The GW debate will go on and on and on, I would guess, until important parts of the world are underwater and have to be evacuated. By then of course it will be too late to do anything. Live and learn. LOL Lots of people say that snow in the UK proves the world is getting colder. Nothing like some snow to decide a scientific issue. Of course when London has a heatwave next summer and people die in France from no air conditioning, lots of people will say the opposite. And so it goes, back and forth and back and forth., etc., etc., etc.
Global Warming go away? Not likely. It’s a subject that everyone can have an opinion on without actually knowing a damn thing. Don’t you ever get tired of being the only person in the discussion who actually has taken the trouble to learn something about it?
BTW, we may be going to have an opportunity to get some modern data on the affects of changes in solar activity on climate.Sun Spot Cycle 23 is very late and remains quite weak. The current Sunspot number is 14 — which translates to one visibile sunsport. The number of 0 sunspot days between cycle 22 and 23 stands at 772 vs 485 typical. Welcome to the second “Little Ice Age” … maybe.
(But that surely doen’t mean that we can forget about global warming. Even if the sunspots go away and the earth cools a bit, they will most likely come back some day).
I don’t like it that every single Angry Bear regular that writes columns is for raising taxes and regulation. At some point on the diversity of opinion scale you pass “slightly left of center” and reach the point of “ultra left hillbillies”.
Hey, weren’t you the one who the other day sided with Jed Clampett’s right to that bubbling crude? Black Gold. Texas “T”.
No one likes raising taxes, but it’s just one of those things that adults have to do. And we tried deregulation of the financial sector. It didn’t work. Even Alan “Ayn Rand is my hero” Greenspan admitted that it failed.
I don’t know about the “public” debates. I suspect that those who worry about global warming will just have to wait it out until those who are skeptics die off. The one thing about the global warming divide is that it’s highly generational…sort of like gay rights.
But in the academic world I think you’re seeing a shift away from “whether” global warming is in the cards and towards strategies to implement cap and trade. Just peruse the sheer number of new working papers each week on CO2 emissions over at the National Bureau of Economic Research. And no carbon intensive industry honestly believes that we won’t have some kind of cap and trade regime eventually. The problem is that they don’t know what kind of cap and trade regime we will have, and that is frustrating new investment. So I don’t think it will be too many years before industries begin to insist upon some kind of certainty about cap and trade in the same way that many industries today have become big supporters of govt involvement in healthcare. Businesses do not like uncertainty and that’s what they have right now.
You said to CoRev: “Don’t you ever get tired of being the only person in the discussion who actually has taken the trouble to learn something about it?” Over the years I have seen no evidence that CoRev understands time series analysis, no evidence that he understands stochastic processes, and no evidence that he understands systems of “coupled” differential equations with nonzero forcing terms, which is really the mathematical guts of climate science. In fact, a lot of the math in climate science models is actually quite similar to the differential equations that describe commercial fishing (that ought to send off alarms!) and predator/prey models in nature. Not really a surprise because these tend to be flow processes. What I have seen is a lot of eyeball analysis and a lot of confusion between stock variables and flow variables.
I don’t like it that every single Angry Bear regular that writes columns is for raising taxes and regulation.
The ramblings of an ultra right whack job. Look mate. Your political philosophy has failed, totally and dismally. Thirty damn years and the average American more or less where he/she was the day that buffoon Ronald Reagan took office. What part of IT DOES NOT WORK do you fail to understand? IMHO denial and insults are not an appropriate response to the discovery that the world does not work the way you would like it to. It’s really not the fault of those to your political left (which would seem to be just about everyone) that free-lunch economics doesn’t seem to work.
If you have some WORKABLE ideas on how we can improve the lot of the average American without regulation of the finance industry and higher taxes, by all means let’s hear them. But how about making some basic reality checks first?
Most large cities have a zone in a public park where nut jobs of various sorts can haul up a soap box and ramble senselessly about economics, politics, religion, poisoning the drinking water with Fluoride, the takeover of governence by Martian autonomons … whatever. Why don’t you get yourself something to stand on and join them?
Is it possible that your perspective is confused? Yesterday, you advocated Supply-Side strategies based on the success of China and India. As if liberalization will achieve the same results from any starting point. Somehow, you seem unaware of our starting point, a place that is the result of confused perspectives applied collectively.
Maybe you should try eliminating all of the name-calling, stereotyping, generalizing, presumption, and distorting of context from your comments. This will leave you with nothing to say for a time, but, that will afford you some much needed reading time.
Tangential, yes. But I would like to ask, if we spend billions to make drugs more affordable to the poor, where will we get the money to fight our war on Islam? Will we print the money? Probably. That’s an easy out. By all means we can’t stop our war, can we? If we did, think of what might happen to us: WMD raining down from the skies all over. I just get into a Bushpanic when I think of it.
The economic costs of sea level rise would be substantial. My guess, equivalent to several times the economic cost of World War II. Even the worst likely case of global warming is not remotely the end of the human race. Here’s a link to a map showing global climates in the Miocene based on fossil evidence. http://www.scotese.com/miocene1.htm The Miocene climate was probably somewhat similar to that projected by the global warming alarmists. Note that there are both winners and losers in the climate shifts. If would appear that the US and Canada would, on average, be winners with warm temperate climates as far North as James Bay. Note also that the continents have moved a bit, not all that much, since the Miocene.
Anyway, I am OK with limiting Carbon emissions because pumping huge amounts of CO2 into the atmosphere is unlikely to be a good idea, and we don’t seem to have a clue how to remove it should it prove to be a problem.
But if I had to pick an environmental problem that is going to cause major problems in this century, I’d vote for problems with fresh water supplies rather than global warming. A significant amount of the world’s economy is dependent on fossil water that is not being replaced, and surface supplies in many semi-arid regions are over-commited.
Why should we impose cap and pay goldman sachs which is what cap and trade would do, if we want to do the deal, just tax carbon, its much simpler, and avoids enriching the vampires of our economy!
There are really two different arguments going on right now. The problem is that “supply side” is being trumpeted by those on the know-nothing-right as the solution to all problems for all times. The principal economic problem in the US (and most of the world) is weak aggregate demand in the face of a liquidity trap. Policies that are designed to push out the supply curve simply do not make sense in that kind of environment. It’s bad enough that they address the wrong curve, but what’s worse is that they actually make the problem worse because a liquidity trap implies a locally upward sloping aggregate demand curve. The last thing you want to do is to push out the AS curve when the AD curve is locally upward sloping. Draw it up on a cocktail napking. The second thing floating around is whether or not supply side policies actually do push out the AS curve under full NAIRU employment. No doubt that excessively high tax rates discourage effort, and therefore shift the AS curve to the left. But a zero tax rate would also shift the AS curve to the left because a certain amount of govt is needed to have any economy at all. Likewise with regulations. You have to have laws that require transparency. You have to limit leveraging. You can’t allow banks to become too big to fail. Those things all undercut confidence in the economic system. And you also have to keep in mind that most of the growth in the AS curve does not come from capital investment or labor effort; most growth is “multifactor” growth (i.e., the residual in the Cobb-Douglas function), and it’s not at all clear that lower taxes and less regulation lead to higher rates of mulitifactor productivity. Remember, France, which is near the top in taxes and regulation also leads the US in hourly productivity.
2slugs, Codger, Lyle, et al of the Obama contingent, we will be able to judge the quality of your party’s policies very soon. At his point the US security policy is a travesty of failure, and has already killed more Americans than the Bush administration’s policy. Moreover, the “O” policy is so hypocritical, let’s give captured terrorists the rights of US citizens so that they can be tried in US courts, while sending more and more armed drones to kill suspected terrorists in their lairs, that it is unfathomable. If you don’t find Obama’s terrorits policies confusing, then you must be a liberal war mongering, baby killing fanatic.
The Obama economic policy seems to be tracking that of FDR, which some studies show might have extended the depression. We have had two recession within the decade and a comparison of the results from the past two administrations’ policies will be interesting.
Obama’s attempt to fight the GWOT has continued using the GWB policies.
Transparency and bipartisanship, two oft repeated Obama campaign primises, have been ignored from the beginning.
Healthcare reform, isn’t.
Deficit spending and tax increases, two more Obama campaign promises, are also completely ignored.
So to summarize, Obama is proving the truth of the claims that the Dem party is weak on US security and for taxing and spending. For his diminishing number of supporters it does not matter because for the short term they have the power to do the ?right? thing(s). Except the voters will have some say in that matter.
Nearly every person in the world nows that China has succeeded via “liberialization”, as you choose to put it. But I did not say ” they are not as open as us it must mean that their current success is not from liberalization in the form of cutting taxes and regulation.” This was part of your distortion of what I said. Your “analysis and expert opinion contradict” what you needed me to say to hide how foolish your argument was in its premise. Which is what I explained in my previous comment: “Yesterday, you advocated Supply-Side strategies based on the success of China and India. As if liberalization will achieve the same results from any starting point. ” You were essentially arguing that a move to the Right, as shown by China’s success, would improve our circumstances. And I tried to explain that for us to be more like China, we would need to move leftward in regards to industrial policy. (and I never mentioned India) So, now maybe you might be able to understand why I am not “wanting to comment on by quote from the CIA factbook that confirms what I said about China or the wiki quote on India”.
I know that your language skills are too elevated to use cliches, but does that also mean that you are unable to learn from them: “when you have dug yourself into a hole, STOP DIGGING.”
Wrong again (kidding), I don’t think you understood the Jed Clampett analogy. Jed wanted to move out of the missouri swamp and go to Beverly Hills; and the government if they took all his oil rent would have kept him there.
If this site can’t find a at least one reasoned supply sider its not worth spit.
You lost the point so i’m digging you a hole to hide in. A thank you would do. Your counter point was brainless. Obama wants a conservative leftward economic policy that piles on restraints and disincentives. This would take us down the road to stagnation. Thankfully, small business owners and the blue collar working man are starting to turn against him so we’ll be getting rid of many of his followers in the congress in the next election cycle.
***I don’t know about the “public” debates. I suspect that those who worry about global warming will just have to wait it out until those who are skeptics die off.***
Or until the alarmists either lose credibility or grow some more persuasive analytic skills and clean up their data.
***Over the years I have seen no evidence that CoRev understands time series analysis …***
Not as well as you do. On the other hand, I don’t seem much evidence that you understand the underlying physical realities as well as he does. And I give him a lot of credit for having looked at the evidence and come to a conclusion that is much more moderate than his politics would suggest.
*** What I have seen is a lot of eyeball analysis and a lot of confusion between stock variables and flow variables. ***
I’ll give you that. Confusing variables with their derivatives is a common problem in many discussions on this board. And not just about climate. A lot of people do it. Including me I expect although I try not to. I don’t recall CoRev doing that a lot, but if you say so, it’s certainly not impossible.
***In fact, a lot of the math in climate science models is actually quite similar to the differential equations that describe commercial fishing (that ought to send off alarms!) and predator/prey models in nature.***
You’re hypothesizing that there are breeding populations of anti-warming fairies out there protecting us and we are oveharvesting them?
Seriously, there isn’t much in the global warming domain that resembles fish populations. Fish population crashes are about replacement. Non-linearities? Feedback loops? Lots of both. None very well understood. Replacement? Advance and retreat of the continental glaciers might have behaved like that (an ice sheet a mile thick surely makes its own weather and climate) , But those glaciers have been pretty much gone since long before humans started burning fossil fuels systematically. Maybe turning off the Gulf Stream might look the same mathematically although I think that’d be a coincidence. Pragmatically, it would be a major problem — hard to disagree on that. But this paleomap from a wamer period http://www.scotese.com/miocene1.htm which is based on fossil evidence, not climate models ,certainly suggests that a somewhat warmer planet still had a Gulf Stream.
A point — we do not remotely understand what causes glaciations — or glacial retreats or why the planet seems normally to be warmer than it is now. See http://www.scotese.com/climate.htm and scroll down a bit to see one of the many estimates of paleoclimate for the past 600 million years. Note that our current climate looks to be quite cool compared to the typical state of things.
slugs, You should remember before you start arguing that the left recently got a turn at the plate promising with the stimulus bill an unemployment rate capped at 8 percent, but then failed to deliver. What they did was to take most of the money and give it to state governments so they could afford avoid layoffs. Unemployment went to 10 percent so they apparently whiffed at the plate. When Kennedy, Reagan, and Bush enacted tax cuts the economy grew. Even with the stupid short term tax rebate of 2008 the tax cut temporarily caused the economy to grow – and this was in the face of sky rocketing oil prices. So we have evidence that tax cuts work and Keynesian stimulus does not. On your point of weak aggregate demand raising taxes is going to make things worse and not better. Forcing young workers to come up with 5 grand to buy 2 grand worth of health insurance is going to take money out of their pockets and further reduce aggregate demand. Raising energy prices will make energy more expensive thus reducing disposable income to purchase other items that make up aggregate demand. And letting the push tax cuts expire is going to take money out the hands of the rich down to the middle class. So the middle will get hit twice, first by a hike in their own taxes and then less of a trickle down benefit that will reduce their incomes and further reduced aggregate demand. Policies that are designed to push out the supply curve simply do not make sense in that kind of environment. This does not make sense. Policies that push out the supply curve lower cost and put money in the pockets of businesses (who are also consumers) and lowers costs to consumers which increases their demand for other goods. High taxes don’t push out the demand curve they pull it in (and even create some pure waste because of deadweight loss).
