Cash For Clunkers

[MRR]

LTSmash and other fiscal libertarians, what say you about the general trend on government spending to get out of a recession? I in fact, took Econ 101 and my prof and John Maynard Keynes and my textbook seemed to think that increasing spending during a recession, or "increasing G" as my prof's mantra went, was the way to go about things. It would seem that the fiscally right seem to think this is a bad thing wheras Keynes didn't see macroeconomic as right or left just as practical or impractical; in a recession increase government spending to get the multiplier effect to increase GDP and in expansion, decrease G to lead to better growth.

Maybe I'm a retard but this very basic macroeconomic class seemed to make things relatively clear (I doubt they actually are) and really rendered this debate rather moot. A "left wing" or "right wing" response is not needed - partisan politics often create a deadlock and division and polarization. Practical solutions whether they be viewed as communist or libertarian fiscally I think shouldn't be feared but should be emraced. What you see too much of in modern society is throwing words around like fascist, far right, far left or socialist/communist. It achieves nothing and makes the user of those words seem like an imbecile.

Use common sense solutions.

Keynes was full of shit and macroeconomics is not based on the same logic and sound footing as microeconomics. What the government is doing now by spending and propping up failed businesses (particularly banks) is SETTING PRICES. They are giving value to worthless assets the banks hold and actually BUYING the bad mortgage debt from the banks when they have almost no value. In turn they are trying to prop up wages and prices in other sectors of the economy to prevent deflation but deflation is exactly what we NEED! If we let wages and prices fall, unemployment will go down as workers are cheaper to hire and can have a similar standard of living because their smaller quantity of money goes further (due to lower prices). Propping up prices is doing the exact opposite and exacerbating the unemployment issue by keeping wages and prices higher than the market dictates they should be and making it too expensive to hire more workers.

Don't even give me the whole "Keynes's theories solves the Great Depression" because they didn't...it was a monetary contraction by the Federal Reserve instead of the opposite that caused it along with the post war boom with hundreds of thousands of soldiers returning home.

[MRR]

What % is used when destroying the clunker?

Probably quite a bit since you have to take the car apart and remove non-metal and toxic components, along with melting and reprocessing steel and aluminum. Don't forget they aren't letting them dissassemble the vehicles and sell the parts their engines have to be destroyed (by removing the oil and running it with a silicate solution - liquid glass) and then they must be shipped off to be crushed (transportation fuel used to get these disabled vehicles to a junk/scrap yard).

[MRR]

Look at this. Defence appears to be the problem at least in my eyes.

Yes I realize I am starting a debate.

The Military is the only type of spending explicitly authorized by the Constitution...unlike 99% of the other stuff the government unconstitutionally spends their money.

plus unlike any stimulus plans US Military research programs and their derivatives have done a long way to actually stimulating creativity and ingenuity (prime example being the internet which was a DARPA funded initiative).

[MRR]

I still view this as government inflicted inflation (catchy ). There needs to be a way around this without giving government checks to the people.

Make it tax deductable instead of deliberately handing out a check (same net cost anyway - probably cheaper because less bureaucracy).

I disagree with an income tax as well but I will leave that discussion to another thread.

[MRR]

It's funny hearing republicans complain about spending when the debacle in Iraq debts the states a figure with TWELVE zeros.

Every party gets reckless and out of control when they have absolute power which is why I choose not to associate myself with either the Democrats or the Republicans. Furthermore just because the Republicans and Bush overspent does not give Obama carte blanche to spend non-existent money on whatever he feels is "necessary."

[G35COUPE]

Um it didn't and it wont since the bill is created on the premise that you are taxing productive resources and people in society (to finance the stimulus) and giving it non-productive and poorly competitive parts of economy. The fact that the government thinks that doing the exact thing that got us into this mess (overspending, debt, living beyond our means, etc) and they expect it will fix the economy is the very definition of insanity. The stimulus didn't stimulate anything...it was $700 billion in pork and special interest projects that help the average person very little. The current administration can complain all they want about the mess left over from their predecessor but Bush didn't create Obama's $1+ trillion deficit...he did.

Sorry to burst your bubble, but all your assumptions are baseless, to say the least.

