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Old 02-20-2009, 06:37 PM   #21
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Hitler and the public works programs of the 1930s is another example of where stimulating the economy move one toward prosperity (if it is done right). That economist whose last name starts with a K mention it in the past.
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I agree if we define public works as:
1. increasing industrial output by gearing up for war
2. reducing unemployment by increasing the size of the army, navy, air force
3. taking away business and possessions from Jews and other undesirables
4. reducing the population by making conditions in the country inhospitable for undesirables
OK - how about this variation:

1. increasing industrial output by gearing up for war the war on terror

2. reducing unemployment by increasing the size of the army, navy, air force Homeland Security, the Border Patrol, Transportation Security, etc etc

3. taking away business and possessions from Jews and other undesirables investors (foreign & domestic)via nationalization of banks & industries to "save" them

4. reducing the population by making conditions in the country inhospitable for undesirables illegal aliens & intending legal immigrants (& perhaps even some US Citizen retirees? )
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Old 02-20-2009, 08:08 PM   #22
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Originally Posted by Free To Canoe View Post
Good point BSSC.

Dex,

Getting money into the economy stimulates it.
Now it is just a question of HOW you do it.
Some ways push your hot buttons, others don't.

Free
The Marshall plan was the USA giving foreign aid to European counties.
Those countries were not burdened with the debt. The money did not come out of the economy of those countries. Also, those countries were in rubble the money and fact that the people were desperate for work, and literally hungry so the help was able to help get those get countries moving. It cost about 13B or 90B in today's dollars.
http://www.cato.org/pub_display.php?pub_id=6138

But the Marshall was not the only thing. Those countries were given food and Most Favored Nation Status; more helping hands.

Using the Marshall plan is not a valid input in the context of this discussion - so not a good point.
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Old 02-20-2009, 08:13 PM   #23
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OK - how about this variation:

1. increasing industrial output by gearing up for war the war on terror

2. reducing unemployment by increasing the size of the army, navy, air force Homeland Security, the Border Patrol, Transportation Security, etc etc

3. taking away business and possessions from Jews and other undesirables investors (foreign & domestic)via nationalization of banks & industries to "save" them

4. reducing the population by making conditions in the country inhospitable for undesirables illegal aliens & intending legal immigrants (& perhaps even some US Citizen retirees? )
Are you suggesting we do these things?
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Old 02-20-2009, 08:43 PM   #24
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Are you suggesting we do these things?
I think he's pointing out that we already have done these things.
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Old 02-21-2009, 11:45 PM   #25
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I think he's pointing out that we already have done these things.
Correct
(and not advocating particular portions to be good or painting any as bad, just making observations ya know)
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Old 02-22-2009, 02:52 PM   #26
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If that spending does not lead to *sustainable* improvements/growth, it is just another house of cards that will collapse.

So, throw money, maybe see a spike and collapse later, or take a slow crawl back? I think those are probably the options. I'll take the slow crawl - hopefully, it is uphill.

-ERD50
If I am reading your intention correctly, you suggest a bottoming of sorts will lead to a "slow crawl back"?
The other thought is that we are starting a downward depressionary spiral. There is no reason that this trend cannot continue indefinitely if no action is taken to change the trend.

Free
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Old 02-22-2009, 02:54 PM   #27
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The Marshall plan was the USA giving foreign aid to European counties.
Those countries were not burdened with the debt. The money did not come out of the economy of those countries. Also, those countries were in rubble the money and fact that the people were desperate for work, and literally hungry so the help was able to help get those get countries moving. It cost about 13B or 90B in today's dollars.
A Look Behind The Marshall Plan Mythology

But the Marshall was not the only thing. Those countries were given food and Most Favored Nation Status; more helping hands.

Using the Marshall plan is not a valid input in the context of this discussion - so not a good point.
I agree with you that our current situation and that of Japan's 20 year recession is more economicly complicated than the Marshal plan scenerio. Therefore, it is not an optimum comparison. It is valid input in that both involve cash flow stimulus. (An excellent discussion of why some countries are able to bounce back from disaster and others not is found in Berstein's The Birth of Plenty.)

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Old 02-22-2009, 06:46 PM   #28
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If I am reading your intention correctly, you suggest a bottoming of sorts will lead to a "slow crawl back"?

The other thought is that we are starting a downward depressionary spiral. There is no reason that this trend cannot continue indefinitely if no action is taken to change the trend.

Free
No, I have no idea what might happen. But I can't see how (quoting myself here) "If that spending does not lead to *sustainable* improvements/growth" can really help long term.

Maybe the trend will continue indefinitely (I doubt it, there is some intrinsic value at some level, and human motivation). But will "some action" help, or hurt? I think it depends on the action.

From what I'm reading, history says that some of the current actions being considered will hurt, not help. In the absence of clear positive actions, maybe the old phrase "Don't just do something, stand there!" would be good advice?