“…[Obama] has already killed more Americans than the Bush administration’s policy.”
Care to provide some facts on that claim? And Fox Facts don’t count.
“…let’s give captured terrorists the rights of US citizens so that they can be tried in US courts, while sending more and more armed drones to kill suspected terrorists in their lairs, that it is unfathomable.”
You don’t understand the purpose of a trial. The purpose of a trial is to determine the facts. The reason we have trials is to determine the facts of the case…are they or are they not terrorists guilty of the crimes for which they have been charged. It’s a legal vehicle for determining facts, not a pro forma privelege reserved only for Americans. And don’t forget that a lot of the people who were initially identified as terrorists were found to be completely innocent. There was one case of a guy who we now know was entirely innocent when he was picked up, so the Bush Administration released him after several years at Gitmo. Then after being released he went and joined up with A-Q and the Taliban. As to innocent civilians being killed by drone attacks, are you now arguing that we should not conduct drone attacks? There is an important difference between intentionally abusing people that are under your direct control and unintentionally killing innocents who are not under your direct control…collateral casualties. The US military actually does go to great efforts to minimize those deaths. It is morally a completely different case than abusing prisoners that are under your direct control.
“The Obama economic policy seems to be tracking that of FDR, which some studies show might have extended the depression.”
Only in the world of teabag economics. There are studies that make that claim….but no studies by actual experts in the field. Being a lit major writing about economics for a monthly magazine does not make you qualified to talk about macroeconomics.
“Transparency and bipartisanship, two oft repeated Obama campaign primises, have been ignored from the beginning.”
I agree. John Boehner and Mitch McConnell completely ignored any good faith effort to bring in Republicans. Too bad their strategy and talking points relating to this strategy were revealed by aggressive reporters.
You’re the one that’s confused. I don’t see you wanting to comment on my quote from the CIA factbook that confirms what I said about China or the wiki quote on India. Your argument was a strawman with the construction that because they are not as open as us it must mean that their current success is not from liberalization in the form of cutting taxes and regulation. Sorry, but analysis and expert opinion contradict you.
You should remember before you start arguing that the left recently got a turn at the plate promising with the stimulus bill an unemployment rate capped at 8 percent, but then failed to deliver. And the unemployment rate was already almost at 8 percent at the time Romer wrote her paper, so the initial condition was a lot worse than most people thought. But that’s an argument for a bigger stimulus bill, not a smaller one. When Kennedy, Reagan, and Bush enacted tax cuts the economy grew. Go check the facts. The economy actually shrank after the Reagan tax cuts. The reason is fairly obvious….the Fed jacked up interest rates. In any event, the issue isn’t whether or not tax cuts stimulate aggregate demand, the issue is whether or not it is the most efficient way to stimulate aggregate demand. Cuts in income tax rates have a very weak effect on aggregate demand relative to direct spending. Regarding healthcare premiums and cap and trade, those are supply side issues and do not affect aggregate demand. They may affect your personal demand curve, but a dollar collected in healthcare premiums is entirely recycled into the economy. No effect on aggregate demand whatsoever. None. And to the extent that cap and trade will have some supply side effect, that won’t happen until several years out long after the economy has recovered. And it’s not like ignoring cap and trade is without its own set of supply side problems. This does not make sense. Policies that push out the supply curve lower cost and put money in the pockets of businesses (who are also consumers) and lowers costs to consumers which increases their demand for other goods. High taxes don’t push out the demand curve they pull it in Ugh. The high priests of supply side economics argue that their policies are not demand side oriented. In fact, they consciously deny that government fiscal policies can have any effect on aggregate demand. They argue that cutting taxes on labor pushes out the supply curve and this expands the economy’s potential GDP. Let’s assume they’re right. If that’s the case, then there would have to be an increase in aggregate demand to offset the increase in potential GDP, otherwise you widen the recession gap. But if you’re in a liquidity trap, then the Fisher effect on interest rates overwhelms the wealth effect and the result is a locally upward sloping AD curve. An upward sloping AD curve coupled with a rightward shift the AS curve actually shifts the equilibrium point to the left. That’s the point that Krugman made in his set of lectures at the London School.
What I’m getting at is that climate scientists are applying similar models to similar problems. For example, the fish harvesting and predator/prey type models go back to Volterra who developed all kinds of techniques for handling linear approximations to nonlinear models. And in the solutions to those kinds of models you end up having to divide out the “t” (time) derivative, which means you end up with vectors without magnitude…which is to say, without vectors. And that’s kind of the problem that you see in climate science. They can model the slopes of the functions and come up with phase diagrams and all that stuff, but it’s very hard to quantify because you lose magnitude. And there are other similarities. Is global warming stable and converging in nature, but does adding a new interaction term make the system unstable and spiraling? This is how the climate scientists that I know talk about those problems.
And the economic costs of arresting CO2 growth, while not trivial, would not be crushing. The general consensus seems to be that we could do this for something like 2% of GDP. And there would be benefits external to standard GDP calculations; e.g., depreciation of public goods is not included in NIPA accounting, but it is not zero.
But if I had to pick an environmental problem that is going to cause major problems in this century, I’d vote for problems with fresh water supplies rather than global warming.
And the two may be related. One of the consequences of global warming could be the shrinking of the Great Lakes. There’s no question that back in the 90s the receding waters in Lake Michigan had a lot of Chicagoans concerned. It’s not clear whether the immediate cause was global warming, or Army Corps of Engineers activity along the St. Clair River, or some combination of both. But the point is that it’s pretty hard to argue that the upper midwest would benefit from global warming without also having to concede that global warming would put additional stress on Lake Michigan as a source of fresh water. The concern is that a drop in the water level could create a deadzone that would bring up all kinds of toxins buried beneath the lakebed.
***I’m willing to give up socialized medicine and global warming legislation.***
Since you have no concern for that welfare of anyone other than your worthless self, of course you are
***What part of government are you willing to cut.***
Most of the bloated and largely useless military. Twice as many aircraft carriers as the rest of the planet’s navies combined and we can’t even stop Somolian pirates from preying on shipping. We’re geared up to fight World War II and are instead refighting every stupid guerilla conflict we have ever managed to provoke (and often lose).
Not that we don’t need a military. It’s just that we need a vastly different one than the one we’ve got. And it doesn’t need to be anywhere near as big and expensive as it is.
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You might want to check out the pie chart here http://www.nationalpriorities.org/node/6916 since the (not unintentionally) confusing “combined budget” we are used to seeing will probably vanish about 72 hours after the contribution from fica turns negative in a few years. The discretionary budget is probably what you will be looking at for the next few decades.
Observe that nearly 60% of the discretionary budget is “defense” (what we used to more accurately call the “War Department”) vs 4& for Veterans Affairs 2% for Transportation (which largely has dedicated funding from the gasoline tax)., etc Where do YOU think the potential for meaningful cuts is greatest? I think (can you think of an easy way to check?) that funding for the lunatic undertakings in Iraq and Afghanistan are not included in this budget.
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My advice: Quit bitching and get used to paying taxes. You right wingers have — against my advice — run up one hell of a tab, and you are going to get to pay it off whether you want to or not.
I don’t want to argue all your points again. Higher taxes lower after tax income and thus correspondingly consumption spending. High taxes on business reduce after tax cash flow and thus reduce investment. Government spending is weaker then one would expect since its bound to take employed resources from the private sector rather then create all new output. This was Barro’s point.
On the liquidity trap there is no evidence that we’re in one. They say when you’re in a liquidy trap monetary policy is not effective since the monetary authority can’t drive the interest rates lower. Yet, most people know that as soon as the fed stops spewing money into the economy then interest rates are going to rise. But how could this happen if we’re in a liquidity trap? In a liquidity trap monetary policy has no punch to it. Yet today we know that monetary policy has punched interest rates down to around zero.Moreover, even Keynes said he knew of no time that the economy had been in a liquidity trap; he had no examples and that was during the depression.
Monetary policy is effective; its what’s driven interest rates down to zero which you have mistakenly interpreted as a liquidity trap.
To adapt a slogan from the war with the Barbary Pirates, Billions for Defense but not one cent for people! I say let the Chinese have Afganistan they will get it in control since they are less squemish than we about doing what is needed. Let them play policeman to the world it has bankrupted the US it bankrupted the UK and Rome before it.
I don’t think you can sell you’re bonds when you in a liquidity trap yet we are selling ours. In the graphs of liquidity traps that I have they say nothing about the interest rate being at zero. What they show is a flat LM curve. What make you thing the LM curve today is flat. I think as soon as the FED starts taking money out of the system rates are going to rise. Inelastic should work in two directions, not just one.
This, it was claimed, was the case because if interest rates were very low, people would expect interest rates to rise in the future and thus would be willing to hold any extra amount of money made available in the interim in anticipation of that rise (i.e. there is no point in buying bonds at low interest rates/high bond prices if one expects interest rates to rise/bond prices to fall).
When I watch the media talk about the Afghan war I see an endless parade of fools babbling on without the slightest understanding of what is going on. We lost in Vietnam and we will lose in Afghanistan and we will be far far deeper in debt than if we had got out when we should have and bad bad things will happen to the USA. Now that Obama is going to spend lots more on the drug benefit something will have to give sooner or later. I predict the empire will fold. In a heap.
Better just let the poor starve and get rid of them. Or cut all medical treatment and let them die of disease. You’d quite like that, would you not, Cantab? I mean they are worthless human beings, like the Jews in Nazi Germany. Right? Hey, why not revive internment camps and ovens for the poor. That would reduce their number.
I doubt the Chinese want Afghanistan, And since they are not at war with Islam, they don’t need to go there to kill people. Muslims don’t hate them since they are not trampling on their countries. Most of the world can do without policing, at least by the UK and US.
Ah but look at the Xinjiang and the riots there the natives are moslem, the Uyguhrs. Recently there were riots there between the chinese and the natives, so China does have a problem, and they put the riots down with an iron hand. Its just that up till now Israel Palestine has gotten the press, but it will change as the problem worsens. Recall that some of the folks at Gitmo were Uyguhrs who were against the Chinese governement but we would not release them to China because they likely would dissappear if returned. Should have let them go. On refugees, I come to an you made your bed, now go lie in it policy.
I count ~62% of the overall budget as nondiscretionary. Most of that is entitlements, and we are about to add another huge chunk to that total with the healthcare bill.
But, go ahead and tax the richest even more if it makes you feel better to give that to those who you feel are needy. It is not going to matter soon after the both of us are gone as the Govt will run out of other people’s money. Then what?
***which means you end up with vectors without magnitude***
You DO understand that strictly speaking that’s not possible since the definition of a vector is a quantity with direction and magnitude? No magnitude, tain’t a vector. I’m not really rigid about that, but my no doubt narrow and plebian view of the nature of vectors does make it a bit difficult to see exactly where you are going.
Best guess — we’re maybe talking about situations where “they” can compute direction, but not magnitude? Something us old fogies might term a vector with unknown magnitude. OK, I could accept that although I suspect that I don’t understand exactly what you are trying to convey.
If you/they can’t compute magnitude how the hell can you/they justify wandering about waving signs proclaiming the end to be absolutely and unequivocably near? Or is that something that the politicians have added to the debate?
If you are saying that pumping the atmosphere full of CO2 possibly is a bad idea and might possibly have a very unsatisfactory outcome. Sure, I agree with that.
***Is global warming stable and converging in nature, but does adding a new interaction term make the system unstable and spiraling? This is how the climate scientists that I know talk about those problems. ***
Sounds me like you are saying that climate scientists don’t know enough about climate to make firm predictions about anything. If so, we are in full agreement. BTW, paleo data suggests to me that climate is stable within a range of maybe 20 degrees Centigrade but is prone to stabilize for long periods near the upper limit. That would suggest that our current climate regeime is either unstable or metastable and that perhaps we shouldn’t get too fond of it as things are likely to get colder if they don’t get warmer.
Look at capital reserves. THAT is a liquidity trap. No matter how much money the Fed creates, banks just sit on it. Banks are borrowing at zero interest and still sitting on huge piles of reserves. What that’s telling us is that the nominal interest rate would have to be negative. In other words, banks can earn a greater return just sitting on money and betting on deflation. That’s the Japan Trap Part Deux. Check on the chart from the St Louis Fed on Excess Reserves at depository institutions and tell me that isn’t a liquidity trap. The LM curve is about as flat as it could possibly get.
