For those morons who claim that government deficit spending "crowds out" private spending by sucking up investment money out of the economy:
- U.S. Treasury bonds are at effectively 0% interest right now. They would probably be at negative interest if not for mattresses. What that means is that there's a lot of excess money just sitting around doing nothing in the economy, effectively stuffed under mattresses at 0% interest. Why shouldn't we suck some of that money into treasury bonds and spend it on useful job-creating infrastructure and other such social needs rather than have it stuffed under mattresses? In short, I will listen to the "crowd out" morons once the U.S. Treasuries rise above 0%.
- The government has this neat technology called the printing press. The government could print money and spend it if government spending started to crowd out private investment.
So yes, there do exist economic conditions where you do not want to do deficit spending on the scale we're currently doing. But those economic conditions are not the current economic conditions. Morons who scream "we should never do X or Y or Z" are like the sort of folks who scream "you should never enter an intersection when the light is red!", errm, except that when the light is red, has been red for ten minutes, and you are turning right, just turn, dammit! Point being, there are exceptions for every rule, and the economic conditions we're facing right now are pretty goddamned exception.
-- Badtux the Rude Penguin
The last I knew the Bush tax cuts were supposed to generate gazillions of investment money, but apparently it was all sent to Bernie Madoff because it sure didn't show up in the stock market.
ReplyDeleteWe tried going through banks and nothing happened, so lets give to people who will actually spend it. At this point we need people spending it, not "investing" it.
Bryan, that money went into the housing market to make it bubble, bubble, toil and trouble. We've had too much investment money chasing too few good assets for quite a few years now, ever since Ronnie Raygun decided to cut taxes on the investor class and raise (payroll) taxes on the working class. The result has been asset bubbles as too much investor money follows too few good assets, followed by recessions when the bubbles burst. So right now all that investment money is just kinda circling around the toilet bowl of 0% interest Treasuries, mattress money waiting to be put to some good use. Until I see interest on Treasuries rise above 0%, it's clear to me that any borrowing the U.S. Treasury is doing is mattress money that otherwise would be stuffed under people's mattresses doing nobody any good, and we might as well do more of it.
ReplyDelete- Badtux the Mattress Money Penguin