1. Please, can you tell us what you mean by taxing productive resources? Is there a resource that is never productive?? The very use of both words together in a phrase, "productive" and "resource", is what we call a tautology. Inherent, in the semantic describing any resource, is its potential to provide other value added contributions to society or to an individual, thus, its productive nature. Taxation has nothing primarily to do with productivity. It is first and foremost a source of raising funds, a means of government control, and secondarily, a tool for social distribution and in some cases, social eugenics.

2. What is a non-competitive part and non-productive part of an economy??? Do you mean the dust in the air or the sand on the gorund or the coral reefs in the oceans??? What do you really mean by this???

3. Are you aware that Bush had gotten the USA into a debt to the tune of over $3 Trillion dollars, of which most were off-balance sheet expenditures??? Why did no one complain when the idiot of the century, Bush, was busy spending like a drunken sailor for 8 years on the lies he told the world and the USA---Iraq???? Can you point to a portion of your life that was influenced by the debt that Bush had taken on in the last 8 years??? Who is going to pay for the deficits that Bush accumulated in the last 8 years??? How did americans allow their inner stupidity to drive them twice towards a total and perputual loser such as Bush who has a sound record of numerous personal failures in life???????????? when you are done reading the followign articles, then le tme know so that we can talk.

Feds ignored clear meltdown warnings - Economy in Turmoil- msnbc.com

[ame="http://www.youtube.com/watch?v=kNqQx7sjoS8"]YouTube - Home Ownership and President Bush[/ame]

$400 billion deficit to greet Bush's successor - USATODAY.com


Bush's Budget Projects Deficits - washingtonpost.com


4. For your information, the Obama stimulus was not designed to work in 6 months. So, expect to see nothing in the first year (2009). Afterall, it took Reagan almosat 2 years to bring down unemployment form about 10.8% to about 7.8%. The Obama stimulus was designed to last 18 months. And the very reason for this is to simply control inflation while economic growth is being achieved. If all the Obama stimulus money was pumped into the system in 6 months, the economy would grow very rapidly but at the risk of a severe inflation, which would require inevitably raising interest rates to control inflation, which happen to have the effect of slowing or cooling down economies. In essence, a forceful pumping of stimulus money would have created a zero sum game. Thats why obama decided to inject the stimulus money slowly, but in a controlled way that can be sustained, without causing any severe inflation. So, wait until next year 2010 June before making any premature comments about whether the Obama stimulus has worked or not. I think he deserves our patience.

[G35COUPE]

Keynes was full of shit and macroeconomics is not based on the same logic and sound footing as microeconomics. What the government is doing now by spending and propping up failed businesses (particularly banks) is SETTING PRICES. They are giving value to worthless assets the banks hold and actually BUYING the bad mortgage debt from the banks when they have almost no value. In turn they are trying to prop up wages and prices in other sectors of the economy to prevent deflation but deflation is exactly what we NEED! If we let wages and prices fall, unemployment will go down as workers are cheaper to hire and can have a similar standard of living because their smaller quantity of money goes further (due to lower prices). Propping up prices is doing the exact opposite and exacerbating the unemployment issue by keeping wages and prices higher than the market dictates they should be and making it too expensive to hire more workers.

Don't even give me the whole "Keynes's theories solves the Great Depression" because they didn't...it was a monetary contraction by the Federal Reserve instead of the opposite that caused it along with the post war boom with hundreds of thousands of soldiers returning home.

1. First of all, Keynes theories have been repeatedly used by republicans like Regean who spent the USA into huge deficits through military armament expenditures. Those deficits brought unemployment down from 10.8% down to about 7.8%. It took 2 years for Reagans deficit spending to bring down unemployment. I wonder why we are not allowing Obama the same courtesy as well. So, Keynes theory does have some credibility.

2. One of the most obvious acts of price setting in the USA, was accomplished by a republican---Richard Nixon, under his Wage and Price Controls of 1973. It led to rationing of oil products and a severe inflation. After the Isreali-Arab war of 1967, arab oil producing nations sought to influence world affairs by forming the Cartel called OPEC in 1973, which led to an oil embargo that caused crude oil shortages and sky high prices. Nixon then made the problem catastrophically worse by his insane policy.

And as far as propping up businesses is concerned, the S&L bank schemes that were created under Ronald Reagan, were quietly propped up or liquidated at cost to the government, by another republican President (Bush 1---the father of Bush 2).