FWIW, I think most models would have rainfall in the great lakes basin stable or increased if the Earth warms. The logic is More Warmth=More evaporation=More Rainfall … in places where rainfall happens. They also have climate zones shifting poleward. Since the area South of the Great Lakes is pretty well watered, one assumes that the great lakes also will be if he climate shifts. Think longer, (even) more humid, Summers and milder Winters.
The areas that will be hurt are the Southwest US, the Mediterranean, Chile/Argentina, Australia and probably parts of Asia. Harder to tell about Asia due to the long range of very tall mountains arcing East to West in the mid-latitudes.
Look up the meaning of the word non-discretionary. The stuff in the non-discretionary budget is largely Social Security which you probably do not understand (read Bruce Webb’s stuff). payment of interest and principle on money that purported “conservatives” borrowed, and payment for various promises that have been made over the years. You possibly want to welch on that stuff. I find that idea repellent
Yes, Medicare and healthcare in general do need attention. Were it not for the diligent efforts of incompetent right wingers, that would be a simple transfer of funds from our failed private insurance system to a more rational system accomplished via taxation and paid back in lower insurance costs for employers and individuals. (pretty much a wash). It isn’t going to be that simple. Thanks a lot for your efforts to screw things up. And thanks also for the failure of the political right to propose a viable alternative to the healthcare bill. Do you seriously think that a well crafted non-government fix for our healthcare system would not have prevailed had one been proposed?.
***But, go ahead and tax the richest even more if it makes you feel better to give that to those who you feel are needy. It is not going to matter soon after the both of us are gone as the Govt will run out of other people’s money. Then what?***
Perhaps you could scrape up the funds for a course in remedial arithmetic which you are apparently in serious need of. The government is not going to run out of money as long as we keep idiot right wing flakes our of office. You seem not to have noticed, but over the past four decades or so, most liberals have come around to the belief that one really has to pay for stuff one buys. Meanwhile “conservatives” have bought into a mythos where it is believed that curring taxes has the power to cure all ills so paying the bills is really a tiresome nuisance.
We do have a bunch of bills to pay run up by the political right not the political left and center. I personally agree with Coolidge — We hired the money, did we not? I think we need to pay those bills. Why, exactly, should the rich not pay them? Thanks to the failed economic policies of the right, our rich have most of the money.
I agree that the Chinese probably want no part of Afghanistan. I don’t think anybody does except maybe the Russians who would like to shut down the Opium growing and maybe the Pakistanis.
I believe that the Chinese are not wild about Islam. Their Western provinces are largely populated by Muslims. The Chinese view Islamic fundamentalism as a threat. And in any case, China seems not to be good with minority relations or most any sort of relations with non-Chinese. They seem to be relatively comfortable with Europeans and North Americans, but other than that their relations with their internal minorities and neighboring countries have frequently been pretty strained.
I don’t think they are wild about any evangelizing religion actually.
Codger, getting angry at me does not change facts. This, one of the most liberal of administrations, has run up the debt in one year more than GWB did in eight.
The current healthcare bill is totally Dem. The Repuubs have been frozen out of submitting reasonable conservative solutions. As an abomination, it is your party’s, not the Repubs/conservatives.
As a policy it is the liberal/progressive view that the Govt is responsible for nearly all of a the populace’s welfare. More entitlement programs while reducing the income taxes on more workers make sense to you? Oh, we’ll fix that by implementing another set of even more regressive taxes, VAT and/or Carbon/Cap & Trade. The latter two carbon-based taxes have little effect on climate only on Govt revenue.
Why? Why for heaven’s sake do we hear nothing of cutting spending? Because it does not fit with the Dem economic view of Govt being the driver and/or most reponsible party in the economic world. It’s not! I believe in personal responsibility, with the Govt (taxpayers) as the last resort. Liberals appear to think the Govt (taxpayers) are much higher than last on the options list for personal responsibility.
In these views we are diametrically opposed. OK, let’s live with it! The politics will sort itself out soon.
You DO understand that strictly speaking that’s not possible since the definition of a vector is a quantity with direction and magnitude? No magnitude, tain’t a vector.
That’s exactly why I ended the sentence with the following: …which is to say, without vectors. That was my point.
Sounds me like you are saying that climate scientists don’t know enough about climate to make firm predictions about anything. If so, we are in full agreement.
Yes. They don’t know enough about it to make firm predictions. They understand enough to know that we could be playing with fire here and things could get wildly bad. Some global warming models actually predict a 2 percent chance of a sharp drop in temperatures. As I’ve said numerous times, on the pure science I am an agnostic. But as a public policy issue we have to provisionally assume that CO2 will have all kinds of bad effects on the climate.
My understanding is that one of this week’s talking points from the RNC is that the Ft Hood killings were part of an A-Q terrorist plot, so they want to count that as a radical Islamist strike on Americans. The problem is that the Ft Hood wasn’t the only example of a disaffected Islamic whacko in the military committing fratricide.
Sorry, as you know I’m a little slow sometimes, I did not realize that you were only talking about short term economic stimulus verus long term. I always argue for a permanent environment with low taxes and minimal regulation. I think this is the best general policy for long term economic growth. Moreover, I think the short term economic stimulus is a sucker’s game that does not work since they government does not have the ability to identify economic downturns, formulate an effective response, change the law in the congress, and then implement the new law and policy in time to achieve the policy’s original objective.
The Republicans were not shut out of the healthcare debate. Obama bent over backwards to try and get Grassley, Ensign, Snow, Collins, Gregg, and Coburn on board. They refused to cooperate, and that is because the GOP made a calculated political decision to be obstinate. If you believe that the GOP was negotiating in good faith, then you are probably gullible enough to believe a four page GOP “budget” without any numbers was also serious. Grassley admitted that he wouldn’t even vote for the bill even if he got 100 percent of what he asked for.
Cap and trade is not a regressive tax. In fact, it’s highly progressive. It rebates more to the bottom quintile than is taxed. Again, you need to do better than just sit there passively soaking up that crap on Fox News. Go check out the CBO analysis of the distribution of cap and trade costs. Do you think the govt just collects revenues and then squirrels them away in some vault…as though Democrats get some kind of perverse glee out of taxing people for no good reason and then hoarding the revenue? Is that what you think? The cap and trade bill generates revenues, but it also generates disbursements and tax credits.
Like a lot of conservatives, you see fiscal policy as some kind of morality play in which government programs weaken the character of a country. Whatever. Apparently it never occurred to you that some of us view fiscal policy as a simple matter of applied macroeconomics. We need fiscal stimulus because of weak aggregate demand. The private sector is not able to soak up excess savings, so the government has to do it instead. This is a technical issue involving equations. A lot of conservatives are sounding a lot like old man Mr. Wilson screaming at Dennis to get off the lawn.
Nice picture but this does not indicate a liquidity trap. You would think if the FED thought we were in a liquidity trap they would be talking about it and making it available in their meeting minutes. You need some expert opinion to back up this claim. Ben Bernake will do.
I some information that the fed way paying interest on the reserves and the fed fund rate is close to zero. I suppose that if they raised the fed funds rate these reserves would go away.
But you really need some expert opinion to back up your claims.
Reserve balances with Federal Reserve Banks are the difference between “total factors supplying reserve funds” and “total factors, other than reserve balances, absorbing reserve funds.” This item includes balances at the Federal Reserve of all depository institutions that are used to satisfy reserve requirements and balances held in excess of balance requirements. It excludes reserves held in the form of cash in bank vaults, and excludes service-related deposits
Nice picture but this does not indicate a liquidity trap. You would think if the FED thought we were in a liquidity trap they would be talking about it and making it available in their meeting minutes. You need some expert opinion to back up this claim. Ben Bernake will do.
I found some information on wiki that said the fed was paying interest on the reserves and the fed fund rate is close to zero. I suppose that if they raised the fed funds rate these reserves would go away.
But you really need some expert opinion to back up your claims; and don’t bother with Krugman or some other liberal democrat gunslinger (anyway, monetary policy is not Krugman’s speciality or an areas that he’s done any serious work in).
Nice picture but this does not indicate a liquidity trap. You would think if the FED thought we were in a liquidity trap they would be talking about it and making it available in their meeting minutes. You need some expert opinion to back up this claim. Ben Bernake will do.
I found some information on wiki that said the fed was paying interest on the reserves and the fed fund rate is close to zero. I suppose that if they raised the fed funds rate these reserves would go away.
But you really need some expert opinion to back up your claims; and don’t bother with Krugman or some other liberal democrat gunslinger (anyway, monetary policy is not Krugman’s speciality or an area that he’s done any serious work in).
2slugs, why do you even try? Saying this: “Obama bent over backwards to try and get Grassley, Ensign, Snow, Collins, Gregg, and Coburn on board. ” is just a plain ole fabrication. He should have told Pelosi and Reid that was his goal. And, saying this: “Cap and trade is not a regressive tax. In fact, it’s highly progressive. It rebates more to the bottom quintile than is taxed.” is just plain conjecture/opinion. Sheesh! Get us a bill before we talk about what it does! Since when was a regressive tax measured by one quintile?
BTW, you obviously think this administration’s fiscal stimulus approach is “efficient” your word. But the only efficiency has been with the traditional republican tax rebates, cash rebates and business incentives.
I’ve said it many times now, but the near future is going to tell us how “efficient” the Dem/your policies are. At this juncture they (the national security and fiscal) policies are falling way behind the last administration’s.
Cantab, “On the liquidity trap there is no evidence that we’re in one. They say when you’re in a liquidy trap monetary policy is not effective since the monetary authority can’t drive the interest rates lower. Yet, most people know that as soon as the fed stops spewing money into the economy then interest rates are going to rise…Monetary policy is effective; its what’s driven interest rates down to zero which you have mistakenly interpreted as a liquidity trap”
The point of a liquidity trap is that equilibrium interest rates are below zero, but conventional monetary policy cannot drive the nominal interest rate below zero. The claim is not that monetary policy is completely ineffective in every way in a liquidity trap, the claim is that at zero nominal interest rates, conventional monetary policy cannot stimulate AD further, exactly because it cannot drive nominal interest rates below zero. The fact that decreasing the MB will cause nominal rates to rise is irrelevant.
Corev, “This, one of the most liberal of administrations, has run up the debt in one year more than GWB did in eight.”
Most of the debt is caused by revenue shortfall, which would’ve occurred whether it was Obama, McCain or Bush. Furthermore, McCain certainly would’ve passed a “stimulus” bill of his own if he was Pres., the only difference is McCain’s would’ve been all tax cuts.
“As a policy it is the liberal/progressive view that the Govt is responsible for nearly all of a the populace’s welfare. More entitlement programs while reducing the income taxes on more workers make sense to you?”
You mean like Bush’s Medicare part D entitlement, which was completely unfunded. I had no idea Bush was liberal. Stop pretending that spending is the result of liberals, its a result of politicians. The only difference is that Obama’s healthcare plan is funded and Bush’s wasn’t.
“Oh, we’ll fix that by implementing another set of even more regressive taxes, VAT and/or Carbon/Cap & Trade.”
You cannot determine regressiveness or progressiveness from looking at one side (taxes) and not the other (spending). If a VAT is instituted, but the revenue is spent on lower income subsidies (or something for the lower income groups) then it can still be progressive.
“Why? Why for heaven’s sake do we hear nothing of cutting spending?”
Again, most of the deficit is from revenue shortfall, not spending, so if the point of this sentence was that we should cut the deficit by eliminating spending, then you’ve missed the biggest part of the deficit.
For those wanting to argue that we are in a liquidity trap I would like you to privide some expert opinion to back you up. If you can find a statement by Ben Bernacke that we’re in one then as far as i’m concerned you’ve proved your point. For a lesser source we’ll evaluate them as they are presented.
For those wanting to argue that we are in a liquidity trap I would like you to provide some expert opinion to back you up. If you can find a statement by Ben Bernacke that we’re in one then as far as i’m concerned you’ve proved your point. For a lesser source we’ll evaluate them as they are presented.
Saying this: “Obama bent over backwards to try and get Grassley, Ensign, Snow, Collins, Gregg, and Coburn on board. ” is just a plain ole fabrication.
Is that another Fox Fact? Sheesh, Reid and Baucus were catching all kinds of flack from Democrats for assuming that Republicans were negotiating in good faith. Grassley wasn’t negotiating in good faith and he even admitted that he was only stalling to try and kill the bill. He even admitted that he wouldn’t have voted for the bill even if he got 100% of what he wanted. McConnell and Boehner told the troops that this wasn’t about healthcare, it was about embarrassing Obama. Are you saying that you don’t remember when reporters unearthed those internal GOP memos telling members that this was a matter of setting things up for 2010 and had nothing to do with the merits of the case??? Are you that addicted to Fox News that you missed all that?
