Do you honestly believe Obama has a chance in 2012?

[thranx]

Akvod said:

HappySqurriel said:

Akvod said:

Japan is in a liquidity trap, where the interest rate is 0.1% and the government can't use monetary policy to stimulate the economy. Japan got out of its recesison, but only by a surge of exports. Germany right now is trying to play that game and looks like it's succeeding. However, this strategy cannot work for all the countries at the same time, in a global recession.

So if it was growth in the export driven private sector that was the reason for the recovery in Japan, what benefit was there to increasing their national debt by 120% GDP through stimulus spending?

Keynesian economics are flawed because there is a substantial difference between someone being paid to "Dig holes and fill them in" and someone who is paid to produce goods and/or services that individuals would happily pay for.

Because that export model was not sustainable, and now Japan is suffering again, because of it's huge reliance on exports, which has plummeted due to the global recession.

There's more advanced Macroecon with Japan, and I'll have to read more on that (Krugman especially wrote a lot about Japan and studied it).

Well the thing about the paying people to dig holes is that those people then go to coffee shops, and then the coffee shop owner buys some clothes for her daughter, etc. But like I said, I prefer stimulus the most, and I'm not really comfortable with other forms of fiscal policy as they sound like you say, a bit too voodoo. I mean, with infrastructure, the money is concentrated on a few people.

So spending with our means is voodoo? Maybe that is the biggest p[roblem, That what should be common sense is seen as voodoo. Unless I took that wrong.

But then again, there may be a psychological effect with giving people the job itself, and regaining confidence. That's why I think Macro economics needs to communicate better with psychology.