Start Saving

The quickest way out of a recession is to boost consumer spending. Big government believers advocate increased government spending as a way to “prime the pump.”

Citizens and government both have three sources of spending money: income, savings and debt.

The United States and most of its citizens have spent their savings, maxed out their credit cards, and are looking at stagnant or falling income. 12.9% of Oregonians have no income.

Let’s talk sustainability, as in financial sustainability.

There’s only one way to be financially sustainable whether you are a government, corporation or individual: Spend less than you make and save or invest a portion of your income for the future. If you make more money, you plunk the extra income into savings, not a new luxury good. If you make less money you cut spending. Pretty simple to say, not always so simple to do.

The prosperity of the 00s was largely fueled by mortgage refinancing and home equity lines of credit. People converted their home equity, once considered a sacred asset, never to be touched, into RVs, vacations and plastic surgery. Once that equity was spent (or vaporized – 20% of homeowners now owe more than their home is worth) consumer spending fell.

The silver lining here may be that since so many people are up against the wall financially, and so many more are realizing just how precarious their debt financed existence is, we’ll have a renewed appreciation for thrift and personal savings that will translate to government.

Eventually we have to pay back everything we’ve borrowed. Every year hundreds of billions of dollars go to interest payments on the debt and hundreds of billions more (close to two trillion this year) of new debt (the budget deficit) is created. It’s akin to running up your credit card. Eventually you hit your limit and your creditors cut you off.

Eventually no one is going to want to buy United States debt. We can choose the date we stop borrowing money or it can be chosen for us. If the Chinese were to stop buying our debt we’d go into an economic tailspin that would make the great depression look like the 1980s.

I am not suggesting we hoard money in mattresses, live on rice and beans and do all our shopping at flea markets and garage sales, only that we, as individuals and as a nation, live within our means.

What a novel concept.

It’s not the fun solution, it’s not the sexy solution, but it is the sustainable solution — the only one.

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  • come again?

    There are some unsubstantiated assumptions in this post.

    1) “Big government believers advocate increased government spending as a way to “prime the pump.”

    Not really. Economists believe this, left, center, and right. It’s basic economic theory since Keynes. One doesn’t have to be a “big government” advocate to accept the reality that only the federal government has the ability to manufacture money and get it into circulation when needed.

    2) “The United States and most of its citizens have spent their savings…”

    I think the right way to put that is aggregate personal debt equals or exceeds aggregate personal savings. I don’t think we have data on what situation “most” citizens are in. As for the US government, it does not and has not had any “savings” in a long long time. Nor does it need any.

    3) “12.9% of Oregonians have no income.”
    Not true. That may be the present unemployment rate, but many if not most unemployed still have “income” due to unemployment insurance, one of those big government programs. Others are looking for work and count as unemployed but recieve SSI, dividends, and other forms of income. And still others may lack individual income but do have household income if they have a working spouse or partner.

    4) “There’s only one way to be financially sustainable whether you are a government, corporation or individual: Spend less than you make and save or invest a portion of your income for the future.”

    Most definitely not true. Individuals, businesses, and governments can and do remain financially stable even with large and continuing debt loads if their income trajectory is up rather than down. Its called investment leading to higher productivity.

    5) “Eventually we have to pay back everything we’ve borrowed.”

    Again, not really. See Chrysler and GM for examples where money borrowed will not be paid back. Loaning money to someone is a risk, and sometimes the lenders lose that bet.

    6) “Eventually no one is going to want to buy United States debt.”

    Not true as long as we make our debt payments. It is true that if we keep piling on debt faster than our economy grows (over a long period of time) we might someday not make debt payments. More likely we would pay debts with newly printed money, accelerating inflation and making debt payments easier.

    “Living within our means” is a good idea. We need to do that both economically and ecologically. But the proper measurement is not year to year, and the time to start (economically at least) is after, not during an economic downturn.

    Lets also acknowledge that the last 3 republican presidents all chose to cut taxes and run up the debt, while the one democratic president chose to raise taxes and balance the budget 4 years straight. This goes to credibility your honor.

    • Anonymous

      As Dean Apostol proves once again, economics is just one more thing he knows nothing about. Like the typical liberal it doesn’t stop him from spouting off.

      Today we add another lie to Dean’s long list of lies: 4 sources of income.

      Your only income is your Forest Service pension.

      Dude, you are such a tool.

    • Poke him with a stick

      Dean, you are nothing but a hunk of ignorant sewer sludge. How is the tax evasion case coming?

    • Rupert in Springfield

      >Lets also acknowledge that the last 3 republican presidents all chose to cut taxes and run up the debt, while the one democratic president chose to raise taxes and balance the budget 4 years straight.

