The Reagan Recovery vs The Obama Recovery - Page 16 - Politics and Economics

JrJr · 06-09-2012, 10:59 PM

Quote:

Originally Posted by 13ball

The main point is that Reagan inherited a different set of circumstances.

Inflation alone wasn't the problem in the 1970s. It was stagflation--inflation coupled with high unemployment and slow growth. Stagflation had mostly been brought on by the oil crisis of 1973.

Right -- Stagflation brought on by Keynesian practice:

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The Theory Hits a Rut
Keynes died in 1946. In addition to "The General Theory", he was part of a panel that worked on the Bretton Woods Agreement and the International Monetary Fund (IMF). His theory continued to grow in popularity and caught on with the public. After his death, however, critics began attacking both the macroeconomic view and the short-term aims of Keynesian thinking. Forcing spending, they argued, might keep a worker employed for another week, but what happens after that? Eventually the money runs out and the government must print more, leading to inflation.

This is exactly what happened in the stagflation of the 1970s. Stagflation was impossible within Keynes' theory, but it happened nonetheless. With government spending crowding out private investment and inflation reducing real wages, Keynes' critics gained more ears. It ultimately fell upon Milton Friedman to reverse the Keynesian formulation of capitalism and reestablish free market principles in the U.S. (Find out what factors contribute to a slowing economy, in Examining Stagflation and Stagflation, 1970s Style.

Your next statement really surprised me...

Quote:

Originally Posted by 13ball

But by 1981, oil prices were dropping and improvements in efficiency were making gas prices drop even more. That allowed monetary policy to work on the inflation problem. Reagan did his part by cutting taxes. The recession was over quickly once interest rates started coming down and pent up demand drove growth.

Obama has done the exact same thing Reagan did, and the situation has not gotten much better. There's no pent up demand now (or, I think there is some, but it hasn't emerged yet.)

You might want to think about why the results are different when Obama has done the same thing that Reagan did.

Obama hasn't done the "exact same thing" as Reagan. Their approaches aren't mutually exclusive, but they are extremely different. Obama exploded borrowing and spending (Keynesian-style stimulus), increased regulation uncertainty (Dodd-Frank, Obamacare), expanded entitlements (Obamacare), and wealth redistribution (Making Work Pay). How are these the "exact same thing" Reagan did?

JrJr · 06-09-2012, 11:14 PM

Quote:

Originally Posted by Turn Prophet

If you can't be bothered to learn economic history, I don't see the point of continuing this discussion. You aren't at all familiar with the deflationary spirals, specie shortages, banking crises, recessions, panics, and monetary struggles of the US during the 19th century?

This is a non-answer. I'm very familiar with the downturns of the 19th century which is why I made the challenge. Nothing comes anywhere close to The Great Depression before it happened. I'm offering you the chance to prove me wrong. Give me a camparable time.

Moreover, we never had an inflationary period like we did in the late Seventies / early Eighties. This too you can prove me wrong on if you can find another period like that.

We got onto this subject because you presume inflationary policy with fiat currency is a generally accepted positive that everyone agrees on and presented another non-answer to backing this claim up. I responded by asking about the 19th century for which you again gave no specificity. Just provide some evidence that shows worse downturns than The Great Depression before The Fed's creation and you will have effectively proved your point.

bernie · 06-10-2012, 04:34 PM

List of recessions.

http://en.wikipedia.org/wiki/List_of..._United_States

b

Turn Prophet · 06-10-2012, 05:32 PM

Quote:

Originally Posted by JrJr

Nothing comes anywhere close to The Great Depression before it happened. I'm offering you the chance to prove me wrong. Give me a camparable time.

This was NOT the original challenge. You're goalpost shifting. It was originally 1980 vs. 2008, and now it's the Great Depression, the biggest economic disaster of the modern era? Obviously nothing was as severe as the Depression of the 1930s in terms of the number of problems and the fact that it happened in a largely globalized economy. But that does not mean there were not very severe recessions before that, caused largely by or correlated with severe deflation, not inflation.

Quote:

Moreover, we never had an inflationary period like we did in the late Seventies / early Eighties. This too you can prove me wrong on if you can find another period like that.

http://en.wikipedia.org/wiki/File:US...on_Ancient.svg

The 1980 inflation levels came after a longer sustained period of inflation caused by poor monetary policy, but it was not the most severe instance of inflation. There were much more severe spikes earlier, in era before your hated "fiat" currency, back when there was a gold standard, which is effectively no monetary policy.

Chips Ahoy · 06-10-2012, 06:24 PM

Quote:

Originally Posted by Turn Prophet

http://en.wikipedia.org/wiki/File:US...on_Ancient.svg

It looks like war causes inflation.

cres · 06-10-2012, 07:32 PM

it definitely has a solid impact on economies, internal and external.

whodathunkit

JrJr · 06-11-2012, 04:52 PM

You:

Quote:

Originally Posted by Turn Prophet

Not if you have a growing population. Even the monetarists are agreed on the need for a small, gradual rate of inflation to account for population and productivity changes. And during recession cycles, an expansionary monetary policy helps prevent the extension of depression cycles.

