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LuckyOne

Fiscal Stimulus Hasn't Worked .....

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There was much debate as to whether fiscal stimulus would work. It appears to have failed.

http://online.wsj.com/article/SB1000142405...3867030644.html

A few extracts from the article :

Is the American Recovery and Reinvestment Act of 2009 working? At the time of the act's passage last February, this question was hotly debated. Administration economists cited Keynesian models that predicted that the $787 billion stimulus package would increase GDP by enough to create 3.6 million jobs. Our own research showed that more modern macroeconomic models predicted only one-sixth of that GDP impact. Estimates by economist Robert Barro of Harvard predicted the impact would not be significantly different from zero.
This is exactly what one would expect from "permanent income" or "life-cycle" theories of consumption, which argue that temporary changes in income have little effect on consumption. These theories were developed by Milton Friedman and Franco Modigliani 50 years ago, and have been empirically tested many times. They are much more accurate than simple Keynesian theories of consumption, so the lack of an impact should not be surprising

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How could they use Keynesian models? The US didn't save before the bust so any Keynesian models are flawed from the start.

If you are using flawed assumptions to begin with you will get flaw answers, although politically good ones as you can make big claims for what grabbing your crotch will achieve.

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US and UK were Keynesian pumping for years.....what else is borrowing if not pumping beyond your current capacity to pay?

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How could they use Keynesian models? The US didn't save before the bust so any Keynesian models are flawed from the start.

If you are using flawed assumptions to begin with you will get flaw answers, although politically good ones as you can make big claims for what grabbing your crotch will achieve.

Agreed. The Keynesian model is to save during booms and to spend the savings during a bust. We overspent during the booms and are overspending massively during the bust.

Politicians are hiding behind Keynes and completely forgetting that the source of spending during busts is supposed to be sourced from disciplined savings during booms.

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Cuckoo.

How the ****** are you supposed to be able to measure the traction of a monetary stimulus when yo have no idea who has stolen the money and where it has gone?

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Administration economists cited Keynesian models that predicted that the $787 billion stimulus package would increase GDP by enough to create 3.6 million jobs.

Our own research showed that more modern macroeconomic models predicted only one-sixth of that GDP impact.

Estimates by economist Robert Barro of Harvard predicted the impact would not be significantly different from zero.

Do I burst out laughing?

Or lie down in a quiet room?

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Do I burst out laughing?

Or lie down in a quiet room?

Interesting question.

Can anyone calculate what rate of growth the US would need to create 3.6m jobs.

Remember Bernanke has stated that if the US has a growth rate of 2.5% that just stops JOB LOSSES.

For a bit of fun can anyone work out what rate of growth would need to be to generate 3.6m jobs. Just to see how ridiculous this job generation really is your aim to create the growth in one year. Would you need say 10% growth or even higher than that.

For every 0.1% of US growth above 2.5% how many jobs does that add?

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Cuckoo.

How the ****** are you supposed to be able to measure the traction of a monetary stimulus when yo have no idea who has stolen the money and where it has gone?

+1 OnlyMe.

but we both know the most simple questions NEVER get asked or answered by TPTB. The reason, then how would the greedy fookers ever make any money & extend their power.

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You can't invest in job creation unless there is something that you plan for these people to do that has demand.

I they invested 787 billion in renewables, they would probably have non-fossil fuel electricity generation for the entire country.

Much better to give it to bankers though of course.

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deflation ? I mean printing the most money in UK & US history, in the shortest space of time can't do much harm.....right ?

:lol::lol::lol:

It wasn't big enough to fill the gaping maw of losses. Credit destruction > printing. Simple formula. Now, if htey had printed about 3 tln, then we are talking.

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printing money to stimulate demand is just bonkers.

it creates an artificial spike (or so they thought) but unless you keep doing it you are jsut putting off the inevitable.

Growth only works by getting poorer countries to believe in the consumption model (and thus feed on the human urge of selfishness and greed) in order for Peter to pay Paul. It's all a load of selfish-capitalistic nonsense if you ask me. Which you didn't .

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in my opinion benanke cant do the printing he thought he could when writing his why they f+cked up in the 30s essays. the chinese will not allow it. deflation still looks on the short to medium term cards for me.

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You can't invest in job creation unless there is something that you plan for these people to do that has demand.

I they invested 787 billion in renewables, they would probably have non-fossil fuel electricity generation for the entire country.

Much better to give it to bankers though of course.

Yep, pissed the money away for no long term benefit. Hoover dam project - now there was a project than employed a lot of people, created something productive and tangible and could be used as a PR exercise to show how the US was moving forward, ticks all the boxes. If you are going to slush public funds, then at least get something back for it.

Not this time.

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How could they use Keynesian models? The US didn't save before the bust so any Keynesian models are flawed from the start.

If you are using flawed assumptions to begin with you will get flaw answers, although politically good ones as you can make big claims for what grabbing your crotch will achieve.

Marx famously lived to say "If these people are Marxists, then I most certainly am not".

Keynes, like Marx and Christ, must be spinning in his grave! :blink:

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Agreed. The Keynesian model is to save during booms and to spend the savings during a bust. We overspent during the booms and are overspending massively during the bust.

Politicians are hiding behind Keynes and completely forgetting that the source of spending during busts is supposed to be sourced from disciplined savings during booms.

It's had some effect.

Stock markets and commodities/oil have gone up.

Not forgetting - Every country in the world is doing it, 'cause it's the right thing to do. Gordon told me.

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You can't invest in job creation unless there is something that you plan for these people to do that has demand.

I they invested 787 billion in renewables, they would probably have non-fossil fuel electricity generation for the entire country.

Much better to give it to bankers though of course.

Yes the bankers.

Who are as was stated in the UK 25 years or so ago 'those most able to be fiscaly prudent and responsible with our money' when the questions of financial deregulation were being knocked down in parliament. Im sure the bankers will do a much better job spending the money on bonuses etc than would engineers (who cant be trusted with money)in building a fossil free energy supply.

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the stimulus wasnt big enough

watch what happens next

yeah, but, we are out of recession...maybe....it MUST have worked.....just need to do it bigger next time.

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Administration economists cited Keynesian models that predicted that the $787 billion stimulus package would increase GDP by enough to create 3.6 million jobs.

Even using their own numbers that's $220,000 per job "created", a terrible return on investment. The trouble with these big numbers is they shut down a lot of people's critical faculties.

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Interesting question.

Can anyone calculate what rate of growth the US would need to create 3.6m jobs.

Remember Bernanke has stated that if the US has a growth rate of 2.5% that just stops JOB LOSSES.

For a bit of fun can anyone work out what rate of growth would need to be to generate 3.6m jobs. Just to see how ridiculous this job generation really is your aim to create the growth in one year. Would you need say 10% growth or even higher than that.

For every 0.1% of US growth above 2.5% how many jobs does that add?

The US has a GDP of $14tn and 142m employed people, so that makes about $99,000 of GDP per job.

Edited by bearly legal

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