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780 BILLION dollar stimulus package

DanMa1156

Is it baseball season yet?
pilot
Contributor
Midn09, you should keep in mind that employment statistics pre 197(3?) often reflected as those in the military as unemployed since they were draftees and the military offered below-market wages in many fields. Furthermore, FDR's work-projects programs were largely unsuccessful in changing the economic status quo. WWII prevented consumer spending during the actual war since the production possibilities frontier was maximized for war goods (think no new tires, tin, chocolate, or silk stockings, since all of these were needed for war materials) but Americans' bank accounts fattened up as men lined up in the service, joined women in factories, farmers produced year round, etc. When the war ended, the labor force shifted to consumer discretionary goods of durables and non durables and with fattened wallets, Americans spent their hard-earned war money, thus keeping people employed. Exports too went up as Europe and Asia turned to the U.S. as a necessary trading partner. While WWII itself did not end the depression, the effects on employment and propensity to consume resulting from WWII production did, in large part end the depression.
 

DanMa1156

Is it baseball season yet?
pilot
Contributor
Any comparison between the current situation and the Great Depression isn't valid. Despite the crash of 1929, we still had a real economy then. We don't have a real economy right now; or at least the proportion of fake economy is huge now compared to then. Our recent economy has been adding cost to things (i.e.: real estate) without adding any value, hence the bubble that ultimately burst and all the losses incurred from it. Where will that missing "economy" come from? We're knee deep in trying to revive our fake economy via the Federal Reserve's actions (btw, PLEASE look into what I mean by that; look at the video below at least until the 90 second mark) and TARP and so forth, so what's left for a real economy?

I don't see how you can't compare the two. Both started out with very similar figures in loss of real estate value and loan losses causing credit markets to tighten up. How is that different from what started today's economic crisis?
 

SkywardET

Contrarian
Well you are right, some comparison can be made, but the fake economy now is so much larger and more powerful with its own advocates and the actions of the Federal Gubment so much more forceful that it is like comparing a Model T to the upcoming 2010 Camaro.
 

Cobra Commander

Awesome Bill from Dawsonville
pilot
Please stop using the term "fake economy". It has no meaning. I think what you're trying to say is service industry, which does provide value. If it didn't people wouldn't pay for it. Your business doesn't need to own extruding machines or a blast furnace to have/ create value.
 

picklesuit

Dirty Hinge
pilot
Contributor
I think we have lost our perspective on this. The economy (macro) has rises and falls. It happens. Just like the 10-year cyclic nature of the price of beef. It happens. We have had many recessions come and go, of varying levels; and while in the midst of them the media thinks it is the worst one ever.

A reccession is the economy's way of righting itself...we will get back to the proper value of things in this country and we will prosper again. If the government wants to throw money at the problem, they will. It will pay for all of their pet-projects so they can get re-elected. Those guys will get old, and be replaced. More of the same. Same shit that happened in the Great Depression. Same shit happened in the 1970's oil crisis, same shit in the 1980's, same shit in the '90s tech bubble bust, same shit now. Overvalued commodities will be discarded and the true heart of our economy will continue to flourish.

I plan on continuing to invest, with a diversified portfolio, and will keep working. If the President finds it necessary to fire my ass I will find another job. I'm an able-bodied, hard working American with a degree. I can always find a job to feed my family. I may not be able to live with cable/internets/nice car/cell phone...but I will be able to work.

It is my belief that many of the "unemployed" are not taking jobs that they deem beneath them. White collar guys are afraid to dig a ditch because they have never had their hands dirty. Blue collar guys won't pick oranges because that has always been a job for the Mexicans.
I'm willing to do that shitty work, therefore I will always be able to get a job. Simple as that.

People will get sick of it when their Unemployment check runs out, they will start looking for that shitty job, and you will see the Illegal Immigration decline in this country. They will get run out by citizens willing to do their job and a public less willing to accept their presence here. All part of the economy righting itself.

The economy, it's a fucking force of nature, above most influences man can put on it...but that won't stop us from trying.
 

navy09

Registered User
None
Midn09, you should keep in mind that employment statistics pre 197(3?) often reflected as those in the military as unemployed since they were draftees and the military offered below-market wages in many fields. Furthermore, FDR's work-projects programs were largely unsuccessful in changing the economic status quo. WWII prevented consumer spending during the actual war since the production possibilities frontier was maximized for war goods (think no new tires, tin, chocolate, or silk stockings, since all of these were needed for war materials) but Americans' bank accounts fattened up as men lined up in the service, joined women in factories, farmers produced year round, etc. When the war ended, the labor force shifted to consumer discretionary goods of durables and non durables and with fattened wallets, Americans spent their hard-earned war money, thus keeping people employed. Exports too went up as Europe and Asia turned to the U.S. as a necessary trading partner. While WWII itself did not end the depression, the effects on employment and propensity to consume resulting from WWII production did, in large part end the depression.