      And lets also acknowledge that this little bit of partisan idiocy is some very nice revisionism. However, its hardly true.

      Cutting taxes did not lead to lower revenues. The fact that Dean believes this with the linking of the two shows partisanship, not economic knowledge.

      One president did not chose to balance the budget. In fact Clinton sent up $300B dollar deficits for as far as the eye could see in 1994. The budget was only balanced after Republicans controlled congress. Prior to his feet being held to the fire, Clinton had no interest in deficit reduction,. Indeed, he proposed national health care!

      Sorry, but the revisionism here is a little ridiculous. On partisanship you are a pro Dean, on economic matters though, don’t make it so obvious if you want to be taken seriously.

      >Your only income is your Forest Service pension.

      Oh good lord. Is this really true? Am I really paying for this guy?

      • anonymous

        Relax yourself. I don’t get a government pension. Don’t believe everything you read from your fellow yahoos.

        Dean

        • Anonymous

          Must have been fired for something pretty heinous to get your Forest Service pension pulled. EVERYONE who works for the forest service (except temp hires) gets some pension, even if they’re only there for a short time.

          • anonymous

            One gets a pension when one reaches the age to collect on it. I am not of that age yet, and am in no particular hurry.

            Now you have to find other names to call me. But I’m sure you will not disappoint.

            Dean

  • Harry

    come again? (dean in drag?) writes:
    “3) “12.9% of Oregonians have no income.”
    Not true. That may be the present unemployment rate, but many if not most unemployed still have “income” due to unemployment insurance, one of those big government programs.”

    How sad that ca? thinks Unemployment Insurance is “income”!! I think of it as insurance, where you pay into a pool, and extract it out when un-employed (untill it runs out). Only a government worker would consider that insurance payment as ‘income’. Only a misguided fool (tool?… troll!) would believe that.

    “Others are looking for work and count as unemployed but recieve SSI, dividends, and other forms of income.”

    More crap that makes no sense. Does he really think that the unemployed have lots of dividend checks to live on? Huh? Maybe he also think that the world’s hungry should just “eat cake” if they are hungry, eh?

    “And still others may lack individual income but do have household income if they have a working spouse or partner.”

    Yes, and they also have neighbors who are working. Maybe they should just claim their spouses’ income and their neighbors income and everything is all better, eh?

    Opps… maybe their spouse is also unemployed.

    come again should come less and go forth and get educated!

    • come again?

      Harry? (probably writing his posts while in his under shorts) writes:
      “thinks Unemployment Insurance is “income”!!

      I not only “think” it is income. It is income by definition, as is earned interest, dividends, rental receipts, SSI, public assistance veterans’ payments, pensions, royalties, & alimony. “Income” is any form of a regular payment. Lots of people get “unearned” (i.e. non labor based) income.

      All unemployed people are not destitute and impoverished Harry. A lot of former stock brokers and investment bankers are currently unemployed. Many of them have other income sources. I have 4 regular sources of income, so if I lose my own (non-government) job I am not without income.

      Spouses and partners can and do pay the bills while their significant other is unemployed. Neighbors, or at least my neighbors, probably wouldn’t contribute much, even if I asked.

      You should take a deep breath, think about what you are going to write before you write it, and maybe save yourself some embarrasment.

  • John in Oregon

    I suspect its worth while to expand on what Tim said.

    Tim is spot on that the view inside the belt-way currently is ‘The quickest way out of a recession is to boost consumer spending. Big government believers advocate increased government spending as a way to “prime the pump”.’

    This is the economic theory of Keynes who was the depression era darling of the Wilsonian Progressives. In contrast Milton Friedman looked at the actual facts of the depression and concluded the solution is to reduce taxes and burdensome government regulation.

    Of course when anyone questions the “prime the pump” theory the usual response is “Economists believe this, left, center, and right.” All economists agree.

    The comments of Peter Schiff clearly show that all economists agree is FALSE.

    “In his speech … summarizing his administration’s economic policies, President Barack Obama grossly overstated the support these policies enjoy by claiming, “economists on the left and right agree that the last thing the government should do during a recession is cut back on spending”. There are a great many economists who were surprised to learn that, apparently, they now agree with the president.”

    “As one of those mythical economists who do not agree with the president, I argue that it is precisely this type of boneheaded thinking [Keynesian progressivism] that got us into this mess, and it’s the reason we are now headed for an inflationary depression.”

    “We do not need, nor should we attempt, to replace lost demand. As Obama himself pointed out in the same speech, Americans have been borrowing and spending too much money. These actions created artificial demand, underpinned by the illusion of real wealth in overvalued stock and real estate markets. Given his intelligence and rhetorical training, it is hard to fathom how Obama cannot notice the inherent contradiction in his argument.”

