Jim Kramer: We're in a recession NOW

[Thorgrim]

The 2008 recession is here, now he's way to the right of me, but I often take his advice on the economy and him

Some statistics are cited, and it all looks horrible, and Kramer just says it multiple times: We're in a recession, and you can't lie about it

YouTube Video

Kramer on NBC (Downloadable WMV)

6Speed or someone else with more than one or two courses in business (I only took Macro/Micro-economics, I didn't major in Economics or anything)

Should do a frontpage article on this

meanwhile feel free to discuss whether we should:

A) Take a deep recession and raise rates, much like 1982, thus killing inflation

B) Risk stagflation but a lighter recession through some interest rate cuts

[Fed Up]

Originally Posted by Thorgrim

The 2008 recession is here, now he's way to the right of me, but I often take his advice on the economy and him

Some statistics are cited, and it all looks horrible, and Kramer just says it multiple times: We're in a recession, and you can't lie about it

6Speed or someone else with more than one or two courses in business (I only took Macro/Micro-economics, I didn't major in Economics or anything)

Should do a frontpage article on this

meanwhile feel free to discuss whether we should:

A) Take a deep recession and raise rates, much like 1982, thus killing inflation

B) Risk stagflation but a lighter recession through some interest rate cuts

I believe there are more variables involved....however,

The answer is probably "A,"

but the Fed will do "B" (see:Ron Paul Grills Ben Bernanke)

which will possibly lead to C. Depression (see Recession or Depression? by Llewellyn H. Rockwell, Jr.)

Fed Up

[Thorgrim]

Depressions don't happen anymore, I was pretty sure we found the cure, dramatically increased domestic deficit spending by the government does it everytime...you spend your way out of a recession, giving enough to the people, who after getting so much cash month after month, spend it, and spending=growth

Sweden got out of the Great Depression by 1934

[Fed Up]

Originally Posted by Thorgrim

Depressions don't happen anymore, I was pretty sure we found the cure, dramatically increased domestic deficit spending by the government does it everytime...you spend your way out of a recession, giving enough to the people, who after getting so much cash month after month, spend it, and spending=growth

Sweden got out of the Great Depression by 1934

Actually... That Keynesian method is what turned a recession into a depression.

So if we add more debt this solves the problem?

No.

Also, what if the people "don't" spend?

The problem is debt to begin with. It stems from spending beyond our means.

Government is already too big. The dollar is just getting weaker and weaker and more spending is not going to make it any stronger.

Neither are Bernanke's solutions. His 2002 speech laid out the foundation of his thinking. Although he didn't actually say he'd drop money from a helicopter (as the press would have you believe), he did say we have a technology called a printing press that he would use. He actually believes that not printing more money and running a tight ship caused the depression.

He glorified the confiscation of the people's gold. This is his mindset.

One way or another, the People will pay for the Fed's decisions in prolonging the eventual pain.

More government spending will do nothing but prolong it as well.

Fed Up

[Fed Up]

More on Keynes economics...

The WSJ : “We’re all Keynesians Now:”

So famously declared Richard Nixon back in 1971, in what we thought was a different economic era. But after yesterday, we’re not sure what decade we’re in. With Federal Reserve Chairman Ben Bernanke and President Bush both endorsing temporary tax cuts and more federal spending as “fiscal stimulus,” an inflation-adjusted version of Jimmy Carter’s $50 rebate can’t be far behind…
…r. Bernanke embraced the explicit Keynesian notion that the government should write checks to “low and moderate income people,” who will spend it quickly and thus lift consumer demand. In the academic literature, this is called having a higher “marginal propensity to consume” than the more affluent, who tend to save more.
We’re all for putting more money in the hands of the poor and moderate earners, especially via stronger economic growth that will give them better paying jobs. But the $250 or $500 one-time rebate check they may now receive has to come from somewhere. The feds will pay for it either by taxing or borrowing from someone else, and those people will have that much less to spend or invest themselves. We are thus supposed to believe it is “stimulating” to take money from one pocket and hand it to another.

[Thorgrim]

federal government can run deficits, that's not increasing taxes on the rich to give the poor money to get out of a recession

and I completely disagree that Keynesian policies CAUSED the great depression...how do you explain Sweden...how do you explain that FDR only half-heartedly took his advice, and then when he went against it and tried to balance the budget, ofcourse we took a step backwards

I have no idea where people (not specifically you) get this notion that during a recession when the lower classes bills are growing, they are going to keep getting cash and start some sort of elaborate savings account...they're going to spend it! When you live from paycheck to paycheck, savings has completely left your mind, and during a recession it's even more put into the back of your mind

[bheld]

The problem with the Bush Recession is that it was completely self-inflicted. We could have avoided it but he chose unilateral action that led to a weakening of the dollar, a spike in oil prices, and a siphoning of public resources to select corporations.

