2.8 GDP -- So, That Keynesian Pump is Working...

polifrog




Well, if the Keynesian "pump" is a debt pump, yeah.

Keynes pumped the US into the Great Depression, it pumped Japan into its lost decade (or two) and now it is again pumping us into depression.

NYPost:

And that meager 2.8 percent annual growth really isn’t what it seems to be.
That’s because 75 percent of that 2.8 percent growth involved businesses restocking inventories. Who says? The Department’s Bureau of Economic Analysis, which released this data.

So people like you and me weren’t really buying all that stuff in the last months of 2011. It was businesses buying stuff and putting it on their shelves in hopes that people would soon come along and buy it from them.

...

Let me explain: The government comes up with a figure on how much it thinks the economy grew, or shrunk. Friday’s figure was a first estimate for the fourth quarter, so most of the numbers used in the calculation are only guesstimates anyway. (But that’s for a different story.)

The government then takes that growth figure, subtracts the rate of inflation and comes up with the real growth it reports in its press release.

So, in other words, if inflation is rising it reduces the rate of actual, after inflation, growth — which is the figure that Washington reports.

In Friday’s number the government used 0.4 percent as the rate of inflation. Zero. Point. Four. Percent.

In which country is inflation that low? Certainly not in America. Absolutely not in the last four months of 2011.

The consumer price index, which is put out by the US Census Bureau, had prices up 3 percent for the year.

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Cracking Economic's Patina of Science or Another Hit on Krugman...

polifrog




Much of Keynesian economic theory relies on statistics, but statistical representations of reality are not empirical facts as they rely on the subjective inference of the confluence of two or more measured occurrences. Being that subjective inference is not measurable, thus not verifiable, it can not rise to the level of empirical fact, thus "theory" rooted in statistically based inference is highly subjective and, as such, does not rise to the level of theory or even hypothesis and should not be used to drive economic policy.

It is, however, in this nether world of inference that Krugman thrives.



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Rep.Brad Miller -- And His Implementation of Bastardized Keynesian Theory (Part 2)...

polifrog
Over almost a century Bastardized Keynesian Theory has become the Wmap of public spending policy; it has become the dark energy behind our ever expanding national debt, and is at the heart of our current economic malaise.

I previously explored the implementation of Bastardized Keynesian Theory funded through the expansion of government debt. Bastardized Keynesian Theory is not limited limited to governmental debt, though. Our politicians have turned to expanding private debt through government incentives to fund their Keynesian economic pump. Under Bastardized Keynesian Theory it does not matter who takes on the debt that puts money in the hands of those who spend; all that matters is that money gets into the hands of those who fund economic activity.


Both parties participated in this private-debt funded faux growth and each pointed to Keynesian Theory as validation for their leadership.

Democrats did so with a never ending train of government "affordable housing" programs which incentivized private debt, and more importantly, from a Keynesian perspective, put money in the hands of spenders. The wealth generated by the resulting housing boom did not culminate in equity over time. Instead it stimulated economic growth in consumerism, in vacations and similar non investment as people cashed in on their home's equity.

Conservatives for their part pointed to Keynes as well, albeit in a more convoluted fashion. Ask yourself what happened when the push for Keynesian spending through Fannie/Freddie came in conflict with existing regulations. The answer is that those regulations disappeared in a puff of Conservative Keynesian logic called "financial deregulation". This frees financial institutions to more efficiently implement the government's desire for all of us to spend more trough any number of financial magic tricks that really boil down to riskier loans to get more money in people's hands. Through deregulation Conservatives had unwittingly set the Democrat debt dogs of incentivized lending loose on the American people.

Suddenly more people had more money and spent more money - stimulus - but none of this stimulation showed up on the federal budget, instead it now weighs directly on the finances of the citizenry. End result - A privately funded stimulus.

Liberal Keynesian validated incentives and Conservative Keynesian validated deregulation worked in concert to lead to our housing bubble.

Unfortunately, by removing financial regulations Conservatives had upset the Democrat's delicate governance of home lending. Had the regulations not been removed the housing market may not have bubbled over so quickly. Conversely, I believe deregulation would not have been detrimental to the housing market had it not been for the Democrat's incentivized lending programs. It was as though a dam of regulations was holding back a ravenous river of incentivized lending.

Currently each party accuses the other of causing the housing crash. Democrats point to financial deregulation while Conservatives lay blame on government intervention in the housing market. The reality is that each party is tugging at different parts of the same animal -- Bastardized Keynesian Theory.

For the American people it is called impoverishment.



End of Part 2 of 3
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Brad Miller's Keynesian Dead End...

polifrog


Polifrog scoffed at the much vaunted Keynesian Economic Theory by UNC-CH professors as a student in economics.

It seemed to Polifrog that any theory that proposed that savings was detrimental to the economy and that also proposed a mystical "multiplier effect" when government spends our hard earned dollars, was little more than a politician's wet dream.

The WSJ, of course expands on the Keynesian Dead end.