    There is new information. There is significant US investment capitol on the side lines. Savings of people like you and me with no safe harbor. Money holding a liquid position, cash or near cash. Estimates place this at some $3 Trillion of investment capitol on the sidelines of the economy.

    An additional $3 Trillion in US corporate foreign earnings which has been taxed and held overseas to avoid double taxation by the US Government.

    There were some rumblings from Treasury with the idea of selling toxic assets privately to allow investors to take the risk of unwinding the mess. Any such idea now seems doomed in the wake of abrogated contract law and overturned bankruptcy law. Deamonizing hedge funds, threatening private investors, and savaging Venture Capitalists makes business activity within reach of Government unattractive. Hint to Treasury, vinegar and death threats are a repellent.

    With the Democratic Congress and Administration placing all eggs in the spending basket, over the next 12 to 18 months we will have a chance to see how well spending our way to wealth works out. To be fair to the more cautious pro-Keynes spending economists, they do say the idea is to inject liquidity and immediately stop spending at the first indicator of inflation.

    Only three ways exist for the Government to get the money it spends. Tax, Borrow or print. And here we have some indicators of the future.

    One is the new permanent full time Jobless rate which was up for April. I know the media said down but they got it wrong. Private sector full time employment fell by 611,000 last month, more than the analysts estimates of 590,000 and more than March. The overall numbers are down only because of a 72,000 jump in temporary part time government payrolls, many of which were Census positions.

    Similar indicators are to be found on the Government Bond market. Via the UK Telegraph last month, “Fears are growing on the financial markets that Britain may not be able to repay the billions of pounds in debt it is amassing to rescue banks and revive the economy… The Government admitted yesterday that, for the first time since 1995, investors had been unwilling to buy the full complement of its so-called gilt-edged bonds at one of its official auctions.”

    As Tim said “Eventually no one is going to want to buy United States debt.” Indicators are that has already happened. Looking at the three most recent Treasury sales is disturbing. The Chinese have become marginal and non buyers. In at least two of those sales, the Federal Reserve steeped in and purchased debt.

    The eye popper is the most recent sale of $14 billion of long bonds at a whopping yield jump. That was far above pre-auction forecasts for yield according to Bloomberg. The bid-to-cover ratio came in at just 2.14, compared with a 10-auction average of 2.24 and a last auction showing of 2.4. Only 33% of the bonds sold to indirect bidders.

    “This is a problem,” said Chris Ahrens, head interest- rate strategist at UBS Securities LLC in Stamford, Connecticut.

    Indeed.

    A huge jump in interest rates of the T bond sale of $14 billion in long bonds! Remember the just passed budget contains something like $1,000 Billion in new Government debt.

    Meanwhile the Chinese are moving to double their gold reserves. Do they know something Congress doesn’t?

    To recap:

    *O* Tax revenue falls as Unemployment is up.

    *O* T bond sales are crashing.

    *O* The Fed is buying debt (printing money).

    *O* Interest rates (inflation) is jumping.

    Is it time to stop spending yet???

    • come again?

      “The comments of Peter Schiff clearly show that all economists agree is FALSE.”

      That is a straw man argument since I never made that claim. I claimed economists left center and right agreed, and this is easily demonstrated. Hank Paulson and Greenspan are both on the right. Bernanke is in the center. Krugman is on the left. All agree on increased government spending (and money creation) as necessary in this downturn.

      You can also find economists left right and center who disagree. But a large majority seem to agree on the fundamental that a recession is the wrong time to reduce government spending.

      And John, weren’t you the one a few weeks ago who said the stock market seemed headed towards a “permanent” low point of 5000 or less? Now you are predicting a “permanent” high unemployment rate?

      None of this stuff is permanent. The economy is always in flux, which keeps things interesting. But so far it looks like Obama’s emergency measures are working. The market is up, loss of jobs is slowing, consumer spending is increasing, and banks are stabilizing. At what point will you concede you may have been wrong here? What indicator will it take?

  • John in Oregon

    Straw man? Not at all. The intent of your statement was clearly to convey that opposition to massive Government spending is a lone voice in the wilderness. You don’t even seem to believe your own subterfuge as you then state > *a large majority seem to agree.*

    > *John, weren’t you the one a few weeks ago who said the stock market seemed headed towards a “permanent” low point of 5000 or less?*

    Not hardly. And your use of “Permanent” is BS. But then you know that. What I said was:

    Financial experts had been predicting the 8,500 bottom and 4Q-09 recovery. And I said was the market did not agree. At the end of January the market, falling from 13,000, fell through the bottom, 8,500 — 8,000 — 7,800 — 7,500 — 6,800 — ETC… Do any of the financial experts still talk of the recession ended in 4Q-09? No. Some are hoping for a START of recovery in 4Q-09.

