Put it on the Credit Card Says Krugman
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- Start date
Kamala Trump
Verified User
What we need is sound currency and growth based on reality and not totalitarian insanity.
FUCK THE POLICE
911 EVERY DAY
LOL YOUR RIGHT RS LET'S BORROW IN TIMES OF PLENTY AND CUT IN TIMES OF RECESSION THAT MAKES SENSE.
Epicurus
Reasonable
You're right it doesn't make sense. It's just unavoidable now.
FUCK THE POLICE
911 EVERY DAY
It isn't unavoidable. We shouldn't cut until the recession is over.
Sir Galahad
Christian Socialist Party
"Anatomy of a Financial Crisis"-Banks & Brokerage"
Part 1
Tuesday, October 28, 2008
SUSIE GHARIB: How did it happen? What went wrong and who's to blame? When it comes to the financial crisis, there are many questions and few answers. That's left investors struggling to understand what led to the meltdown. So, tonight, we're kicking off a special three-part series, "Anatomy of a Financial Crisis," looking at the roles Wall Street, Washington and Main Street played in the crisis. Clearly, there is no shortage of culprits, but as Erika Miller explains, Wall Street's banks and brokerage firms are squarely in the bulls-eye.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is probably what you think of when you hear the word ninja. But the financial crisis has given the word a whole new meaning. Ninja loans were given to people with "no income, no job, no assets" -- the lowest of the sub-prime loans. Princeton economics Professor Alan Blinder says lenders should have known better than to give money to people who were unable or unwilling, to provide such basic information.
ALAN BLINDER, ECONOMICS PROFESSOR, PRINCETON UNIVERSITY: This is where the earthquake started and they were granting loans on terms that, in retrospect, are ludicrous and even in prospect, should have been seen as ludicrous.
MILLER: Mortgage lenders were comfortable relaxing their loan standards when home values were rising. But when prices started to decline and interest rates edged up, sub-prime borrowers increasingly defaulted on their loans.
BLINDER: The system cracked on sub-prime mortgages and once it cracked, more and more fissures started to appear; more and more weak points in the system started to become apparent. The contagion then spread to other mortgages.
MILLER: Initially, the damage was limited to companies like Countrywide Financial, which were directly tied to residential real estate. But it was Wall Street's securitization of mortgages that eventually turned a nasty housing downturn into a full-blown global banking crisis. Major brokerage firms bought up risky mortgages, bundled them together and sold them off in slices to investors, often keeping big chunks for themselves. As bond market expert Tony Crescenzi points out, credit ratings agencies gave the securities top marks.
ANTHONY CRESCENZI, CHIEF BOND MARKET STRATEGIST, MILLER TABAK: They didn't think through the risks in their entirety, particularly the liquidity risk, which is to say that the ratings agencies didn't think about what would happen if securities were difficult to buy and sell in the financial markets.
MILLER: Former Lehman Brothers CFO Brad Hintz -- now, a brokerage stock analyst -- says the problem wasn't the securitization, it was the way it was done.
BRAD HINTZ, BROKERAGE ANALYST, SANFORD C. BERNSTEIN: Securitization, fundamentally is a good thing. The problem with securitization is when you take it too far and that's the idea that I can securitize something and I don't care the quality of what I'm securitizing. You know, it's a box of dirt; I'm going to sell a box of dirt, and that's fine.
MILLER: The crisis also would not have escalated so quickly had it not been for esoteric financial contracts called credit default swaps-CDS for short. The buying and selling of these complex derivatives were supposed to reduce risk; instead, they ended up ensuring that problems at one firm had a domino effect.
CRESCENZI: Where CDS went wrong was that they lacked transparency. We couldn't know for sure how many CDS existed for an underlying security. For example, a company might have $1 billion of bonds outstanding, but there could be $4 billion, $5 billion, $10 billion of CDS outstanding.
MILLER: On top of that, many financial firms used leverage strategies to try to magnify gains. The SEC had limited brokerage firm leverage to 10 to 15 times core holdings. But in 2004, in a climate of deregulation, the agency loosened restrictions to allow the five biggest brokerage houses to borrow 30 to 40 times core holdings.
HINTZ: That's an astounding change in terms of total leverage and for the banks, you saw a similar move, but not quite as much, because the regulatory regime for the banks was a little tighter. But you certainly saw them taking more risk.