As to the cap and trade bill, the CBO did an analysis of the Waxman bill. They found that it was progressive and was a net benefit for the lowest quintile, which is what I said. Here’s CBO’s summary:
For the remaining portion of the net cost, households in the lowest income quintile would see an average net benefit of about $40 in 2020, while households in the highest income quintile would see a net cost of $245. Added costs for households in the second lowest quintile would be about $40 that year; in the middle quintile, about $235; and in the fourth quintile, about $340. Overall net costs would average 0.2 percent of households’ after-tax income.
I do not think the Obama stimulus package is efficient; I think it is more efficient than the one proposed by Boehner and Cantor, which had very little bang for the buck. A much more efficient stimulus plan would have been the original $1.3T plan that Romer privately recommended to Obama during the transition. That plan was shelved because Emmanuel Rahm said it had no chance of getting passed.
I’ve said it many times now, but the near future is going to tell us how “efficient” the Dem/your policies are.
So now you’re telling us that retired teabaggers are technically qualified to judge economic policies??? Half the electorate has an IQ under 100.
At this juncture they (the national security and fiscal) policies are falling way behind the last administration’s.
At this point in his Administration Bush had already managed to lose one war in Afghanistan, suffered through 9/11, anthrax attacks, shoe bombers, blown budget surpluses and humiliation by the North Koreans. But I do agree with your point about making Bush the poster child for incompetent Administrations. If at the end of his tenure Obama ends up doing worse than Bush 43, then Obama will go down in history as the worst President ever.
Apparently, 2slugbaits hasn’t seen the following chart. The third and fourth quintiles are slammed while the highest quintile bears a smaller burden of the House bill on cap and trade. Progressive must stop at the fourth quintile. Most importantly, though, note the hit that the middle quintile takes.
Ben Bernanke does think we’re in a liquidity trap. That’s why he is pushing “quantitative easing.” What else did you think Bernanke meant by the term? In his 1999 paper on Japan he argued that in a liquidity trap the monetary authority should flood the banks with money. At some point reserves will be so large that banks will start lending again and liquidity will not be “trapped” behind bankers’ vaults. In Fed Speak, when Bernanke uses the phrase “quantitative easing” what he is saying is that we’re in a liquidity trap.
A policy that benefits the lowest quintile is progressive. The bottom quintile sees a small net benefit of $40, the next lowest quintile sees a small net cost of $40 and the middle quintile sees a net cost of $235. That, sir, fits most people’s definition of a progressive tax.
Think about the y-axis on that chart and ask yourself if it tells you anything meaningful. Seriously, you cannot decompose the share distribution of various taxes by quintile and then compare the shares for each quintile. It’s a meaningless statistic. It’s the same kind of mess you get if you’re not careful about comparing individual components of a chain weighted index. The progressivity of a tax is not about the tax’s share of total revenue by quintile, it’s about the tax as a share of average income within each quintile.
Look at the y-axis and ask yourself if it makes any sense. The y-axis shows the percent of total tax share for each quintile. That is not a measure of progressivity. Progressivity is a measure of the burden of the tax within each quintile, which is very different than comparing relative shares across quintiles. See the difference? This guy just slapped together a chart without asking himself if the numbers actually made sense. And you cannot compare relative shares by quintile across different types of taxes. You can’t do that anymore than you can make naive comparisons across components of a chain weighted index. Well, you CAN do that, but the results are meaningless.
2slugs, nearly everything you just added in your latest comment was, again, useless, no meat and no rebuttal to my counterpoints.
I can agree with this, however, “If at the end of his tenure Obama ends up doing worse than Bush 43, then Obama will go down in history as the worst President ever.” I would add though, not worse than GWB, but Carter, a well accepted Dem high point.
BB, I see you’ve had one of those well, DUH!!! moments: “Most of the debt is caused by revenue shortfall,“.
Also, saying this: “You mean like Bush’s Medicare part D entitlement, which was completely unfunded. I had no idea Bush was liberal. ” If you were a conservative, you would not be surprised by this statement. Yes, a social liberal, a fiscal moderate, and a national security conservative. Your basic complex man. Not what you were told by dKOS and HuffPo? And, BTW, we can truthfully say “O’s” healthcare plan is at best starting out partially funded with less (more deficit) built in for the future decades.
I agree with you re: the regressive/progressive argument, but we are probably splitting hairs, because it’s what defines our different politics.
Now, just think this statement through, please! “Again, most of the deficit is from revenue shortfall, not spending,” That one is worth a sheesh!
So Grassley’s admission that he was not negotiating in good faith is not a rebuttal to your point??? Only in FoxNewsLand. And pointing to the CBO’s numbers showing that the cap and trade bill is indeed progressive is not a rebuttal to your claim that it is regressive??? Again, only in FoxNewsLand.
UGH!!! The CBO chart showing relative shares is interesting and meaningful only because it also shows the relative share of before tax income. In other words, that chart does exactly what I said a meaningful chart would do, which is to show the relative burden within each quintile. Here’s what I said: Progressivity is a measure of the burden of the tax within each quintile, which is very different than comparing relative shares across quintiles. When looking at progressivity you look at taxes relative to income within each quintile and only then can you compare quintiles. That is not what the Atlantic correspondent did.
A progressive tax is a tax by which the tax rate increases as the taxable amount increase.
Note that the Atlantic correspondent’s chart did not show that. It compared relative tax shares of several different types of taxes. That doesn’t tell you anything about progressivity.
You’re missing the point. The C&T taxes do not exist now. He provided a distribution based on the proposed taxes/credits. I have no problem with his presentation. He was comparing the impact spread across the quintiles.
Ben Bernanke does think we’re in a liquidity trap. That’s why he is pushing “quantitative easing.”
This is not good enough. I asked for a quote. Its a well know term.
What else did you think Bernanke meant by the term?
From Wikipedia,
The term quantitative easing describes an extreme form of monetary policy used to stimulate an economy where interest rates are either at, or close to, zero. Normally, a central bank stimulates the economy indirectly by lowering interest rates but when it cannot lower them any further it can attempt to seed the financial system with new money through quantitative easing
I think Bernacke is saying he’s not in a trapm, he’s got more in his bag of tricks.
Let’s face it. You and all the other from the Krugman school want to call it a liquidity trap to rationalize more government spending. Your school claims its the only way out. Bernacke does not seem to agree with you.
Ben Bernanke does think we’re in a liquidity trap. That’s why he is pushing “quantitative easing.”
This is not good enough. I asked for a quote. Its a well know term.
What else did you think Bernanke meant by the term?
From Wikipedia,
The term quantitative easing describes an extreme form of monetary policy used to stimulate an economy where interest rates are either at, or close to, zero. Normally, a central bank stimulates the economy indirectly by lowering interest rates but when it cannot lower them any further it can attempt to seed the financial system with new money through quantitative easing
I think Bernacke is saying he’s not in a trap; he’s got more in his bag of tricks.
Let’s face it. You and all the others from the Krugman school want to call it a liquidity trap to rationalize more government spending. Your school claims its the only way out. Bernacke does not seem to agree with you.
2slugs, “So Grassley’s admission that he was not negotiating in good faith is not a rebuttal to your point??? ” No! Frozen out was my rebuttal to your “Obama tried…..include…” Reid and Pelosi were not accepting any meaningful Repub amendments.
And, “And pointing to the CBO’s numbers showing that the cap and trade bill is indeed progressive is not a rebuttal to your claim that it is regressive??? ” Nope. Targeted rebates of part of the revenues do not make a flat usage tax progressive. The implementing bill may help some members of one group, but unless rebates are correctly indexed the tax is regressive and implementation for many, even in the targeted group, will probably be regressive. Unless rebates are correctly indexed, over time, the implementation will certainly be regressive. But, you see, I live in the real world and not Lib-land where wishes and happy thoughts are truths.
Most, probably all, of the commentators here have no idea who Tony Judt is. That is sad. He is a brilliant intellectual critic of Israel and Zionism. Also he happens to be a Jew. One of the courageous ones who will stand up for the truth. What has happened to him physcially, crushed by fate, is very sad. Still his legacy will remain and is supremely relevant to what is going on in the world today.
No, we call it a liquidity trap because that is what it is. You don’t want to admit it. Bernanke has a bad record for predicting and understanding what is going on in the economy. It is to our credit probably if he does not agree with us.
When you are in a liquidity trap, and we are even if you don’t like the fact, the only recourse is powerful fiscal stimulus. Obama is trying that, but probably there is not enough to accomplish the job.
Define a liquidity trap and then quote an authority that says we’re in one and i’ll get back to you. Pasting a wiki quote without understanding what you’re saying will not due.
I don’t have time to track down quotes but here is a short list of experts I remember thinking we are in a liquidity trap: Scott Sumner, Gauti Eggertsson, Brad DeLong, Mark Thoma, Frank heinemann, and I think Nick Rowe.
The issue most economists would argue over is not whether we are in a liquidity trap, but what unconventional policies would get us out of it. Liquidity traps only mean conventional monetary policy cannot impact AD, but we could do price level targeting, quantitative easing (instead of Bernanke’s credit easing) exchange rate depreciation.
but here is a short list of experts I remember thinking we are in a liquidity trap:
If you want credability you need Ben Bernacke or at least someone from the FEDs Board of Governers. However, I would also be interested in the quotes from democrat gun slingers, some of which were in your list.
He provided a distribution based on the proposed taxes/credits.
Think about it for 2 minutes. The relative shares alone are irrelevant for purposes of determining progressivity. The reason is that you don’t have the same total income in each quintile. You have to know the tax rellative to the total income within each quintile if you’re going to try and measure progressivity. That’s why the CBO report that you linked to provided both shares of income and shares of taxes.
You need to reread the wiki quote. It does not support your interpretation of liquidity trap. Seriously, reread the thing. Being in a liquidity trap does not mean that the monetary authority is powerless, it means that conventional open market operations that operate through the interest rate are powerless to further stimulate aggregate demand. Bernanke’s rationale for “quantitative easing” is his “Plan B” for when an economy is in a liquidity trap. That is, when the NAIRU clearing interest rate is negative, the economy is in a liquidity trap and the central bank has to use other nontraditional tools. That was the point behind Bernanke’s 1999 paper:
In this section I will discuss some options that the monetary authorities have to stimulate the economy. Overall, my claim has two parts: First, that—despite the apparent liquidity trap—-monetary policymakers retain the power to increase nominal aggregate demand and the price level.
Krugman’s recommendation for Japan’s slump was to have the BOJ make a credible threat to reinflate the economy. Bernanke’s recommendation was to bury the banks in massive amounts of money.
And here is a paper that explicity defines a liquidity trap as being when the NAIRU clearing interest rate is negative:
In general, liquidity traps occur when the natural (or equilibrium) nominal interest rate (i.e., the nominal interest rate level that balances aggregate demand and supply) becomes negative.
I’m beginning to think that I should start charging you for all of these free macroeconomics lessons that I’m giving you.
Is the Global Warming argument finished? Are the debates continuing from just the pro-AGW zealots?
The GW debate will go on and on and on, I would guess, until important parts of the world are underwater and have to be evacuated. By then of course it will be too late to do anything. Live and learn. LOL
Lots of people say that snow in the UK proves the world is getting colder. Nothing like some snow to decide a scientific issue. Of course when London has a heatwave next summer and people die in France from no air conditioning, lots of people will say the opposite. And so it goes, back and forth and back and forth., etc., etc., etc.
Global Warming go away? Not likely. It’s a subject that everyone can have an opinion on without actually knowing a damn thing. Don’t you ever get tired of being the only person in the discussion who actually has taken the trouble to learn something about it?
BTW, we may be going to have an opportunity to get some modern data on the affects of changes in solar activity on climate.Sun Spot Cycle 23 is very late and remains quite weak. The current Sunspot number is 14 — which translates to one visibile sunsport. The number of 0 sunspot days between cycle 22 and 23 stands at 772 vs 485 typical. Welcome to the second “Little Ice Age” … maybe.
(But that surely doen’t mean that we can forget about global warming. Even if the sunspots go away and the earth cools a bit, they will most likely come back some day).
I don’t like it that every single Angry Bear regular that writes columns is for raising taxes and regulation. At some point on the diversity of opinion scale you pass “slightly left of center” and reach the point of “ultra left hillbillies”.
Cantab,
“ultra left hillbillies”.
Hey, weren’t you the one who the other day sided with Jed Clampett’s right to that bubbling crude? Black Gold. Texas “T”.