    The legacy media has described the present market as a Bear Market Rally. The media is correct it’s a bear market, not looking up. The media is correct the market has rallied although not projecting long term recovery. Fortunately its not a real bear market rally.

    But we better hope we don’t see a real bear market rally. That is an unrealistic and unexpected rise from 8,500s to 9,000 — 9,500 — 10,000 — and higher. Followed by a free fall to 9,000 — 8,000 — 7,000 to a real crash. How likely? Who knows. What I do know is we don’t want it.

    If our economy follows Japans spending stimulus experience we should expect to settle into a long term stagnation. No real growth, no improvement, just bumbling along.

    *Did you notice Dean that you ignored every fact?* Yes of course you did.

    So let me recap.

    *Fact* Full time Permeate jog loss for April was 611,000. Job loss is not slowing.

    *Fact* The US Government will need to borrow 46 cents of every dollar spent. Total deficit for 2009 and 2010 equals $3,100 Billion. (AP)

    *Fact* The Chinese have become marginal and non buyers of debt.

    *Fact* In at least two of the last three Treasury Bond sales huge blocks were sold to the Federal Reserve.

    *Fact* In the last Treasury Bond sale of only $14 Billion in long bonds took a whopping interest rate jump in the face of falling demand.

    *Fact* The Chinese are moving to double their gold reserves.

    *Fact* The Chinese are pressuring the IMF to sell its gold reserves.

    I shouldn’t need to do this. It uses a lot of space. But it is necessary to drive a stake through the heart of the lie that economists support massive Government Spending.