Me:

Quote:

Originally Posted by JrJr

So should I assume the periods of peacetime between 1774 and 1913 (creation of the Fed) were full of horrible downturns eclipsing The Great Depression? Mass unemployment and soup lines? No innovation or expansionary periods likeThe Industrial Revolution?

Or was there no "expanding population" during this period?

I honestly love when the case is made for the Fed and "modest inflation" (as though that's ever locked into place), because it is often presented in a fiat-only paradigm.*

You:

Quote:

Originally Posted by Turn Prophet

If you can't be bothered to learn economic history, I don't see the point of continuing this discussion. You aren't at all familiar with the deflationary spirals, specie shortages, banking crises, recessions, panics, and monetary struggles of the US during the 19th century?

Me:

Quote:

Originally Posted by JrJr

This is a non-answer. I'm very familiar with the downturns of the 19th century which is why I made the challenge. Nothing comes anywhere close to The Great Depression before it happened. I'm offering you the chance to prove me wrong. Give me a camparable time.

You:

Quote:

Originally Posted by Turn Prophet

This was NOT the original challenge. You're goalpost shifting. It was originally 1980 vs. 2008, and now it's the Great Depression, the biggest economic disaster of the modern era? Obviously nothing was as severe as the Depression of the 1930s in terms of the number of problems and the fact that it happened in a largely globalized economy. But that does not mean there were not very severe recessions before that, caused largely by or correlated with severe deflation, not inflation.

You're the one who brought this into a larger discussion of the virtues of fiat meddling with currency. I was following your lead, not the other way around. If you want to keep this isolated to comparing Reagan and Obama, quit making grand economic statements and insisting it an agreed upon axiom by "even the monetarists." This wastes both our time because you either forget or flatly deny you brought this into play and insist that I took us there once it clear it can be challenged effectively.

JrJr · 06-11-2012, 05:49 PM

http://en.wikipedia.org/wiki/File:US...on_Ancient.svg

Quote:

The 1980 inflation levels came after a longer sustained period of inflation caused by poor monetary policy, but it was not the most severe instance of inflation. There were much more severe spikes earlier, in era before your hated "fiat" currency, back when there was a gold standard, which is effectively no monetary policy.

I can't find the methodology of this graph. Can you cite the source?

seattlelou · 06-11-2012, 06:26 PM

Historical inflation, using data from [1] (pre-1913: McCusker study; post-1913: CPI)
Pre-1774 data can be found in How Much is that in Real Money?: A Historical Price Index for Use as a Deflator of Money Values in the Economy of the United States [0-944026-33-8] McCusker (not shown in linked source)

neg3sd · 06-11-2012, 07:55 PM

Quote:

Originally Posted by 13ball

Deflation can be worse than inflation.

We live in the worst of all possible worlds. Inflation in life's necessities. Deflation in large ticket items.

JrJr · 06-12-2012, 02:10 PM

Great timing for a country that went Obama-style stimulus first (failed), then Reagan-style tax cutting second -- with some added Tea Party style government shrinkage For The Win!

Baltic Tiger Takes A Bite Out of Paul Krugman

bernie · 06-12-2012, 03:25 PM

Quote:

Originally Posted by JrJr

Great timing for a country that went Obama-style stimulus first (failed), then Reagan-style tax cutting second -- with some added Tea Party style government shrinkage For The Win!

Baltic Tiger Takes A Bite Out of Paul Krugman

Good thing they spend so much on military. Oh wait. 2.9% compared to US 4.7%.

btw...ever notice with great spending reduction poverty rates seem to rise?

http://www.baltic-course.com/eng/analytics/?doc=43191

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According to the report, the share of people at-risk of poverty has grown constantly during the past few years in Estonia and is reaching nearly 20%.

b

JrJr · 06-12-2012, 06:21 PM

Quote:

Originally Posted by bernie

Good thing they spend so much on military. Oh wait. 2.9% compared to US 4.7%.

btw...ever notice with great spending reduction poverty rates seem to rise?

http://www.baltic-course.com/eng/analytics/?doc=43191

b

So what explains all the increase in poverty that corresponds with the increase in government spending?

Turn Prophet · 06-12-2012, 06:43 PM

Quote:

Originally Posted by JrJr

So what explains all the increase in poverty that corresponds with the increase in government spending?

Because the vast majority of government spending in the US helps the wealthy, not the poor.

neg3sd · 06-12-2012, 08:10 PM

http://www.economicpolicyjournal.com...7-2010-on.html

Quote:

U.S. Wealth Fell 38.8% In 2007-2010 On Housing

Obviously this isn't entirely Obama's fault. He must bare a large part of the responsibility.