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Discussion: (7 comments)

  1. Of course! The ELITE/banksters ALWAYS take their cut off the top. They create “inflation” through manipulating the money and that “inflation” is siphoned off to them, seemingly invisible.
    This is PAYBACK by o’bama to those who OWN HIM!

  2. then, obviously, we should have gone off the fiscal cliff and raised everyone’s taxes back to 2001 levels…every dollar thus taken out of the economy would reduce growth by much less than a dollar..

    1. notice that 40% of it is tax cuts:
      American Recovery and Reinvestment Act of 2009
      Summary of Major Spending and Revenue Provisions
      (Billions of Dollars)
      Major Spending Components:
      State Fiscal Stabilization Fund……………………………………………….
      $53.6
      Enhanced Federal Medicaid Match Rate………………………………….
      86.6
      Transportation Infrastructure………………………………………………….
      48.0
      Other Infrastructure Grants…………………………………………………….
      72.0
      Investments in Health Programs…………………………………………….
      14.2
      Energy-Related Programs……………………………………………………..
      37.5
      Education and Training Programs…………………………………………..
      52.3
      Unemployment Insurance Expansion………………………………………
      35.8
      Health Insurance for Unemployed Workers………………………………
      24.7
      All Other Areas of Spending…………………………………………………..
      75.7
      Total Spending Components……………………………………………….
      $500.4
      Tax Revenue Components:
      Individual Tax Relief……………………………………………………………..
      $232.4
      Business Tax Relief………………………………………………………………
      34.2
      Energy-Related Tax Issues……………………………………………………
      20.0
      Total Revenue Components………………………………………………..
      $286.6
      Total Federal Stimulus………………………………………………………..
      $787.0

  3. Todd Mason

    Fine. Government spending is the blunt instrument approach, but superior to the Fed’s printing presses, which is the ineffectual approach. Now how about discussions on policies that might actually work well? You mentioned that Glenn Hubbard would have had Mitt endorsing broad mortgage relief. Bring Glenn out; let’s get the ball rolling like the pragmatic Americans we are. We are all Americans, right?

  4. Roger Ramjet

    This is a surprise to no one, save for those who think they can raise the level of water in their swimming pool by taking a bucket of water from the deep end and then pouring it into the shallow end.

    Keynesian Economic Theory has been successful in only one environment – The Classroom. There are no examples of Keynesian economic policy successfully stimulating an economy for even the mid-term. However, the theory doves perfectly with the social engineering efforts of the Progressive, which is why it’s worshipped and utilized – as it is an integral part of wealth redistribution, not sound economic policy.

  5. Vic Volpe

    Government spending would stimulate if spent in the right places. The way it was spent was like giving out a ticket to the gravy train. We have the wrong leadership that does not know how to inspire. Reviving our manufacturing sector would have big paybacks…
    http://vicpsu.blogspot.com/2013/01/economics-without-bs-reviving-our.html

  6. The fiscal multiplier is mathematical nonsense,
    and a government spending scam.

    How income is divided into consumption and investment,
    according to the marginal propensity to consume,
    is irrelevant to the effect of spending on income,
    which is what the “multiplier” is supposed to tell us.

    b = marginal propensity to consume

    Keynes’ original equation, with some numbers:
    ΔY = ΔC + ΔI
    10 = 9 + 1

    Keynes’ investment “multiplier” k, as he described it:

    k = ΔY/ΔI = ΔY/(1-b)ΔY = 1/(1-b) = 10/1 = 10
    so b must = 0.9

    Here’s baseline income:

    Y = C + I

    Add a $1 increment.
    Both sides must give the same result:

    Y +1 = C + I +1

    If the $1 is investment:
    ΔY = ΔI = 1
    k = ΔY/ΔI = ΔY/(1-b)ΔY = 1/(1-b) = 1/1 = 1
    and b must = 0
    Investment has zero propensity to consume.

    If the $1 is consumption:
    ΔY = ΔC = 1
    ΔY/ΔC = ΔY/bΔY = 1/b = 1/1 = 1
    and b must = 1
    Consumption has 100% propensity to consume.

    There are simultaneously 3 different values for b.
    Keynes used the wrong value.

    The fiscal “multiplier” always = 1.
    If the govt-spent $1 is offset by tax, or loss of value from inflation, then there’s no effect at all.

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