Krugman: The Deficits Saved The World. But Then, It's Only A Problem When Democrats Do The Spending.
By Susie Madrak Saturday Aug 29, 2009 1:00pm
Ever notice the deficits are only a problem when Democrats spend to help the rest of us?
Krugman explains why the deficit isn't the huge problem Republicans always say it is (but only when there's a Democratic president, of course):
So is there anything to worry about? Yes, but the dangers are political, not economic.
As I’ve said, those 10-year projections aren’t as bad as you may have heard. Over the really long term, however, the U.S. government will have big problems unless it makes some major changes. In particular, it has to rein in the growth of Medicare and Medicaid spending.
That shouldn’t be hard in the context of overall health care reform. After all, America spends far more on health care than other advanced countries, without better results, so we should be able to make our system more cost-efficient.
But that won’t happen, of course, if even the most modest attempts to improve the system are successfully demagogued — by conservatives! — as efforts to “pull the plug on grandma.”
So don’t fret about this year’s deficit; we actually need to run up federal debt right now and need to keep doing it until the economy is on a solid path to recovery. And the extra debt should be manageable. If we face a potential problem, it’s not because the economy can’t handle the extra debt. Instead, it’s the politics, stupid.
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Start another war. That always works.
Reagan proved that deficits don't matter.
I am too busy trying to keep the mortgage paid, have electricity, maintain the car, pay for water, buy food....
And there will be all the $$$ we need for ALL Americans to have decent health care.
Of course it won't happen. To many $$$ to be made by too many war profiteers.
:(
The US government currently pays some 40% of all health care bills in the US, old people are expensive. We as a nation spend twice as much on health care as countries with Universal Coverage. So, for what the government pays now, we could be 80% of the way to a sane universal health care system (I personally prefer the French model over the English nationalized or Canadian single payer systems).
70% of America's GDP comes from consumer spending. This is the highest percentage in the industrialized world (since in other countries there is a greater participation in the domestic economy by the government). This also means that our economy is even more tied to wages. And if we enter into a cycle of consumer "savings", we will stay in the doldrums longer than other industrialized nations.
Lovely, lovely, lovely
and there will be more money for education, housing and healthcare. But we can't have that now can we...
the deficit now so that we can create jobs to pay it down later, duh.
Then rip out the FICA earnings limit to cure SS woes.
Kill health insurance so we have more spending cash on hand.
Just for starters
baby boomer generation will do its best to keep political control and tilt things its way.
The Baby Boomers changed everything. The Boomers now expect their children to look after them while they enjoy thirty years of knitting or playing golf in genteel retirement.
Sixty years, ten Presidents, only three ended with higher results than when they took office: all three Republicans.
Circumstances that none of these Presidents faced will result in Obama being the fourth. But we do need to remind Republicans of their own sorry history.
I would also add that Reagan/GWH Bush drove the debt up by over $4 trillion dollars. Of that, only 14% can be attributed to investments in America's infrastructure (domestic spending). It is estimated that 75% of the Obama stimulus will go into infrastructure investment.
WHEN DICK CHENEY SAID, "Deficits don't matter," economists took that as proof of the economic illiteracy of the Bush administration. But it turns out there is a case to be made that Cheney was onto something.
http://www.weeklystandard.com/Content/Public/...
Make the Republicans defend this before they start crying about the deficit.
This is an idiotic statement:
"we actually need to run up federal debt right now and need to keep doing it until the economy is on a solid path to recovery ... the extra debt should be manageable."
The extra debt should be manageable? REALLY? We are in the worst recession since the great depression and our creditors are already talking about dumping the dollar...
And WHY do we need to continue to run up the federal debt to pay for things? What we NEED to do is stop spending more money than we have because that is exactly what got us into this mess. If you want to create social programs fund it by cutting spending on something else... like, I don't know... how about we end the 2 friggen wars we are waging right now on the other side of the world? How about we scale back our military size to something more reasonable... if it is big enough to wage 2 wars in other countries at the same time, it is too big. We send way too much of our tax dollars to the MIC.
agreed.
... because the biggest "government program"/"deficit spending project" that this country has ever known--the one that finally got us out of the Great Depression (because--as Krugman himself points out--the New Deal simply wasn't big enough), would throw things out of whack. Yet we can still see its effects on the chart that's there.
There are a handful of really horrific issues at hand. They are, in order of imperative:
0. overpopulation
1. Peak Oil
2. The environmental crisis (which consists of: a: global warming, b: the extinction event, c: industrialism's destructive impact on the biosphere, viz., hydro dams, the oceanic garbage gyres, etc.)