No one likes raising taxes, but it’s just one of those things that adults have to do. And we tried deregulation of the financial sector. It didn’t work. Even Alan “Ayn Rand is my hero” Greenspan admitted that it failed.
VtCodger,
I don’t know about the “public” debates. I suspect that those who worry about global warming will just have to wait it out until those who are skeptics die off. The one thing about the global warming divide is that it’s highly generational…sort of like gay rights.
But in the academic world I think you’re seeing a shift away from “whether” global warming is in the cards and towards strategies to implement cap and trade. Just peruse the sheer number of new working papers each week on CO2 emissions over at the National Bureau of Economic Research. And no carbon intensive industry honestly believes that we won’t have some kind of cap and trade regime eventually. The problem is that they don’t know what kind of cap and trade regime we will have, and that is frustrating new investment. So I don’t think it will be too many years before industries begin to insist upon some kind of certainty about cap and trade in the same way that many industries today have become big supporters of govt involvement in healthcare. Businesses do not like uncertainty and that’s what they have right now.
You said to CoRev: “Don’t you ever get tired of being the only person in the discussion who actually has taken the trouble to learn something about it?” Over the years I have seen no evidence that CoRev understands time series analysis, no evidence that he understands stochastic processes, and no evidence that he understands systems of “coupled” differential equations with nonzero forcing terms, which is really the mathematical guts of climate science. In fact, a lot of the math in climate science models is actually quite similar to the differential equations that describe commercial fishing (that ought to send off alarms!) and predator/prey models in nature. Not really a surprise because these tend to be flow processes. What I have seen is a lot of eyeball analysis and a lot of confusion between stock variables and flow variables.
And where are you, Cantab? Slightly to the right of Ghenghis Khan?
I don’t like it that every single Angry Bear regular that writes columns is for raising taxes and regulation.
The ramblings of an ultra right whack job. Look mate. Your political philosophy has failed, totally and dismally. Thirty damn years and the average American more or less where he/she was the day that buffoon Ronald Reagan took office. What part of IT DOES NOT WORK do you fail to understand? IMHO denial and insults are not an appropriate response to the discovery that the world does not work the way you would like it to. It’s really not the fault of those to your political left (which would seem to be just about everyone) that free-lunch economics doesn’t seem to work.
If you have some WORKABLE ideas on how we can improve the lot of the average American without regulation of the finance industry and higher taxes, by all means let’s hear them. But how about making some basic reality checks first?
Most large cities have a zone in a public park where nut jobs of various sorts can haul up a soap box and ramble senselessly about economics, politics, religion, poisoning the drinking water with Fluoride, the takeover of governence by Martian autonomons … whatever. Why don’t you get yourself something to stand on and join them?
Contab,
Is it possible that your perspective is confused? Yesterday, you advocated Supply-Side strategies based on the success of China and India. As if liberalization will achieve the same results from any starting point. Somehow, you seem unaware of our starting point, a place that is the result of confused perspectives applied collectively.
Maybe you should try eliminating all of the name-calling, stereotyping, generalizing, presumption, and distorting of context from your comments. This will leave you with nothing to say for a time, but, that will afford you some much needed reading time.
http://news.yahoo.com/s/ap/20100108/ap_on_bi_ge/us_medicare_twist;_ylt=ApApgTtikL6wKE5HYWEKZIqs0NUE;_ylu=X3oDMTFkNGVzOWlnBHBvcwMxNTAEc2VjA2FjY29yZGlvbl9oZWFsdGgEc2xrA2RydWdiZW5lZml0ZQ—
Tangential, yes. But I would like to ask, if we spend billions to make drugs more affordable to the poor, where will we get the money to fight our war on Islam? Will we print the money? Probably. That’s an easy out. By all means we can’t stop our war, can we? If we did, think of what might happen to us: WMD raining down from the skies all over. I just get into a Bushpanic when I think of it.
The economic costs of sea level rise would be substantial. My guess, equivalent to several times the economic cost of World War II. Even the worst likely case of global warming is not remotely the end of the human race. Here’s a link to a map showing global climates in the Miocene based on fossil evidence. http://www.scotese.com/miocene1.htm The Miocene climate was probably somewhat similar to that projected by the global warming alarmists. Note that there are both winners and losers in the climate shifts. If would appear that the US and Canada would, on average, be winners with warm temperate climates as far North as James Bay. Note also that the continents have moved a bit, not all that much, since the Miocene.
Anyway, I am OK with limiting Carbon emissions because pumping huge amounts of CO2 into the atmosphere is unlikely to be a good idea, and we don’t seem to have a clue how to remove it should it prove to be a problem.
But if I had to pick an environmental problem that is going to cause major problems in this century, I’d vote for problems with fresh water supplies rather than global warming. A significant amount of the world’s economy is dependent on fossil water that is not being replaced, and surface supplies in many semi-arid regions are over-commited.
Why should we impose cap and pay goldman sachs which is what cap and trade would do, if we want to do the deal, just tax carbon, its much simpler, and avoids enriching the vampires of our economy!
Cantab,
There are really two different arguments going on right now. The problem is that “supply side” is being trumpeted by those on the know-nothing-right as the solution to all problems for all times. The principal economic problem in the US (and most of the world) is weak aggregate demand in the face of a liquidity trap. Policies that are designed to push out the supply curve simply do not make sense in that kind of environment. It’s bad enough that they address the wrong curve, but what’s worse is that they actually make the problem worse because a liquidity trap implies a locally upward sloping aggregate demand curve. The last thing you want to do is to push out the AS curve when the AD curve is locally upward sloping. Draw it up on a cocktail napking. The second thing floating around is whether or not supply side policies actually do push out the AS curve under full NAIRU employment. No doubt that excessively high tax rates discourage effort, and therefore shift the AS curve to the left. But a zero tax rate would also shift the AS curve to the left because a certain amount of govt is needed to have any economy at all. Likewise with regulations. You have to have laws that require transparency. You have to limit leveraging. You can’t allow banks to become too big to fail. Those things all undercut confidence in the economic system. And you also have to keep in mind that most of the growth in the AS curve does not come from capital investment or labor effort; most growth is “multifactor” growth (i.e., the residual in the Cobb-Douglas function), and it’s not at all clear that lower taxes and less regulation lead to higher rates of mulitifactor productivity. Remember, France, which is near the top in taxes and regulation also leads the US in hourly productivity.
2slugs, Codger, Lyle, et al of the Obama contingent, we will be able to judge the quality of your party’s policies very soon. At his point the US security policy is a travesty of failure, and has already killed more Americans than the Bush administration’s policy. Moreover, the “O” policy is so hypocritical, let’s give captured terrorists the rights of US citizens so that they can be tried in US courts, while sending more and more armed drones to kill suspected terrorists in their lairs, that it is unfathomable. If you don’t find Obama’s terrorits policies confusing, then you must be a liberal war mongering, baby killing fanatic.
The Obama economic policy seems to be tracking that of FDR, which some studies show might have extended the depression. We have had two recession within the decade and a comparison of the results from the past two administrations’ policies will be interesting.
Obama’s attempt to fight the GWOT has continued using the GWB policies.
Transparency and bipartisanship, two oft repeated Obama campaign primises, have been ignored from the beginning.
Healthcare reform, isn’t.
Deficit spending and tax increases, two more Obama campaign promises, are also completely ignored.
So to summarize, Obama is proving the truth of the claims that the Dem party is weak on US security and for taxing and spending. For his diminishing number of supporters it does not matter because for the short term they have the power to do the ?right? thing(s). Except the voters will have some say in that matter.
Cantab,
Nearly every person in the world nows that China has succeeded via
“liberialization”, as you choose to put it. But I did not say ” they are not as open as us it must mean that their current success is not from liberalization in the form of cutting taxes and regulation.” This was part of your distortion of what I said. Your “analysis and expert opinion contradict” what you needed me to say to hide how foolish your argument was in its premise. Which is what I explained in my previous comment: “Yesterday, you advocated Supply-Side strategies based on the success of China and India. As if liberalization will achieve the same results from any starting point. ” You were essentially arguing that a move to the Right, as shown by China’s success, would improve our circumstances. And I tried to explain that for us to be more like China, we would need to move leftward in regards to industrial policy. (and I never mentioned India) So, now maybe you might be able to understand why I am not “wanting to comment on by quote from the CIA factbook that confirms what I said about China or the wiki quote on India”.
I know that your language skills are too elevated to use cliches, but does that also mean that you are unable to learn from them: “when you have dug yourself into a hole, STOP DIGGING.”
Slugs,
Wrong again (kidding), I don’t think you understood the Jed Clampett analogy. Jed wanted to move out of the missouri swamp and go to Beverly Hills; and the government if they took all his oil rent would have kept him there.
If this site can’t find a at least one reasoned supply sider its not worth spit.
rl Love,
You lost the point so i’m digging you a hole to hide in. A thank you would do. Your counter point was brainless. Obama wants a conservative leftward economic policy that piles on restraints and disincentives. This would take us down the road to stagnation. Thankfully, small business owners and the blue collar working man are starting to turn against him so we’ll be getting rid of many of his followers in the congress in the next election cycle.
***I don’t know about the “public” debates. I suspect that those who worry about global warming will just have to wait it out until those who are skeptics die off.***
Or until the alarmists either lose credibility or grow some more persuasive analytic skills and clean up their data.
***Over the years I have seen no evidence that CoRev understands time series analysis …***
Not as well as you do. On the other hand, I don’t seem much evidence that you understand the underlying physical realities as well as he does. And I give him a lot of credit for having looked at the evidence and come to a conclusion that is much more moderate than his politics would suggest.
*** What I have seen is a lot of eyeball analysis and a lot of confusion between stock variables and flow variables. ***
I’ll give you that. Confusing variables with their derivatives is a common problem in many discussions on this board. And not just about climate. A lot of people do it. Including me I expect although I try not to. I don’t recall CoRev doing that a lot, but if you say so, it’s certainly not impossible.
***In fact, a lot of the math in climate science models is actually quite similar to the differential equations that describe commercial fishing (that ought to send off alarms!) and predator/prey models in nature.***
You’re hypothesizing that there are breeding populations of anti-warming fairies out there protecting us and we are oveharvesting them?
Seriously, there isn’t much in the global warming domain that resembles fish populations. Fish population crashes are about replacement. Non-linearities? Feedback loops? Lots of both. None very well understood. Replacement? Advance and retreat of the continental glaciers might have behaved like that (an ice sheet a mile thick surely makes its own weather and climate) , But those glaciers have been pretty much gone since long before humans started burning fossil fuels systematically. Maybe turning off the Gulf Stream might look the same mathematically although I think that’d be a coincidence. Pragmatically, it would be a major problem — hard to disagree on that. But this paleomap from a wamer period http://www.scotese.com/miocene1.htm which is based on fossil evidence, not climate models ,certainly suggests that a somewhat warmer planet still had a Gulf Stream.
A point — we do not remotely understand what causes glaciations — or glacial retreats or why the planet seems normally to be warmer than it is now. See http://www.scotese.com/climate.htm and scroll down a bit to see one of the many estimates of paleoclimate for the past 600 million years. Note that our current climate looks to be quite cool compared to the typical state of things.
Margery,
No, I’m a Cambridge liberal.
VtCodger,
I’m not your mate (and I don’t like this term).
slugs,
You should remember before you start arguing that the left recently got a turn at the plate promising with the stimulus bill an unemployment rate capped at 8 percent, but then failed to deliver. What they did was to take most of the money and give it to state governments so they could afford avoid layoffs. Unemployment went to 10 percent so they apparently whiffed at the plate. When Kennedy, Reagan, and Bush enacted tax cuts the economy grew. Even with the stupid short term tax rebate of 2008 the tax cut temporarily caused the economy to grow – and this was in the face of sky rocketing oil prices. So we have evidence that tax cuts work and Keynesian stimulus does not.
On your point of weak aggregate demand raising taxes is going to make things worse and not better. Forcing young workers to come up with 5 grand to buy 2 grand worth of health insurance is going to take money out of their pockets and further reduce aggregate demand. Raising energy prices will make energy more expensive thus reducing disposable income to purchase other items that make up aggregate demand. And letting the push tax cuts expire is going to take money out the hands of the rich down to the middle class. So the middle will get hit twice, first by a hike in their own taxes and then less of a trickle down benefit that will reduce their incomes and further reduced aggregate demand.
Policies that are designed to push out the supply curve simply do not make sense in that kind of environment.
This does not make sense. Policies that push out the supply curve lower cost and put money in the pockets of businesses (who are also consumers) and lowers costs to consumers which increases their demand for other goods. High taxes don’t push out the demand curve they pull it in (and even create some pure waste because of deadweight loss).
***where will we get the money to fight our war on Islam?***
You’re suggesting that we pay for a war? Socialism!!!!
In any case, there’s no problem. We’ll simply lower the capital gains tax.
