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[Tyrone Slothrop]

Originally Posted by sebastian_dangerfield

For the 2946493534723th time: The Stimulus did bridge us for a period of time.

For the third time today, the federal stimulus merely offset cuts in state and local spending. Government spending was flat. So it was really more about preserving the status quo, in a macro sense.

Now it is all but exhausted, and there is nothing on the other side. To go out and do it again would require borrowing we cannot afford, borrowing which would destabilize the country.

Leave the bridge metaphor alone. It's really not helping anything

And this suggestion that we can't afford the borrowing is recockulous. Interest rates are really, really low. Historically low. The government can borrow really, really cheaply. This is because people don't have things they want to invest in -- instead, they want to put their money somewhere safe, and that means the federal government. Far from worrying that the government might be destabilized, investors are saying exactly the opposite -- that they are so worried about the safety of their money, they are willing to buy bonds from the government for almost no return, just to have their money parked somewhere safe.

You say do it again. I say, show me where it takes us. You agree with me that there is no transformative technology or bubble on the other side. I say, well then you're just saying "Spend another trillion to buy a couple more years of stability. That's not worth it."

I'm not for buying "stability." Things are depressingly stable now, and that's the trouble.

Your argument back? The same repetitive shit. "But we need aggregate demand!"

It's because we still do. That was the problem and it's still the problem. If you have a different macroeconomic explanation for the recession, I'm all ears, but you're not saying anything that wasn't equally true five or ten years ago. Five or ten years ago, we had expensive labor compared to the rest of the world and a service economy. We still do. But now we're in a huge recession, and then we weren't. We need to do something about the specific circumstances we find ourselves in.

Carve around what I'm saying all day long (which you will), the fact is, stimulus is a temporary fix. Yours and every other Keynesian's argument only makes sense when there's a pot of gold at the end of the rainbow. There isn't. There's nothing. There's a big fucking void, and everybody holding their breath because they all see the same absence of anything picking up the slack you describe.

As Keynes said, in the long run we're all dead. It's a temporary fix to a problem that needs a temporary fix. A lot of people are out of work. They aren't producing anything. That's a big problem. We need economic activity, and if the private sector isn't supplying it then we need the public sector to supply it.

If the federal government hires people to fix a bridge in Philadelphia, those people are earning money and spending it, just as they would be if they were being paid by a private company to build a bridge on private land. They spend their earnings on food and housing and consumer goods, and for the businesses that make those sales, those receipts are real money that they can turn around and spend.

In time, we generally want private companies to be hiring those people instead of the government, because we think private companies will allocate resources more efficiently. If the economy is at full employment, government hiring drives up the costs of private hiring by making labor more expensive, and so resources are allocated less efficiently. But these aren't normal times. We have lots of people who want to be working, and who can't find jobs. There just isn't enough demand in the private sector.

Your answer, apparently, is that those workers need to experience pain and destruction of unemployment so that somehow, magically, they (and the Underpants Gnome) will create a pot of gold. Honest to God, I can't understand how you think that will happen. These people want to work now, and theren't jobs for them because no one is hiring. As they continue not to work, society loses. If this goes on for a few years, they become less employable, and society loses more. The loss to society from all of this unemployment is massive and real, and you just don't have any suggestion about what to do about it.

I hate to mix metaphors, but if I told you to run the first leg of a relay race where there'd be nobody waiting to grab the baton, would you do it? No.

Your relay race is misguided because it posits that the only thing that matters is where you come out at the end. If you don't start running now, without worrying about the end of that leg, you're going to be standing in the same exact place in a few minutes, and you'll be that much farther behind -- *always* farther behind, because of the lost opportunity for progress. So maybe we can't sprint and we have to walk instead -- we're still better off moving forward, instead of sitting on our ass and convincing ourselves that we're better off going nowhere because we can't be sprinting.