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.
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Monday, October 19, 2009
Ex-Tarp, deficit in 2009 was about 7% of GDP, like Reagan deficit of 1983
When you exclude the $364 billion that was spent on Tarp, the deficit for FY 2009 was about $1 trillion, which equates to about 7% of GDP. Reagan ran a deficit of 6.8% of GDP in 1983, so what's the big deal? And why all the Republican outrage?
Tarp should rightfully be excluded because it did not constitute any "real" spending; it was merely an asset swap and did absolutely nothing to sustain or bolster aggregate demand. What a waste! (Thanks, Hank Paulson!!)
In contrast, a payroll tax holiday or new spending or tax rebates in the amount spent on Tarp, would have been far more effective in sustaining demand.
And Tarp money never should have been given to non-bank financial intermediaries at all. If they were unable to operate as going concerns they should have been allowed to fail, with the Fed providing unlimited lending to commercial banks without the requirement of posting collateral.
MAYBE ART LAUFFER WOULD LIKE TO EXPLAIN THE DEFICIT OF THE REAGAN YEARS - WAS IT REALLY DESIGNED TO BE PAID FOR BY LOWERING TAXES ?
ReplyDeleteRE: PETER SCHIFF "THE PREDICTOR"
NOTE THAT PETER SCHIFF PREDICATED THE PRE-TSUMANI OF THE ECONOMIC TSUNAMI WHEN THE BOTTOM WENT OUT.
HOWEVER, HE TOLD EVERYONE TO GET OUT OF THE USA DOLLAR, TO GET OUT OF USA FUNDS, AND TO GO INTO FOREIGN FUNDS AND CURRENCIES.
SO HE PREDICTED THE TIDAL OUTSWEEP ( THAT PRECEEDS THE TSUNAMI ) BUT HE WAS CAUGHT LOOKING AT THE FLOPPING FISH WHEN THE REAL TSUNAMI CAME CRASHING DOWN.
HIS FUNDS LOST 30, 40 OR 50% ??
BEING CORRECT 1 TIME A DAY IS NOT BETTER THAN A BROKEN CLOCK WHICH IS CORRECT 2 TIMES A DAY!
THE RUSH TO THE DOLLAR DURING LATE 2008 SPIKED AND STRENGTHENED THE DOLLAR SO MUCH THAT THE TREASURY AND FED RESERVE HAD TO PROVIDE DEFAULT SWAP LINES TO OTHER COUNTRIES TO EXTEND CREDIT AND SOFTEN THE RUSH TO THE DOLLAR WHICH WOULD HAVE BROKEN WORLD WIDE BANKS OUTSIDE THE USA.
SO THE PLACE TO BE WAS THE DOLLAR AND EVIDENTLY PETER SCHIFF WAS NOT PATRIOTIC ENOUGH TO BE THERE.
The Republicans are [itching a fit over deficits because they want Obama and the Democrats to fail and they care little about the country being damaged as a result.
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