[Fed Up]

Originally Posted by Thorgrim

federal government can run deficits, that's not increasing taxes on the rich to give the poor money to get out of a recession

Granted they can run deficits but they should only be short term for emergencies and possibly utilized to fight "declared" wars. Why did the government run larger and larger deficits after WWII all the way through today? To help the poor? Why didn't they pay off the debt?

and I completely disagree that Keynesian policies CAUSED the great depression...how do you explain Sweden...how do you explain that FDR only half-heartedly took his advice, and then when he went against it and tried to balance the budget, ofcourse we took a step backwards

Perhaps I should rephrase that a bit as I was just going off the top of my head (which usually doesn't work well for me, ha). I have to pull out books I have read....

The Federal Reserve CAUSED the great depression. Keynes viewed "the successfull management of the dollar by the Federal Reserve Board from 1923-1928" as a "triumph." "Keynes continued to hail the Reserve's policy a few years after the depression began." Source: "America's Great Depression" by Murray N. Rothbard

I have no idea where people (not specifically you) get this notion that during a recession when the lower classes bills are growing, they are going to keep getting cash and start some sort of elaborate savings account...they're going to spend it! When you live from paycheck to paycheck, savings has completely left your mind, and during a recession it's even more put into the back of your mind

I agree with that comment. I think that those who really do need the money during a recession would just spend it on neccessities, like food and utilities, not luxury type items. Some will probably just use it for booze and smokes. I'm not sure I would view this as a "stimulus" but rather a prolonging of the inevitable.

I also wouldn't want to be in the luxury sales business right now. The consumer is tapped. They took all the excess they had during the Fed induced housing boom and have spent it. A few more dollars isn't going to change anything now. Debt is their achilles heel and it's been sliced with a sharp Rambo type knife and will take some time to repair. Possibly years.

The Fed's solutions will not help, but prolong this as I mentioned. The writing is on the wall per Bernanke's 2002 speech.

When more and more jobs are lost, what is left? Right now, some have said, that 40% of the new jobs in the last few years were real estate related. Real Estate agents, loan sharks agents, contractors, builders, plumbers, electricians, etc. etc. What are these people going to do now, sell insurance?

In the Business Cycle, we are headed down towards the bottom. We're not there yet.

Here is a synopsis of what has happened and what will happen next:

"The thrust of the Austrian theory of the business cycle is that credit inflation distorts this process, by making it appear that more means exist for current production than are actually sustainable (at least in some renditions; see Hülsmann [1998] for a "non-standard" exposition of ABCT). Since this is in fact an illusion (printing claims to property ["inflation"] is not the same thing as actually having property; see Hoppe et al. [1998]), the endeavors of entrepreneurs to create a structure of production not reflecting actual consumer time preferences (as manifested in available savings for the purchase of producer goods) must end in failure."

Austrian Business Cycle Theory: A Brief Explanation - Mises Institute

I'm not an economist. I have been to Mises University for the Austrian Scholars Conference and have spent the last year trying to decipher past economic history to calculate future patterns based on ABCT. I can't really do this with any other economic theory. Look how well they have worked so far?

There's a reason why economists aren't taught the Austrian Theory. It's because it stands for everything the government doesn't. 1. Limited government 2. Free Markets 3. Sound money - They can't line their pockets with the Serfs wealth under that type of theory!

There's a reason why Austrian Economics isn't even in the index of my college Economics textbooks. There's a reason why Keynes was knighted by England. There's a reason why Greenspan, who used to be in favor of gold in the 60's, was knighted by England. This is a good exchange over the years between Ron Paul and Sir Alan Greenspan: Alan Greenspan Congressional Testimony on Gold with Ron Paul

Fed Up

[Thorgrim]

Economics isn't exactly a real science, and if someone from the MU made predictions and a model that was more accurate than anything out there, he'd get a nobel prize...libertarians have won it before

[Fed Up]

Originally Posted by Thorgrim

Economics isn't exactly a real science, and if someone from the MU made predictions and a model that was more accurate than anything out there, he'd get a nobel prize...libertarians have won it before

Mises preceeded Keynes by 30 years in his Economic Theory. They don't give nobel prizes to economists whose theory is not utilized or for that matter taught at a University level.

