You need to quit trying to boil things down to conservative ideology talking points -- the size of government is largely irrelevant to the choices faced in an economic downturn. The only people who care are right-wingers who try to drag it into everything.
1) Oversimplification, read an intro to economics book about how the chain of lending actually creates more dollars and wealth without just printing them
2) Not addressing what I was saying. The size of government is irrelevant here, we're talking about stimulus spending -- totally orthogonal.
3) Not addressing what I was saying in the slightest.
It is in fact almost universally agreed that in both of those cases, the government spending was too little too late. By the vast majority of economist who've spent their lives studying this.
Maybe your "gut feeling" is smarter than their decades of research. But I'd suggest you read this: http://www.xkcd.com/675/
EDIT: I'll add a history lesson so we can all learn something today.
1929 - stock market crashes
29-32 - hoover does nothing, economy spirals downwards
32 - FDR elected, massive counter-cyclical public works projects, economy recovers
37 - FDR raises taxes and cuts back on spending as an austerity measure, too early, double-dip
In the case of Japan, similar story except the high savings rate exacerbated it, leading to deflation -- the government printing money and handing it out on a street corner would have been more effective than what they did
I presume that views are either "ideology talking points" or "universally agreed-upon facts," right? Case closed!
I have read intro econ textbooks. The notion that taking a dollar from one party and giving it to another party creates wealth is absurd. At best, you can argue that it will debase the currency (if not, why doesn't it work with any commodity? You can say that if we confiscate X amount of wealth, and give it away, it turns into 2X amount of wealth. But if the wealth is denominated in, e.g., gold, or houses, or publishing rights, it doesn't have similar fecundity.)
Thank you for the comic. It ably makes your point. However, we're talking about a social science, which is at least partially influenced by the need for grants, public approval, speaking engagements, etc. You can't just put the Depression in a supercolider and run tests on it. Because of this, it's more analogous to other ideological popularity contests, like English Lit and Scientology. People have spent decades studying both of those, but it hasn't made them great writers or superhumans. Similarly, economists who study lots of Keynesian economics don't end up making awesomely profitable global macro trades--even Keynes was smart enough to invest based on something other than his own philosophy.
Hoover's spending was unprecedented. It was hardly "nothing". Another timeline to consider:
Dawn of time-Present: Governments attempt to control currency, typically lead to inflationary bubbles, followed by busts.
> 2) Not addressing what I was saying. The size of government is irrelevant here, we're talking about stimulus spending -- totally orthogonal.
Actually, it's not orthogonal. In fact, it's quite on point, as stimulus spending tends to become permanent spending, that is, part of govt.
We don't have counter-cyclical spending in the US. We have huge increases during down times and smaller increases during up times. Occasionally the private growth during up times exceeds govt growth. However, it's basically a one-way ratchet.
Sigh, well if you're determined to bring silly ideology into everything, of course you can find a way to relate it. But it's entirely beside the point, unless we take your assumptions as gospel (they're not). Adding "but I think this will happen" when it is in no way mandated or apparent doesn't change the facts.
We do in fact have counter-cyclical spending. You're seeing it now. Obama already announced a spending freeze on domestic programs, so we'll be seeing federal domestic spending decrease in real terms over the next few years.
If you're wondering the last time that federal spending decreased in real terms? It's not "never". It's "the 1990s". (protip: inflation is relevant).
> But it's entirely beside the point, unless we take your assumptions as gospel (they're not).
I didn't "assume" that US govt spending grows monotonically in the past. I observed it. If you think that my observation is incorrect, let's see supporting data.
> Adding "but I think this will happen" when it is in no way mandated or apparent doesn't change the facts.
I didn't say that monotonic spending increases are mandated - I said that they happened. If you're going to claim that this time will be different, you get to explain why.
> We do in fact have counter-cyclical spending. You're seeing it now. Obama already announced a spending freeze on domestic programs
Actually, he didn't. He announced a freeze on some types of discretionary spending. That "freeze" excludes the vast majority of the budget and the places where the increases have been occurring.
Similar "freezes" have been announced in the past and didn't happen. Since this one isn't actually reducing spending (contrary to the "now" claim), it's somewhat silly to assume that this time will be any different until it actually is.
> If you're wondering the last time that federal spending decreased in real terms? It's not "never". It's "the 1990s". (protip: inflation is relevant).
I didn't say "never", I said almost never.
The 90s drop came from decreased military spending due to the end of the cold war. The military budget is now small enough that plausible future cuts are less than planned increases in other spending. In other words, that's a one-time event.
1) Oversimplification, read an intro to economics book about how the chain of lending actually creates more dollars and wealth without just printing them 2) Not addressing what I was saying. The size of government is irrelevant here, we're talking about stimulus spending -- totally orthogonal. 3) Not addressing what I was saying in the slightest.
It is in fact almost universally agreed that in both of those cases, the government spending was too little too late. By the vast majority of economist who've spent their lives studying this.
Maybe your "gut feeling" is smarter than their decades of research. But I'd suggest you read this: http://www.xkcd.com/675/
EDIT: I'll add a history lesson so we can all learn something today.
1929 - stock market crashes 29-32 - hoover does nothing, economy spirals downwards 32 - FDR elected, massive counter-cyclical public works projects, economy recovers 37 - FDR raises taxes and cuts back on spending as an austerity measure, too early, double-dip
In the case of Japan, similar story except the high savings rate exacerbated it, leading to deflation -- the government printing money and handing it out on a street corner would have been more effective than what they did