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Spending freeze is bad says Krugman

  • 01-02-2010 8:57pm
    #1
    SLUSK
    Closed Accounts Posts: 1,156 ✭✭✭


    Spending is good and saving is bad, so says Paul Krugman one of the "finest" minds in Economics.
    http://krugman.blogs.nytimes.com/2010/01/26/obama-liquidates-himself/

    At this moment in time the deficits in the American economy are record high and therefore Obama wants to curtail some of the spending, however this is something Paul Krugman thinks is disastrous.

    Are we to honestly believe that you should not cut spending when you have the highest budget deficits ever?


Comments

  • #2
    [Deleted User]
    Posts: 5,589 ✭✭✭ [Deleted User]


    SLUSK wrote: »
    Spending is good and saving is bad, so says Paul Krugman one of the "finest" minds in Economics.
    http://krugman.blogs.nytimes.com/2010/01/26/obama-liquidates-himself/

    At this moment in time the deficits in the American economy are record high and therefore Obama wants to curtail some of the spending, however this is something Paul Krugman thinks is disastrous.

    Are we to honestly believe that you should not cut spending when you have the highest budget deficits ever?

    Don't think of it like a householder - Krugman has a point, and depending on your viewpoint of economics, is correct or incorrect. A stimulus should have a positive effect in kickstarting a recovery.


  • #3
    SLUSK
    Closed Accounts Posts: 1,156 ✭✭✭SLUSK


    Why not increase spending a hundred times more? That should kick start a "recovery". I just wonder what happens when the creditors want their money back or when America no longer will afford to pay the interest on their loans...


  • #4
    [Deleted User]
    Posts: 5,589 ✭✭✭ [Deleted User]


    SLUSK wrote: »
    Why not increase spending a hundred times more? That should kick start a "recovery". I just wonder what happens when the creditors want their money back or when America no longer will afford to pay the interest on their loans...

    Obviously there is a balance to be had - there is a good article on all this in this week's economist


  • #5
    SLUSK
    Closed Accounts Posts: 1,156 ✭✭✭SLUSK


    Hey in this day and age it is not old fashioned production and investment that drives the economy, it is consumption. Why not give every person a big bag of money to spend? That seems to be the Paul Krugman way.


  • #6
    Flamed Diving
    Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    SLUSK wrote: »
    Hey in this day and age it is not old fashioned production and investment that drives the economy, it is consumption. Why not give every person a big bag of money to spend? That seems to be the Paul Krugman way.

    It only seems that way when you have no clue what you are talking about. The same way my lack of knowledge about rocket science might lead me to think that lighting dynamite under a toilet will fly me to the moon.


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  • #7
    SLUSK
    Closed Accounts Posts: 1,156 ✭✭✭SLUSK


    Did Paul Krugman say we should spend more or did Paul Krugman not say that we should spend more?


  • #8
    Flamed Diving
    Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    SLUSK wrote: »
    Did Paul Krugman say we should hand out big bags of cash or did Paul Krugman not say that we should hand out big bags of cash?

    :)


  • #9
    Time Magazine
    Registered Users, Registered Users 2 Posts: 8,452 ✭✭✭Time Magazine


    Your argument, "the deficits in the American economy are record high", are based on previous economic conditions; situations that were faced in the past.

    The theoretical argument for fiscal stimulus is primarily that monetary policy (which you're also not a fan of, but we all know that) has reached its limit.

    When was the last time that a shock occurred so violently that an economy was still on its knees even with interest rates of 0%? Never. So making arguments that the current spending is bad based on previous deficits is not logically sound. Things have changed.

    This isn't an argument for infinite spending, either. Of course not. However the basis for your original argument is poor.


  • #10
    SLUSK
    Closed Accounts Posts: 1,156 ✭✭✭SLUSK


    Sooner or later they will have to start to pay normal interest rates on their record high debts and they will end up in the same situation as Argentina probably.

    As far as I know the record high deficit does not even include unfunded liabilities for Social Security and Medicare.


  • #11
    Flamed Diving
    Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    You gotta love the way he simply dodges any point which he cannot refute/defend against and simply moves on to something else.


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  • #12
    SLUSK
    Closed Accounts Posts: 1,156 ✭✭✭SLUSK


    Flamed Diving wrote: »
    You gotta love the way he simply dodges any point which he cannot refute/defend against and simply moves on to something else.
    Are you saying it is a good idea for America to put itself deeper into debt?


  • #13
    Flamed Diving
    Closed Accounts Posts: 6,609 ✭✭✭Flamed Diving


    SLUSK wrote: »
    Are you saying it is a good idea for America to put itself deeper into debt?

    No, I have no idea where you got that from.


  • #14
    nesf
    Registered Users, Registered Users 2 Posts: 27,645 ✭✭✭✭nesf


    Flamed Diving wrote: »
    It only seems that way when you have no clue what you are talking about. The same way my lack of knowledge about rocket science might lead me to think that lighting dynamite under a toilet will fly me to the moon.

    As someone with a background in both economics and rocket science, believe me this thread is truly painful.


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