    *The following economists oppose massive Government Spending.*

    Burton Abrams, Univ. of Delaware – Douglas Adie, Ohio University – Ryan Amacher, Univ. of Texas at Arlington – J.J. Arias, Georgia College & State University – Howard Baetjer, Jr., Towson University – Stacie Beck, Univ. of Delaware – Don Bellante, Univ. of South Florida – James Bennett, George Mason University – Bruce Benson, Florida State University – Sanjai Bhagat, Univ. of Colorado at Boulder – Mark Bils, Univ. of Rochester – Alberto Bisin, New York University – Walter Block, Loyola University New Orleans – Cecil Bohanon, Ball State University – Michele Boldrin, Washington University in St. Louis – Donald Booth, Chapman University – Michael Bordo, Rutgers University – Samuel Bostaph, Univ. of Dallas – Scott Bradford, Brigham Young University – Genevieve Briand, Eastern Washington University – George Brower, Moravian College – James Buchanan, Nobel laureate – Richard Burdekin, Claremont McKenna College – Henry Butler, Northwestern University – William Butos, Trinity College – Peter Calcagno, College of Charleston – Bryan Caplan, George Mason University – Art Carden, Rhodes College – James Cardon, Brigham Young University – Dustin Chambers, Salisbury University – Emily Chamlee-Wright, Beloit College – V.V. Chari, Univ. of Minnesota – Barry Chiswick, Univ. of Illinois at Chicago – Lawrence Cima, John Carroll University – J.R. Clark, Univ. of Tennessee at Chattanooga – Gian Luca Clementi, New York University – R. Morris Coats, Nicholls State University – John Cochran, Metropolitan State College – John Cochrane, Univ. of Chicago – John Cogan, Hoover Institution, Stanford University – John Coleman, Duke University – Boyd Collier, Tarleton State University – Robert Collinge, Univ. of Texas at San Antonio – Lee Coppock, Univ. of Virginia – Mario Crucini, Vanderbilt University – Christopher Culp, Univ. of Chicago – Kirby Cundiff, Northeastern State University – Antony Davies, Duquesne University – John Dawson, Appalachian State University – Clarence Deitsch, Ball State University – Arthur Diamond, Jr., Univ. of Nebraska at Omaha – John Dobra, Univ. of Nevada, Reno – James Dorn, Towson University – Christopher Douglas, Univ. of Michigan, Flint – Floyd Duncan, Virginia Military Institute – Francis Egan, Trinity College – John Egger, Towson University – Kenneth Elzinga, Univ. of Virginia – Paul Evans, Ohio State University – Eugene Fama, Univ. of Chicago – W. Ken Farr, Georgia College & State University – Hartmut Fischer, Univ. of San Francisco – Fred Foldvary, Santa Clara University – Murray Frank, Univ. of Minnesota – Peter Frank, Wingate University – Timothy Fuerst, Bowling Green State University – B. Delworth Gardner, Brigham Young University – John Garen, Univ. of Kentucky – Rick Geddes, Cornell University – Aaron Gellman, Northwestern University – William Gerdes, Clarke College – Michael Gibbs, Univ. of Chicago – Stephan Gohmann, Univ. of Louisville – Rodolfo Gonzalez, San Jose State University – Richard Gordon, Penn State University – Peter Gordon, Univ. of Southern California – Ernie Goss, Creighton University – Paul Gregory, Univ. of Houston – Earl Grinols, Baylor University – Daniel Gropper, Auburn University – R.W. Hafer, Southern Illinois – University, Edwardsville – Arthur Hall, Univ. of Kansas – Steve Hanke, Johns Hopkins – Stephen Happel, Arizona State University – Frank Hefner, College of Charleston – Ronald Heiner, George Mason University – David Henderson, Hoover Institution, Stanford University – Robert Herren, North Dakota State University – Gailen Hite, Columbia University – Steven Horwitz, St. Lawrence University – John Howe, Univ. of Missouri, Columbia – Jeffrey Hummel, San Jose State University – Bruce Hutchinson, Univ. of Tennessee at Chattanooga – Brian Jacobsen, Wisconsin Lutheran College – Jason Johnston, Univ. of Pennsylvania – Boyan Jovanovic, New York University – Jonathan Karpoff, Univ. of Washington – Barry Keating, Univ. of Notre Dame – Naveen Khanna, Michigan State University – Nicholas Kiefer, Cornell University – Daniel Klein, George Mason University – Paul Koch, Univ. of Kansas – Narayana Kocherlakota, Univ. of Minnesota – Marek Kolar, Delta College – Roger Koppl, Fairleigh Dickinson University – Kishore Kulkarni, Metropolitan State College of Denver – Deepak Lal, UCLA – George Langelett, South Dakota State University – James Larriviere, Spring Hill College – Robert Lawson, Auburn University – John Levendis, Loyola University New Orleans – David Levine, Washington University in St. Louis – Peter Lewin, Univ. of Texas at Dallas – Dean Lillard, Cornell University – Zheng Liu, Emory University – Alan Lockard, Binghampton University – Edward Lopez, San Jose State University – John Lunn, Hope College – Glenn MacDonald, Washington – University in St. Louis – Michael Marlow, California – Polytechnic State University – Deryl Martin, Tennessee Tech University – Dale Matcheck, Northwood University – Deirdre McCloskey, Univ. of Illinois, Chicago – John McDermott, Univ. of South Carolina – Joseph McGarrity, Univ. of Central Arkansas – Roger Meiners, Univ. of Texas at Arlington – Allan Meltzer, Carnegie Mellon University – John Merrifield, Univ. of Texas at San Antonio – James Miller III, George Mason University – Jeffrey Miron, Harvard University – Thomas Moeller, Texas Christian University – John Moorhouse, Wake Forest University – Andrea Moro, Vanderbilt University – Andrew Morriss, Univ. of Illinois at Urbana-Champaign – Michael Munger, Duke University – Kevin Murphy, Univ. of Southern California – Richard Muth, Emory University – Charles Nelson, Univ. of Washington – Seth Norton, Wheaton College – Lee Ohanian, Univ. of California, Los Angeles – Lydia Ortega, San Jose State University – Evan Osborne, Wright State University – Randall Parker, East Carolina University – Donald Parsons, George Washington University – Sam Peltzman, Univ. of Chicago – Mark Perry, Univ. of Michigan, Flint – Christopher Phelan, Univ. of Minnesota – Gordon Phillips, Univ. of Maryland – Michael Pippenger, Univ. of Alaska, Fairbanks – Tomasz Piskorski, Columbia University – Brennan Platt, Brigham Young University – Joseph Pomykala, Towson University – William Poole, Univ. of Delaware – Barry Poulson, Univ. of Colorado at Boulder – Benjamin Powell, Suffolk University – Edward Prescott, Nobel laureate – Gary Quinlivan, Saint Vincent College – Reza Ramazani, Saint Michael’s College – Adriano Rampini, Duke University – Eric Rasmusen, Indiana University – Mario Rizzo, New York University – Richard Roll, Univ. of California, Los Angeles – Robert Rossana, Wayne State University – James Roumasset, Univ. of Hawaii at Manoa – John Rowe, Univ. of South Florida – Charles Rowley, George Mason University – Juan Rubio-Ramirez, Duke University – Roy Ruffin, Univ. of Houston – Kevin Salyer, Univ. of California, Davis – Pavel Savor, Univ. of