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HappySqurriel on 06 November 2009
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Rath said:
NJ5 said:
Chairman-Mao said:
Well lets see, the Soviet Union no longer exists and the USA has just survived the worst recession since the great depression and is slowly emerging. I'd say we're doing just fine thanks Mr Gorbachev.

p.s. I'd die for capitalism

Getting out of a recession by stimulating the economy with borrowed money and a high deficit is like solving your personal financial problems by maxing out your credit cards. It may work if you're lucky enough to get a source of revenue to cover up the deficit afterwards, otherwise it just adds to your problems. Of course in the US government's case, the main source of revenue is taxes from citizens, which aren't about to raise to a level which can cover up the deficit.

It's also still very uncertain what will happen to the economy once the stimulus is withdrawn.

 

Personal finances are nowhere near as complex as an economy, the associated problems with going bankrupt are not similar to the problems of a financial system collapsing.

I agree the economy is still uncertain and your deficit is ridiculous, but I don't think the analogy properly conveys the consequences.

I would argue that the economy on the whole is no more complicated than personal finance; and the only reason people believe the economy is more complicated is because (moronic) economists use unproven economic models to make predictions that don’t come true about the economy to support actions which will have a negative impact on the economy.

The well-being of the economy on the whole is just a representation of the well-being of the majority of individual’s (and company’s) finances within the economy. Actions that encourage individuals and companies to take the actions that will lead to improving their finances in the long run will improve the economy; and actions designed around short term gains with limited long term results will hurt the economy.

The government could take on debt to improve the economy but that would require them to spend the money making individuals and companies more competitive in the economy; and not on short term incentives to buy a house to re-inflate a speculative bubble, or to buy a car to try to save a powerful union. In what way does the stimulus help to make American workers worth 10 times as much as their Chinese counterparts, and how has the stimulus made the typical American business more competitive internationally? The answer is it hasn't ...

The truth is the economy is pretty simple to manage and there has been little decent management done in quite a long time. The best analogy of what is happening in this economy is what the government is trying to encourage individuals to do. Rather than encouraging individuals with limited job security to get improved training and skills, the government is encouraging them to take out massive loans at variable interest rates (that will soon rise) to buy homes and cars they can’t afford.