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View Diary: Two million jobless Americans face their own fiscal cliff if unemployment benefits expire (112 comments)

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  •  I don't buy the "multiplier" effect (0+ / 0-)

    So, do we get a "divider" effect when we pay down debt and stop spending?

    Where is the counterforce to your supposed multiplier effect? When do we pay for it?

    The multiplier sounds like a self-serving myth, like when Repubs say that cutting taxes increases revenues. Everyone always says that giving government money to their favored group will help the economy. I don't really buy it.

    (-5.50,-6.67): Left Libertarian
    Leadership doesn't mean taking a straw poll and then just throwing up your hands. -Jyrinx

    by Sparhawk on Mon Nov 12, 2012 at 02:55:05 PM PST

    [ Parent ]

    •  Yes, actually, we do, (2+ / 0-)
      Recommended by:
      divineorder, MKinTN

      which is why deficits should be countercyclical.

      As for the limit: It only works this well when the economy is underperforming, since government spending isn't going to displace any private spending (what private spending?). Also crucial is that we've already done all we can with the more orthodox means of stimulus, namely lowering Fed rates. This is what people refer to as the zero lower bound, and the reason we have to resort to fiscal stimulus.

      Self-serving as the policy may appear, the evidence for Keynesian stimulus is pretty strong. (Actually, most evidence we have goes in the other direction, that austerity is bad in a depressed economy. But WWII certainly indicates that deficit spending is good in a depressed economy.)

      Code Monkey like freedom / Code Monkey like peace and justice too
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      Formerly known as Jyrinx.

      by Code Monkey on Mon Nov 12, 2012 at 03:02:36 PM PST

      [ Parent ]

    •  The point is to cut the deficit during good times (2+ / 0-)
      Recommended by:
      MKinTN, qofdisks

      not during bad times.  And this economy is still pretty shaky.  If you want to see what austerity policies would do in this situation, all you have to do is look to Europe.  Those policies have been an absolute disaster over there.  

      Once we get back on our feet then we can focus on cutting the deficit.  Now isn't yet the time.  

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