MILLER: Bear Stearns was the first brokerage to collapse, which made other financial firms reluctant to lend to each other. The ensuing credit crisis led to the demise or government bailout of Lehman Brothers, Fannie Mae, Freddie Mac, Washington Mutual, Wachovia and many other financial institutions around the world. The role of greed in the financial crisis shouldn't be minimized. Homebuyers eagerly purchased houses they couldn't afford and Wall Street was only too happy to lend them the money, dazzled by bigger year-end bonuses. But such risky bets did not just hurt the participants; they endangered the economy and the global financial system. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
----------
Part 2
Wednesday, October 29, 2008
SUSIE GHARIB: How did American government leaders allow the financial crisis to occur? It's a question many people are asking. Tonight as we continue our series "Anatomy of a Financial Crisis," we shift our focus to the nation's capital for some answers. As Stephanie Dhue explains, lax lending standards and a hands-off regulatory approach laid the groundwork for the meltdown.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The problems began when lenders started bundling their mortgage loans into securities and stopped worrying about whether those loans could be paid back. The government let that happen in pursuit of the American dream of home ownership. Ira Peppercorn was at the Federal Housing Administration from 1998 until 2002.
IRA PEPPERCORN, FORMER DEPUTY FEDERAL HOUSING COMMISSIONER: What went wrong is simply the system failed and the system failed in so many different ways and part of that is the regulation of the system is completely fragmented.
DHUE: During the housing boom, sub-prime loans were barely regulated. And it wasn't until last year that the Feds made a serious attempt to crack down.
PEPPERCORN: We have no system as a nation that looks at mortgage products and mortgage foreclosures and defaults holistically. And the challenge is you say, well the government should have. Well, the problem is when the government did step in, it pushes people over into the non- regulated sector.
DHUE: Ironically, Fannie Mae and Freddie Mac were regulated all along and could have been a stabilizing factor in the market, but even they got into the sub-prime game. Their mission to support affordable housing conflicted with the mission to increase shareholder profitability. Both collided in August when the government took over the firms. Analyst Karen Petrou says the quest for profits drove the firms to buy billions of dollars in sub-prime mortgage backed securities.
KAREN PETROU, MANAGING PARTNER, FEDERAL FINANCIAL ANALYTICS: Freddie's CFO said this, we did it because the competition was and we thought we needed to too, to give our shareholders a profit.
DHUE: At the same time home loans were getting riskier, Wall Street was increasing the complexity of packaging and traded mortgage backed securities, selling them around the world. Petrou says regulators had faith the markets were spreading the risk.
PETROU: The regulators had bought into what I call the gee, isn't it cool approach to financial product innovation. They believed that the market had an insight into them. They believed all of these quote innovative products were in fact distributing risk and they did not respect how dependent the entire global financial market had gotten on untested models.
DHUE: Last week former Fed Chairman Alan Greenspan confessed as much to a House committee investigating the financial crisis.
ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: Those of us who have looked to the self interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief.
DHUE: Banks were counting on an innovation called credit default swaps to protect themselves from bad mortgage investments. These instruments are essentially insurance against the potential failure of a company or investment. In this case, Greenspan and other regulators were hands off. Michael Greenberger disagreed with that approach. He headed the trading and markets division at the Commodity Futures Trading Commission in the late 1990s. At that time, he worried credit default swaps were kind of a shell game.
MICHAEL GREENBERGER, FORMER DIR., TRADING & MARKETS, CFTC: The people who held the guarantees were saying, look the worst that can happen to us is we'll collect our insurance, so financial statements seemed very much in order. What nobody understood is that the money guaranteeing the so-called insurance was not there.
DHUE: But against Greenberger's advice, swaps were deregulated further and trading took off. Now there are an estimated $55 trillion in credit default swaps.
GREENBERGER: Had at any point between December 2000 and the onset of this crisis, which really was pretty clear to anybody who was paying attention in the summer of 2007, someone made the judgment to check on the capital reserves of the guarantors on the credit default swap side, this fiasco could have been prevented.