Frankly, as it stands now, the only way forward for industrialism is what Jay Hanson calls "war socialism", where the government rules with the consent of the people by providing animal basics. In order to acquire these basics, all the governments are in a state of war with each other. A shooting war, a cold war, an economic war, whatever. That is the future of industrialism as it is presently configured.
If the USGov is able to clear the deficit, and then consistently pay off the debt at the measly rate of 1 million dollars a day, something it as not been able to do, EVER, it will be some 25,000 years from now by the time it gets paid.
Therefore, the answer is: it's not getting paid. Ever.
So, all you "fiscal conservatives" can go stuff it. The currency is WORTHLESS. Once we crest the oil peak (which is happening roughly now or very soon, some say it happened in 2005) everything will quickly devolve to a zero sum game, and the USA will be left holding the bag, because it is in debt the most.
Game over, chumps.
And hanging the bastards won't make the money come back.
You are all well and truly f*cked. Your culture is dying, and you don't even notice. You never had "the good times", because you let a bunch of gangsters run your economy into the ditch. Well, good move, losers. Now you get to pay the price.
Why is peak oil important?
Oil == energy. Energy is the capacity to do work. As the TOTAL amount of energy available decreases, the amount of work will decrease. The growth economy will then be OVER. Forever. It will never come back - it can't, as there is no energy to do the work.
The next 20 years are going to be completely different from the past 20 years.
This doesn't mean run for the hills and protect your family. That won't help.
What would help?
1. dismantle the suburbs ASAP, and turn them back into farmland.
2. electrify the entire railway system IMMEDIATELY.
3. reforest North America as quickly as possible with hardwood forests. The core should be oak, maple, and elm, the periphery should be (black and honey) locust, sycamore, elder, cherry, walnut, etc. The north needs to focus on hard pine, not soft pine. You will need these trees for food and heat.
4. ban gas powered automobiles as soon as possible.
5. promote bicycles and electric bikes and electric trikes.
6. set up biodiesel for farm equipment only.
7. Learn the old ways: supplement your food with stuff you grow in your yard, mend your clothing, eat everything you cook, WASTE NOTHING...
8. STOP HAVING KIDS. No more than 1 per family, incentivise childless couples.
9. DISMANTLE THE AMERICAN EMPIRE IMMEDIATELY.
10. LEarn how to entertain yourself, rather than be entertained - tell stories around the fire, rather than having the fire tell you stories.
11. Leave the carbon i nthe ground as much as possible.
Do all this ASAP. If the clathrates melt, GAME OVER.
that Raygun and the Shrubs did. Never trust a republican. If they're talking, they're lying.
Deficits have not saved the world, they have dug a deeper hole. More debt is not going to solve a problem caused by excessive debt. The math simply does not work.
The FED is trying to avoid an audit. Why? Because the FED holds the truth about all the bad debt.
Two Nobel Lauriates founded LTCM. What happened to LTCM?
It crashed.
They ignored the math. Krugman ignores the math. Bernanke ignored the math. Bernanke said he knew how to make sure deflation wouldn't happen here. What is the math on deflation? Every inflation ends in a deflation. All cycles complete themselves by a down phase. Deflation is happening now. Math wins, Bernanke loses.
The math says deficits cannot save the world. Krugman can create an illusion for a while, but that is all it is. Bernanke has created an illusion by hiding bad debt and hiding bad banks. The truth eventually comes out.
.. because the biggest "government program"/"deficit spending project" that this country has ever known--the one that finally got us out of the Great Depression (because--as Krugman himself points out--the New Deal simply wasn't big enough)
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The math says nothing is big enough. Every bubble bursts and deflates. 100%. Yet fools keep trying to beat the math. 100% is unbeatable. Krugman is wrong to claim the New Deal wasn't big enough.
I just saw a picture of a Zimbabwe 100 billion dollar note. Was that big enough? Are Zimbabwians richer than Americans?
100% of booms end in a bust. 100%. Yet fools continue to think they can beat the math.
WHEN DICK CHENEY SAID, "Deficits don't matter," economists took that as proof of the economic illiteracy of the Bush administration. But it turns out there is a case to be made that Cheney was onto something.
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Wiemar Republic. Following WW1, Germany did not suffer a recession, like the U.S. and other participants in WW1 did. In November 1923, Germany crashed as a result of hyperdeflation. Yes, i said hyperdeflation, which is the final result of a hyperinflation.
In 1921, one could have made a case that Germany was onto something, as they did not accept a corrective recession and had prosperity, while others did not.
It was a fools case.
Thinking that Cheney was onto something is also a fools case. The math is never wrong.
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