VtCodger,
You’re suggesting that we pay for a war? Socialism!!!!
I’m willing to give up socialized medicine and global warming legislation. What part of government are you willing to cut.
CoRev,
“…[Obama] has already killed more Americans than the Bush administration’s policy.”
Care to provide some facts on that claim? And Fox Facts don’t count.
“…let’s give captured terrorists the rights of US citizens so that they can be tried in US courts, while sending more and more armed drones to kill suspected terrorists in their lairs, that it is unfathomable.”
You don’t understand the purpose of a trial. The purpose of a trial is to determine the facts. The reason we have trials is to determine the facts of the case…are they or are they not terrorists guilty of the crimes for which they have been charged. It’s a legal vehicle for determining facts, not a pro forma privelege reserved only for Americans. And don’t forget that a lot of the people who were initially identified as terrorists were found to be completely innocent. There was one case of a guy who we now know was entirely innocent when he was picked up, so the Bush Administration released him after several years at Gitmo. Then after being released he went and joined up with A-Q and the Taliban. As to innocent civilians being killed by drone attacks, are you now arguing that we should not conduct drone attacks? There is an important difference between intentionally abusing people that are under your direct control and unintentionally killing innocents who are not under your direct control…collateral casualties. The US military actually does go to great efforts to minimize those deaths. It is morally a completely different case than abusing prisoners that are under your direct control.
“The Obama economic policy seems to be tracking that of FDR, which some studies show might have extended the depression.”
Only in the world of teabag economics. There are studies that make that claim….but no studies by actual experts in the field. Being a lit major writing about economics for a monthly magazine does not make you qualified to talk about macroeconomics.
“Transparency and bipartisanship, two oft repeated Obama campaign primises, have been ignored from the beginning.”
I agree. John Boehner and Mitch McConnell completely ignored any good faith effort to bring in Republicans. Too bad their strategy and talking points relating to this strategy were revealed by aggressive reporters.
rl love,
You’re the one that’s confused. I don’t see you wanting to comment on my quote from the CIA factbook that confirms what I said about China or the wiki quote on India. Your argument was a strawman with the construction that because they are not as open as us it must mean that their current success is not from liberalization in the form of cutting taxes and regulation. Sorry, but analysis and expert opinion contradict you.
Cantab,
You should remember before you start arguing that the left recently got a turn at the plate promising with the stimulus bill an unemployment rate capped at 8 percent, but then failed to deliver.
And the unemployment rate was already almost at 8 percent at the time Romer wrote her paper, so the initial condition was a lot worse than most people thought. But that’s an argument for a bigger stimulus bill, not a smaller one.
When Kennedy, Reagan, and Bush enacted tax cuts the economy grew.
Go check the facts. The economy actually shrank after the Reagan tax cuts. The reason is fairly obvious….the Fed jacked up interest rates. In any event, the issue isn’t whether or not tax cuts stimulate aggregate demand, the issue is whether or not it is the most efficient way to stimulate aggregate demand. Cuts in income tax rates have a very weak effect on aggregate demand relative to direct spending.
Regarding healthcare premiums and cap and trade, those are supply side issues and do not affect aggregate demand. They may affect your personal demand curve, but a dollar collected in healthcare premiums is entirely recycled into the economy. No effect on aggregate demand whatsoever. None. And to the extent that cap and trade will have some supply side effect, that won’t happen until several years out long after the economy has recovered. And it’s not like ignoring cap and trade is without its own set of supply side problems.
This does not make sense. Policies that push out the supply curve lower cost and put money in the pockets of businesses (who are also consumers) and lowers costs to consumers which increases their demand for other goods. High taxes don’t push out the demand curve they pull it in
Ugh. The high priests of supply side economics argue that their policies are not demand side oriented. In fact, they consciously deny that government fiscal policies can have any effect on aggregate demand. They argue that cutting taxes on labor pushes out the supply curve and this expands the economy’s potential GDP. Let’s assume they’re right. If that’s the case, then there would have to be an increase in aggregate demand to offset the increase in potential GDP, otherwise you widen the recession gap. But if you’re in a liquidity trap, then the Fisher effect on interest rates overwhelms the wealth effect and the result is a locally upward sloping AD curve. An upward sloping AD curve coupled with a rightward shift the AS curve actually shifts the equilibrium point to the left. That’s the point that Krugman made in his set of lectures at the London School.
VtCodger,
What I’m getting at is that climate scientists are applying similar models to similar problems. For example, the fish harvesting and predator/prey type models go back to Volterra who developed all kinds of techniques for handling linear approximations to nonlinear models. And in the solutions to those kinds of models you end up having to divide out the “t” (time) derivative, which means you end up with vectors without magnitude…which is to say, without vectors. And that’s kind of the problem that you see in climate science. They can model the slopes of the functions and come up with phase diagrams and all that stuff, but it’s very hard to quantify because you lose magnitude. And there are other similarities. Is global warming stable and converging in nature, but does adding a new interaction term make the system unstable and spiraling? This is how the climate scientists that I know talk about those problems.
And the economic costs of arresting CO2 growth, while not trivial, would not be crushing. The general consensus seems to be that we could do this for something like 2% of GDP. And there would be benefits external to standard GDP calculations; e.g., depreciation of public goods is not included in NIPA accounting, but it is not zero.
But if I had to pick an environmental problem that is going to cause major problems in this century, I’d vote for problems with fresh water supplies rather than global warming.
And the two may be related. One of the consequences of global warming could be the shrinking of the Great Lakes. There’s no question that back in the 90s the receding waters in Lake Michigan had a lot of Chicagoans concerned. It’s not clear whether the immediate cause was global warming, or Army Corps of Engineers activity along the St. Clair River, or some combination of both. But the point is that it’s pretty hard to argue that the upper midwest would benefit from global warming without also having to concede that global warming would put additional stress on Lake Michigan as a source of fresh water. The concern is that a drop in the water level could create a deadzone that would bring up all kinds of toxins buried beneath the lakebed.
***I’m willing to give up socialized medicine and global warming legislation.***
Since you have no concern for that welfare of anyone other than your worthless self, of course you are
***What part of government are you willing to cut.***
Most of the bloated and largely useless military. Twice as many aircraft carriers as the rest of the planet’s navies combined and we can’t even stop Somolian pirates from preying on shipping. We’re geared up to fight World War II and are instead refighting every stupid guerilla conflict we have ever managed to provoke (and often lose).
Not that we don’t need a military. It’s just that we need a vastly different one than the one we’ve got. And it doesn’t need to be anywhere near as big and expensive as it is.
============================
You might want to check out the pie chart here http://www.nationalpriorities.org/node/6916 since the (not unintentionally) confusing “combined budget” we are used to seeing will probably vanish about 72 hours after the contribution from fica turns negative in a few years. The discretionary budget is probably what you will be looking at for the next few decades.
Observe that nearly 60% of the discretionary budget is “defense” (what we used to more accurately call the “War Department”) vs 4& for Veterans Affairs 2% for Transportation (which largely has dedicated funding from the gasoline tax)., etc Where do YOU think the potential for meaningful cuts is greatest? I think (can you think of an easy way to check?) that funding for the lunatic undertakings in Iraq and Afghanistan are not included in this budget.
======
My advice: Quit bitching and get used to paying taxes. You right wingers have — against my advice — run up one hell of a tab, and you are going to get to pay it off whether you want to or not.
Slugs,
I don’t want to argue all your points again. Higher taxes lower after tax income and thus correspondingly consumption spending. High taxes on business reduce after tax cash flow and thus reduce investment. Government spending is weaker then one would expect since its bound to take employed resources from the private sector rather then create all new output. This was Barro’s point.
On the liquidity trap there is no evidence that we’re in one. They say when you’re in a liquidy trap monetary policy is not effective since the monetary authority can’t drive the interest rates lower. Yet, most people know that as soon as the fed stops spewing money into the economy then interest rates are going to rise. But how could this happen if we’re in a liquidity trap? In a liquidity trap monetary policy has no punch to it. Yet today we know that monetary policy has punched interest rates down to around zero.Moreover, even Keynes said he knew of no time that the economy had been in a liquidity trap; he had no examples and that was during the depression.
Monetary policy is effective; its what’s driven interest rates down to zero which you have mistakenly interpreted as a liquidity trap.
To adapt a slogan from the war with the Barbary Pirates, Billions for Defense but not one cent for people! I say let the Chinese have Afganistan they will get it in control since they are less squemish than we about doing what is needed. Let them play policeman to the world it has bankrupted the US it bankrupted the UK and Rome before it.
Slugs,
I don’t think you can sell you’re bonds when you in a liquidity trap yet we are selling ours. In the graphs of liquidity traps that I have they say nothing about the interest rate being at zero. What they show is a flat LM curve. What make you thing the LM curve today is flat. I think as soon as the FED starts taking money out of the system rates are going to rise. Inelastic should work in two directions, not just one.
This, it was claimed, was the case because if interest rates were very low, people would expect interest rates to rise in the future and thus would be willing to hold any extra amount of money made available in the interim in anticipation of that rise (i.e. there is no point in buying bonds at low interest rates/high bond prices if one expects interest rates to rise/bond prices to fall).
Oh, sorry. I get it: quite a bit to the right of Ghenghis Khan. Thanks for the clarification.
When I watch the media talk about the Afghan war I see an endless parade of fools babbling on without the slightest understanding of what is going on. We lost in Vietnam and we will lose in Afghanistan and we will be far far deeper in debt than if we had got out when we should have and bad bad things will happen to the USA. Now that Obama is going to spend lots more on the drug benefit something will have to give sooner or later. I predict the empire will fold. In a heap.
Better just let the poor starve and get rid of them. Or cut all medical treatment and let them die of disease. You’d quite like that, would you not, Cantab? I mean they are worthless human beings, like the Jews in Nazi Germany. Right? Hey, why not revive internment camps and ovens for the poor. That would reduce their number.
I doubt the Chinese want Afghanistan, And since they are not at war with Islam, they don’t need to go there to kill people. Muslims don’t hate them since they are not trampling on their countries. Most of the world can do without policing, at least by the UK and US.
2slugs, a totally unimpressive performance today. There’s nothing worth responding.
Ah but look at the Xinjiang and the riots there the natives are moslem, the Uyguhrs. Recently there were riots there between the chinese and the natives, so China does have a problem, and they put the riots down with an iron hand. Its just that up till now Israel Palestine has gotten the press, but it will change as the problem worsens. Recall that some of the folks at Gitmo were Uyguhrs who were against the Chinese governement but we would not release them to China because they likely would dissappear if returned. Should have let them go. On refugees, I come to an you made your bed, now go lie in it policy.
Codger why discuss only part of the story? The whole budget is what gets us in trouble. See here:
http://upload.wikimedia.org/wikipedia/en/thumb/d/d4/Fy2009spendingbycategory2.png/800px-Fy2009spendingbycategory2.png
I count ~62% of the overall budget as nondiscretionary. Most of that is entitlements, and we are about to add another huge chunk to that total with the healthcare bill.
But, go ahead and tax the richest even more if it makes you feel better to give that to those who you feel are needy. It is not going to matter soon after the both of us are gone as the Govt will run out of other people’s money. Then what?
***which means you end up with vectors without magnitude***
You DO understand that strictly speaking that’s not possible since the definition of a vector is a quantity with direction and magnitude? No magnitude, tain’t a vector. I’m not really rigid about that, but my no doubt narrow and plebian view of the nature of vectors does make it a bit difficult to see exactly where you are going.
Best guess — we’re maybe talking about situations where “they” can compute direction, but not magnitude? Something us old fogies might term a vector with unknown magnitude. OK, I could accept that although I suspect that I don’t understand exactly what you are trying to convey.
If you/they can’t compute magnitude how the hell can you/they justify wandering about waving signs proclaiming the end to be absolutely and unequivocably near? Or is that something that the politicians have added to the debate?
If you are saying that pumping the atmosphere full of CO2 possibly is a bad idea and might possibly have a very unsatisfactory outcome. Sure, I agree with that.
***Is global warming stable and converging in nature, but does adding a new interaction term make the system unstable and spiraling? This is how the climate scientists that I know talk about those problems. ***
Sounds me like you are saying that climate scientists don’t know enough about climate to make firm predictions about anything. If so, we are in full agreement. BTW, paleo data suggests to me that climate is stable within a range of maybe 20 degrees Centigrade but is prone to stabilize for long periods near the upper limit. That would suggest that our current climate regeime is either unstable or metastable and that perhaps we shouldn’t get too fond of it as things are likely to get colder if they don’t get warmer.
