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Discussion: (11 comments)

  1. ” Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker”

    so you’ve got quite a few beyond Bernanke …

    and…in terms of actual spending….

    if someone gets entitlements and they spend the money on food or services – it’s not going into a black hole… it’s going into the economy and it does employ people who grow, process, transport and market food.

    there is an argument that people who pay for entitlements, might, with lower taxes, spend the money on something else – but the point is the money does get spent on something – either way – and spent money does represent aggregate demand that does promote jobs.

    1. a black hole? you mean, like stuffing it into a mattress?

      are you being sarcastic?

      I thought rich people spent money, too, or they invest it = give it to someone else to spend, in return for a little interest.

      Of course, who needs to borrow money from rich people when Bernanke just prints off some more billions to loan to the government to give to favored constituencies.

      If you can’t loan money with the big dogs, stay on the porch.

      1. well the point is whether you spend it (or invest it) yourself of the govt takes it away from you and spends it – it still gets into the economy.

        one could argue about the fairness or “wrongness” of the govt taking the money but the argument that when the govt takes it – that it essentially “disappears” is wrongheaded.

        One could say that the rich guy would spend it on a Cadillac or the govt could take it and spend it on tank and that some worker at GM would have a job building either one.

        And that worker would then spend that money for milk and bread and mortgage…

        and at that point.. would the bakery, or dairy or bank really care where the money originally came from?

        Now the Rich guy could instead spend it on a Chinese factory or gold Krugerrands to keep in his safe but he could also buy T-bills with it.

        the recipient of the entitlement financed from the rich guys taxes would not be spending that money on Krugerrands..

        right?

        I’m not arguing the good or bad or right or wrong of it – only the mechanics.

        have I got the mechanics wrong?

    2. SeattleSam

      When you take money from someone to give to another via an “entitlement”, how does that represent a change in aggregate demand? The person from whom you took the money has that much less to spend. Ignoring, of course, the considerable compliance costs of collecting that money.

      1. re: change aggregate demand

        it does not really – unless the rich guy was not going to spend it.. on similar things the entitlement recipient would have, right?

        1. it does not really – unless the rich guy was not going to spend it.. on similar things the entitlement recipient would have, right?“…

          You just can’t help yourself can you larry g?

          A silly, clueless statement from you is as dependable as sunrise…

  2. The reason the economy does not respond to silly new tinkering by the Government is because individual businesspersons look at the next 12 to 18 months and are scared to death that there will be more intrusive government control of their business, with Nationalization a very real possibility.

    If the Government is assuring that your business cannot make profits from new investments in capital equipment (which includes hiring additional workers), then every single month thousands of individual businesspersons conclude that this is STILL not a good time to invest and expand.

    Reckless spending by the Government scares the pants off real businesses, and they decline to either apply for loans from the stacks of cash at banks and decline to spend any of the billions the businesses themselves already hold in reserve.

    Consumer spending won’t ever expand the economy. Capital spending always expands the economy. Government spending is by definition wasteful.

    1. tell me again why if a company is making good profits and the demand for their product/services remains strong and is exceeding their current ability to provide – that they would not expand?

      there are a LOT of factors that involve a business looking ahead – besides just govt – to consider.

      the simple-minded answer that the only one that really matters is govt – is just that – simple minded.

      The economy IS expanding right now – slowly, not robustly but there are companies that ARE HIRING and ARE EXPANDING DESPITE all the gloom and doom purveyors.

      1. “the simple-minded answer that the only one that really matters is govt – is just that – simple minded.”

        Yeah, Larry, but who ever said that? Obama’s war on capitalism is a huge factor, but not the only one to consider. Duh.

        “The economy IS expanding right now – slowly, not robustly but there are companies that ARE HIRING and ARE EXPANDING DESPITE all the gloom and doom purveyors.”

        And there are many that are not giving us the weakest recovery since WWII. And that’s the whole point, isn’t it? Some companies expanded during the Great Depression also. Talk about simple-minded.

        Your socialist hero’s wrecking ball is smashing through some industries like the medical device industry, and is poised to flatten others like oil and gas fracking.

        1. re: ” And there are many that are not giving us the weakest recovery since WWII. And that’s the whole point, isn’t it? Some companies expanded during the Great Depression also. Talk about simple-minded.”

          the economy expanded during the Depression rather than contract?

          re” the “socialism blather”…also simple-minded for the gullible

  3. Business will always expand to meet demand and consumer demand drives capital spending. Obama is no more a socialist than our last 10 presidents, the fact that Fox News calls him one does not make it so. Who knows if QE3 is good or bad ? You have a guy with a PHD in Economics and a board of FR Bankers that are advocating it versus the tea party who would just as soon turn it all over to grandpa from He Haw. Myself I will leave it up to the professionals at the FED to figure out. Freedman had interesting thoughts but he was blinded by his Ayne Raynd ideals, you all know Atlas Shrugged was fiction right ? meaning the author gets to make up the outcome, kind of like Fox News……..oh and producers ? if we want your money we will take it, you aint the boss of anybody no more.

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