Krugman: Spend Now, Save Later

[axt113]

richardhutnik said:

axt113 said:

 

Census is known to be short term it happens once a decade, most government work is more long term a few years at least, the economy will only naturally product jobs, if there is something driving job growth, consumption, technological innovation, private investment, etc. but those drivers are not operating at the moment, this is the problem with this recession compared to most recessions, this is why the Government expenditure is a must.

If things could take care of themselves then I would say time to pull back on spending, but they won't that's what you aren't getting, if we pull back now, the bottom will fall out because there is nothing to keep it going on its own.

Ok, this is how the game of economics works:  Individuals A provides goods and services to individual B.  Individual B then must of provided goods and services at some point to give A money.  Now, without this arriving naturally, which also could be by the assist of loans from the government or individuals, then if individual B an individual that is propped up by government to merely consume that which is by A, then when B happens to no longer get government money, then A doesn't have anyone to keep buying his goods and services, and thus, goes out of business.  The government spending is short term.  B has to add something to the ecosystem of the economy or once they are gone, they it isn't sustainable.

If you keep playing this game, eventually it is going to collapse, much the way the Soviet economy did.  Once the government stopped creating jobs, the entire economy there collapsed, and unemployment shot up like crazy.  But, it happened because the Soviet economy wasn't sustainable.

There is also far too many presumptions being made, like somehow this is just something short-term that will be ridden out if you just keep pumping things up.  Well, we look at globalization, and that has resulted in a flow of money out of the United States.  So, you can face a case where your propping up merely creates jobs in India or China.

The transfer of goods and services and money is only part of what economics is.

And government spending isn't short term much of government spending occurs over the long term, which is why we tend to have deficits for many years in a row, because the spending is at similar levels every year.

It'll only collapse at a point where there is no one to buy the debt or their demands for buying the debt become too high, we are no where near that point, right now, our debt is bought up readily.

Actually globalization hasn't just been a flow of money out of the US, a lot has come into the US, the problem has been for lower and middle skilled workers in the US, who have suffered due to the  competition from workers in other countries who have workers of similar skill willing to work for far less.  They have suffered as a result of globalization, but that is expected.

I understand where you're coming from, but your fears are overblown, right now, government spending is a necessity, and we still have a good deal of time left to address the debt.  Priorities, first recovery, then the debt.