DHUE: Lawmakers are still figuring out what went wrong. What they decide will set the stage for a new regulatory structure aimed at keeping it from happening again. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
----------
Part 3
Thursday, October 30, 2008
SUSIE GHARIB: This week we looked at the roles of Washington and Wall Street in the financial meltdown. Tonight as we conclude our series, "Anatomy of a Financial Crisis," we look in the mirror, at ourselves. How did the greed of American consumers contribute to the mess? As Suzanne Pratt explains, our bad behavior is now forcing us to face the music.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Since the 1980s Americans have been on a serious shopping spree. Our homes, our cars, our wardrobes and our gadget collections have gotten larger and more expensive. At first we paid for things with cash or few major credit cards. Pretty soon, however, our wallets were bulging with plastic. To make matters worse, by the middle of this decade, interest rates were at historic lows, allowing banks to offer loans we couldn't refuse. And as home prices surged, many Americans extracted the value by refinancing mortgages or taking out home equity lines of credit. We used the extra cash to bankroll lifestyles we couldn't afford and some of us got greedy and irresponsible. Financial historian and NYU Professor Richard Sylla says consumers deserve at least some of the blame for the current mess.
RICHARD SYLLA, ECONOMICS PROFESSOR, NYU STERN SCHOOL OF BUSINESS: The American public is responsible, the consuming public because the American public has been saving less and less over the years and went on this borrowing binge. You know there have to be two parties to a loan transaction. Somebody says yes I agree to borrow it and the other person says I agree to lend.
PRATT: Our need for things has gravely injured our household finances. Just look at the stats. Between 1990 and 2007, credit card debt more than quadrupled from $214 billion to $937 billion. At less than 1 percent, our nation's savings rate is the lowest in the developed world. Much of Europe is saving in double digits while China is at a whopping 24 percent. Nobel Prize winning economist and Princeton Professor Paul Krugman says we're bad savers partly because of easy credit.
PAUL KRUGMAN, ECONOMICS PROFESSOR, PRINCETON UNIVERSITY: You have to come up with a lot of cash if you want to buy a house in Japan and in a lot of Europe. In the United States, the money has flowed freely so saving doesn't seem quite as important.
PRATT: Still, others say our urge to splurge is also cultural. Psychotherapist April Benson is an expert on compulsive shopping and has written two books on the topic. While only a fraction of us suffer from the actual disorder, she says we're a society of excessive spenders.
APRIL BENSON, PH.D., PSYCHOTHERAPIST: We think that happiness is only as far away as the next purchase. But really nothing could be farther than the truth. And, in the pursuit of all of these goods, we really miss out on what's good: community, time with family, there's such a race.
PRATT: OK, so maybe we over borrowed and we did so to feel better about ourselves. But some experts say don't be so quick to blame our fondness for debt on emotions. Blame instead our desire to keep up with the Joneses, while our income was stumbling.
SYLLA: How is an American going to maintain his increasing standard of living, which he's gotten used to throughout American history, at a time when real wages aren't going up? The way to do it was to go into debt.
PRATT: Still, others say blame stretches well beyond U.S. households or busy suburban shopping malls. Krugman questions why we expect the public to have seen the folly when our leaders did not.
KRUGMAN: It's not up to John Smith in the street or Joe the plumber or whatever to say, hey, this is a housing bubble, look at the price-rent ratio. You expect responsible people in Washington and New York to be saying that and they didn't.
PRATT: Historians will debate for many years who or what should bear the blame for the 2008 financial crisis. But, most experts already agree the experience will limit our irresponsible spending. Whether that change is permanent is another matter. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
Part 1
Tuesday, October 28, 2008
SUSIE GHARIB: How did it happen? What went wrong and who's to blame? When it comes to the financial crisis, there are many questions and few answers. That's left investors struggling to understand what led to the meltdown. So, tonight, we're kicking off a special three-part series, "Anatomy of a Financial Crisis," looking at the roles Wall Street, Washington and Main Street played in the crisis. Clearly, there is no shortage of culprits, but as Erika Miller explains, Wall Street's banks and brokerage firms are squarely in the bulls-eye.
ERIKA MILLER, NIGHTLY BUSINESS REPORT CORRESPONDENT: This is probably what you think of when you hear the word ninja. But the financial crisis has given the word a whole new meaning. Ninja loans were given to people with "no income, no job, no assets" -- the lowest of the sub-prime loans. Princeton economics Professor Alan Blinder says lenders should have known better than to give money to people who were unable or unwilling, to provide such basic information.
ALAN BLINDER, ECONOMICS PROFESSOR, PRINCETON UNIVERSITY: This is where the earthquake started and they were granting loans on terms that, in retrospect, are ludicrous and even in prospect, should have been seen as ludicrous.
MILLER: Mortgage lenders were comfortable relaxing their loan standards when home values were rising. But when prices started to decline and interest rates edged up, sub-prime borrowers increasingly defaulted on their loans.
