Fiscal Cliff

You,

Those are the policies in which I agree with; the Euro countries are between a rock and a hard place, because their policies are in direct opposition to what's right in correcting their economic stagnation.

Typo on my part: I meant the IS-LM model, of course.

I should also comment on georgeob1's point about economists dismissing the Keynesian multiplier on government spending. (I meant to, but my last post was too long already.) Even Keynesian economists would agree with George if---repeat if---the economy operated workably close to full employment. The American economy has been operating in this condition for maybe 75 of the last 100 years. In those normal times, expanded government spending crowds out business investment or consumer spending, leaving no net effect stimulating the economy.

But after the financial crisis of 2008, the state of the American economy has fallen into the high-unemployment regime that characterizes those other 25 percent of times. That's where Keynesians and non-Keynesians differ on the size of the fiscal multiplier. Conservative economists, usually on the basis of some rational-expectations model, think that nothing changes, because they believe recessions are the economy's rational response to something real. Keynesians, by contrast, think that recessions represent a particular kind of market failure. They predict that government spending will not crowd out private spending. Instead it will mostly re-mobilize idle resources such as unemployed workers, empty houses, and shut-down factories.

Fortunately, we needn't go into the conflicting theories behind the disagreement, because the past four years have given us empirical data on the actual size of the multiplier. The International Monetary Fund, hardly a gang of pinko iconoclasts, discussed the question in detail in its World Economic Outlook. It found that fiscal multipliers were much higher than estimated based on previous data, and that Wetern-hemisphere governments do grow the economy by more than the amount of their spending.

Summing up, the Keynesian multiplier is small in normal times. But we're not living in normal times right now. We are living in times of prolonged involuntary unemployment, times where zero percent interest isn't enough to recover employment. And these are exactly the times where Keynesian multipliers matter a lot.

I have been consistently told this by conservatives here on A2K since joining in 2004. And there's always some excuse as to why it hasn't happened yet. And there probably will continue to be excuses when we don't see the inflation appear.

Cycloptichorn

I don't think conservatives understand economics very well; they're ready to let the fiscal cliff come and go, and then do nothing about the debt ceiling that will hurt our economy in many ways. Loss of buying power by consumers because of higher taxes will definitely dampen consumer spending and tax revenues at every level.

With their holdout on the debt ceiling, we may see another downgrade of our bonds that will end up costing higher interest on bonds that's payable to China and Japan.

We lose in every way. And many financial experts fear for another recession.

It's clear that democrats don't understand economics at all
and that Obama's plan is to ruin our free market economy.

It is clear from the last two posts that neither Reps or Dems understand economics.

What is to be done then?

Simplify the tax code and reduce spending.

waterhead, Europe is now implementing austerity programs, and their economy is getting worse. Where did you study Economics? Do you understand macro-economics? What is your definition of micro-economics?

Do you understand anything about the circulation of money? What is it?

The San Francisco Bay Area economy is improving - not only in the high tech industry, but in construction and retail sales. Guess why if you can?

Ci, just when I think your stupidity has peaked, you get dumber.
When & where did you relieve yourself of all common sense?

In what way and by how much?

According the CBS News Chinese investment is a major factor.

How does Obama's democrat plan to raise taxes and further complicate the tax code help the situation?
How does Obama's democrat plan to increase spending help the situation?

Please be specific with your answers.

You really are brain dead. The Fiscal Cliff is going to go into effect, because the GOP will not vote on reducing taxes for 98% of Americans.

This is how this inability of the GOP as the No Party will affect your income taxes for next year. I'm enjoying this ride, because conservatives are too stupid for their own good. This will help our country's deficit reduction - FINALLY!

Try to figure out how this will impact your pocket book? It starts will a combined increase of about 25% in the tax rate for most middle class families.

The GOP already ruined the christmas season shopping by scaring most consumers from spending, because of this Fiscal Cliff. HAPPY HOLIDAYS TO ALL!

Congress is back in session. Obama made separate calls to Reid, McConnell, Pelosi and Boehner re getting something done this week.

The House Rs insist that the Senate take up the bills they passed last week. The Senate Ds insist that the House take up the bill they passed last August. In other words, nothing new.

How does the Senate have a say when California with a pop'n of 38 million has 2 votes and 21 states with a total pop'n of less that 38 million have 42 votes?

Both sides are playing nah-nah-da-boo-boo



edit - it appears that the url BBcodes aren't working....

And.....

The House has now adjourned until 2:00pm Monday.

These clowns in washington have not been willing to work together for the greater good for decades so they are not going to do it now until they are forced. Unfortunantly since the public has not been willing to force them it will be pain to america that does the job. Pain is a very useful and needed part of human existance...it will not be denied and it will not stop till our errors in thinking and behaviour are fixed.

I get the sense that these lawmakers actually want the Budget Control Act to kick in, because across the board tax increases and spending cuts are precisely what is needed by the country in regard to the national debt, and after it happens both parties can blame the other for the intransigence that lead to its implementation.

The reporters nearly unamously believe that these cats are more interested in winning the blame game than they are in fixing the nations financial problems.


This outcome should come as a surprise to no one.