Pennsylvania – Ronald Schmidt, Univ. of Rochester – Carlos Seiglie, Rutgers University – William Shughart II, Univ. of Mississippi – Charles Skipton, Univ. of Tampa – James Smith, Western Carolina University – Vernon Smith, Nobel laureate – Lawrence Southwick, Jr., Univ. at Buffalo – Dean Stansel, Florida Gulf Coast University – Houston Stokes, Univ. of Illinois at Chicago – Brian Strow, Western Kentucky University – Shirley Svorny, California State – University, Northridge – John Tatom, Indiana State University – Wade Thomas, State University of New York at Oneonta – Henry Thompson, Auburn University – Alex Tokarev, The King’s College – Edward Tower, Duke University – Leo Troy, Rutgers University – David Tuerck, Suffolk University – Charlotte Twight, Boise State University – Kamal Upadhyaya, Univ. of New Haven – Charles Upton, Kent State University – T. Norman Van Cott, Ball State University – Richard Vedder, Ohio University – Richard Wagner, George Mason University – Douglas M. Walker, College of Charleston – Douglas O. Walker, Regent University – Christopher Westley, Jacksonville State University – Lawrence White, Univ. of Missouri at St. Louis – Walter Williams, George Mason University – Doug Wills, Univ. of Washington Tacoma – Dennis Wilson, Western Kentucky University – Gary Wolfram, Hillsdale College – Huizhong Zhou, Western Michigan University – – Lee Adkins, Oklahoma State University – William Albrecht, Univ. of Iowa – Donald Alexander, Western Michigan University – Geoffrey Andron, Austin Community College – Nathan Ashby, Univ. of Texas at El Paso – George Averitt, Purdue North Central University – Charles Baird, California State University, East Bay – Timothy Bastian, Creighton University – Joe Bell, Missouri State University, Springfield – John Bethune, Barton College – Robert Bise, Orange Coast College – Karl Borden, University of Nebraska – Donald Boudreaux, George Mason University – Ivan Brick, Rutgers University – Phil Bryson, Brigham Young University – Richard Burkhauser, Cornell University – Edwin Burton, Univ. of Virginia – Jim Butkiewicz, Univ. of Delaware – Richard Cebula, Armstrong Atlantic State University – Don Chance, Louisiana State University – Robert Chatfield, Univ. of Nevada, Las Vegas – Lloyd Cohen, George Mason University – Peter Colwell, Univ. of Illinois at Urbana-Champaign – Michael Connolly, Univ. of Miami – Jim Couch, Univ. of North Alabama – Eleanor Craig, Univ. of Delaware – Michael Daniels, Columbus State University – A. Edward Day, Univ. of Texas at Dallas – Stephen Dempsey, Univ. of Vermont – Veronique de Rugy, George Mason University – Allan DeSerpa, Arizona State University – William Dewald, Ohio State University – Jeff Dorfman, Univ. of Georgia – Lanny Ebenstein, Univ. of California, Santa Barbara – Michael Erickson, The College of Idaho – Jack Estill, San Jose State University – Dorla Evans, Univ. of Alabama in Huntsville – Frank Falero, California State University, Bakersfield – Daniel Feenberg, National Bureau of Economic Research – Eric Fisher, California Polytechnic State University – Arthur Fleisher, Metropolitan State College of Denver – William Ford, Middle Tennessee State University – Ralph Frasca, Univ. of Dayton – Joseph Giacalone, St. John’s University – Adam Gifford, California State Unviersity, Northridge – Otis Gilley, Louisiana Tech University – J. Edward Graham, University of North Carolina at Wilmington – Richard Grant, Lipscomb University – William Green, Sam Houston State University – Kenneth Greene, Binghamton University – Gauri-Shankar Guha, Arkansas State University – Darren Gulla, Univ. of Kentucky – Dennis Halcoussis, California State University, Northridge – Richard Hart, Miami University – James Hartley, Mount Holyoke College – Thomas Hazlett, George Mason University – Scott Hein, Texas Tech University – Bradley Hobbs, Florida Gulf Coast University – John Hoehn, Michigan State University – Matt Holian, San Jose State University – Daniel Houser, George Mason University – Thomas Howard, University of Denver – Chris Hughen, Univ. of Denver – Marcus Ingram, Univ. of Tampa – Joseph Jadlow, Oklahoma State University – Sherry Jarrell, Wake Forest University – Scott Kelly, Albany State University – Carrie Kerekes, Florida Gulf Coast University – Robert Krol, California State University, Northridge – James Kurre, Penn State Erie – Peter Leeson, George Mason University – Tom Lehman, Indiana Wesleyan University – W. Cris Lewis, Utah State University – Stan Liebowitz, Univ. of Texas at Dallas – Anthony Losasso, Univ. of Illinois at Chicago – John Lott, Jr., Univ. of Maryland – Keith Malone, Univ. of North Alabama – Henry Manne, George Mason University – Richard Marcus, Univ. of Wisconsin-Milwaukee – James Barney Marsh, University of Hawaii at Manoa – Timothy Mathews, Kennesaw State University – John Matsusaka, Univ. of Southern California – Thomas Mayor, Univ. of Houston – John McConnell, Purdue University – W. Douglas McMillin, Louisiana State University – Mario Miranda, The Ohio State University – Ed Miseta, Penn State Erie – James Moncur, Univ. of Hawaii at Manoa – Charles Moss, Univ. of Florida – Tim Muris, George Mason University – John Murray, Univ. of Toledo – David Mustard, Univ. of Georgia – Steven Myers, Univ. of Akron – Dhananjay Nanda, University of Miami – Stephen Parente, Univ. of Minnesota – Allen Parkman, Univ. of New Mexico – Douglas Patterson, Virginia Polytechnic Institute and University – Timothy Perri, Appalachian State University – Mark Pingle, Univ. of Nevada, Reno – Ivan Pongracic, Hillsdale College – Robert Prati, East Carolina University – Richard Rawlins, Missouri Southern State University – Thomas Rhee, California State University, Long Beach – Christine Ries, Georgia Institute of Technology – Nancy Roberts, Arizona State University – Larry Ross, Univ. of Alaska Anchorage – Timothy Roth, Univ. of Texas at El Paso – Atulya Sarin, Santa Clara University – Thomas Saving, Texas A&M University – Eric Schansberg, Indiana University Southeast – John Seater, North Carolina University – Alan Shapiro, Univ. of Southern California – Thomas Simmons, Greenfield Community College – W. James Smith, University of Colorado Denver – Frank Spreng, McKendree University – Judith Staley Brenneke, John Carroll University – John E. Stapleford, Eastern University – Courtenay Stone, Ball State University – Avanidhar Subrahmanyam, UCLA – Scott Sumner, Bentley University – Clifford Thies, Shenandoah University – William Trumbull, West Virginia University – A. Sinan Unur, Cornell University – Randall Valentine, Georgia Southwestern State University – Gustavo Ventura, Univ. of Iowa – Marc Weidenmier, Claremont McKenna College – Robert Whaples, Wake Forest University – Gene Wunder, Washburn University – John Zdanowicz, Florida International University – Jerry Zimmerman, Univ. of Rochester – Joseph Zoric, Franciscan University of Steubenville-

