Greece looking to the right for solutions ?

[dogtowner]

There is a ltter to the Editor in today"s Australian Herald Sun Newspaper that sums this up.

"The leaders of the eight most powerful nations came together to show some leadership in resolving the European debt crisis. Their resolution of more growth and less debt could have come from any VCE (college) students

A more detail of the American failure is in an article in Insights, Melbourne University Business and Economics Vol 11 April 2012 which can be read from my web site.Aus22.bigblog.com.au It is too long to summarize here.

the euros talk a lot but Germany will decide whether or not they throw good money after bad. Angie M can only suggest and her power is on the wan because of previous actions.

 

[GenSeneca]

Dogtower, Keynes was the accepted economic theory in almost every University from after the war to recent times. Eeven the G8 conference accepted the need for spending in some areas. See the New York Times.

Universities are run by Leftists who agree with Keynes, citing such a biased source is meaningless.

Scale down the Keynesian economic theory to the individual level and no rational individual would ever pursue such a course of action: "I just lost my job, I need to go run up a bunch of debt on all my credit cards so that I can become gainfully employed as quickly as possible." Such a theory is totally irrational.

A system that fails on the individual level will not work on any level, not with 10 people, not with 1000 people, not with an entire nation of people. It is only because of government's ability to spend (steal) tax dollars that don't yet exist (debt), from generations not yet born, on current existing generations that you can be convinced that such an economic theory has merit.

Going back to the example I gave... Let's say Visa came out with an inter-generational credit card that allowed you to rack up $1,000,000 of debt over the course of your lifetime and you were only required to make payments on the interest you had already accumulated. For the sake of argument, let's say it has a 5% interest rate. You could rack up $1,000,000 in debt over the course of your life and use $50,000 of that debt to cover the interest, leaving you with $950k to spend. Your child then gets handed the card and racks up another $1,000,000 in debt and only has to use $100,000 of that new debt to cover the interest. Your grandchild is then given the card, he racks up another $1 million and uses $200k of the new debt to cover the interest.

For several generations, this will seem like a great system but the conclusion is obvious and inevitable; eventually the amount of money needed to service the debt will exceed the credit limit. The generation that gets handed that ticking time bomb will be decimated by the greed of all the generations that came before it, generations who cared only about themselves and not about the misery they would be leaving to future generations.

 

[Aus22]

The economy of an individual is not the same as a government. The government has far moire assets. In fact it has the power to own all the assets of a country. That why in war time governments run deficits. If you think all university are run by leftists then you have not study economist.

 

[dogtowner]

The economy of an individual is not the same as a government. The government has far moire assets. In fact it has the power to own all the assets of a country. That why in war time governments run deficits. If you think all university are run by leftists then you have not study economist.

ok, the vast majority of universities are run by leftists.
the vast majority of all schools teach that Lincoln ended slavery in the US which is not the case either.

opinion does not equal reality in all cases.

 

[dogtowner]

The economy of an individual is not the same as a government. The government has far moire assets. In fact it has the power to own all the assets of a country. That why in war time governments run deficits. If you think all university are run by leftists then you have not study economist.

while it have more assets its creditworthiness is still a calculation same as the individual. more zeros perhaps but the math still applies.

 

[GenSeneca]

The economy of an individual is not the same as a government. The government has far moire assets. In fact it has the power to own all the assets of a country. That why in war time governments run deficits. If you think all university are run by leftists then you have not study economist.

You are not addressing any of the points I make and you're not even putting forward anything that resembles a defense of Keynesian economics, so let me ask: On what grounds are you willing/able to defend Keynesian economics?

 

[Aus22]

while it have more assets its creditworthiness is still a calculation same as the individual. more zeros perhaps but the math still applies.

If the number of zeroes exceed in your assets your debt , you have nothing to worry about. Of course they may be a short term money problem but that can be solved in the future either by investing in productive resources or in borrrowing. The former is better as you might have to take drastic action to repaid your debt. For instance the USA could have solve their debt by selling its armed forces to the highest bidder. This would have gain billions but with no defense forces there would be other problems. Germany solve part of their problem in the 1930s by investing in munitions. This reduce unemployment but resulted in engaging in a war that they lost costing millions of lives and billions of dollars of destruction. Hardly a profitable investment.

 

[Aus22]

Gen Senca , I think I answer your question. You compare the government with an individual living on a credit card. you said" For several generations, this will seem like a great system but the conclusion is obvious and inevitable; eventually the amount of money needed to service the debt will exceed the credit limit. The generation that gets handed that ticking time bomb will be decimated by the greed of all the generations that came before it, generations who cared only about themselves and not about the misery they would be leaving to future generations. "

Most governments have more assets than debts. Even if they do not have the money to pay back their debts, the lender will forgive most of the debts.That what the Germans plan to do in Greece. Thy may ask for some austerity to satisfy their own voters. But in the end they can't force Greece to do anything. Even keeping them out of the EU and not lending them in the future will not work. The EU will need Greece in the future and will still need to trade with them.

