Yes, We Can Do Stimulus Without Adding Debt. Here’s How (Magic Liberal Alert)

The New Republic ^ | 8/29/2011 | Robert Schiller

[mojito]

There are two facts about our current economic situation that can no longer be denied: Our economy is in desperate need of government stimulus, and our political system won’t abide any increase in our national deficit.

Taken together, the two points seem to bode poorly for the United States. But we shouldn’t be too quick to assume a contradiction. Just because stimulus has traditionally been understood as a function of deficit-spending doesn’t mean that’s how it has to work.

We first have to come to grips with the fact that we need stimulus because we’re facing a problem of inadequate aggregate demand, a concept that we owe to the work of John Maynard Keynes.

[...]

The problem is essentially one of communication: Somehow the unemployed have to communicate—not just in words but in the marketplace—their desire both to supply their labor and also to buy the excess of goods they would produce with the income from that labor....

The medium through which that communication largely needs to occur is collective action. We need to assert as a nation our will to get out of the bad equilibrium and get moving. And the way to do that is through government stimulus: We need to increase government expenditure for as long as it takes to break out of our rut.

[mojito]

Here's how: with baby flying bunnies and unicorns sliding down rainbows with teddybears on their backs.

If anyone needed proof that liberals are incapable of giving up on their insanity, here's proof.

This may be the dumbest thing I've read all year in a major news magazine, Newspeak excluded.

[mirkwood]

[Nat Turner]

Robert Shiller, a professor of economics at Yale University, is the co-author, with George Akerlof, of Animal Spirits.

That pretty much says it all, so you should send me rebate checks since I saved you wasting time reading it and simultaneous reduced your health care costs by not needlessly raising your blood pressure from reading such mindless drivel...you can send the funds via PayPal...

[roaddog727]

“Our economy is in desperate need of government stimulus,” False premise.

What we need the government to do is let business run itself.

And yes, these libs live in a land of Rainbows, unicorns and Fairy-dust.

[MNJohnnie]

You are right. This is a remarkably stupid article.

Another example of the dangers of letting never done anything but teach academics try to write public policy. This is another one of those college class room theories that dies a painful, ugly death when it trys to operate in the real world.

[roaddog727]

“a concept that we owe to the work of John Maynard Keynes.”

Yes. As the mythbusters say: “Now there’s your problem”.......

[mojito]

In reality, stimulus can easily take a balanced budget form: The government can simply raise taxes and raise expenditures by the same amount.

Ok, this IS the stupidest thing I've read all year, even including Newsweek.

[MNJohnnie]

Some one really needs to teach this cretin math. IF you tax, at 100%, every $ over $250,000 you get enough money to fund the current Federal budget for 141 days. We cannot tax enough to fund our current spending, much less tax enough to fund this guy Stimulus fantasies.

[Jack of all Trades]

Somehow the unemployed have to communicate—not just in words but in the marketplace—their desire both to supply their labor

Get up, get dressed first thing in the morning in clothing appropriate to whatever work you are seeking, and head out of the house to knock on doors and fill out applications. Be ready to start today.

Hmmm, how ever can we influence that to happen. Hey!, just a wild idea here, let's stop paying people to not work for almost two years!

[tet68]

collective action. We need to assert as a nation our will to get out of the bad equilibrium and get moving. And the way to do that is through government...

Step one. Organize the masses.
Step two. Tell them to start work.
Step three. Tax half the masses.
Step four. Tell the untaxed half that the taxed
aren’t paying their fair share.
Step five. Instigate class war.

[Lonesome in Massachussets]

I was twenty-five before I knew GreatImmortalJohnMaynardKeynes was more than one word.

[okie01]

Robert Shiller, a professor of economics at Yale University, is the co-author, with George Akerlof, of Animal Spirits.

I am...stunned.

Shiller is actually a "professor of economics"? After reading this collection of supremely dumb ideas, I was convinced Shiller was a half-assed journalist.

[org.whodat]

Good onion story.

[sickoflibs]

RE "We first have to come to grips with the fact that we need stimulus because we’re facing a problem of inadequate aggregate demand, a concept that we owe to the work of John Maynard Keynes. Keynes pointed out that a national economy can get stuck in a bad equilibrium—as it had in the Great Depression in 1930—where unemployed people really wish to supply their labor to some employer, but employers won’t hire them because they don’t think that the extra product they would make could be sold. Why not? Because of all the unemployed people trying unsuccessfully to supply their labor who can’t afford to buy anything. And why aren’t they working? Because no one will hire them. That sounds circular, but that was exactly Keynes’ point. The whole depression situation is just an absurd circularity that we get stuck in from time to time, and can stay stuck in for a very long time. The core idea of Keynes’ theory is that there’s no fundamental reason to be in such a weak economy except the fact that we’re in it."

This is the polar opposite of Austrian theory that says that a natural recession is required to purge the economy of malinvestments, the best example is the oversupply of homes due to the price bubble run-up cannot recover until the losses are recognized and prices go down, the sooner the better.

The liberal Keynes’ (Krugman ) theory above is that the government can paper over those bad investments (over-priced houses) by spending the money it doesnt have that we wont spend and then taxing us later to pay it back when the economy actually recovers, of course 'later' never comes because it never works. Trying to prop up prices of bad investments with more debt just delays the recovery,

[Kozak]

[genghis]

shiller is sorta of right.
there is an algebraic identity that produces this result. The only problem is it makes SOME completely insane assumptions.