    • come again?

      That looks like a lot of economists. I have no idea what % that represents in the US. Do you? I also have no idea what it is they object to. Massive government spending that is short term? Long term? Both?

      Opposition to temporary massive government spending in order to help get the economy out of a ditch is pretty fringe and counter to broadly accepted economic theory and experience. Moneterism sort of runs out of gas when interest rates hit zero and the economy continues to tank.

      As for the market, I have no idea where it is headed tomorrow or next week let alone next month or year. If you think you know, then mortgage your house and make your bet one way or the other.

      Also, answer the question. At what point will you concede you may have been wrong here? What indicator will it take? A stock market back up to 10,000 that lasts for a year? What John?

      If you can’t point to a single indicator that would disprove your thesis, then all you are doing is looking for ways to complain, no matter the condition of the economy.

  • John in Oregon

    > *That looks like a lot of economists. I have no idea what % that represents in the US. Do you? I also have no idea what it is they object to. Massive government spending that is short term?*

    Give it up. When the mallet hit the wooden stake it was propelled through the heart of your Claim of acceptance. When the stake pierced the heart, the corpse of your claim fell to dust. When the sunlight of day fell upon the dust of your claim it burst into flame. The flame of the dust of your claim rose to become so much hot air.

    The tea parties marked the joyous wake of the death of the corpse of your claim.

    > *Moneterism sort of runs out of gas when interest rates hit zero and the economy continues to tank.*

    True. The FED took the last step of negative interest rates and buying Government Debt. So, OK I agree printing and spending money isnt working. I already got that.

    So why not try something different. Like, oh I don’t know. How about not strangling free markets, stop bullying investors, and letting private enterprise flourish? Or do you prefer more of the same, which Einstein said is the definition of insanity?

    > *Also, answer the question. At what point will you concede you may have been wrong here?* … *If you can’t point to a single indicator that would disprove your thesis*

    You have to be kidding. Giggle, giggle. You are kidding, right? He he he. I mean really. Snicker snicker. If I can’t prove my self wrong then that proves you are right. That’s a good one for the comedy club. A real knee slapper.

    Why not try some facts. Oh Here are some;

    *Fact* Full time Permanent job loss for April was 611,000. Job loss is not slowing.