I've been teaching a freshman Econ class for two semesters (I've done this stuff to death). No question- anyone that knows anyting about economics, PPFs, and int'l trade can tell you that WW2 was great for the US economy.

Back to the original debate, how was the New Deal unsuccessful? What am I missing? GDP and employment #s rising above pre-crash level before WW2 broke out. Could just the ND have sustained us into the 40s for a full recovery and continued economic growth?

Despite outward appearances I'm not some liberal nut. I'm just sayin' give credit where credit's due. And again, anyone that thinks we can spend our way out of this one is probably wrong.

picklesuit- I agree 100%. $15/hr workers are refusing to take $8/hr jobs, but they'll come around. It really is all cyclical, there are just certain ways to turn it around faster and cutting a trillion dollar check isn't the way to do it.
 

SkywardET

Contrarian
Please stop using the term "fake economy". It has no meaning. I think what you're trying to say is service industry, which does provide value. If it didn't people wouldn't pay for it. Your business doesn't need to own extruding machines or a blast furnace to have/ create value.
No, I'm not referring to the service sector as a whole. I'm referring to the finance and real estate sectors mainly, but also insurance. I've been reading too much iTulip and other sources, so I sort of have a bias against the FIRE economy now. Bah, in a week I will need to concentrate on other things and won't have to worry about this type of thing for a few years. Lucky me...
 

DanMa1156

Is it baseball season yet?
pilot
Contributor
MIDN09 I think you're making a fundamental mistake of correlation is not causation. GDP rising may not have been totally caused by the New Deal plans. I don't have the resources or times (testing week here...) to take a look at it, but every academic paper I've read whether it was intro/micro/macro/econ of nat'l def/ etc. seems to agree that the New Deal did not get the U.S. out of the depression. What about all the trade laws that changed in that time - pre 1940 how tarriffs and bans were reaching all time highs as nations pursued protectionist trade policies, but with the war, resources HAD to be shifted and those laws were changed to less protectionist trade policies. That's just one example. You're just the first person whom I've read as saying the New Deal policies were successful in "stimulating" the economy or that they were directly related to the rise in GDP. Rise in employment? I'll buy that... but rise in GDP? No way - the Government spending (a "-" sign in the GDP equation would equal the value of the products produced, a "+" sign, say a new road or a new dam as I see it most simply).

Would you not agree that Government spending =/= rise in GDP?
 

navy09

Registered User
None
What about all the trade laws that changed in that time - pre 1940 how tarriffs and bans were reaching all time highs as nations pursued protectionist trade policies, but with the war, resources HAD to be shifted and those laws were changed to less protectionist trade policies.

Would you not agree that Government spending =/= rise in GDP?

OK, well if you're talking about shifting policies to open trade during WW2, you're still talking about 1939-40 and after. There is naturally going to be a strong correlation between Gov spending and GDP (especially if they're spending a ton like with the New Deal).

Hit me with a PM when you get a free couple minutes. I'm not saying I'm totally right and you're totally wrong. This topic really interests me. I'm taking a US Economic History class this semester which should hopefully touch on it too.
 

FlyinRock

Registered User
A billion here, a billion there, pretty damned quick we're gonna be talking about some BIG money!
Politicians are disgusting and need to be brought under control as OUR representatives.
Are you happy with the amount you are losing in every freaking paycheck so some asshole can spend it on someplace else that you never heard of?
Ah, I forgot, since you are military, you are working for THEM and need to just shut up and do what they tell you, go where they tell you, and be thankful for the experience.
yeh right ................
Is anyone listening to what is happening out there?
 

usmarinemike

Solidly part of the 42%.
pilot
Contributor
So with such a gloomy outlook, what is an American family to do? Suppose one with a steady, secure income, no unsecured debt, and a current mortgage.

Inflation. Deflation. What should a family do over the next 5 years?

If hyperinflation is the case, will interest rates be used to try to control it, and when can we expect it to happen if it does?

All serious questions. Thanks.
 

SkywardET

Contrarian
My guess, after drinking a different flavor of kool-aid than the standard variety (the standard variety being the one that would have killed your portfolio), is that hyperinflation will be the result because the Federal Government will do anything to avoid bankruptcy. But, because a significant cultural shift will not have taken place in the highest levels of government in time to actually be an effective government financially, the Fed will be too slow to act when it throws everything at its latest and greatest crisis of hyperinflation. Political tormoil is a small but very real possibility.

Google "Iceland government" to see early reports from the front line.
 
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