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The nature of America’s troubles is easy to state. We’re in the aftermath of a severe financial crisis, which has led to mass job destruction. The only thing that’s keeping us from sliding into a second Great Depression is deficit spending. And right now we need more of that deficit spending because millions of American lives are being blighted by high unemployment, and the government should be doing everything it can to bring unemployment down.
In the long run, however, even the U.S. government has to pay its way. And the long-run budget outlook was dire even before the recent surge in the deficit, mainly because of inexorably rising health care costs. Looking ahead, we’re going to have to find a way to run smaller, not larger, deficits.
How can this apparent conflict between short-run needs and long-run responsibilities be resolved? Intellectually, it’s not hard at all. We should combine actions that create jobs now with other actions that will reduce deficits later. And economic officials in the Obama administration understand that logic: for the past year they have been very clear that their vision involves combining fiscal stimulus to help the economy now with health care reform to help the budget later.
The sad truth, however, is that our political system doesn’t seem capable of doing what’s necessary.
On jobs, it’s now clear that the Obama stimulus wasn’t nearly big enough. No need now to resolve the question of whether the administration should or could have sought a bigger package early last year. Either way, the point is that the boost from the stimulus will start to fade out in around six months, yet we’re still facing years of mass unemployment. The latest projections from the Congressional Budget Office say that the average unemployment rate next year will be only slightly lower than the current, disastrous, 10 percent.
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The broad components of GDP are: consumption, investment, net exports, government purchases, and inventories. Consumption is by far the largest component, totaling roughly 2/3rds of GDP.
ReplyDelete"Gross" means that GDP measures production regardless of the various uses to which that production can be put. Production can be used for immediate consumption, for investment in new fixed assets or inventories, or for replacing depreciated fixed assets.
"Domestic" means that GDP measures production that takes place within the country's borders.
Economists usually preferred to split the general consumption term into two parts; private consumption, and public sector (or government) spending.
Goods and services provided by government are included, so if government spends trillions on artificially increased spending programs like those of today, GDP in a collapsing economy can be made to look positive. It does not erase the fact that the economy is still collapsing as can be evidenced by the Three Million new people who are filing for Unemployment Insurance every month.
krugman is making a tired argument predicated formoston the idea that the rest of the world is desperate to see the US turn it around. It simply isnt the case. The US can only spend if it can sell bonds and with Banana Ben at the helm with ZIRP the fuse on depression goes off before you can spend your way out. Funny how the poly sci (econ) crowd simply can't digest the financial realities. The econ crowd is still scuking at the teet of capital market exceptionalism. The paradox of the globalization crowd complaining about jobs and wages while defending the banks and status quo trade is the height of irony. Two ships passing in the night.
ReplyDeleteMore Keynesian economics- a worn out formula that has never worked. The stimulus was $787 B too big, not any number too small. Deficit spending never helps.
ReplyDeleteHmm, did you happen to read the article?
ReplyDeletePaul Krugman says the problem with the economy is easy to state. Moreover, he says that the solution is intellectually easy: we need MORE spending in the short term to help the economy and that the problem with the stimulus was that it was NOT BIG ENOUGH. Other than that, our politicians are fiscally irresponsible and bad.
Wow, thanks a lot Paul. First rate analysis.
Here Sheeple > just stay in your crib and here... play with these toys - global warming, universal healthcare, brown men with beards...
ReplyDeleteand don't you worry about what the adults are up to...
Brown man with beard Osama Been trodden says in newly released tape that ALL you people here are responsible for climate change and are to send
ReplyDeleteThe Taliban money.
It has been unseasonably hot in pakeestan that his camels ( whom only drink designer bottled water from USA) will not forage on their own.
I love those brown bearded people. Especially their sandals & dresses.
How exactly do you take a piss wearing one O dem
dresses anyway?
America seems to be a Nation that is build on selfishness, anger, and hate.
ReplyDeleteWhite males hate anyone that doesn't look like them, White men are angry about the ecomony (which was ruined by guess who?) White men.
