[mattduke]

According to Keynes, savings destroys the economy. Oh, and hurricanes are good for growth too. Not to worry, if you won't spend yourself into the poorhouse, the government will do it for you.

wsj

[bratticus]

So just don't sit there--buy something!

[bratticus]

Those terrible poor people--how could they do this to us?

[efarmer]

Please do not discourage me and break my concentration,
if all goes well, I shall have borrowed my way to prosperity
in time to become a Republican and protest the Obama
stimulus spending as it takes place. With all the rich
people I know being broke on their ass, I will fit right
in a be accepted with any luck at all.

[canis_lupus]

efarmer --

Your posts look the way they do on the screen because you hit the 'enter' key at the end of every line, like we used to do with typewriters.

As a result, your posts (I read them all) have the eerie feel of poetry when read like poetry.

I take the smiles in my day where I can get them, I suppose.

Has anyone else noticed this? Read the above post one line at a time and see if you get the same vibe!

[bratticus]

recession haiku blues

my hand reaches in
finding nothing worth a shit
no bail out for me!

[3aidlillahi]

efarmer --

Your posts look the way they do on the screen because you hit the 'enter' key at the end of every line, like we used to do with typewriters.

As a result, your posts (I read them all) have the eerie feel of poetry when read like poetry.

I take the smiles in my day where I can get them, I suppose.

Has anyone else noticed this? Read the above post one line at a time and see if you get the same vibe!

I've always thought the same thing! It's a good idea - makes your posts stand out and thus more people will read them.

I've kind of dreamt of becoming well-versed enough in English so that I could write or even speak in rhyme. I don't see it happening though.

recession haiku blues

[Plantagenet]

Please do not discourage me and break my concentration,
if all goes well, I shall have borrowed my way to prosperity
in time to become a Republican and protest the Obama
stimulus spending as it takes place.

Borrowing is old-fashioned. Its much smarter now to line up for a tax-payer funded billion-dollar bail out from Obama and the dem Congress.

[ReverseEngineer]

Wasn't it just last week people here were lauding the Chinese for their Thrifty Ways, and taking Americans to task for being Spendthrifts? Now the Republican Party Line is Americans need to Spend More? WTF? Will these nincompoops never quit? They can't roll over and die already?

What a bunch of sad clowns. Its embarassing.

Reverse Engineer

[Starvid]

Well, you do manage to twist Keynesian economics into something completely different.

At its purest, Keynesianism is the understanding that it is better to have people produce something than having them unemployed and idle. The same with capital. Better have it work than sitting idle.

A very simple example: imagine World Depression Two hits. Lots of people lose their jobs and can't find new ones. As they are our countrymen and we're all patriots we certainly aren't going to let them starve or freeze to death. Then, what's the best thing to do, either put them on the dole and have them do nothing, or pay them to do something useful, like sweeping the streets or removing grafitti?

Or building railroads, walkable communities and nuclear power stations...

For further understanding, I recomend this post from a certain Nobel prize winning economist.

[perdition79]

At its purest, Keynesianism is the understanding that it is better to have people produce something than having them unemployed and idle. The same with capital. Better have it work than sitting idle.

A very simple example: imagine World Depression Two hits. Lots of people lose their jobs and can't find new ones. As they are our countrymen and we're all patriots we certainly aren't going to let them starve or freeze to death. Then, what's the best thing to do, either put them on the dole and have them do nothing, or pay them to do something useful, like sweeping the streets or removing grafitti?

Or building railroads, walkable communities and nuclear power stations...

A huge war would be Keynesian as well, because it solves both the idle labor issue and that pesky overpopulation problem.

[mattduke]

Well, you do manage to twist Keynesian economics into something completely different.

At its purest, Keynesianism is the understanding that it is better to have people produce something than having them unemployed and idle. The same with capital. Better have it work than sitting idle.

A very simple example: imagine World Depression Two hits. Lots of people lose their jobs and can't find new ones. As they are our countrymen and we're all patriots we certainly aren't going to let them starve or freeze to death. Then, what's the best thing to do, either put them on the dole and have them do nothing, or pay them to do something useful, like sweeping the streets or removing grafitti?

Or building railroads, walkable communities and nuclear power stations...

For further understanding, I recomend this post from a certain Nobel prize winning economist.

Krugman is also a fool, and deserves the prize as much as Kissenger deserved the peace prize. These same people offering solutions to the problem are the same ones that assured us we didn't have a problem to begin with. Better listen to the Austrians, who warned of it coming, and have the correct prescription.

[Starvid]

A huge war would be Keynesian as well, because it solves both the idle labor issue and that pesky overpopulation problem.

That is certainly very true, but don't you agree it would be better to utilize the resources of society to create goods rather than to destroy them?

[Starvid]

Well, you do manage to twist Keynesian economics into something completely different.

At its purest, Keynesianism is the understanding that it is better to have people produce something than having them unemployed and idle. The same with capital. Better have it work than sitting idle.

A very simple example: imagine World Depression Two hits. Lots of people lose their jobs and can't find new ones. As they are our countrymen and we're all patriots we certainly aren't going to let them starve or freeze to death. Then, what's the best thing to do, either put them on the dole and have them do nothing, or pay them to do something useful, like sweeping the streets or removing grafitti?

Or building railroads, walkable communities and nuclear power stations...

For further understanding, I recomend this post from a certain Nobel prize winning economist.

