The debate continues in the country. Do we save the economy by reducing the deficits or continue to stimulate with increased federal deficit spending? One of the major key indicators of an economy is unemployment. This chart shows the rise and fall of unemployment during boom times and recessions from 1890 to today. There are many theories for the causes of these historical peaks and valleys. These same ideas are being used as examples of how to fix the current economic problems. Are any of these past fixes applicable to today's problems?
Read more: http://www.deficitaid.com/...
Live U.S. Debt Counter iPhone App Free DeficitAid.com
The debate continues in the country. Do we save the economy by reducing the deficits or continue to stimulate with increased federal deficit spending? One of the major key indicators of an economy is unemployment. This chart shows the rise and fall of unemployment during boom times and recessions from 1890 to today. There are many theories for the causes of these historical peaks and valleys. These same ideas are being used as examples of how to fix the current economic problems. Are any of these past fixes applicable to today's problems?
Deficit Hawks is a term getting lots of airtime lately, but who and what are Deficit Hawks.
According to Wikipedia.... "Deficit hawks are fiscal conservatives that believe the best way to reduce the deficit, pay off national debt, and balance the budget is by increasing taxes in addition to cutting government spending. Some believe that deficit hawks use deficits as an excuse to oppose government spending. William Greider claims that 'their real intent is to stymie the very spending programs that can deliver economic recovery and relief to battered citizens' [1]. He points to the example of World War II spending during the Great Depression, in which the government ran up massive deficits but brought about America's postwar prosperity took greater control over the economy, focusing production on arms and suppressing consumption."
Paul Kurgman, a left-leaning economist, carries the flag for the "spend more" to stimulate the economy. Mr. Krugman has impressive resume with Yale, MIT, Princeton, London School of Economics, Nobel Prize, economic advisor to Ronald Regan, author, NY Times contributor, and TV commentator. He's opposed to Fresh Water Economics that could mean he is in favor of Salt Water Economists. Although, his Wikipedia site only states he's opposed to Fresh Water Economists. The differences are described...
Saltwater economists typically tended to find "examples of irrational behavior interesting and important."[5] Like Behavioral psychologists, they tend to be interested in the behavior of single individuals, which they find on an individual basis often deviates from strict "rationality".
Freshwater economists, in contrast, have in general been interested in quantitatively accounting for the behavior of large groups of people interacting in markets, and believe that understanding market failures requires framing problems that way.
The third idea for fixing the economy involves Tinker Bell and fairy dust. According to Wikipedia, "Fairies can enable others to fly by sprinkling them with fairy dust..." The site doesn't indicate if Tinker Bell could make the U.S. economy fly again by sprinkling fairy dust on it. However, there is an indication that the magical dust is very powerful.
Do Deficit Hawks have it right or wrong? Are Krugman's ideas right or wrong? Or, perhaps there are those who think that the Deficit Hawk's conservative policies and Krugman's economic theories will have the same effect on the economy as a sprinkle of Tinker Bell's fairy dust.
Krugman, and the like, think that federal spending on industries will increase productivity, jobs, revenues and jump-start the economy. The debt incurred during the recession can be paid back during the good-times. Is there really historical evidence that this can work? Post World War II economic expansion isn't a good example because the United States was the industrial nation still in business after war. Europe, Japan, China, and Russian were leveled.
Deficit Hawks think too much federal debt is the cause of recession. Reducing the debt will spark economic expansion, jobs, increased revenue and increase spending with the expansion. Is there historical evidence that cutting federal spending and increasing taxes will reduce the debt? Secondly, is there historical evidence reducing debt will spark economic growth?
One thing is for certain about economies. They are cyclical. All the historical evidence proves that economies have good years and bad years. The idea that an economy can only have up years is impossible. So why do governments try to influence the cycles? No one agrees on what works. Data can be used to prove or disprove results. Is the economy a living breathing beast with a mind of it's own?
Perhaps sprinkling a little fairy dust is the best idea of all. Convince people the dust actually works. Tell everyone the effects of dust will take about 12 to 18 months before change will occur. The myth of the dust will slowly create a positive feeling about spending again. The positive psychological feeling will go viral, and then create actual economic growth. Like magic, the dust fixes the economy after every recession.
Live U.S. Debt Counter iPhone App Free DeficitAid.com