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Friday, March 01, 2013

What "austerity"?

Paul Krugman appears to be moderately pleased that another bearded Scots-Irish hippie has publicly joined the ranks of the anti-austere.
Will it make any difference that Ben Bernanke has now joined the ranks of the hippies?  Earlier this week, Mr. Bernanke delivered testimony that should have made everyone in Washington sit up and take notice. True, it wasn’t really a break with what he has said in the past or, for that matter, with what other Federal Reserve officials have been saying, but the Fed chairman spoke more clearly and forcefully on fiscal policy than ever before — and what he said, translated from Fedspeak into plain English, was that the Beltway obsession with deficits is a terrible mistake.

First of all, he pointed out that the budget picture just isn’t very scary, even over the medium run: “The federal debt held by the public (including that held by the Federal Reserve) is projected to remain roughly 75 percent of G.D.P. through much of the current decade.”

He then argued that given the state of the economy, we’re currently spending too little, not too much: “A substantial portion of the recent progress in lowering the deficit has been concentrated in near-term budget changes, which, taken together, could create a significant headwind for the economic recovery.”

Finally, he suggested that austerity in a depressed economy may well be self-defeating even in purely fiscal terms: “Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.”
Speaking of the Federal Reserve, I note the following numbers:  526.5    560.9    465.4    338.4    378.7    261.4    477.8    344.5    390.1    367.8    260.3    92.7    389    326    398.3    198.2    229.8.

Those are the numbers, in billions, that represent the quarterly increase in federal debt as reported by the Federal Reserve's Z1 credit report.  That is a $6 trillion INCREASE in just over four years, which more than doubled the federal government's outstanding debt.  There is no austerity.  In fact, the idea that the sequester somehow amounts to imposing austerity is rather like a drunk claiming that because he did 20 shots last night and planned to do 24 shots tonight, only doing 22 shots represents teetotalism.

They simply don't make ascetics like they used to.

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43 Comments:

Anonymous Jack Amok March 01, 2013 1:08 PM  

We'd all be a lot better off if Krugman and Bernanke were growing pot in Southern Humboldt county.

Anonymous Josh March 01, 2013 1:10 PM  

fact, the idea that the sequester somehow amounts to imposing austerity is rather like a drunk claiming that because he did 20 shots last night and planned to do 24 shots tonight, only doing 22 shots represents teetotalism.

Jamie?

Anonymous Crispy March 01, 2013 1:44 PM  

we’re currently spending too little, not too much
...thus setting up the excuse: we didn't spend enough and that's why we've had a Lost Decade. He's learned from Krugman. Give the man a Nobel Prize!

Anonymous Stilicho March 01, 2013 1:59 PM  

...Scots-Irish...

Hey now, no self-respecting Appalachian-American would let Bernanke or Krugman into his home.

Blogger Unknown March 01, 2013 2:08 PM  

VoxDay doesn't think on the margin.

Anonymous Orion March 01, 2013 2:17 PM  

"Hey now, no self-respecting Appalachian-American would let Bernanke or Krugman into his home."

Unless they were mounting their heads as trophies.

Blogger James Dixon March 01, 2013 2:34 PM  

> Unless they were mounting their heads as trophies.

Those go on pikes outside. As a warning.

Anonymous John Regan March 01, 2013 2:38 PM  

I don't know how they can keep the circle jerk - buying up treasuries with newly minted money - going before it all falls apart. It will all fall apart, no doubt. The only question is when.

In this fiat monetary system the government is the borrower of last resort. The explosion of federal debt was thus predictable, and indeed predicted. It was so easy to see because it is the politically easy thing to do in the "short term", however long that happens to be.

At some point debt will be canceled. That, or we really will have a brutal "austerity", which amounts to the denouement of civilized life in the US. Truthfully, I think the latter is a political and social impossibility, so it will be the former, in some manner yet to be determined.