BLINDER: The system cracked on sub-prime mortgages and once it cracked, more and more fissures started to appear; more and more weak points in the system started to become apparent. The contagion then spread to other mortgages.
MILLER: Initially, the damage was limited to companies like Countrywide Financial, which were directly tied to residential real estate. But it was Wall Street's securitization of mortgages that eventually turned a nasty housing downturn into a full-blown global banking crisis. Major brokerage firms bought up risky mortgages, bundled them together and sold them off in slices to investors, often keeping big chunks for themselves. As bond market expert Tony Crescenzi points out, credit ratings agencies gave the securities top marks.
ANTHONY CRESCENZI, CHIEF BOND MARKET STRATEGIST, MILLER TABAK: They didn't think through the risks in their entirety, particularly the liquidity risk, which is to say that the ratings agencies didn't think about what would happen if securities were difficult to buy and sell in the financial markets.
MILLER: Former Lehman Brothers CFO Brad Hintz -- now, a brokerage stock analyst -- says the problem wasn't the securitization, it was the way it was done.
BRAD HINTZ, BROKERAGE ANALYST, SANFORD C. BERNSTEIN: Securitization, fundamentally is a good thing. The problem with securitization is when you take it too far and that's the idea that I can securitize something and I don't care the quality of what I'm securitizing. You know, it's a box of dirt; I'm going to sell a box of dirt, and that's fine.
MILLER: The crisis also would not have escalated so quickly had it not been for esoteric financial contracts called credit default swaps-CDS for short. The buying and selling of these complex derivatives were supposed to reduce risk; instead, they ended up ensuring that problems at one firm had a domino effect.
CRESCENZI: Where CDS went wrong was that they lacked transparency. We couldn't know for sure how many CDS existed for an underlying security. For example, a company might have $1 billion of bonds outstanding, but there could be $4 billion, $5 billion, $10 billion of CDS outstanding.
MILLER: On top of that, many financial firms used leverage strategies to try to magnify gains. The SEC had limited brokerage firm leverage to 10 to 15 times core holdings. But in 2004, in a climate of deregulation, the agency loosened restrictions to allow the five biggest brokerage houses to borrow 30 to 40 times core holdings.
HINTZ: That's an astounding change in terms of total leverage and for the banks, you saw a similar move, but not quite as much, because the regulatory regime for the banks was a little tighter. But you certainly saw them taking more risk.
MILLER: Bear Stearns was the first brokerage to collapse, which made other financial firms reluctant to lend to each other. The ensuing credit crisis led to the demise or government bailout of Lehman Brothers, Fannie Mae, Freddie Mac, Washington Mutual, Wachovia and many other financial institutions around the world. The role of greed in the financial crisis shouldn't be minimized. Homebuyers eagerly purchased houses they couldn't afford and Wall Street was only too happy to lend them the money, dazzled by bigger year-end bonuses. But such risky bets did not just hurt the participants; they endangered the economy and the global financial system. Erika Miller, NIGHTLY BUSINESS REPORT, New York.
----------
Part 2
Wednesday, October 29, 2008
SUSIE GHARIB: How did American government leaders allow the financial crisis to occur? It's a question many people are asking. Tonight as we continue our series "Anatomy of a Financial Crisis," we shift our focus to the nation's capital for some answers. As Stephanie Dhue explains, lax lending standards and a hands-off regulatory approach laid the groundwork for the meltdown.
STEPHANIE DHUE, NIGHTLY BUSINESS REPORT CORRESPONDENT: The problems began when lenders started bundling their mortgage loans into securities and stopped worrying about whether those loans could be paid back. The government let that happen in pursuit of the American dream of home ownership. Ira Peppercorn was at the Federal Housing Administration from 1998 until 2002.
IRA PEPPERCORN, FORMER DEPUTY FEDERAL HOUSING COMMISSIONER: What went wrong is simply the system failed and the system failed in so many different ways and part of that is the regulation of the system is completely fragmented.
DHUE: During the housing boom, sub-prime loans were barely regulated. And it wasn't until last year that the Feds made a serious attempt to crack down.
PEPPERCORN: We have no system as a nation that looks at mortgage products and mortgage foreclosures and defaults holistically. And the challenge is you say, well the government should have. Well, the problem is when the government did step in, it pushes people over into the non- regulated sector.
