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Thread: The US Recovery

  1. #946
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by AndrewSimons View Post
    source please, i need it for my test
    Welcome!
    Here's your source:
    https://fred.stlouisfed.org/
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  2. #947
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    Quote Originally Posted by DOR View Post
    Welcome!
    Here's your source:
    https://fred.stlouisfed.org/
    thank you very much!

  3. #948
    Senior Contributor GVChamp's Avatar
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    Quote Originally Posted by DOR View Post
    There are fundamental differences in how to deal with a recession, and how to deal with a deflating, once-in-75-years depression. Those who play around with fiscal policy for partisan political gain do the economy, and the country, no favors. Slashing taxes just because one has control of the White House and Congress is against the national interest. Driving up the budget deficit when the economy is bubbling along and very modest inflation and very low unemployment is simply irresponsible. This is when a responsible government starts rebuilding the war chest, not firing off the left over ammo.
    Question: WHY should a sovereign issuer of currency concern itself with building up a warchest? The answers to this question are all right-leaning, from an economics POV.
    "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

  4. #949
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    very interesting point you bring up, because that's the heart of Modern Monetary Theory. which Trump apparently also believes in.

    Krugman argued against MMT before:

    https://krugman.blogs.nytimes.com/2011/08/15/mmt-again/

    so critiques of this is hardly all "right-leaning".
    There is a cult of ignorance in the United States, and there has always been. The strain of anti-intellectualism has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that "My ignorance is just as good as your knowledge."- Isaac Asimov

  5. #950
    Senior Contributor GVChamp's Avatar
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    It's right-leaning in the current political context, because only right-wing economists would think the current debt levels are economically damaging. To give another analogy, Krugman can correctly state that he thinks 100% tax rates are economically devastating. He canNOT say that the government raising taxes would be economically damaging in the current context, because that's a right-wing argument. It's straight-up inconsistent.

    And Krugman HAS been inconsistent on this before. He claimed publicly that the deficits of the Bush adminstration were going to have economically damaging effects because of traditional inflation and crowding out reasons. Fair enough. Then you should keep to that position as the economy entered economic recovery, and for instance call for both massive tax hikes and massive spending increases until we get to a more sustainable 50% of GDP debt level, or whatever. But he doesn't, because Krugman isn't consistent.

    There's not a strong economic concern about increasing current debt levels. It's not like you really run out of run-room when it comes to fighting recessions or depressions. The concern is a political one, you can't drive a political consensus to dramatically expand the welfare net when the debt level is high.
    Last edited by GVChamp; 26 Sep 18, at 22:08.
    "The great questions of the day will not be settled by means of speeches and majority decisions but by iron and blood"-Otto Von Bismarck

  6. #951
    Senior Contributor DOR's Avatar
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    Quote Originally Posted by GVChamp View Post
    Question: WHY should a sovereign issuer of currency concern itself with building up a warchest? The answers to this question are all right-leaning, from an economics POV.

    Short answer: because it's the prudent thing to do. And, for clarification, we're talking about an over-heating economy in this particular segment.

    If all your debt is in your own currency you can print money until the cows come home to repay the debt. But, that works exactly as long as people think your currency is worth holding. As that confidence fades, the cost of issuing your debt rises, to the point where it is stupid to continue issuing debt in your own currency.

    Many countries issue debt in US$ for two reasons: first, it is far more liquid; and second, it is cheaper . . . if your exchange rate doesn't go south in a big hurry. If the volume of US debt gets to the point where lenders are demanding high real interest rates to hold T-bills, something is broken.

    So, back to the question: why a war chest?

    If fiscal policy is more “loose” than normal when the economy is bubbling along nicely, the usual result will be inflation. If monetary policy is the sole response (i.e., the GOPers are in charge), then interest rates must rise more sharply than would otherwise be the case and the economy comes crashing down into a recession.

    If a fiscal response is the only one, and monetary policy is unavailable (for whatever reason, like Hong Kong where the currency is pegged to the dollar and monetary policy is out-sourced to the Fed), then the process of adapting to an overheating economy is a slow one. Raising taxes typically forces people to pay more (i.e., extracts money from the economy, like taking fuel out of the fire) only one to two years down the road. Cutting spending might require violating contracts, which could incur large penalties.

    On the other hand, if fiscal policy is tightened along with monetary policy, the economy has a much better chance of slowing gradually and perhaps avoiding a recession. That's what happened in the mid-1990s. But, it requires at least a small degree of fiscal responsibility and we know which US political policy historically has none of that.

    Now, about that war chest. When times are good, a moderately tight fiscal policy will extract a larger share of revenues from the economy than it does under 'normal' circumstances. The money goes into paying down the debt and, in countries with a history of fiscal responsibility (again, Hong Kong comes to mind), the surplus is socked away as fiscal reserves. In Hong Kong, that figure is now about 35% of GDP, or enough for more than two years of full government expenditure.

    When the economy finally turns down, those reserves provide a cushion that allows the government to continue -- or increase -- spending without either increasing borrowing (possible crowding out) or extracting more revenue from the economy.
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  7. #952
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    The California Economy

    I thought about putting this under the Silicon Valley thread, and then maybe the Shithole Countries thread, but ended up putting it here.

    The Bureau of Economic Analysis just released its first-ever analysis of GDP by county. The results are for 2012-15, and they are still quite preliminary. Nevertheless, there are some interesting results to be found.

    The California economy was worth $2.4 trillion in 2015, or 13.3% of the nation. Growth was 5% in real terms, or double the rate of the US minus California.

    Four California counties are worth more than 1% of the national total: Los Angeles ($656 billion, 3.8%), Santa Clara (1.5%), Orange (1.4%), and San Diego (1.2%). Together, they grew 5.5% in 2015, and the rest of the state 4.4%.

    The 30 largest counties (No. 30 is Madera) are all worth more than $4 billion, comprise 90.8% of the state total (and 12.7% of the nation), and together grew 4.9% in 2015. The remaining 28 counties grew 5.7%, but are smaller than Orange County ($243.5 billion, vs. $225.5 billion).

    Unsurprisingly, the fastest growing county over the period covered by this study was Santa Clara, which grew an amazing 9.2% p.a. Five others grew more than 6% a year, including Glenn (7.8% p.a.), Colusa (6.5% p.a.), San Mateo (6.4% p.a.), Madera (6.2% p.a.), and San Francisco (6.2% p.a.).

    Nine counties registered negative growth over the three-year period: Trinity (-4.0% p.a.), Plumas (-2.4% p.a.), Inyo (-1.9% p.a.), Sierra (-1.5% p.a.), Yuba (-1.1% p.a.), Nevada (-1.0% p.a.), Mariposa (-0.9% p.a.), Solano (-0.8% p.a.), and Mono (-0.2% p.a.). Among the nine, Solano accounts for more than two-thirds of their economic activity.

    https://apps.bea.gov/scb/2019/03-mar...totype-results
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