    *Fact* The administration analysis of the American Recovery and Reinvestment Act predicted that with the stimulus unemployment would top out at 8% next month. Without the stimulus next month would be 8.9%. Welllll with the stimulus it was 8.9% last month.

    *Fact* The US Government will need to borrow 46 cents of every dollar spent. Total deficit for 2009 and 2010 equals $3,100 Billion. (AP)

    *Fact* The Chinese have become marginal and non buyers of US debt.

    *Fact* In at least two of the last three Treasury Bond sales huge blocks were sold to the Federal Reserve. (printed money.)

    *Fact* In the last Treasury Bond sale of only $14 Billion in long bonds took a whopping interest rate jump in the face of falling demand.

    *Fact* The Chinese are moving to double their gold reserves.

    *Fact* The Chinese are pressuring the IMF to sell its gold reserves.

    *Fact* Congressman Barney Frank has agreed to allow the Chinese to dump US Dollars for 200 Tonnes of IMF gold in exchange for $4 Billion dollars for the poor.

    *Fact* Treasury Secretary Timothy Geithner has sent mixed signals in support of dumping the US Dollar as the world reserve currency.

    *Fact* The congress and administration spent $275 Billion to fix foreclosures. CNN reported that April saw a record 342,000 homes slipped into the foreclosure and the worst is yet to come.

    *Fact* On April 17, the DC Circuit halted all offshore oil drilling.

    *Fact* Last week the year over year railroad carloads were down more than 20%. Week 17 saw a year-over-year volume shortfall of 21.6% – which is slightly worse than the 20.4% drop in Week 16.

    *Fact* Congress is moving its plan to dictate to the financial industry how much they can pay their employees. The most productive employees should simply move on to other fields.

    *Fact* AP’s review of more than 5,500 planned transportation projects nationwide reveals that government is planning to spend the stimulus in communities where jobless rates are lowest.

    *Fact* The administration is preparing to double tax US companies overseas earnings.

    *Fact* The administration has voided contracts between private parties that had been protected by Article V of the Constitution. Written business contracts are no longer enforceable.

    *Fact* The administration has voided debtor bankruptcy rights. Debtor rights are no longer enforceable.

    *Fact* According to the Los Angeles Times the SEIU participated in the Federal decision to void the California state budget.

    *Fact* Trustees for Social Security and Medicare announce they will be in the red in less than a year.

    Some of the above facts represent intense deflationary pressures on the economy and private enterprise.

    Other of the above facts represent intense inflationary pressures on the economy and currency.

    *Is it possible we may envy the Japanese experience of long term economic stagnation?*

    • come again?

      “So why not try something different. Like, oh I don’t know. How about not strangling free markets, stop bullying investors, and letting private enterprise flourish? Or do you prefer more of the same, which Einstein said is the definition of insanity?”

      Interesting. I thought we were trying something different. I thought we just went through 28 years of deregulated financial markets and ended up derailing the economy. Now you say we should try that again? Thanks but no thanks.

      I’m asking you for some stats 6 months from now, a year from now, whatever. A stock market at X. An unemployment rate at Y. Current stats reflect the trough we are in. No one is arguing we are not in a recession.

      If by the end of the year the economy is again growing, the deficit declining, unemployment declining, the stock market at 9000, etc…will you say ooops, looks like Obama-Geithner knew what they were doing after all?

      Don’t bother answering. I know in advance whatever it is, it won’t be enough for you.

  • John in Oregon

    We tried Government spending, strangling free markets, bullying investors, and suppressing private enterprise from 1929 to 1941. It didn’t work.

    Nixon and Carter tried it and it didn’t work.

    Geithner and the IMF tried it during the Japanese / Asian crisis and it didn’t work.

    The Democrats are trying it yet again and its not working.

    How to measure success? A good measure would be when the States of California, Massachusetts, Michigan, New Jersey, and New York combined produce more permanent full time free market jobs in a month than the State of Texas produces in that same month.

  • John in Oregon

    The latest update via CNN Money.

    “The Federal Reserve’s latest forecasts for the U.S. economy are gloomier than the ones released three months earlier, with an expectation for higher unemployment and a steeper drop in economic activity.

    The Fed’s forecasts, released as part of the minutes from its April meeting, show that its staff now expects the unemployment rate to rise to between 9.2% and 9.6% this year. The central bank had forecast in January that the jobless rate would be in a range of 8.5% to 8.8%, but the unemployment rate topped that in April, hitting 8.9%.

    The Fed also now expects the gross domestic product, the broadest measure of the nation’s economic activity, to post a drop of between 1.3% and 2% this year. It had previously expected only a 0.5% to 1.3% decline.”

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