Escaping From Depression

[Guest]

I have faith in Hari Seldon's plan.

So do I. Thanks to it, the 10,000-year Dark-Ages-to-come will be reduced to "only" a 1,000-year period and a handful of selected few might escape even that.

 

Regards,

Vesselin

[Guest]

I saw MH had given this article some publicity on IDS yesterday as good bedtime reading and indeed certain parts are clearly classic fairy tale material.

 

From the article

 

First, in the U.S. in the 1930s, continual increases in government spending, accompanied by a massive increase in regulation and an extraordinary harassment of business, particularly the capital market, kept economic growth at a very low level for no less than 12 years.

 

. . .I could go on. But the examples above, from four different countries in three different eras and situations, show what must be done.

Er, not really. Indeed the writers knowledge of the causes and cures of economic malaise in the 1930s reminds me of the old Woody Allen line: ?I once took a course in sped-reading that enabled me to read War and Peace in 15 minutes; its about Russia.?

 

To say that excessive government spending was the cause of the depression is pure, unadulterated nonsense. Rather than go into this argument at length I would rather point to the fact that the most obviously successful economies of the time were Nazi Germany and Sweden who both extensively used government expenditures and public works programs to kick start recovery.

 

As I said, traditional Keynesian remedies for recession, trotted out every time there appears to be a problem, will not at that stage be available. However, there is a dirty secret about Keynesian stimulus by a burst of government spending: it doesn't work. As the U.S. economy of 2001-2003 has exhaustively demonstrated, such stimulus can provide a considerable boost to the economy in the short term.

Tax giveaways to the rich which are substantially the cause of recent US deficits are not normally viewed as Keynesian stimulus.

[FauxCaster]

Every macro-economic theory to date has had the explanation/prevention of the great depression as the core of its theory. If you can't explain the great depression, your theory is no good. Unfortunately, as if it was planed by Seldon himself, an over-concern with preventing another depression, has lead all but a few to dangerously ignore the opposite-end: mania. And without offending too many Second Foundationers, I hope I can say, the mania was surely a large part of the cause of the great depression. Will we meet the challenge with anit-mania (and restrictive) policies and thus unpopular, or just go back to another century of depression-prevention policies in government that ignore dangerous manias?

[Pee Brain]

Tax giveaways to the rich which are substantially the cause of recent US deficits are not normally viewed as Keynesian stimulus.

 

 

 

an Alternate Minimum Tax can be a giveaway.

 

a rebate to someone who doesnt pay taxes is obviously a giveaway.

 

a tax reduction is not a giveaway.