Comments on: Printing Money Confirmed

By: Pelon

Pelon — Tue, 03 Feb 2009 18:47:55 +0000

Monyelover,

You may be right that we need a stimulus, but I find your arguments unconvincing. If I read your statements correctly, we can’t believe the ideologs on the one side because they are deluded by their ideology, but we can believe the ones on the other side because their claims have been proven. How exactly have those claims been proven? By the idealogs on the other side finding data that supports this belief? To accept your position that we know what ended the Great Depression is to accept the position that the Nobel prize winners on the fiscal stimulus side of the argument are smarter than the Nobel prize winners on the other side. That only makes sense if you are biased towards the fiscal stimulus argument. Personally, I think both sides make compelling arguments, but there is simply not enough good data to draw a definitive conclusion.

By: monyelover

monyelover — Tue, 03 Feb 2009 15:07:11 +0000

Beware of any economist who puts a prefix on his professional designation, as in “Keynesian” or “conservative” or “free-market”. It’s pretty obvious to all but knee-jerk ideologs and the terminally ignorant that the government must try to stimulate the economy, otherwise it will be The Great Depression II. Objective economists have a pretty good idea as to what policies will have a stimulative effect. Just because you can’t measure all the effects of every idea precisely doesn’t mean you shouldn’t do it. As to when it is needed: Now and for the foreseeable future.
Why do all the same clowns who say the Great Depression didn’t end until WWII understand that massive government spending is necessary now? (Why do they cling to their trickle-down theories that have led us into this mess?) At that time the feds took over the economy: They rationed consumer goods, made high profits a felony, raised marginal taxes on the rich to 95%, and sent the debt to GDP ratio to record levels. Yes, the downturn recurred – when in the late 1930s FDR tried to change the policies he so successfully implemented in the early 1930s. So when it fits their ideology, the usual ideologs say don’t spend, when it serves to denigrate their political enemies, they point to a period when everything they claim was, by those same claims, disproved.

By: Manshu

Manshu — Mon, 02 Feb 2009 11:24:37 +0000

Quantitative easing would be printing money, where the Fed issues a credit to banks through the NY Fed. That’s what Japan did in the 90’s quite a bit.

I agree with Pelon that the situation is so complex that it is really impossible to judge what kind of stimulus is needed, how much and when.

By: Pelon

Pelon — Sat, 31 Jan 2009 15:07:19 +0000

I don’t think there is anyway to really know whether or not a stimulus plan is a good idea. There are studies that show an increase in government spending results in a greater economic benefit. There are studies that show that an increase in government spending actually reduces the economic benefit. The same is the case for tax decreases. The problem is that the number of variables in the economy are too numerous to model, and the variables we do model are subject to input bias.

If we do implement a stimulus plan, there is no way to measure its effectiveness. Let’s say we implement a stimulus plan, and unemployment rises to 10%. An opponent of the plan will state that we wasted a bunch of money and didn’t make anything better. An advocate of the plan will say that if we had done nothing, unemployment would have been 12%. Who would be correct? The only way to know for sure would be to re-run the experiment over and over again changing that one variable. That isn’t possible. Some will claim that we can look at the economic data to determine whether the stimulus worked, but we’ve been looking at the data on the Great Depression for 70 years, and economists still can’t agree on whether the New Deal helped or hurt.

By: TFB

TFB — Fri, 30 Jan 2009 16:15:14 +0000

Weakonomist - I asked exactly that question in my previous post about the interview with Krugman on Fresh Air: What Does Printing Money Mean? There's a good discussion there.

By: Mr. ToughMoneyLove

Mr. ToughMoneyLove — Fri, 30 Jan 2009 15:16:11 +0000

Earlier this week the Fed stated that it was about start a program of purchasing Treasury debt obligations. The technical term for this is “monetizing the debt”, i.e., using the Fed’s balance sheet (and government money) to purchase government debt. That is “printing money” in its purest form within out monetary system. If you asked either of these economists about that, they would have to agree.

By: The Weakonomist

The Weakonomist — Fri, 30 Jan 2009 15:12:37 +0000

By printing money what exactly does he mean? I don’t think they are handing out sheets to homeless people and no one is handing me a stack as I walk into my bank. I think the term us being overused. NPR should spend less time interviewing PhDs and more time finding out what “printing money” actually means.