Updates

by on December 24, 2008 at 7:08 am in Economics | Permalink

Martin Feldstein argues that military spending should be part of the stimulus
package

Jacob Hacker argues that health care reform should be part of the stimulus
package

Zoo and Aquariums Look for Slice of Stimulus Pie

Keep in mind that no matter what your view of health care reform, the goal of our next round of health care policy changes should not be to spend as much money on labor costs as quickly as possible.

This is an object lesson — in progress — of how bad decisions end up getting made. 

There will be no slice of stimulus pie for me this Christmas, though perhaps we will manage tamales de elote.

1 a person December 24, 2008 at 7:54 am

I think the last appropriate avenue for stimulus money is towards 0-utility military projects.

A good list of stimulus priorities:

1.) Unexpected payroll tax reduction

37.) Money to infrastructure like roads and bridges (wait didn’t we already overbuild that stuff? Or was this only true when oil was triple what it is now)

5613.) MORE MILITARY SPENDING.

Nobody actually enjoys fences. They enjoy the things that the fences protect. Our fence does not need to be higher and thicker.

2 MichaelG December 24, 2008 at 8:33 am

Mish says that the TALF will now be handling securitized auto loans as well as dealership floorplan loans. He think the Federal government will end up owning a lot of auto dealerships…

http://globaleconomicanalysis.blogspot.com/2008/12/fed-destined-to-become-worlds-largest.html

Now there’s a plan!

3 a student of economics December 24, 2008 at 10:19 am

Here’s another way to think of the situation.

The CPI had the largest drop since 1947 last month. But, the threat of deflation doesn’t need to be a problem. It can be a huge opportunity.

Seigniorage is the answer.

Print money and retire gov’t debt. When consumers and businesses hold more cash (instead of interest bearing securities) they will want spend that money and that will increase demand, and put idle resources back to work. While we’re at it, re-start some of those government infrastructure projects that were put on hold. Pay for them by printing money. For good measure, give everyone a tax cut and pay for that by printing money, too.

Keep printing money, paying off our debt, investing in infrastructure, and cutting taxes until deflation ends and we have moderate (1-3%) inflation.

Yes, it’s a free lunch. More gov’t spending and lower taxes but less gov’t debt.

That’s what happens when resources are idle. Putting them to work creates value at no ones expense.

It’s not that often we can literally print money without negative consequences. Let’s enjoy it while we can.

4 Grant December 24, 2008 at 11:15 am

That’s what happens when resources are idle. Putting them to work creates value at no ones expense.

…assuming those resources aren’t idle for good (costly) reasons.

5 Anonymous December 24, 2008 at 1:22 pm

It’s not that often we can literally print money without negative consequences. Let’s enjoy it while we can.

Once upon a time, the US had Reaganomics. Now, I suppose, we’ll have to settle for Gononomics.

6 notedscholar December 24, 2008 at 6:39 pm

Military spending as PART of the budget? No thanks. Military spending should be CUT in the stimulus package, no matter what your arguments are.

It’s very bloated. Like 20 times every other country combined, last time I checked.

And as Ha-Joon Chang has demonstrated, investing in schools and other infrastructure is much more beneficial for society.

NS
http://sciencedefeated.wordpress.com/

7 Alan Brown December 25, 2008 at 12:59 am

We need military spending stimulus now? 2 wars and troops in every other country simply not costing enough?

This all reminds me of a family that have all lost their jobs and who have decided to run up their credit cards and go bankrupt as a way to get money.

I wonder if Madoff is this inspiration for the national Ponzi scheme we have going? Who will be left holding the bag I wonder?

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