Krugman: Spend Now, Save Later

[mrstickball]

Akvod said:

mrstickball said:

@Akvod - you said you 'posted the article again', but posted completely different articles. You know, your not really discussing the issues...Only posting what Krugman thinks. Are you wanting us to discuss economics with you, or Krugman? Your arguments are very confusing, as I don't know which to respond to. Maybe that is why the thread is getting de-railed?

*edit*

Also, your summary is way off base. Your summary was about how poor people spent more. None of the articles you posted by Krugman talk about that...Or am I missing an entire article you posted?

I've posted the Stimulus Gone Bad article, which is complaining that the last stimuluses were directed toward the middle class who will most likely save the money, rather than spend it. The other articles are new, hence why I said "Extra" and "Bonus" before them.

I've already said my share in the very first few pages, but you guys ignore them. Therefore, I figured that since I'm not a good writer/arguer, I'll just bring in Krugman, whose saying the same exact thing to do it.

 

Me and Krugman's argument is quite simple... Spend now, save later

We've been spending for 30 years now. When do you suggest we stop?

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You're obviously not reading anything I posted. Here's a quote from the article I posted twice: Stimulus Gone Bad

... And sending checks to people in good financial shape does little or nothing to increase overall spending. People who have good incomes, good credit and secure employment make spending decisions based on their long-term earning power rather than the size of their latest paycheck. Give such people a few hundred extra dollars, and they'll just put it in the bank.

And you (along with Krugman) make the faulty assumption that putting the money in the bank is a bad idea.

When that money is put in the bank - regardless if its a poor, middle, or upper class person, that money is loaned out. Someone may borrow the money (like I have before) to buy a house - which reduces housing inventory, spurring new development of properties. The money does get used, but will have a much larger impact on creating jobs if its saved. Why is it that when our savings rate was so high, we had more growth than we did when we stopped saving?

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http://en.wikipedia.org/wiki/Marginal_propensity_to_consume

People who are in good shape have a small MPC

People in bad shape have a big MPC

Again, you assume that is a bad thing.

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And you're clearly not addressing anything I said.

Can't you see the graphs and statistics? They're not rocket science. The negative inflation rate were in red >.< The price levels have gone down, along with the rates of bonds >.<

I also saw that inflation has increased 2% since last year. Did you not read that part? We had under 0.4% inflation last year, and 2% this year...That isn't something of major concern, I don't believe.

Do you at least concede that inflation and high borrowing costs are absolutely not an issue?

They are not an issue now. I worry that they may be. You and Krugman can argue all you want that we are not Greece, but no one knew that bonds would increase from 4% to 8% in a matter of a few weeks, there. I am not saying that I believe 100% that it will happen in the US, but we can't put our head in the sand like Krugman, and think that our insane borrowing habits will never become an issue.