Cantab,
Look at capital reserves. THAT is a liquidity trap. No matter how much money the Fed creates, banks just sit on it. Banks are borrowing at zero interest and still sitting on huge piles of reserves. What that’s telling us is that the nominal interest rate would have to be negative. In other words, banks can earn a greater return just sitting on money and betting on deflation. That’s the Japan Trap Part Deux. Check on the chart from the St Louis Fed on Excess Reserves at depository institutions and tell me that isn’t a liquidity trap. The LM curve is about as flat as it could possibly get.
“…[Obama] has already killed more Americans than the Bush administration’s policy.”
Care to provide some facts on that claim? And Fox Facts don’t count.
Me too, I’d like some facts on this one. Would that include New Orleans? Where’s Obama’s New Orleans?
FWIW, I think most models would have rainfall in the great lakes basin stable or increased if the Earth warms. The logic is More Warmth=More evaporation=More Rainfall … in places where rainfall happens. They also have climate zones shifting poleward. Since the area South of the Great Lakes is pretty well watered, one assumes that the great lakes also will be if he climate shifts. Think longer, (even) more humid, Summers and milder Winters.
The areas that will be hurt are the Southwest US, the Mediterranean, Chile/Argentina, Australia and probably parts of Asia. Harder to tell about Asia due to the long range of very tall mountains arcing East to West in the mid-latitudes.
All pure conjecture of course.
***Codger why discuss only part of the story?***
Look up the meaning of the word non-discretionary. The stuff in the non-discretionary budget is largely Social Security which you probably do not understand (read Bruce Webb’s stuff). payment of interest and principle on money that purported “conservatives” borrowed, and payment for various promises that have been made over the years. You possibly want to welch on that stuff. I find that idea repellent
Yes, Medicare and healthcare in general do need attention. Were it not for the diligent efforts of incompetent right wingers, that would be a simple transfer of funds from our failed private insurance system to a more rational system accomplished via taxation and paid back in lower insurance costs for employers and individuals. (pretty much a wash). It isn’t going to be that simple. Thanks a lot for your efforts to screw things up. And thanks also for the failure of the political right to propose a viable alternative to the healthcare bill. Do you seriously think that a well crafted non-government fix for our healthcare system would not have prevailed had one been proposed?.
***But, go ahead and tax the richest even more if it makes you feel better to give that to those who you feel are needy. It is not going to matter soon after the both of us are gone as the Govt will run out of other people’s money. Then what?***
Perhaps you could scrape up the funds for a course in remedial arithmetic which you are apparently in serious need of. The government is not going to run out of money as long as we keep idiot right wing flakes our of office. You seem not to have noticed, but over the past four decades or so, most liberals have come around to the belief that one really has to pay for stuff one buys. Meanwhile “conservatives” have bought into a mythos where it is believed that curring taxes has the power to cure all ills so paying the bills is really a tiresome nuisance.
We do have a bunch of bills to pay run up by the political right not the political left and center. I personally agree with Coolidge — We hired the money, did we not? I think we need to pay those bills. Why, exactly, should the rich not pay them? Thanks to the failed economic policies of the right, our rich have most of the money.
I agree that the Chinese probably want no part of Afghanistan. I don’t think anybody does except maybe the Russians who would like to shut down the Opium growing and maybe the Pakistanis.
I believe that the Chinese are not wild about Islam. Their Western provinces are largely populated by Muslims. The Chinese view Islamic fundamentalism as a threat. And in any case, China seems not to be good with minority relations or most any sort of relations with non-Chinese. They seem to be relatively comfortable with Europeans and North Americans, but other than that their relations with their internal minorities and neighboring countries have frequently been pretty strained.
I don’t think they are wild about any evangelizing religion actually.
Codger, getting angry at me does not change facts. This, one of the most liberal of administrations, has run up the debt in one year more than GWB did in eight.
The current healthcare bill is totally Dem. The Repuubs have been frozen out of submitting reasonable conservative solutions. As an abomination, it is your party’s, not the Repubs/conservatives.
As a policy it is the liberal/progressive view that the Govt is responsible for nearly all of a the populace’s welfare. More entitlement programs while reducing the income taxes on more workers make sense to you? Oh, we’ll fix that by implementing another set of even more regressive taxes, VAT and/or Carbon/Cap & Trade. The latter two carbon-based taxes have little effect on climate only on Govt revenue.
Why? Why for heaven’s sake do we hear nothing of cutting spending? Because it does not fit with the Dem economic view of Govt being the driver and/or most reponsible party in the economic world. It’s not! I believe in personal responsibility, with the Govt (taxpayers) as the last resort. Liberals appear to think the Govt (taxpayers) are much higher than last on the options list for personal responsibility.
In these views we are diametrically opposed. OK, let’s live with it! The politics will sort itself out soon.
VtCodger,
You DO understand that strictly speaking that’s not possible since the definition of a vector is a quantity with direction and magnitude? No magnitude, tain’t a vector.
That’s exactly why I ended the sentence with the following: …which is to say, without vectors. That was my point.
Sounds me like you are saying that climate scientists don’t know enough about climate to make firm predictions about anything. If so, we are in full agreement.
Yes. They don’t know enough about it to make firm predictions. They understand enough to know that we could be playing with fire here and things could get wildly bad. Some global warming models actually predict a 2 percent chance of a sharp drop in temperatures. As I’ve said numerous times, on the pure science I am an agnostic. But as a public policy issue we have to provisionally assume that CO2 will have all kinds of bad effects on the climate.
Noni,
My understanding is that one of this week’s talking points from the RNC is that the Ft Hood killings were part of an A-Q terrorist plot, so they want to count that as a radical Islamist strike on Americans. The problem is that the Ft Hood wasn’t the only example of a disaffected Islamic whacko in the military committing fratricide.
Slugs,
Sorry, as you know I’m a little slow sometimes, I did not realize that you were only talking about short term economic stimulus verus long term. I always argue for a permanent environment with low taxes and minimal regulation. I think this is the best general policy for long term economic growth. Moreover, I think the short term economic stimulus is a sucker’s game that does not work since they government does not have the ability to identify economic downturns, formulate an effective response, change the law in the congress, and then implement the new law and policy in time to achieve the policy’s original objective.
CoRev,
The Republicans were not shut out of the healthcare debate. Obama bent over backwards to try and get Grassley, Ensign, Snow, Collins, Gregg, and Coburn on board. They refused to cooperate, and that is because the GOP made a calculated political decision to be obstinate. If you believe that the GOP was negotiating in good faith, then you are probably gullible enough to believe a four page GOP “budget” without any numbers was also serious. Grassley admitted that he wouldn’t even vote for the bill even if he got 100 percent of what he asked for.
Cap and trade is not a regressive tax. In fact, it’s highly progressive. It rebates more to the bottom quintile than is taxed. Again, you need to do better than just sit there passively soaking up that crap on Fox News. Go check out the CBO analysis of the distribution of cap and trade costs. Do you think the govt just collects revenues and then squirrels them away in some vault…as though Democrats get some kind of perverse glee out of taxing people for no good reason and then hoarding the revenue? Is that what you think? The cap and trade bill generates revenues, but it also generates disbursements and tax credits.
Like a lot of conservatives, you see fiscal policy as some kind of morality play in which government programs weaken the character of a country. Whatever. Apparently it never occurred to you that some of us view fiscal policy as a simple matter of applied macroeconomics. We need fiscal stimulus because of weak aggregate demand. The private sector is not able to soak up excess savings, so the government has to do it instead. This is a technical issue involving equations. A lot of conservatives are sounding a lot like old man Mr. Wilson screaming at Dennis to get off the lawn.
2slugs, this weeks??? From the beginning. Then there is Littlre Rock, and the almost Detroit panty bomber. Total count? Fourteen and counting.
Noni, we are talking about Terrorism policies here.
Slugs,
Nice picture but this does not indicate a liquidity trap. You would think if the FED thought we were in a liquidity trap they would be talking about it and making it available in their meeting minutes. You need some expert opinion to back up this claim. Ben Bernake will do.
I some information that the fed way paying interest on the reserves and the fed fund rate is close to zero. I suppose that if they raised the fed funds rate these reserves would go away.
But you really need some expert opinion to back up your claims.
Reserve balances with Federal Reserve Banks are the difference between “total factors supplying reserve funds” and “total factors, other than reserve balances, absorbing reserve funds.” This item includes balances at the Federal Reserve of all depository institutions that are used to satisfy reserve requirements and balances held in excess of balance requirements. It excludes reserves held in the form of cash in bank vaults, and excludes service-related deposits
Nice picture but this does not indicate a liquidity trap. You would think if the FED thought we were in a liquidity trap they would be talking about it and making it available in their meeting minutes. You need some expert opinion to back up this claim. Ben Bernake will do.
I found some information on wiki that said the fed was paying interest on the reserves and the fed fund rate is close to zero. I suppose that if they raised the fed funds rate these reserves would go away.
But you really need some expert opinion to back up your claims; and don’t bother with Krugman or some other liberal democrat gunslinger (anyway, monetary policy is not Krugman’s speciality or an areas that he’s done any serious work in).
Nice picture but this does not indicate a liquidity trap. You would think if the FED thought we were in a liquidity trap they would be talking about it and making it available in their meeting minutes. You need some expert opinion to back up this claim. Ben Bernake will do.
I found some information on wiki that said the fed was paying interest on the reserves and the fed fund rate is close to zero. I suppose that if they raised the fed funds rate these reserves would go away.
But you really need some expert opinion to back up your claims; and don’t bother with Krugman or some other liberal democrat gunslinger (anyway, monetary policy is not Krugman’s speciality or an area that he’s done any serious work in).
2slugs, why do you even try? Saying this: “Obama bent over backwards to try and get Grassley, Ensign, Snow, Collins, Gregg, and Coburn on board. ” is just a plain ole fabrication. He should have told Pelosi and Reid that was his goal. And, saying this: “Cap and trade is not a regressive tax. In fact, it’s highly progressive. It rebates more to the bottom quintile than is taxed.” is just plain conjecture/opinion. Sheesh! Get us a bill before we talk about what it does! Since when was a regressive tax measured by one quintile?
BTW, you obviously think this administration’s fiscal stimulus approach is “efficient” your word. But the only efficiency has been with the traditional republican tax rebates, cash rebates and business incentives.
I’ve said it many times now, but the near future is going to tell us how “efficient” the Dem/your policies are. At this juncture they (the national security and fiscal) policies are falling way behind the last administration’s.
Cantab,
“On the liquidity trap there is no evidence that we’re in one. They say when you’re in a liquidy trap monetary policy is not effective since the monetary authority can’t drive the interest rates lower. Yet, most people know that as soon as the fed stops spewing money into the economy then interest rates are going to rise…Monetary policy is effective; its what’s driven interest rates down to zero which you have mistakenly interpreted as a liquidity trap”
The point of a liquidity trap is that equilibrium interest rates are below zero, but conventional monetary policy cannot drive the nominal interest rate below zero. The claim is not that monetary policy is completely ineffective in every way in a liquidity trap, the claim is that at zero nominal interest rates, conventional monetary policy cannot stimulate AD further, exactly because it cannot drive nominal interest rates below zero. The fact that decreasing the MB will cause nominal rates to rise is irrelevant.
Corev,
“This, one of the most liberal of administrations, has run up the debt in one year more than GWB did in eight.”
Most of the debt is caused by revenue shortfall, which would’ve occurred whether it was Obama, McCain or Bush. Furthermore, McCain certainly would’ve passed a “stimulus” bill of his own if he was Pres., the only difference is McCain’s would’ve been all tax cuts.
“As a policy it is the liberal/progressive view that the Govt is responsible for nearly all of a the populace’s welfare. More entitlement programs while reducing the income taxes on more workers make sense to you?”
You mean like Bush’s Medicare part D entitlement, which was completely unfunded. I had no idea Bush was liberal. Stop pretending that spending is the result of liberals, its a result of politicians. The only difference is that Obama’s healthcare plan is funded and Bush’s wasn’t.
“Oh, we’ll fix that by implementing another set of even more regressive taxes, VAT and/or Carbon/Cap & Trade.”
You cannot determine regressiveness or progressiveness from looking at one side (taxes) and not the other (spending). If a VAT is instituted, but the revenue is spent on lower income subsidies (or something for the lower income groups) then it can still be progressive.
“Why? Why for heaven’s sake do we hear nothing of cutting spending?”
Again, most of the deficit is from revenue shortfall, not spending, so if the point of this sentence was that we should cut the deficit by eliminating spending, then you’ve missed the biggest part of the deficit.
baby blue,
For those wanting to argue that we are in a liquidity trap I would like you to privide some expert opinion to back you up. If you can find a statement by Ben Bernacke that we’re in one then as far as i’m concerned you’ve proved your point. For a lesser source we’ll evaluate them as they are presented.
baby blue,
For those wanting to argue that we are in a liquidity trap I would like you to provide some expert opinion to back you up. If you can find a statement by Ben Bernacke that we’re in one then as far as i’m concerned you’ve proved your point. For a lesser source we’ll evaluate them as they are presented.
