An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
Trump: "The US Is Headed For A Massive Recession; It's A Terrible Time To Invest In Stocks" https://t.co/sjLsPAlr3j pic.twitter.com/YxMRFod1Gd— zerohedge (@zerohedge) April 3, 2016
Trump: "The US Is Headed For A Massive Recession; It's A Terrible Time To Invest In Stocks" https://t.co/sjLsPAlr3j pic.twitter.com/YxMRFod1Gd
LOL!!! Yes, the deficit is too small!!!
It's good politics: A vote for Trump is a vote against guaranteed recession. What do you expect him to say, things are going splendidly well? Trump's right, but not for the reasons he gives. Anyway, at the risk of being out of step with two big beasts and liable to being eaten alive, the deficit is too small! Way, way too small! The true unemployment numbers are indicative of that.
Trump also said he will pay off the national debt within 8 years. Let's hope he is planning to use platinum coins to do that. :-)
John there only about 1,000 to 2,000 of us who have any clue (FD I think I have at least a clue...) as to what is going on...7B humans.....
Should a recession happen, then everyone from Iran to China should get into their bunkers.HRC will not let a domestic political crisis go unanswered.
the deficit is too small! Way, way too small! The true unemployment numbers are indicative of thatIf there is unemployment then aggregate demand is too low. The government should either spend more or tax less - but that doesn't necessarily mean that the deficit is smaller than it should be.Suppose the government decides to cut the FICA tax rate to stimulate demand. Individuaks and firms may react by spending more - maybe be so much more that the end result will be a much higher GDP, lower unemployment and also a smaller deficit due to larger tax receipts and lower government expenditures on automatic transfer payments.
As I've said before 'the deficit is too small' is a rejoinder to 'the deficit is too big'. The actual mechanism is to spend more or tax less. In other words create more flow and let the deficit be whatever it is. Everybody knows that, and I don't understand why Mike and Matt think there is a difference in view. There isn't.
Agreed Neil...Perhaps actually thinking there's a 'difference' in view, maybe Mike is just 'differentiating' himself from the view (?) Since this post was originally about Trump, I'll use a Trump analogy: Just like Trump has brilliantly branded himself as the 'anti-political-establishment' choice, Mike is cleverly offering an 'anti-MMT-establishment' choice (read: anti-Mosler)... It's just smart marketing (at the expense of occasional political missteps by Trump /MMT ones by Mike).
Neil has put it more economically accurately. Spend more or tax less, or ideally do both for the time being. Like the widening fiscal deficit created by automatic stabilisers in a recession, the government can and should increase the deficit immediately. It will rise for a while and then fall when the economy strengthens. Mitchell and Wray talk and write about deficits being too small all the time! And their solution is to tax less or spend more. Why? Because the "deficit is too small", their words. Jose, what you say is perfectly true. Spending more and taxing less may in fact result in a smaller deficit. As MMTers always say, deficits are ex post, so aggregate demand may decrease the deficit. But in all likelihood, given the economy we have and people needing to delever their debts, the deficit will for the time being increase. Looking at the true unemployment figures, whether here in the UK or in the US or indeed almost anywhere, the deficit is too small.
Are you trying to forecast what the economy will do or what the financial markets will do? Most of the analyses here are about the latter and extracting money from it. I don't expect that the two (Main St. and Wall St.) will perform synonymously.
"deficit spending" is not a good phrase to use either technically OR politically sorry...They get nowhere.... why? something is wrong with their approach its not working ... this is when objective people would "go back to the drawing board..."They seem rather to want to blame their lack of success on some sort of "neo-liberal conspiracy!" allegedly being run successfully by a "neo-liberal" cabal of people who are manifestly incompetent in everything they try to do...
"deficit spending" is not a good phrase to use either technically OR politically sorry...Right. It is based on a discretionary fiscal balance based on the budget . The most policy makers can do is set the fiscal stance from tight to loose. The fiscal balance is the outcome of the budget , tax policy, recurring items from previous appropriations, money policy, automatic stabilization, and political and economic conditions.There's a false idea out there that the fiscal balance is completely related to the budget. That's not true. It goes along with the erroneous notion that government finance is the same as firm and household finance, therefore, a good business person in charge of the budget is what the country needs. NOT.
Well Tom you can never get to that conversation when you lead with "we need higher deficits..." or "the deficit is too small...." Why dont we just talk about the leading spending being insufficient ... then let savings desires of recipients of the proposed increased leading spending result in whatever deficit they want...
The issue is that fiscal is political and it's not just the amounts but also the multipliers based on targeting.
Because Matt its just as viable to cut taxes to stimulate the economy. But according the spending flow only characterization you and Mike keep using, tax cuts wont do anything for the economy because taxes are irrelevant, the deficit is irrelevant, the only thing that matters is GOvt spending.
Auburn if the taxes are of withholding type there is a positive adjustment in leading flow... Even so, such a positive adjustment is not because "the deficit is too small".... it would be because they changed the withholding tax policy to not withhold as much as previous...but we havent had any such adjustment since they let the Bush tax cuts and the small FICA holiday expire a few years ago...Tax refunds and if they were ever to do tax rebates again like they did in 2008 are reported immediately in the DTS on the withdrawals side...Let's say they do a tax rebate again... how is that gauged? Wait till the deficit comes out a month later? And then if the deficit doesnt change, they they think a tax rebate had no effect? c'mon this is idiocy....
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