Krugman is also a fool, and deserves the prize as much as Kissenger deserved the peace prize. These same people offering solutions to the problem are the same ones that assured us we didn't have a problem to begin with. Better listen to the Austrians, who warned of it coming, and have the correct prescription.

Austrians and fanatic Randians like, uh, Alan Greenspan, the man who is singularily most responsible for causing the Second Depression?

It is quite clear to me that focusing on balanced budgets via spending cuts and tax hikes at this juncture would crush aggregate demand in a way not very different at all from what happened in the US in 1937. I guess this feels strange for supply siders, the fact that it's really demand, not supply, that matters.

And Keynesians didn't saw this coming? My editor Jerome Guillet who's as freakingly Keynesian as you can get predicted this crisis back in 2005 and it has played out exactly as he predicted. To bad I didn't believe him until it was to late, or I would be outrageously rich today.

Not really connected to what you said, but if you truly believe Krugman is stupid, I really recommend his book "The Conscience of a liberal", a well written and reasearched scholary work which is also full of passion.

You can find it as an audio book at The Pirate Bay, and I don't think Mr. Krugman would disaprove much if you downloaded it, given that he's gotten something like a million dollars at a cetain ceremony in Stockholm.

[AlexdeLarge]

Zorg's Keynesian Economics Review

"............Or can your empire come crashing down.....because of one little cherry?"

[sjn]

Doesn't this all rest upon the assumption that human consumption of natural resources is inherently desirable, and that somehow through this consumption we can create a better world than that which came about by the processes that shaped our very species?

It would seem to me history has demonstrated very clearly that this ideal has resulted in the destruction of our living environment, the mass extinction of species and potentially catastrophic climate disruption.

[Ludi]

It would seem to me history has demonstrated very clearly that this ideal has resulted in the destruction of our living environment, the mass extinction of species and potentially catastrophic climate disruption.

Which could be interpreted merely as "change" and perhaps only esthetically unpleasing to some humans. It's unlikely nature has an opinion about it.

[sjn]

It would seem to me history has demonstrated very clearly that this ideal has resulted in the destruction of our living environment, the mass extinction of species and potentially catastrophic climate disruption.

Which could be interpreted merely as "change" and perhaps only esthetically unpleasing to some humans. It's unlikely nature has an opinion about it.

The point I was trying to make, in our efforts to follow the ideology of consumption and growth, we actually change the world in a way that moves us further from our ideal environment. Aesthetics are more far more important than naive sentiment; the aesthetic beauty in nature, as in any complex system is a measure of truth, the balance and indeed health of the system - for example there is a clear link between the health of the local natural ecology and human psychological health. We perceive aesthetic truth on an instinctive emotional level. We can feel when things are wrong.

[MonteQuest]

For many years, economists held the view that since money saved was later invested; you could never save too much. This notion was revised by economist John Maynard Keynes in the 1930s, who asserted that thrift is virtuous only up to a point. An increase in the savings portion of your disposal income reduces the expenditure on goods and will lower total demand in the economy. This thrift is commendable up to the point others in the economy wish to borrow your savings for investment. Herein lies the paradox.

On the face of it, saving more of your disposable income would seem to lead to an increase in overall savings, but an economic multiplier model predicts that total savings will remain the same and income will decline.

Thus, the paradox of thrift implies that more savings will harm the economy.

Another way to illustrate the logic of the paradox of thrift uses the analogy of the leaky bucket. Consider what will happen if the savings hole in the bucket is made a little larger, which corresponds to people becoming thriftier. Initially there will be a larger flow of water out. But this cannot continue indefinitely. Equilibrium exists when the inflow equals the outflow, and the inflow has not changed. This means that the water level must drop so that the pressure forcing water out the bottom will be reduced. Less pressure means less outflow, and at some lower level of water equilibrium will be reestablished.

Thus, the Keynesian denigration of saving is currently being used to get people to stop saving their money for a rainy day, paying down debt, and just flat stop being thrifty, while we create massive deficits in order to redistribute wealth from those who would save it to those who would spend it. With all this infusion of liquidity, are they trying to convince people that prices are going to go up later (inflation), thus encouraging them to spend now?

This can also be readily applied to the Paradox of Conservation.

Both have the collective paradox: what is good for the individual will weaken the economy. Because as conservation may be a virtue for the individual (microeconomics), it damages the economy as a whole (macroeconomics).

In the Paradox of Thrift, faced with slowing demand, businesses would not necessarily use the extra money available in the economy to invest. In the Paradox of Conservation, faced with slowing demand, businesses would not necessarily use the extra money available in the economy to invest, either.
However, since much of the conservation (reduced spending) in a post-peak world would be targeted at less energy consumption, faced with slowing demand, would businesses use the lower energy costs available in the economy to either lower prices to stimulate new demand or do more with less costs and increase profitability?

If they did, the conservation of energy gains would be used up to fuel increased consumption or profitability and a growth in GDP which takes more energy.

If they did not, then the conservation measures induce a self-imposed economic contraction. Either way, in a growth based economy, thrift and conservation spell trouble.

Does this lead to a recession or a depression? Isn’t that just the question we are waiting to see answered with our demand destruction and increased saving’s rate? The word on the street is that increased savings is killing the economy; we got to spend.

What if we also tried to be energy thrifty about now?

[Quinny]

The difference between economics and business is at the heart of many problems in our economy. As you say, balance is key and this is true in all areas.

Many on the right trumpet the need for 'business sense' when running government - in my experience this narrow minded view always leads to disaster.