How does limited government create jobs in this recession?

I agree with you. It is wise to use government as a counterweight to the economic cycle -- pumping money in during recessions, and taking money out in boom times. Right now, we need them putting money in. The only problem is that government has not and likely will not do enough to take money out again in boom times.

 

...by virtue of the same math that the key to deficit reduction is cutting taxes....a.k.a. MAGIC!

 

Limited government is not an issue in the recession, at all.

The issue is the fundementals behind the recession- debt bubbles, fiat currency, corporatism.

Since no one is addressing the fundementals there is no realistic opportunity for fiscal limited government and the republicans are clueless when they speak about it.

Since increasing govt. debt will stimulate some short term job creation this is a political way of stalling a dollar crisis.

I'm all for stalling a dollar crisis even if it only delays a huge dollar correction that would likely be hyper inflationary or at least very destructive to the US standard of living.

I guess if the ship is taking on alot of water but you can still dance in the ballroom, play the next song...

 

Not sure, but it was nice to see Obama focus more on small business in the SOTU address yesterday. A Capital gains tax holiday and more lending to businesses was exactly what I have been saying was needed to help business invest more, grow, and hire people. Small businesses will shoulder a large portion of the load it is going to require to get us out of the recession. I would have liked to see him do something in regards to the payroll tax to decrease the cost of employees, but we're still headed in the right direction.

 

Limited government of the libertarian-conservative type has proven historically to be only effective for the elite. The recent financial crash is just the latest proof of this. As we saw with the old communists ideology is tough to kill with just historical facts.

Time to jettison this concept unless you are truly above the pay scale of perhaps anyone on this board.

 

WASHINGTON (AP) — Senate Democrats are counting on their soon-to-expire 60-vote majority to raise the U.S. debt ceiling by $1.9 trillion so they do not have to take more politically painful votes on government borrowing until after the November elections.

– The Democratic-controlled Senate has muscled through a plan to allow the government to go a whopping $1.9 trillion deeper in debt.

The party-line 60-40 vote was successful only because Republican Sen.-elect Scott Brown has yet to be seated. Sixty votes were required to approve the increase. The measure would lift the debt ceiling to $14.3 trillion. That's about $45,000 for every American.

Democrats had to scramble to approve the plan, which means they won't have to vote on another increase until after the midterm elections this fall. To win the votes of moderate Democrats, President Barack Obama promised to appoint a special task force to come up with a plan to reduce the deficit. The House must still vote on the measure before it's sent to Obama for his signature.

link

 

You can't unless you also dramatically cut taxes. You just can't cut the deficit and avoid a depression at the same time.

 

You're right, let's be like Japan.

 

Attempt to mask inability to respond to initial post = failed

 

Neither big government nor small government will create a sustainable recovery on its own. The point is, the government should rely on monetary policty, not discredited, inefficient fiscal policy, like Japan did.

If only we followed the advice Bernanke and Krugman gave Japan...

 

I hate to break this to you as it is apparently news to you, but interest rates have effectively been at zero since 2008 and we are still losing jobs and in a period of slow to no growth - With rates at zero, how do you propose that a central bank use interest rates to spur growth? Cut them to negative? A novel solution but probably inadvisable.

You can't use a monetary policy fix when you have used all of the bullets in the gun..

This is one of many reasons why Monetarism kind of died last year. It has been written up quite a bit (most notably by Judge Posner). Actually the whole Chicago school is pretty much a laughingstock these days, rational expectations/efficient markets and all that has gone out the window. As one of them said, in the foxhole we are all keynsians

...as opposed to the advice we followed during the Great Depression which caused another recession?

 

All this political BS breaks down into the fact that consumers are in debt, and the world economy, let alone our own, needs American spending.

Western Banks overleveraged with 30:1 and 50:1 ratios doesn't help either.

 

Liquidity traps are the bane of conservative policy makers everywhere.

 

I hate to break this to you, but there are ways around the zero bound problem. Read stuff by: Bernanke, Ben or Krugman, Paul. Krugman has even written about it on his blog recently.

Please, monetarism didn't die at all. The Chicago School is associated more with the EMH, which is getting criticized, but what is there to replace it at this point?

I am advocating aggressive monetary policy that those two recommended to Japan.

 

I am no Hayekian but I would think the answer would be that limited government would translate into low or no taxes which would lead to job growth.

 

And apparently liberals love them because it gives them an excuse to go on a spending binge.

 

Really? Krugman has written that we can monetarize our way to growth in lieu of fiscally? Do you have a link to this?

Really? So Milton Friedman isn't the father of monetarism? Read the article on Posner from the New Yorker...or better yet, read his blog with Becker from the last 2 years, the transformation in their opinions in that span is amazing.

Really? I mean tabling the point that it's inherently ridiculous to accept something shown to be a failure as true because 's "nothing to replace" the Chicago School/EMH, you're arguing that good old fashioned Keynsianism/AMH/reflexivity can't replace it, when in fact they purport to do exactly that? Please explain.

Really? So you advocate a fix that neither would recommend here because it's a different problem, based on their recommendation for a different problem?

 

blah blah, if this is all you got, why don't you just write "TAX N SPEND!!!!11!! blargh!!111! and then wave a tea bag around while the adults (and I use that term loosely) discuss real problems

 

No, not "monetize," exactly, but use more aggressive monetary policy.

This is just one post:

http://krugman.blogs.nytimes.com/2009/11/13/its-the-stupidity-economy

I didn't say Friedman isn't the father of monetarism, I'm just saying I don't agree monetarism is dead. Monetarist ideas will still help us going forward.

I don't think the EMH is ridiculous, it can still be useful. In fact, Krugman has used market prices in support of his arguments. My point is, if you can't rely on market prices, then what do you use? Market prices aren't always right, but they are still often the best guess.

No.