 

[GenSeneca]

Most governments have more assets than debts. Even if they do not have the money to pay back their debts, the lender will forgive most of the debts.That what the Germans plan to do in Greece. Thy may ask for some austerity to satisfy their own voters. But in the end they can't force Greece to do anything. Even keeping them out of the EU and not lending them in the future will not work. The EU will need Greece in the future and will still need to trade with them.

You seem to recognize, and readily acknowledge, that Keynesian economics is a complete abandonment of fiscal responsibility and that it operates by piling up debt... So your only defense of Keynesian economics seems to be that debt doesn't really matter, you seem to honestly believe there is no downside to endless deficit spending and mountains of debt. Well...

Since the debt doesn't matter...

That is an old thread of mine that I think you will like, in it I propose a drastic expansion of the welfare state to eradicate all poverty in the US.

 

[Aus22]

Debt only matters in relative terms. That why the recession started in the USA.

 

[GenSeneca]

Debt only matters in relative terms.

Then, in "relative terms", what do you think about a plan to give the bottom 33% of Americans a guaranteed government income of $80k a year? Wouldn't that completely eliminate all poverty in the US at the low, low cost of racking up massive debt? Of course, with the "multiplier" effect of Keynesian economics, wouldn't all that government spending cause an economic boom that would cover the cost of such a program?

That why the recession started in the USA.

Perhaps you could explain your use of this non-sequitor... 'Debt only matters in relative terms and that's why the recession started in the USA'... Our recession started because our debt is relative? That statement simply doesn't make sense.

 

[Moby76065]

What ever is coming down the pipeline it won't be good.
Better be stocking up on food and supplies gents.
We were over 15 trillion in debt and the free loaders only want more from the working class.

 

[Aus22]

Then, in "relative terms", what do you think about a plan to give the bottom 33% of Americans a guaranteed government income of $80k a year? Wouldn't that completely eliminate all poverty in the US at the low, low cost of racking up massive debt? Of course, with the "multiplier" effect of Keynesian economics, wouldn't all that government spending cause an economic boom that would cover the cost of such a program?

Perhaps you could explain your use of this non-sequitor... 'Debt only matters in relative terms and that's why the recession started in the USA'... Our recession started because our debt is relative? That statement simply doesn't make sense.

I had to reply quickly. If is impossible to defend all economic theories in such a short time. . I read your suggesting of giving some money to the poor. However this is not the solution. Poverty can only be define in relative terms. You are poor if you get much less than the rest of the people in your country. The actual level depends on the country. In the Philippines thea average monthly income is 3ooo p. or about $150. This would not be enough to live on in the USA or Australia. But it is enough there. The poor are those who get much less. In Australia the average basic income is about $30,000 a year . The poor are those who get much less than this although it is much higher than almost Filipinos get. So given a set sum regardless of the income of the rest of the population is useless. The high incomes of the very rich force up the cost of living and therefore the amount needed for the poor.
It has also economic problems also as the rich do not spend much of their income they mainly save. Only the poor spend most of their income so to increase production and consumption money must be given to them. The great inequality in incomes in one of the reason Freeman gives for the recession starting in the USA.

 

[GenSeneca]

If is impossible to defend all economic theories in such a short time. .

I'm only asking that you defend one economic theory, the Keynesian economic theory, that is the theory you have been promoting.

I read your suggesting of giving some money to the poor. However this is not the solution.

Giving money to the poor won't solve the problem... I agree... but you're about to disagree with yourself.

Only the poor spend most of their income so to increase production and consumption money must be given to them.

Now you believe giving money to the poor will solve the problem...

The high incomes of the very rich force up the cost of living... The great inequality in incomes in one of the reason Freeman gives for the recession starting in the USA.

I combined those two because they are both examples of unsubstantiated claims being used as a false premise.

 

[Aus22]

Then, in "relative terms", what do you think about a plan to give the bottom 33% of Americans a guaranteed government income of $80k a year? Wouldn't that completely eliminate all poverty in the US at the low, low cost of racking up massive debt? Of course, with the "multiplier" effect of Keynesian economics, wouldn't all that government spending cause an economic boom that would cover the cost of such a program?

Perhaps you could explain your use of this non-sequitor... 'Debt only matters in relative terms and that's why the recession started in the USA'... Our recession started because our debt is relative? That statement simply doesn't make sense.

I am having technical trouble in replying I will do so later