Can anyone debunk this Liberal claim thank you ?

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Unless you want to make an argument that thinning the pool of young males is a recession buster, there is no intellectually sincere way to argue that war in and of itself gets you out of a recession.

And at any rate we don't have that kind of war anymore. So, if someone is arguing that we should go all-out into the middle east like we did into europe and asia in WWII, they should come out and say it.

If it's the money spent, we can spend money without aggression, and get a better rate of return on the investment.

If WWII was responsible for ending the depression, my guess is that it had a lot to do with the massive reinvestment in industry and scientific education.

And how do you invent new stuff? I thought you were a scientist of engineer of some sort. Surely you realize that all the truly groundbreaking stuff starts in academia or the military, and that in recent history that means government grants. Look at what the private sector has done: for the past 3 decades they've taken all the groundbreaking research in computing, engineering and physics from about the 40s-70s and made a ton of useful s**t from it. The problem is that in the process they run their options dry and need new theoretical research, which corporations either just don't want to do, or are trying to do and failing because of reluctance to share important results. Also, while economics isn't completely zero-sum, it has some zero-sum qualities. I'd call it "fixed but potentially expandable sum". And when the rich get richer, everyone else gets just a little bit poorer. The claim that "my wealth doesn't make you poorer" is only true if said wealth has been gained through true innovation that actually expands the economy, and I can't remember the last time that actually happened in this country.

I am kind of confused.

The purpose of the business in the first place is to bring in income. So.... why would a person invest more due to higher taxes? It seems irrational, unless this is some form of tax management. After all, the reinvestment profits will be taxed, and possibly at the same rate that the original sum was taxed. So, I don't think this should impact the time value of money.

I think the real issue is that business cycle theory and other things like that are really sort of complicated with many additional variables. It is correct to recognize that the Great Depression wasn't just a US phenomenon but also related to international monetary flows. It doesn't seem to be the case that the stagflation of the Carter Administration was a matter of lower taxes or deregulation. It is also correct that the Great Depression wasn't really fixed by Hoover tax raises, and that FDR's efforts didn't seem very powerful.

Honestly, with that explanation, why does government have to raise taxes? Why not just take on more government debt?

The neat thing about economics is that they are almost never zero sum.

When bankers extend credit in excess of reserves it creates illusory wealth, but the neat thing about it is that it works, and if you manage it correctly the illusory wealth can generate enough value that it is re-paid in actual wealth.

if you give money to people who don't have much money they spend it. In order for them to spend it someone else has to create value.

Where are the null sums?

When you buy stock in a company the value of that stock is illusory as well, and can vary wildly from what a small percentage of that company is actually worth by any measure.

Sure it's scary but most of the people who are truly terrified of it believe that gold has intrinsic value.

That is the magic of credit. Credit is absolutely necessary for a capitalist economy to grow in real material terms. Credit even funds the education of our young and bright folks who invent New Stuff and make us all richer and more comfortable. Debt and Credit are necessary, but, as you point out, they must be managed well. Which is NOT happening in the U.S.. Unfortunately.

ruveyn

Seriously though - those of you who believe that only WWII could end the great depression - was it the 6.7% loss of life for the USA that did it, or was it the colossal government spending, or was it the investment in science and industry?

Because I've heard historians make the argument that tossing a lot of your young males into a meat grinder is a great way to reduce unemployment.

to bad our grinder only grinds their limbs and brains.
The death rate of Americans is remarkably low in our current wars
but we are doing wonders for the economies of Iraq and Afghanistan.

Credit for investment is necessary. Credit for consumption is absolute BS though.

With few exceptions, I agree with you. For ultra large purchases, such as a house, credit is necessary, but the load is collateralized, so it is not a complete gamble to the lender. For those who want to purchase less expensive items, let them save up for it. If one has to save first and buy later, perhaps people would control their impulse to buy better.

ruveyn

I think it's still a question of appropriate management of debt. Being collateralized makes a big difference of course, but it still comes down to whether you can service your debt in a reasonable way.

We agree then. Loans should be made only when there is a good chance of them being repaid.

Without credit a capitalist economy cannot grow. There is just so much gold and silver in the ground to serve as capital. So let there be credit, granted in a careful reasonable way.

ruveyn

You liberals don't know jack s**t about history.



Actually, it got us out of the depression because there was a legitimate reason to manufacture tanks, planes, etc. We did not do idiotic research and continued to spend money on building something that didn't work.

Furthermore, in case you missed the history lesson, we were attacked at Pearl Harbor, sitting out the war was not an option, then Adolf Hitler made the stupid and fatal mistake of declaring war on the United States when the American people were already furious about being attacked. I would argue that the turning point of World War II was when the United States officially entered the war, because much of the industrial base of the US couldn't even be attacked by Axis powers thanks to the Atlantic and Pacific Oceans

It wasn't the loss of life that helped the economy, it was the demand for the hardware to fight and win the war that got us out of the depression. One of the few areas that Government has a net positive on the economy is National Defense Spending.

The whole thing is kind of vacuous. Rich people don't get rich by pulling money out of their investments and throwing it in the bank. Having that habit to begin with is in its own right an insurance that you'll never get rich. People like Warren Buffet average in excess of 20% ROE on their investments, you net negative with money in the bank or money thrown into depreciable goods.

I would agree with the posters who say that deregulation preceeds most of our worst financial decisions. Raising income tax though means very little when the rich are already pros at minimizing the amount of money they have exposed to income tax.

Though on the other hand I'm almost ready to say - sure, go for it. Raise income tax on the rich as high as you want; a) it'll have no real effect on them and b) people will feel all kinds of warm and fuzzy over adjusting a number on paper.

Last edited by techstepgenr8tion on 27 Sep 2011, 1:10 pm, edited 1 time in total.

However, the housing bubble was caused by government regulations which forced banks to make the bad loans in the first place.

A parallel to that is Gramm-Leach-Bliley repealing Glass-Steagall, the difference being that the housing bubble and collapse was a predominantly democrat-driven problem where GLB and the early 2000's financial fiascos were more republican-driven.

Either way, a law repealing a law to relax previous standards is still technically deregulation and what stopped the bubbles from happening were perfectly good laws that were repealed for whatever inane reason.