It is sad that from the time Christoper Columbus set foot on this nation that White men fought to take it from (Red Men) the Native Americans, then White men decided to enslave (Black men), impregnate Black women (therefore taking away from the purity of their race and making thenselves the "NEW" minority.
Have White men ever been happy? I think not. White males have run his country since the days of George Washington and have ruined a nation. Now one of your impure decendants is at the helm and he is at fault for all you have caused.
Yet, White men think they are the smartest group of people on the planet...Go Figure that one out.
Dear Cee,
ReplyDeleteI'm not sure about the hate part; it is a VERY strong word not to be used just in passing.
It is a very controversial ( and interesting) set of points you make.
I immediately wonder -------------------------
Would it be different if the black race had been the ones to discover America ??
Or The Chinese ??
Or the Japanese ??
Or The Indians ( Of INDIA )??
Or The Mexicans ??
Or the Peurto Ricans ??
Or The hawaiians ??
Or The Itailians ??
Or The Muslims ??
I would also like for you to tell me any point in time.history when man ( any color ) was not warlike against his fellow man ( again any color)
Some of the greatest genocides in recorded history were outside this country ( civil war was huge of course ). But some of the the atrocities in Africa are/were even greater ( and are still to this day going on) along with the Chinese and Russians and Mussolini and make no mistake native Americans were certainly no exception.
How about AIDS ? Where did it originate and propagated by whom?? Is that not a form of amazing selfishness by males ??
I would also like to hear from you exactly where this world would be right now if the white man had not settled the USA - an interesting thought all unto it's own!! I mean really - where would the world be?? better ? worse?
The smartest group on the planet? yeah maybe in some respects - but the dumbest by far in many others.
My father who was a very learned man once told me that there would come a day in this country when race would be totally irrevelant as we would all be " a light shade of brown " not a malicious comment - just one he saw coming 40 years ago and seems as if it's coming to pass & judging by your comments above you see this also.
How obtuse can all these so called 'experts be!!
ReplyDelete**The massive deficit debt accrued during WWII left our nation with new infrastructure and a trained work force that paid dividends. The current deficit is a CONSUMPTION deficit--there will be little or no return on this debt.
**After the war the USA was THE only builder on the block. Today we are under increasing competition from many corners of the world.
**The resources needed to build things are now demanded by all these new emerging economies. The easy pickings of these resources has already occurred; the price of these commodities will rise with competition and scarcity. Number one being oil and at least 15-16 other metals and minerals necessary for modern societies.
The only item of the above that our nation can do anything about is the debt. If we can't control ourselves our children will not participate in the world that is to come.
The ignorance on this blog always amazes me
ReplyDelete^^^^ Agreed.
ReplyDeleteThese psychopaths think in terms of money (pieces of paper) rather than physics & math of reality.
HERE'S A CLUE FOR YOU, LEGIONS OF PSYCHOPATHS THAT HAVE REPRODUCED OUT OF CONTROL. The planet has finite space and a finite regeneration rate. The planet is about 14X overpopulated. This is the major cause of all your problems. To reduce it is the major solution. Introduce radical birth control measures now, or you will all anhilate yourselves.
STOP having mini-me/more-advanced-pet fetishes you disgusting freaks. The entire planet is 1 family; you don't need to be obsessed with things coming out of your genitals to find meaning in life you sick sick sick psychopaths. If you feel you can reproduce in unstable/unsustainable situations, someone else will birth you in an equally retarded situation. Enjoy.
0 kids here (because I don't have primitive fetishes).
Here either.... Of course they will accuse you of plotting genocide because sex=conception, and other such ridiculous ideas. God meant for the three child three car family suburbs to expand indefinitely on the path of american dream/englightenment, with all its churches, religious bilboards, fast food fine dining, and empty culture entrapments.
ReplyDeleteWhen I pass a church I always salute because ultimately we are fighting the war for God.