Fed Up

[Thorgrim]

Libertarian economics are largely based out of learnings from Mises/Austrian school...they win nobel prizes

All you need is original work, and a real model...if their was some secret agenda anti-libertarian agenda they'd only award it to socialists

[bheld]

Anybody with two eyes can see that our current policy is leading us to economic destruction. The problem is that corporations control our government's economic policy and also conveniently control most of the information that makes it to the public. That's why when people hear "economy" they immediately think of the stock market instead of whether they have a job or not or if they can afford to live without going further into debt this year.

The article about Austrian economics did a good job of explaining the obvious.

[Fed Up]

Originally Posted by Thorgrim

Libertarian economics are largely based out of learnings from Mises/Austrian school...they win nobel prizes

All you need is original work, and a real model...if their was some secret agenda anti-libertarian agenda they'd only award it to socialists

I was speaking of Mises here...

Here's a real model;

Limited Government
Free Markets
Sound Money


Now where's my nobel prize?

Fed Up

[Fed Up]

Originally Posted by bheld

The article about Austrian economics did a good job of explaining the obvious.

How come "the obvious" is not taught at our Universities?

(I readily admit it is obvious to many here on this forum, but not to the general public...and I base that on asking people about economics when I'm out and about, and especially those who majored in economics - I get that "what's that? comment in reply)

Fed Up

[bheld]

Originally Posted by Fed Up

How come "the obvious" is not taught at our Universities?

(I readily admit it is obvious to many here on this forum, but not to the general public...and I base that on asking people about economics when I'm out and about, and especially those who majored in economics - I get that "what's that? comment in reply)

Fed Up

I wasn't an econ major either so I don't know how far in depth the curriculum goes but I'd imagine that an undergraduate degree would pretty much just concentrate on the fundamentals like demand and supply curves and then build on that to analyze more complex situations. I don't know if whole economic models are a part of that, or if they should be. I'd rather have the basics down instead of learning about the differences between Keynesian, Austrian, etc. schools of thought.

[Fed Up]

Originally Posted by bheld

I wasn't an econ major either so I don't know how far in depth the curriculum goes but I'd imagine that an undergraduate degree would pretty much just concentrate on the fundamentals like demand and supply curves and then build on that to analyze more complex situations. I don't know if whole economic models are a part of that, or if they should be. I'd rather have the basics down instead of learning about the differences between Keynesian, Austrian, etc. schools of thought.

Understood...

However, I have interviewed economic graduates and even those with Masters degrees in economics who haven't heard of Austrian Economics.

There is not one university that offers courses in Austrian Economics, but a few scattered professors that do follow the teachings (the ones I met at Mises University last year).

It is an uphill battle to get Austrian Economics into mainstream America.

When I met Ron Paul in April of last year, I had him sign an Austrian Econmics book that he wrote. He said, "I was heavily influenced by them." I said, maybe when you're President, you can have our Universities teach it. He literally gave me this look of (my interpretation) Dude...I'm not going to be President. I think his attitude changed as his message grew.

I can pretty much confidently say that when Paul mentioned the Austrian Business Cycle in the last debate (or second to last), that 99.9% of America didn't have a clue.

Fed Up

[bheld]

Well the Austrian School and the Chicago School are almost synonymous and I'd wager that a lot more people are familiar with Milton Friedman and his views and therefore Austrian School economics by extension. Even if they don't recognize the name they are probably well-versed in the theory.

Sort of like how most people wouldn't be able to tell Hobbes, Locke, Rousseau, etc. apart but they're all familiar with the ideas they had because they all heavily influenced our founding fathers. While somebody may not be able to attribute the idea of humans being inherently good to Locke an understanding of the motivations of Jefferson would also bring an understanding of the concept independent of their recognition of Locke's influence.

[Fed Up]

Originally Posted by bheld

Well the Austrian School and the Chicago School are almost synonymous and I'd wager that a lot more people are familiar with Milton Friedman and his views and therefore Austrian School economics by extension. Even if they don't recognize the name they are probably well-versed in the theory.

Granted there can be an understanding among those who espouse each school of thought (as in knowing your competition), but I particularly have issues with Friedman's monetarism as well as his opposition to the gold standard. When it comes to "quantity" theory vs. "quality" theory, I'm on the side of quality;

See the following for a good analysis of both theories:

Vienna and Chicago: A Tale of Two Schools | The Foundation for Economic Education: The Freeman, Ideas on Liberty

But I'm sure you already know this...

Thanks for the discourse...

Fed Up

[bheld]

I saw this in the article you linked and thought I would point it out.

Both the Austrian and Chicago schools of free-market economics were decidedly unpopular at the beginning of the postwar period, but now, a generation later, their views are represented in almost all textbooks and economics departments.

Looks like that the concepts are being covered but that, according to your experience, credit isn't being given to the Austrians.