at them…. My husband is a retired US submariner so I do have a biased perspective.