Brad Miller (D) of NC-13 revels in the rationalization for his policies that is granted him when basing his arguments on Keynesian economics. It is Keynesian Economic Theory that brings forth Obamacare and all other unnecessary federal spending on the grounds that it is cheaper for the federal government to spend a citizens dollars than for the citizen to spend their dollars . Reality says otherwise time and again. Keynesian Economics failed in the 30's, failed in the 70's is failing in Europe now, and will fail here too.

There is a reality out there and it ain't Keynesian.



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Obama: More European than the Euros and Maybe Even Brad Miller...

polifrog



First Germany turns their backs on Obama, now the Brits do as well.

Obama wedded to an ideology contined his Keynesian push,

Obama urged the world's leading economies Friday to avoid scaling back government spending too quickly or risk derailing the global recovery.

...

The warning - a clear shot at European governments reining in budget deficits - comes after months of worry about the health of the eurozone, fuelled by huge public debts in Greece and Spain.

Angela Merkel's wisely ignored Obama.

Referring to the G20 summit in Canada next weekend, Merkel said in a videotaped message that "we are going to discuss when to quit the phase of short-term measures and go on to lasting budget consolidation."

Such a move was "urgently necessary, in the view of the Europeans and particularly of Germany," she said.

Now the Brits have ignored Obama,

Mr. Osborne's budget is the latest to depart from the short-lived Keynesian consensus that government can spend its way back to prosperity.

...

George Osborne presented the U.K. government's emergency budget yesterday, with spending cuts and consumption-tax hikes intended to shrink public borrowing to 1.1% of GDP by 2016, down from 10.1% of GDP this year. Nearly 80% of that retrenchment comes as spending cuts rather than tax increases. The Chancellor of the Exchequer's cuts are, on balance, good news for the British economy.

It would be refreshing if we in the US could follow suit and ignore Obama, but Polifrog would settle for a bout of fiscal common sense to roll across American governance.

Keynesian economics theory, crack for government spenders like Brad Miller (NC-13).



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A "Win" for Brad Miller -- HR 5297 -- Merkel knows otherwise...

polifrog




Contrast the anti Keynesian title below to Brad Miller's "win" with HR 5297 (more stimulus),

Europe to urge exit from stimulus schemes at G20

You don't have to, thanks to Merkel.

Europe will push for a swift exit from fiscal stimulus programs and a focus on budget consolidation at the G20 meeting next week, German Chancellor Angela Merkel said on Saturday.

Brad Miller, stuck on Keynesian stupid.



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A Win for Brad Miller -- HR 5297 -- Previously HR 5409

polifrog


If the vote counts are any indication congress has learned nothing from their mistakes. They create a housing bubble and when it deflates they continue pumping. Polifrog addressed this bill when it was known as HR 5409 here.

Today the House of Representatives approved an amendment to H.R. 5297, the Small Business Lending Fund Act of 2010, offered by Rep. Joe Baca (D-Rialto) and Rep. Brad Miller (D-NC). The amendment, which passed with an overwhelmingly bipartisan vote of 418 - 3, ensures that small and medium sized banks issuing housing production loans to America's home builders are eligible for additional capital under the new Small Business Lending fund the bill creates.

Insanity - doing the same thing expecting different results. Keynesian fail.




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Keynesian Fail Continues -- Robert Reich

polifrog


How does Reich open his latest piece in Business Insider?

We’re falling into a double-dip recession.

The Labor Department reports this morning that the private sector added a measly 41,000 net new jobs in May. (The vast bulk of new jobs in May were temporary government Census workers.) But at least 100,000 new jobs are needed every month just to keep up with population growth.

In other words, the labor market continues to deteriorate.

Remember this is Reich....the Keynesian left talking.
So, what is Reich's solution after 2 years of the greatest stimulus spending in US history?

So what’s the answer? In the short term, more stimulus...
...
We have to get to the core problem: a middle class that doesn’t have the dough to buy the goods and services the economy is capable of producing. Where to start? Expand the Earned Income Tax Credit and extend it up through the middle class.

Spend, spend, spend, spend!

Like Brad Miller, Robert Reich thinks it is best to keep screwing that (Keynesian) chicken.





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Brad Miller (NC-13) - Keynesian Fail

polifrog



Brad Miller is a Keynesian at heart and what is more Keynesian than pumping priming the economy with Census workers?

Payrolls across America increased by 431,000 in May, but

Virtually all the job creation in May came from the hiring of 411,000 census workers. Such hiring peaked in May and will begin tailing off in June.

By contrast, hiring by private employers, the backbone of the economy, slowed sharply. They added just 41,000 jobs, down from 218,000 in April and the fewest since January.

Not even the press pump monkeys can fudge these numbers.

It remains to be seen if the Keynesian take on trickle down economics through government will have any positive effect on the economy in the long run.

In all likelihood the drag imparted on the economy by the immense borrowing done by the Fed will more than offset any positive trickle down effects. Government borrowing kills the vaunted multiplier effect.




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