3. WRONG!!!!!!!!!!!!!!! Deflation does exactly the opposite. If wages fall, there will be severe unemployment as businesses are unable to sell their products above their cost prices. This means, organizations without any significant cash reserves or any significant loan facilities, will go out of business rather quickly. If you want to understand how severe deflation can be, look at the Japanese economy from 1990 down to 2000. For almost a decade, the Japanese economy suffered the severe effects of deflation, while wages fell like crazy. The idea in economics is that every economy needs a minimum amount of inflation to stay afloat. That number hoovers around 2- 3 % in the USA. This level of inflation tells policy makers that wages are either inching up gradually, which is acceptable, or that wages are stagnating. And for your information, you can still get cheap workers in an inflationary economy. Wages in a market economy is determined by the skills and value the worker brings to the organization. So, if your skill does not provide any value added benefit to a corporation, ina market economy, you automatically become a cheap source of labor.

4. Your argument about wages is based on what we call capital intensive versus labor intensive economy. The USA is a capital intensive economy and thus wages will always be higher to support the advanced skills required in such an economy. So, jobs in the US that are typical of labor intensive economies, where wages are generally low, are simply shipped to where they are best utilized. Again, this falls back into the law of comparative advantage in economic thinking. What you are suggesting is that the US revert back to being a labor intensive economy for the sake of just making wages low again. Beleive it or not, China will one day rise from being a labor intensive economy to a capital intensive one, as the standard of living and technological advancement of their nation, rises.

[G35COUPE]

The Military is the only type of spending explicitly authorized by the Constitution...unlike 99% of the other stuff the government unconstitutionally spends their money.

plus unlike any stimulus plans US Military research programs and their derivatives have done a long way to actually stimulating creativity and ingenuity (prime example being the internet which was a DARPA funded initiative).

The US constitution, if i recall, only allows the government to have a standing militia for its protection. I don't beleive it says anything explicit in it with regards to military expenditures. So, I am not sure where you got these assertions from.

[LTSmash]

Not that I disagree, but in order for businesses to survive it takes consumers willing to spend and said spending is hurting a bit. Government breaks and incentives help but the funding is akin to franchising a struggling restaurant when the revenues for the restaurant don't warrant the business growing.

I was getting tired when I wrote that bit and I realized that I left out a few things when I went over it today. I should have expressed that I personally wouldn't inject the stimulus at all, but if I had no choice I'd put more into SBA than government; to make a comparison at the current SBA funding from the stimulus. That's all what I was getting at.

[MRR]

The US constitution, if i recall, only allows the government to have a standing militia for its protection. I don't beleive it says anything explicit in it with regards to military expenditures. So, I am not sure where you got these assertions from.

Article 1 Section 7...
[congress has power to...]

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years

To provide and maintain a Navy

It specifically mentions an Army and Navy as separate from state and local militias in several parts.

[LTSmash]

Article 1 Section 7...
[congress has power to...]

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years

To provide and maintain a Navy

It specifically mentions an Army and Navy as separate from state and local militias in several parts.

Interesting, I had discretionary/mandatory spending in my mind when you made the original post regarding the subject.

[Kitdy]

So what's your ideal US MRR and LTSmash?

[wwgkd]

So what's your ideal US MRR and LTSmash?

Hey, may as well throw me in there, too, since I've been agreeing with 99% of what they say. I haven't been posting, serious posts at least, because I have this argument all the time and I'm frankly tired of it. It usually seems to devolve into either "obama walks on water and bush is the antichrist" (I call that the msnbc approach) or "the US has been spending way too much money on defense which is just proof of our imperialist policies and now you're mad that we're spending money on poor people instead of the fat cats on wall street."

I thought I'd step in here for a couple of comments while trying to avoid the main event. Our military spending isn't all bad since as a country we've tended to follow the motto that we should spend money not lives. Yes, people still die in wars since both sides are trying really hard to kill each other, but we do our best. War does suck, so all those people who respond to this by saying "but look at all the civilians killed there..." you can save it and maybe use the time to think about all the civilians killed in other wars, such as WWII, and at least be gratefull over some of the improvements being made. My other point on military spending is that the cold war did put our country into great debt (look at some of the spending increases obama wants before telling me all debt is bad) but it also started a technological revolution that has ot only effected everyone in this country but on the planet. Some more than others since some parts of the world still have trouble with toilet paper, but the fact that we are even having this argument here is testament to how much it has effected us.

And my ideal US would be to round up all the canadians and candadian sympathizers and kick them out (I'm looking at you G35.) Anyone see the movie canadian bacon?