We live in interesting times.

http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-edition-part-i/

http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-edition-part-ii/

http://strikelawyer.wordpress.com/2011/12/27/saving-the-world-revised-edition-part-iii/

Anonymous Idle Spectator March 01, 2013 2:45 PM  

There is no austerity. In fact, the idea that the sequester somehow amounts to imposing austerity is rather like a drunk claiming that because he did 20 shots last night and planned to do 24 shots tonight, only doing 22 shots represents teetotalism.

Are you following me around Vox?

Anonymous Stilicho March 01, 2013 2:50 PM  

OT: this comes up a lot around here, so quite a few of the Ilk will find this discussion of military support for constitution interesting. Armchair generals, start your engines.

Anonymous Stilicho March 01, 2013 2:52 PM  

Those go on pikes outside. As a warning.

Indeed. Plus, you just don't have the option of nailing the horns to the wall of the barn or shed in this case.

Anonymous Porky? March 01, 2013 3:30 PM  

You don't think they can ease this sucker in for a hard landing?

Anonymous Huckleberry - est. 1977 March 01, 2013 3:38 PM  

Jamie wouldn't stop at 22, he'd congratulate himself on moderation then shoot four more in celebration of moderation to reach 26.

Blogger James Dixon March 01, 2013 3:42 PM  

> You don't think they can ease this sucker in for a hard landing?

Not really, no. I think we're well past that point.

Blogger Giraffe March 01, 2013 3:46 PM  

We will get our austerity in the long run.

Anonymous DT March 01, 2013 3:51 PM  

You don't think they can ease this sucker in for a hard landing?

If by "ease" you mean "full throttle dive" and by "hard landing" you mean "crash into the mountain"...then yeah, I think they can ease this sucker in for a hard landing.

Anonymous Idle Spectator Jackson March 01, 2013 3:52 PM  

Itsss okey yall!!!

obama gu na pay the morgages ghettofabulous.

I gots bit introuble lately wit my baby mamas, but no foul. hotlanta in dis shit for everyone!

Anonymous Will Best March 01, 2013 3:54 PM  

If Japan is any indication we can keep the party rolling for another 15 years. Longer if USD isn't dumped as the world reserve currency.

Blogger foxmarks March 01, 2013 3:54 PM  

I wonder if profligacy is even possible in the Krugman-Bernanke universe.

Blogger Giraffe March 01, 2013 3:58 PM  

If Japan is any indication we can keep the party rolling for another 15 years. Longer if USD isn't dumped as the world reserve currency.

Um.. The party ended five years ago. Your talking about extending the hangover.

Anonymous Idle Spectator March 01, 2013 3:58 PM  

If Japan is any indication

It's not.

Anonymous Porky March 01, 2013 4:00 PM  

obama gu na pay the morgages

Ya know, this actually would have been real stimulation.

Monetizing debt and rewarding big banks... not so much.

Anonymous Idle Spectator Jackson March 01, 2013 4:03 PM  


real stimulation?

is dat were they stick ur jimmy in the mouth roof?

Anonymous Porky March 01, 2013 4:08 PM  

...stimulus - for all you Freaknik attendees.

Blogger Laramie Hirsch March 01, 2013 4:18 PM  

Vox,

I'm no economic genius. But I do pay attention to players and commentators.

Have you heard about Webster Tarpley? He rails against "pro-austerity Ron Paul supporters," and he decries the willing destruction of many government services we worked a generation to acquire. I know he sounds liberal. But I think it's more complicated than just branding him in that way. He is very anti-austerity.

Vox, do you have an opinion on the thoughts of Webster Tarpley?

Does any of the Dread Ilk have an opinion of him?

His stuff can be read/seen/heard over at tarpley.net.

Anonymous Josh March 01, 2013 4:33 PM  

Tarpley is a greenbacker fool. Tom woods and Bob Murphy have done takedowns of him.

Anonymous Anonymous March 01, 2013 4:35 PM  

He then argued that given the state of the economy, we’re currently spending too little, not too much: “A substantial portion of the recent progress in lowering the deficit has been concentrated in near-term budget changes, which, taken together, could create a significant headwind for the economic recovery.”

