now DC, i understand that you are pissed off about the recession, and all the corruption involved, BUT to day that the 5,000,000,000,000 spent was worthless is not true.

the stimulus did work in that it saved jobs by way of avoiding a depression. Krugman may actually be correct in saying that more stimulus would help the US economy escape from its current stagnation. I look at Germany as my reason for saying this. Germany has benefited greatly from the devaluation of the euro brought about by the excessive spending of the PIGS.

The equation is pretty simple really, a cheaper currency boosts domestic manufacturing by decreasing export costs relative to other nations currency which should be increasing relatively. So while the euro dropped, Germany exported more bc their cars cost less around the world, but within the domestic European market Germany's purchasing power increased relative to other EU countries.

That being said i dont have any problems with the US spending 3 trillion more on stimulus ON ONE CONDITION: that the increased spending is tied to budget cuts AND increased tax revenue down the road.

To make a simple analogy, I can borrow as much money for my business as someone is willing to give me. As long as I budget prudently and invest that money wisely (which is the main point that DC is getting at) then it really shouldnt matter how much i borrow as that loan should be paid back in the future, while also giving me the benefit of upgrading my business so that i generate more income.

If we hadnt run the stimulus the economy would have collapsed and all the music would have stopped playing. Im glad that didnt happen. Lets just put a damn plan together to balance this budget over the next 5-10 years.

Pce

/agree

@TC,

I agree that devaluing ones currency will boost exports. But at what expense? I would venture that you are paying for those gains with greater losses in other areas of the economy. For example; decreased buying power of consumers/businesses, increased interest rates on loans, and decreased demand for the said currency. All these things effect the nation as a whole.

Lastly I will add, the government/Fed is essentially experimenting with central planning; it is just doing so by using monetary policy. The effect is the same though; the government is controlling the flow of capital to specific businesses.

Central Planning might be able to give you a short term success here and there; but the long term is a sealed deal; total collapse.

And BTW; I disagree with the concept that stimulus was needed to avoid total collapse in 2007-2008. I haven't seen any evidence of this. I've asked everyone who claims this theory for evidence and it all boils down to so and so ensured us it was the truth. It's time to ask these tough questions; or all is lost.

questions are good, and we will just have to disagree about 2008.

it really all comes down to confidence when any currency is the medium, be it gold, fiat or barter.

do you have confidence in the exchange of value?

IMO some/most banks were fucked and that creates a run on the banks, which exhausts leverage, which causes reserve call which exposes the fractional banking system for what it is.

But whatever i think about that if someone is willing to sell me something for a piece of paper, then it works.

ill respond with more after class.
holla

Thanks; I'll wait for the rest before commenting.

I myself do not have much confidence in the US Dollar (or any fiat currency; for that matter). However I do hold a bunch of money in dollars; because of the liquidity. Personally I would prefer a dollar backed by gold/etc.

Btw; wow; Ron Paul is really running hard this cycle. Check out this campaign ad. Looks like it actually has some production value added.

http://www.youtube.com/watch?feature=player_embedded&v=UUNIeOB0whI