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View Diary: How much Stimulus is Needed? Estimate: $1T to $1.6T (22 comments)

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  •  I discussed exactly this (0+ / 0-)

    in my prior post.

    Check it out

    I was not trying to say what to spend it on here, only to attempt to get a handle on the size of the stimulus spending needed to get us growing again.

    I think a payroll tax holiday would fill your Targeted, Timely, Temporary criteria.   Those are my criteria as well.

    I am repeating myself, and thats ok.

    by mickslam on Fri Dec 19, 2008 at 10:09:46 AM PST

    [ Parent ]

    •  Payroll Tax Holiday is TTT? (1+ / 0-)
      Recommended by:
      mickslam

      Timely and Temporary, yes, but Targeted?

      No, it is just a generalized tax break that won't necessarily be spent and therefore isn't even a stimulus.

      Problem: Massive unsold glut of houses and cars on the market that is shutting down production of both with huge job losses.

      Why not a stimulus that clears out these gluts so that economic expansion can occur.

      •  Targeted at working people. (0+ / 0-)

        Because payroll taxes fall most heavily on working people, it is targeted at the right people.  
        For example,  Social Security hits all working people making less than 100K at 6%, plus every business that employs these people as well.  People making under 30K usually don't save, they just spend, and right now, increasing individual balance sheets is important.  Most people can't afford to save, and this would give money to poeple most likely to have to spend it, every week, until the economy improves.

        Your idea about simply buying all this extra stuff isn't bad, but operates on the supply side of the equation.  We are facing a problem of demand, because we've had flat wages for so long and our increase spending was fueled by asset price run up.  I am suggesting we stimulate the demand side by basically increasing every working persons pay in the country by about 10% for the duration of the crisis.

        I am repeating myself, and thats ok.

        by mickslam on Fri Dec 19, 2008 at 12:06:57 PM PST

        [ Parent ]

        •  How does this clear the inventory glut? (0+ / 0-)

          People making under 30K usually don't save, they just spend,

          They spend on rent, food, utilities, gas, etc.

          None of those areas are glutted with goods that must be cleared from the market so that production will increase and the economy will expand.

          We need tax incentives to clear the unsold cars and houses from the market.  That is what is causing the collapse of our economy.

          Why do you think all the car factories are being shut down indefinitely?  Why do you think millions of foreclosures are happening?

          It is because people are not buying and prices are falling.  That must be reversed.

      •  Hey nice posts on your page! (0+ / 0-)

        I wasn't able to find other people covering this part of the stimulus.

        That PK post is spot on - spending enough money is really hard to do and figuring out a good path is critical.

        I am repeating myself, and thats ok.

        by mickslam on Fri Dec 19, 2008 at 12:09:57 PM PST

        [ Parent ]

        •  It all seems obvious (1+ / 0-)
          Recommended by:
          mickslam

          But politically it is extremely difficult.

          Did you see the poll results? Nobody wants to do anything that might help the wealthy even though it would save the economy and working people's jobs.

          Even the idea of a tax break is politically unacceptable to many!

          Kossacks would rather see the economy crash and burn before doing anything that might benefit people with money.

          •  Kossacks (0+ / 0-)

            I know, I've just been shocked at how much some people are willing to burn down the house to spite wealthy guys.  I was attacked by people for saying my proposal of a holiday tax proposal was a republican strategy.

            What I don't see about your proposal is the effect working to generate long term viable growth.  It seems to be more like a war, were we basically blow stuff up until we have enough stuff to rebuild that everyone gets fully employed again.  

            Not that this is necessarily a bad way to go - something needs to be done.  I was trying to take care of this from the demand side rather than reducing supply.  If we buy this stuff, what are we going to do with it?

            Have you read any H. Randally Wray?  I read a book "Understanding Modern Money" and it is fantastic.  A must read, if you like Keynes.  

            I am repeating myself, and thats ok.

            by mickslam on Fri Dec 19, 2008 at 12:41:56 PM PST

            [ Parent ]

            •  I haven't read Wray (0+ / 0-)
              But I will take a look at it.

              Keynes' The General Theory just seemed so clearly correct that it wasn't necessary to go further.

              The concept with clearing the glut of inventory is that the market becomes self-sustaining once prices start to rise and the economy starts to expand.  Deflation is the enemy of economic recovery.

              Instead of a vicious cycle down, you get a virtuous cycle up. Keynes figured it out 70 years ago, but most economists have not read the original texts so they just get others' interpretations which are often inaccurte.

              •  Wray is more about money and how it works (0+ / 0-)

                and concerned about how fiat money is totally different than commodity money.

                Keynes is good about govt investment must come up to replace insufficient demand...

                I just started GT for the first time and I am on Chapter 6 or 7.  But I skipped ahead to 12 and that is a good one too.  An astonishing book from many angles.

                I am repeating myself, and thats ok.

                by mickslam on Fri Dec 19, 2008 at 02:31:13 PM PST

                [ Parent ]

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