-ERD50
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Old 02-22-2009, 07:34 PM   #29
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There is no reason that this trend cannot continue indefinitely if no action is taken to change the trend.

Free
While I might agree that an inflationary trend can continue indefinitely , a deflationary trend ends when all prices and wages reach zero.
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Old 02-22-2009, 07:53 PM   #30
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There's a good podcast on NPR Planet Money that explains some parallels and claims that Japan would have only been in trouble for about five years until the government made some poor choices.

Online version of the podcast here: NPR: Hear: Japan's Lost Lesson

The guest leaves a few things unclear - read the comments at the bottom of the page.
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Old 02-22-2009, 09:16 PM   #31
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From what is quoted, one third of the American economy is consumer spending. Now, put me in the camp that says, that while we are in a recession, we are not in Great Depression II. I think, as it has happened in all recessions since Great Depression I, that the American consumer will start spending again, when the fear of loosing their job subsides. I think things will get better if the government did nothing, and that the stimulus plan is going to lead to strong inflation.

Now, having said that, does anyone know if consumer spending made up 1/3rd of Japan's economy?
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Old 02-23-2009, 05:56 AM   #32
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Mid 2008 data but the percentage of the US Economy that is Consumer driven is a lot closer to 70%: The Percentage of the U.S. Economy Devoted to Consumer Spending Went Up and Up
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Old 02-23-2009, 07:24 AM   #33
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If the 70% figure is valid, then I am even more unconcerned about a recovery. The American consumer will spend again. It is what we do! Unless Paris stops making a fashion statement, Japan stops making electronics, and China stops making everything, Americans are going to consume. It is like drugs! And, yes the banks will lend so consumers can spend.
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Old 02-23-2009, 07:57 AM   #34
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If the 70% figure is valid, then I am even more unconcerned about a recovery. The American consumer will spend again. It is what we do! Unless Paris stops making a fashion statement, Japan stops making electronics, and China stops making everything, Americans are going to consume. It is like drugs! And, yes the banks will lend so consumers can spend.
I agree with you. Recessions and business cycles are normal. Usually we get out of them when confidence is restored. I've got kids and grandkids who can lead the way.

However, Mr. Volker doesn't like us spending so much. He believes we should take our medicine. I think most on this forum think he's a genius.

Paul Volcker is back, and he warns of tough times ahead - Los Angeles Times

A generation ago, Paul A. Volcker was a household name, the Federal Reserve chief who waged a hard-nosed but successful battle against virulent inflation that clouded the nation’s economic future. He did it by engineering a horrific recession, clamping on the financial brakes and sending the economy into a tailspin in 1981.
His concerns go to the very core of how America lives and how Wall Street operates. A child of the Great Depression and a man of legendary personal thrift, Volcker thinks Americans have been living above their means for too long.
It is the United States as a whole that became addicted to spending and consuming beyond its capacity to produce,” Volcker lectured the Economic Club of New York in April. “It all seemed so comfortable.”
Bringing consumption back in line with income would not only crimp individuals and families, but also require major readjustments in the global economy, which has relied on the U.S. as consumer of last resort.
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Old 02-23-2009, 09:05 AM   #35
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I think the premise is false: Japan has not been in a 20 year recession. They have not really grown that much, but I believe their population has decreased.

If you like, you may liken them to a country of fiscally conservative LBYM-types. That is, if everyone wants to save money and retire early, then it appears to become a little more difficult to get ahead of the Watanabe's.
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Old 02-23-2009, 09:29 AM   #36
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And instead of an article from 2002, why not this one from last week about Japan compared to the current situation in US/World? http://www.nytimes.com/2009/02/22/bu...s/22japan.html
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Old 02-23-2009, 02:59 PM   #37
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And instead of an article from 2002, why not this one from last week about Japan compared to the current situation in US/World? http://www.nytimes.com/2009/02/22/bu...s/22japan.html
Wow, yeah. That article was way more up to date, and depressing, than mine was. Thanks.

Do you see Americans ever using old bath water to wash clothes? I'll eat cabbage every day, but damn, that bath water thing is kind of gross.
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Old 02-23-2009, 03:02 PM   #38
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... it appears to become a little more difficult to get ahead of the Watanabe's.
Groan...
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Old 02-23-2009, 10:09 PM   #39
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However, Mr. Volker doesn't like us spending so much. He believes we should take our medicine. I think most on this forum think he's a genius.
I don't see how anyone can argue that American's need to be spending as much as they have in the recent past. Obviously, there needs to be spending, but not to the extent of a zero or negative savings rate and significantly leveraged purchasing. We need to spend, while living at or preferrably below our means. Anything else will just push the problems forward a little in time, to re-occur again in the near future.
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Old 02-24-2009, 07:34 AM   #40
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I found this to be a good source of what went on in Japan:

http://www.npr.org/blogs/globalpoolo...dcast02.02.mp3
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