DHUE: Ironically, Fannie Mae and Freddie Mac were regulated all along and could have been a stabilizing factor in the market, but even they got into the sub-prime game. Their mission to support affordable housing conflicted with the mission to increase shareholder profitability. Both collided in August when the government took over the firms. Analyst Karen Petrou says the quest for profits drove the firms to buy billions of dollars in sub-prime mortgage backed securities.
KAREN PETROU, MANAGING PARTNER, FEDERAL FINANCIAL ANALYTICS: Freddie's CFO said this, we did it because the competition was and we thought we needed to too, to give our shareholders a profit.
DHUE: At the same time home loans were getting riskier, Wall Street was increasing the complexity of packaging and traded mortgage backed securities, selling them around the world. Petrou says regulators had faith the markets were spreading the risk.
PETROU: The regulators had bought into what I call the gee, isn't it cool approach to financial product innovation. They believed that the market had an insight into them. They believed all of these quote innovative products were in fact distributing risk and they did not respect how dependent the entire global financial market had gotten on untested models.
DHUE: Last week former Fed Chairman Alan Greenspan confessed as much to a House committee investigating the financial crisis.
ALAN GREENSPAN, FORMER FEDERAL RESERVE CHAIRMAN: Those of us who have looked to the self interest of lending institutions to protect shareholders' equity, myself especially, are in a state of shocked disbelief.
DHUE: Banks were counting on an innovation called credit default swaps to protect themselves from bad mortgage investments. These instruments are essentially insurance against the potential failure of a company or investment. In this case, Greenspan and other regulators were hands off. Michael Greenberger disagreed with that approach. He headed the trading and markets division at the Commodity Futures Trading Commission in the late 1990s. At that time, he worried credit default swaps were kind of a shell game.
MICHAEL GREENBERGER, FORMER DIR., TRADING & MARKETS, CFTC: The people who held the guarantees were saying, look the worst that can happen to us is we'll collect our insurance, so financial statements seemed very much in order. What nobody understood is that the money guaranteeing the so-called insurance was not there.
DHUE: But against Greenberger's advice, swaps were deregulated further and trading took off. Now there are an estimated $55 trillion in credit default swaps.
GREENBERGER: Had at any point between December 2000 and the onset of this crisis, which really was pretty clear to anybody who was paying attention in the summer of 2007, someone made the judgment to check on the capital reserves of the guarantors on the credit default swap side, this fiasco could have been prevented.
DHUE: Lawmakers are still figuring out what went wrong. What they decide will set the stage for a new regulatory structure aimed at keeping it from happening again. Stephanie Dhue, NIGHTLY BUSINESS REPORT, Washington.
----------
Part 3
Thursday, October 30, 2008
SUSIE GHARIB: This week we looked at the roles of Washington and Wall Street in the financial meltdown. Tonight as we conclude our series, "Anatomy of a Financial Crisis," we look in the mirror, at ourselves. How did the greed of American consumers contribute to the mess? As Suzanne Pratt explains, our bad behavior is now forcing us to face the music.
SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: Since the 1980s Americans have been on a serious shopping spree. Our homes, our cars, our wardrobes and our gadget collections have gotten larger and more expensive. At first we paid for things with cash or few major credit cards. Pretty soon, however, our wallets were bulging with plastic. To make matters worse, by the middle of this decade, interest rates were at historic lows, allowing banks to offer loans we couldn't refuse. And as home prices surged, many Americans extracted the value by refinancing mortgages or taking out home equity lines of credit. We used the extra cash to bankroll lifestyles we couldn't afford and some of us got greedy and irresponsible. Financial historian and NYU Professor Richard Sylla says consumers deserve at least some of the blame for the current mess.
RICHARD SYLLA, ECONOMICS PROFESSOR, NYU STERN SCHOOL OF BUSINESS: The American public is responsible, the consuming public because the American public has been saving less and less over the years and went on this borrowing binge. You know there have to be two parties to a loan transaction. Somebody says yes I agree to borrow it and the other person says I agree to lend.
PRATT: Our need for things has gravely injured our household finances. Just look at the stats. Between 1990 and 2007, credit card debt more than quadrupled from $214 billion to $937 billion. At less than 1 percent, our nation's savings rate is the lowest in the developed world. Much of Europe is saving in double digits while China is at a whopping 24 percent. Nobel Prize winning economist and Princeton Professor Paul Krugman says we're bad savers partly because of easy credit.