CoRev,
Saying this: “Obama bent over backwards to try and get Grassley, Ensign, Snow, Collins, Gregg, and Coburn on board. ” is just a plain ole fabrication.
Is that another Fox Fact? Sheesh, Reid and Baucus were catching all kinds of flack from Democrats for assuming that Republicans were negotiating in good faith. Grassley wasn’t negotiating in good faith and he even admitted that he was only stalling to try and kill the bill. He even admitted that he wouldn’t have voted for the bill even if he got 100% of what he wanted. McConnell and Boehner told the troops that this wasn’t about healthcare, it was about embarrassing Obama. Are you saying that you don’t remember when reporters unearthed those internal GOP memos telling members that this was a matter of setting things up for 2010 and had nothing to do with the merits of the case??? Are you that addicted to Fox News that you missed all that?
As to the cap and trade bill, the CBO did an analysis of the Waxman bill. They found that it was progressive and was a net benefit for the lowest quintile, which is what I said. Here’s CBO’s summary:
For the remaining portion of the net cost, households in the lowest income quintile would see an average net benefit of about $40 in 2020, while households in the highest income quintile would see a net cost of $245. Added costs for households in the second lowest quintile would be about $40 that year; in the middle quintile, about $235; and in the fourth quintile, about $340. Overall net costs would average 0.2 percent of households’ after-tax income.
http://cboblog.cbo.gov/?p=300
I do not think the Obama stimulus package is efficient; I think it is more efficient than the one proposed by Boehner and Cantor, which had very little bang for the buck. A much more efficient stimulus plan would have been the original $1.3T plan that Romer privately recommended to Obama during the transition. That plan was shelved because Emmanuel Rahm said it had no chance of getting passed.
I’ve said it many times now, but the near future is going to tell us how “efficient” the Dem/your policies are.
So now you’re telling us that retired teabaggers are technically qualified to judge economic policies??? Half the electorate has an IQ under 100.
At this juncture they (the national security and fiscal) policies are falling way behind the last administration’s.
At this point in his Administration Bush had already managed to lose one war in Afghanistan, suffered through 9/11, anthrax attacks, shoe bombers, blown budget surpluses and humiliation by the North Koreans. But I do agree with your point about making Bush the poster child for incompetent Administrations. If at the end of his tenure Obama ends up doing worse than Bush 43, then Obama will go down in history as the worst President ever.
Apparently, 2slugbaits hasn’t seen the following chart. The third and fourth quintiles are slammed while the highest quintile bears a smaller burden of the House bill on cap and trade. Progressive must stop at the fourth quintile. Most importantly, though, note the hit that the middle quintile takes.
http://correspondents.theatlantic.com/conor_clarke/2009/06/how_progressive_is_cap_and_trade.php
Cantab,
Ben Bernanke does think we’re in a liquidity trap. That’s why he is pushing “quantitative easing.” What else did you think Bernanke meant by the term? In his 1999 paper on Japan he argued that in a liquidity trap the monetary authority should flood the banks with money. At some point reserves will be so large that banks will start lending again and liquidity will not be “trapped” behind bankers’ vaults. In Fed Speak, when Bernanke uses the phrase “quantitative easing” what he is saying is that we’re in a liquidity trap.
MG,
A policy that benefits the lowest quintile is progressive. The bottom quintile sees a small net benefit of $40, the next lowest quintile sees a small net cost of $40 and the middle quintile sees a net cost of $235. That, sir, fits most people’s definition of a progressive tax.
MG,
Think about the y-axis on that chart and ask yourself if it tells you anything meaningful. Seriously, you cannot decompose the share distribution of various taxes by quintile and then compare the shares for each quintile. It’s a meaningless statistic. It’s the same kind of mess you get if you’re not careful about comparing individual components of a chain weighted index. The progressivity of a tax is not about the tax’s share of total revenue by quintile, it’s about the tax as a share of average income within each quintile.
MG
Look at the y-axis and ask yourself if it makes any sense. The y-axis shows the percent of total tax share for each quintile. That is not a measure of progressivity. Progressivity is a measure of the burden of the tax within each quintile, which is very different than comparing relative shares across quintiles. See the difference? This guy just slapped together a chart without asking himself if the numbers actually made sense. And you cannot compare relative shares by quintile across different types of taxes. You can’t do that anymore than you can make naive comparisons across components of a chain weighted index. Well, you CAN do that, but the results are meaningless.
2slugs, nearly everything you just added in your latest comment was, again, useless, no meat and no rebuttal to my counterpoints.
I can agree with this, however, “If at the end of his tenure Obama ends up doing worse than Bush 43, then Obama will go down in history as the worst President ever.” I would add though, not worse than GWB, but Carter, a well accepted Dem high point.
BB, I see you’ve had one of those well, DUH!!! moments: “Most of the debt is caused by revenue shortfall,“.
Also, saying this: “You mean like Bush’s Medicare part D entitlement, which was completely unfunded. I had no idea Bush was liberal. ” If you were a conservative, you would not be surprised by this statement. Yes, a social liberal, a fiscal moderate, and a national security conservative. Your basic complex man. Not what you were told by dKOS and HuffPo? And, BTW, we can truthfully say “O’s” healthcare plan is at best starting out partially funded with less (more deficit) built in for the future decades.
I agree with you re: the regressive/progressive argument, but we are probably splitting hairs, because it’s what defines our different politics.
Now, just think this statement through, please! “Again, most of the deficit is from revenue shortfall, not spending,” That one is worth a sheesh!
2slugs,
I suppose that you also disagree with his CBO reference and methodology:
Data on the Distribution of Federal Taxes and Household Income
April 2009
http://www.cbo.gov/publications/collections/taxdistribution.cfm
CoRev,
So Grassley’s admission that he was not negotiating in good faith is not a rebuttal to your point??? Only in FoxNewsLand. And pointing to the CBO’s numbers showing that the cap and trade bill is indeed progressive is not a rebuttal to your claim that it is regressive??? Again, only in FoxNewsLand.
The most widely accepted definition: A progressive tax is a tax by which the tax rate increases as the taxable amount increase.
MG,
UGH!!! The CBO chart showing relative shares is interesting and meaningful only because it also shows the relative share of before tax income. In other words, that chart does exactly what I said a meaningful chart would do, which is to show the relative burden within each quintile. Here’s what I said: Progressivity is a measure of the burden of the tax within each quintile, which is very different than comparing relative shares across quintiles. When looking at progressivity you look at taxes relative to income within each quintile and only then can you compare quintiles. That is not what the Atlantic correspondent did.
MG,
A progressive tax is a tax by which the tax rate increases as the taxable amount increase.
Note that the Atlantic correspondent’s chart did not show that. It compared relative tax shares of several different types of taxes. That doesn’t tell you anything about progressivity.
2slugs,
You’re missing the point. The C&T taxes do not exist now. He provided a distribution based on the proposed taxes/credits. I have no problem with his presentation. He was comparing the impact spread across the quintiles.
Slugs,
Ben Bernanke does think we’re in a liquidity trap. That’s why he is pushing “quantitative easing.”
This is not good enough. I asked for a quote. Its a well know term.
What else did you think Bernanke meant by the term?
From Wikipedia,
The term quantitative easing describes an extreme form of monetary policy used to stimulate an economy where interest rates are either at, or close to, zero. Normally, a central bank stimulates the economy indirectly by lowering interest rates but when it cannot lower them any further it can attempt to seed the financial system with new money through quantitative easing
I think Bernacke is saying he’s not in a trapm, he’s got more in his bag of tricks.
Let’s face it. You and all the other from the Krugman school want to call it a liquidity trap to rationalize more government spending. Your school claims its the only way out. Bernacke does not seem to agree with you.
Slugs,
Ben Bernanke does think we’re in a liquidity trap. That’s why he is pushing “quantitative easing.”
This is not good enough. I asked for a quote. Its a well know term.
What else did you think Bernanke meant by the term?
From Wikipedia,
The term quantitative easing describes an extreme form of monetary policy used to stimulate an economy where interest rates are either at, or close to, zero. Normally, a central bank stimulates the economy indirectly by lowering interest rates but when it cannot lower them any further it can attempt to seed the financial system with new money through quantitative easing
I think Bernacke is saying he’s not in a trap; he’s got more in his bag of tricks.
Let’s face it. You and all the others from the Krugman school want to call it a liquidity trap to rationalize more government spending. Your school claims its the only way out. Bernacke does not seem to agree with you.
2slugs, “So Grassley’s admission that he was not negotiating in good faith is not a rebuttal to your point??? ” No! Frozen out was my rebuttal to your “Obama tried…..include…” Reid and Pelosi were not accepting any meaningful Repub amendments.
And, “And pointing to the CBO’s numbers showing that the cap and trade bill is indeed progressive is not a rebuttal to your claim that it is regressive??? ” Nope. Targeted rebates of part of the revenues do not make a flat usage tax progressive. The implementing bill may help some members of one group, but unless rebates are correctly indexed the tax is regressive and implementation for many, even in the targeted group, will probably be regressive. Unless rebates are correctly indexed, over time, the implementation will certainly be regressive. But, you see, I live in the real world and not Lib-land where wishes and happy thoughts are truths.
http://chronicle.com/article/The-Trials-of-Tony-Judt/63449/
Most, probably all, of the commentators here have no idea who Tony Judt is. That is sad. He is a brilliant intellectual critic of Israel and Zionism. Also he happens to be a Jew. One of the courageous ones who will stand up for the truth. What has happened to him physcially, crushed by fate, is very sad. Still his legacy will remain and is supremely relevant to what is going on in the world today.
No, we call it a liquidity trap because that is what it is. You don’t want to admit it. Bernanke has a bad record for predicting and understanding what is going on in the economy. It is to our credit probably if he does not agree with us.
When you are in a liquidity trap, and we are even if you don’t like the fact, the only recourse is powerful fiscal stimulus. Obama is trying that, but probably there is not enough to accomplish the job.
Margery,
Define a liquidity trap and then quote an authority that says we’re in one and i’ll get back to you. Pasting a wiki quote without understanding what you’re saying will not due.
I don’t have time to track down quotes but here is a short list of experts I remember thinking we are in a liquidity trap: Scott Sumner, Gauti Eggertsson, Brad DeLong, Mark Thoma, Frank heinemann, and I think Nick Rowe.
The issue most economists would argue over is not whether we are in a liquidity trap, but what unconventional policies would get us out of it. Liquidity traps only mean conventional monetary policy cannot impact AD, but we could do price level targeting, quantitative easing (instead of Bernanke’s credit easing) exchange rate depreciation.
Margery,
Are you making a joke?
Baby,
I don’t have time to track down quotes
I can wait. Do it at your convenience.
but here is a short list of experts I remember thinking we are in a liquidity trap:
If you want credability you need Ben Bernacke or at least someone from the FEDs Board of Governers. However, I would also be interested in the quotes from democrat gun slingers, some of which were in your list.
Movie Guy,
He provided a distribution based on the proposed taxes/credits.
Think about it for 2 minutes. The relative shares alone are irrelevant for purposes of determining progressivity. The reason is that you don’t have the same total income in each quintile. You have to know the tax rellative to the total income within each quintile if you’re going to try and measure progressivity. That’s why the CBO report that you linked to provided both shares of income and shares of taxes.
Cantab,
You need to reread the wiki quote. It does not support your interpretation of liquidity trap. Seriously, reread the thing. Being in a liquidity trap does not mean that the monetary authority is powerless, it means that conventional open market operations that operate through the interest rate are powerless to further stimulate aggregate demand. Bernanke’s rationale for “quantitative easing” is his “Plan B” for when an economy is in a liquidity trap. That is, when the NAIRU clearing interest rate is negative, the economy is in a liquidity trap and the central bank has to use other nontraditional tools. That was the point behind Bernanke’s 1999 paper:
http://people.su.se/~leosven/und/522/Readings/Bernanke.pdf
In this section I will discuss some options that the monetary authorities have to stimulate the economy. Overall, my claim has two parts: First, that—despite the apparent liquidity trap—-monetary policymakers retain the power to increase nominal aggregate demand and the price level.
Krugman’s recommendation for Japan’s slump was to have the BOJ make a credible threat to reinflate the economy. Bernanke’s recommendation was to bury the banks in massive amounts of money.
And here is a paper that explicity defines a liquidity trap as being when the NAIRU clearing interest rate is negative:
http://129.3.20.41/eps/mac/papers/0402/0402033.pdf
In general, liquidity traps occur when the natural (or equilibrium) nominal interest rate (i.e., the nominal interest rate level that balances aggregate demand and supply) becomes negative.
I’m beginning to think that I should start charging you for all of these free macroeconomics lessons that I’m giving you.