[G35COUPE]

Article 1 Section 7...
[congress has power to...]

To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years

To provide and maintain a Navy

It specifically mentions an Army and Navy as separate from state and local militias in several parts.

While you are correct, the constition still does not say anything about making expenditures of the scale you have described. As you well know, there are two schools of thoughts regarding how the US Constitution should be interpreted---those who think it should be interpreted by strict construction, and those who think the constitution evolves with time because it is living and breathing document.

If I go by the data you have supplied, then I would also say that the US Constitution permits expenditure of ever increasing salaries of US Congress people, when in fact, I don't recall anything in the document that says we should pay them a dime for their work in Congress.

[G35COUPE]

Hey, may as well throw me in there, too, since I've been agreeing with 99% of what they say. I haven't been posting, serious posts at least, because I have this argument all the time and I'm frankly tired of it. It usually seems to devolve into either "obama walks on water and bush is the antichrist" (I call that the msnbc approach) or "the US has been spending way too much money on defense which is just proof of our imperialist policies and now you're mad that we're spending money on poor people instead of the fat cats on wall street."

I thought I'd step in here for a couple of comments while trying to avoid the main event. Our military spending isn't all bad since as a country we've tended to follow the motto that we should spend money not lives. Yes, people still die in wars since both sides are trying really hard to kill each other, but we do our best. War does suck, so all those people who respond to this by saying "but look at all the civilians killed there..." you can save it and maybe use the time to think about all the civilians killed in other wars, such as WWII, and at least be gratefull over some of the improvements being made. My other point on military spending is that the cold war did put our country into great debt (look at some of the spending increases obama wants before telling me all debt is bad) but it also started a technological revolution that has ot only effected everyone in this country but on the planet. Some more than others since some parts of the world still have trouble with toilet paper, but the fact that we are even having this argument here is testament to how much it has effected us.

And my ideal US would be to round up all the canadians and candadian sympathizers and kick them out (I'm looking at you G35.) Anyone see the movie canadian bacon?

LOL! I generally migrate to where common sense and rationality takes root. If it happens to take root with Canadians or with Australians, then so be it. I don't think the US was formed as a nation to support questionable and futile ideals that tear it apart and/or tries to destroy it.

Surprisingly, the Canadians have done an outstanding job regulating their finanacial industries and markets. They are less than 500 miles away from US borders and yet they escaped the financial meltdown unscathed. The same goes for Australia, which also has one of the closest cultural underpinnings as the US. Would you beleive that the politicians in the US are resisting the creation of the sort of strong financial regulation to protect our financial system, as the Canadians have done? So, where is the prudence here?

So, how is Canada and Australia smart enough to escape the same financial disease and meltdown that almost crippled the USA?? There is something terribly wrong and faulty with the way the USA and its citizens are going about some of its policies, and the choices we are making as a nation. Of course, hubris and shear arrogance, will not allow us in the USA to look at what other nations are doing right. Instead, we continue to spread misinformation to the massively uninformed US citizenry, in hopes of roping them into great white lies and deceptive intentions.

So, lets continue with the dumbing down and misinformation of americans. We will get to Mars and Jupiter in manned space flights with the dumbing down of americans. If you wanna see a parody of what happens to a nation filled with people who refuse to use their brains for critical thinking, I suggest you watch the movie, "Idiocy". I saw a lot of things in that movie that mmay be occuring in small part in our current environment in the USA.

The first of this questionable behavior by we americans, that I find similar to the movie "Idiocy", is how in the hell did americans decide to elect George Bush, twice???? What was the basis for the decision most people made to elect a failure like Bush into power? Anyone who voted for Bush twice, and is now suffering in the current US economy, deserves every bit of the pain and suffering their own poor decision of voting for a total failure like Bush. There was ample data out there showing that Bush was a failuer at life. Yet, we ignored it and fell for his emotional talk. We deserve what we got. Seems like intellectual engagement is abhored in the USA because may be it might reveal the truth that we don't want to ever hear.

People get mad at me all time because i question the irrational behavior and decisions we make in the USA. Emotional response with no rational basis, is what we are good at in the USA. I don't give a rats behind what anyone thinks. If they have issues with my position, I welcome their poking holes at my ideas and comments, and then show me where and how it is flawed or how their ideas and thinking is superior or trumps mine.