Finally, he suggested that austerity in a depressed economy may well be self-defeating even in purely fiscal terms: “Besides having adverse effects on jobs and incomes, a slower recovery would lead to less actual deficit reduction in the short run for any given set of fiscal actions.”

So should I interpret that as Berneke saying that the government has to spend money to make money? That they should spend more so they can make more even though the amount the government would get in return is less than what was spent to get it?

What could possibly go wrong with that?

Anonymous Josh March 01, 2013 4:35 PM  

Murphy on tarpley:

http://consultingbyrpm.com/blog/2012/06/prison-break-from-the-historical-narrative-of-webster-tarpley.html

Blogger Nate March 01, 2013 4:56 PM  

Ahem...

http://bloggerblaster.blogspot.com/2013/03/the-great-inflation-debate-trap.html


I don't need a week.


Lets move this along.

Blogger Unknown March 01, 2013 5:07 PM  

The Scots-Irish (of which I am one) may be not be all that bright for the most part, and drunken crazed redneck hillbillies, but they're not traitors and cowards, which are two of the man characteristics of the
"Scots-Irish" tribe to which you refer.

Anonymous cherub's revenge March 01, 2013 6:18 PM  

American policy and media 2013:

A Jew reporting a Jew making a decision after a discussion between two Jews regarding what another Jew said about something written by a different Jew.

Anonymous paradox March 01, 2013 6:19 PM  

Born Fighting is a good book on us redneck-Americans.

Anonymous T14 March 01, 2013 7:07 PM  

Wholly off-topic, but seems in line with the general interests of the blog.

http://defensedistributed.com/

Anonymous bob k. mando March 01, 2013 7:19 PM  

this is a joke about how by importing other cultures and nationalities they are magically assimilated to the culture of the host country via the magic of geography?

cuz i gotta tell ya, i haven't ever seen a yarmulke at the highland games.

Anonymous Anonymous March 01, 2013 8:15 PM  

But, listen to the words, man! Listen to the words!

Anonymous Stilicho March 01, 2013 8:36 PM  

The Scots-Irish (of which I am one) may be not be all that bright for the most part, and drunken crazed redneck hillbillies, but they're not traitors and cowards, which are two of the man characteristics of the
"Scots-Irish" tribe to which you refer.


NABSIHALT

Anonymous The other skeptic March 01, 2013 10:32 PM  

Newspaper from 1970 claiming that Nixon wanted to cut $1B from Defense spending

No wonder he was paranoid and was forced to resign.

Anonymous The other skeptic March 01, 2013 11:39 PM  

Looks like black homosexuals are solving the gay problem and perhaps white homosexuals will also.

Anonymous James May March 02, 2013 12:59 AM  

Don't worry, it's a circle jerk of compassion. You saying that about black homosexuals will outrage Balzi and he'll make more t-shirts of transgendered rabbits and give the money to black homosexuals to make videos they distribute to white, straight high schools which really solves the problem.

Okay, maybe it's a circle jerk of failure, but they sho' knows how to write the science fiksh novels about LBGT in non-white locales 400 years in the future so there's that.

Anonymous stg58/Animal Mother March 02, 2013 1:29 AM  

I am one of the founders, and I sit on the Board as well.

Anonymous Koanic March 02, 2013 9:34 AM  

They don't make good ascetics anymore because you have to eat paleo or at least not industrial to fast easily.

Anonymous The other skeptic March 02, 2013 12:54 PM  

“All of us agree that the city has serious financial challenges which must be addressed, however I fundamentally disagree with taking measures that disenfranchise the families I represent in Detroit,” Peters said, in a statement.

I am more than happy for the voters of Detroit to drive it further into the ground. Illinois should stop funding Detroit, of course.

Blogger The Aardvark March 02, 2013 6:30 PM  

it is amusing that as a high school senior, Ben Bernanke starred in the play "Hip Hippie Hooray". He was the commune leader "Commander Brotherhood".

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