PAUL KRUGMAN, ECONOMICS PROFESSOR, PRINCETON UNIVERSITY: You have to come up with a lot of cash if you want to buy a house in Japan and in a lot of Europe. In the United States, the money has flowed freely so saving doesn't seem quite as important.
PRATT: Still, others say our urge to splurge is also cultural. Psychotherapist April Benson is an expert on compulsive shopping and has written two books on the topic. While only a fraction of us suffer from the actual disorder, she says we're a society of excessive spenders.
APRIL BENSON, PH.D., PSYCHOTHERAPIST: We think that happiness is only as far away as the next purchase. But really nothing could be farther than the truth. And, in the pursuit of all of these goods, we really miss out on what's good: community, time with family, there's such a race.
PRATT: OK, so maybe we over borrowed and we did so to feel better about ourselves. But some experts say don't be so quick to blame our fondness for debt on emotions. Blame instead our desire to keep up with the Joneses, while our income was stumbling.
SYLLA: How is an American going to maintain his increasing standard of living, which he's gotten used to throughout American history, at a time when real wages aren't going up? The way to do it was to go into debt.
PRATT: Still, others say blame stretches well beyond U.S. households or busy suburban shopping malls. Krugman questions why we expect the public to have seen the folly when our leaders did not.
KRUGMAN: It's not up to John Smith in the street or Joe the plumber or whatever to say, hey, this is a housing bubble, look at the price-rent ratio. You expect responsible people in Washington and New York to be saying that and they didn't.
PRATT: Historians will debate for many years who or what should bear the blame for the 2008 financial crisis. But, most experts already agree the experience will limit our irresponsible spending. Whether that change is permanent is another matter. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.
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I thought you were against currency.
FUCK THE POLICE
911 EVERY DAY
The one good thing about a non-inflating currency is that you morons couldn't constantly claim that the government was growing anymore.
FUCK THE POLICE
911 EVERY DAY
The bad thing about a non-inflating currency would be that we would enter a recession for the entire period of time we were using it.
FUCK THE POLICE
911 EVERY DAY
For instance, here is the actual "growth" of the gov over the past 50 years:
And here is the chart a libertarian is likely to show everyone:
And then say something like 'ZOMGZ WE IS ALLS LAVERYS IF WE SDON'T ABOLISH EVERYTHING THE WORLDS WILL ENDS AND GOV WILL EAST UP EVERYTHIN!'
And here is the chart a libertarian is likely to show everyone:
And then say something like 'ZOMGZ WE IS ALLS LAVERYS IF WE SDON'T ABOLISH EVERYTHING THE WORLDS WILL ENDS AND GOV WILL EAST UP EVERYTHIN!'
You are an idiot. As I have said repeatedly these policies, at best, will only kick off another boom-bust cycle.
SmarterthanYou
rebel
because deficit spending makes the economy grow. Are you reagans reincarnation?
FUCK THE POLICE
911 EVERY DAY
Reagan did deficit spending in times of boom. I we are to decide to cut spending, a boom is the time to do it, not a recession.
KingCondanomation
New member
For instance, here is the actual "growth" of the gov over the past 50 years:
And here is the chart a libertarian is likely to show everyone:
And then say something like 'ZOMGZ WE IS ALLS LAVERYS IF WE SDON'T ABOLISH EVERYTHING THE WORLDS WILL ENDS AND GOV WILL EAST UP EVERYTHIN!'
Why does the first chart show government spending going down in the future?
Some government spending is war, that will always go down because all wars end, but social welfare programs just grow and expand and if you look at Medicare, Medicaid and SS they are all expanding much quicker than the rate of inflation. And to that you can add the Pill Bill.
Those programs are addictive and will not go away.
Your 2nd chart only validates the view that government is growing.
KingCondanomation
New member
Where did RS advocate borrowing at all?
If you rack up debt on your credit card (during bad times) do you really think you are extending your prosperity? You MIGHT be and even then only on the belief that the good times are enough to get you out of your debt. What if they are not?
And in government that goes moreso because the spending is not on anything liquidable.
KingCondanomation
New member
Watermark goes into super emo spaz mode when someone insults his idol (which this year is Paul Krugman FYI).
FUCK THE POLICE
911 EVERY DAY
My 2nd chart validates two things: that inflation happens, and that GDP greows faster than inflation.
FUCK THE POLICE
911 EVERY DAY
I AM AN EMO!
uscitizen
Villified User
the first chart is budget fiction not actual spending.