Death of the [Austerity]/Confidence Fairy Tale

The adopted austerity, actually waited until if was forced on them if truth be told, because the gravy train of high credit ratings and having others willing to purchase more of their debt dried up. The only option left other than austerity measures was removing themselves from the Euro and having their printing presses work overtime to come up with enough fiat paper to send to their creditors. That worked out well for so many others in the past that they decided austerity would be a better choice than the hyperinflation that would result from the other choice.

The good old days of 1,000,000 lira notes. Who wants to be a millionaire?

PrintSmith wrote:

LadyJazzer wrote: Yeah, let's keep cutting... Let's keep chasing policies that we already KNOW don't work...

Oh, but they do work. Consider the 1920-21 Depression. In 1920 the federal government's spending was $6.4 Billion, which was dropped to $5 Billion in 1921 and had been nearly cut in half at $3.3 Billion by 1922. In 18 short months the union had recovered from a stock market crash where the value of the market had dropped by 47%, a 36% drop in wholesale prices, double digit unemployment (11.7%) and a decline in actual GNP of about 17% ($88.4 Billion to $73.4 Billion). In 18 short months the union recovered from a depression that, at its onset, was worse than even the Great Depression. What sets the two apart is how the federal government responded to them. The 1920/21 Depression saw the federal government significantly reduce its spending and the rate at which it taxed the populace. What the federal government did at the onset of the Great Depression was exactly the opposite, it increased spending and increased taxes which both magnified the problem and extended it. The 1920/21 Depression was over in 18 months, the Great Depression lasted 132 months. And history shows us that it wasn't until the federal government cut spending and lowered taxes in 1948 that recovery from the Great Depression truly gained a foothold. Truman vetoed two tax cuts in 1947 citing the same reason that Democrats oppose them now - they favored the wealthy. It wasn't until Congress overrode Truman's third veto of the tax cuts in 1948 that the economic engine of the union started humming once again. Here again federal government spending was cut along with the tax rates. In 1947 federal outlays were 17% of GDP at $41.4 Billion, in 1948 they were 13.25% of GDP and $35.6 Billion - a reduction of actual dollars spent by the federal government of 14% in one year.

Reducing the actual amount of money spent by the general government always yields positive results for the union's economy. Keynesian "stimulus" attempts my halt a decline, but they also inevitably lengthen the amount of time necessary to recover from the decline. The Great Depression lasted 7 times as long as the 1920/21 Depression did. As our current predicament shows, those that fail to learn the lessons of history are doomed to repeat it. Cut the tax rates, cut the actual amount of spending and we can get ourselves out of this mess which the general government created. It is the only solution which has shown itself to bring a quick end to economic downturns. Lowering tax rates alone will not solve the problem - actual dollars spent must also be significantly reduced instead of pretending that a smaller increase than previously proposed equates to less spending.

We still have the Bush tax cuts in place as well as the Obama tax cuts. Where's the recovery?

Sheldon wrote: We still have the Bush tax cuts in place as well as the Obama tax cuts. Where's the recovery????? Moron!

Hey Stupid - did you miss this part of the equation?

PrintSmith wrote: Lowering tax rates alone will not solve the problem - actual dollars spent must also be significantly reduced instead of pretending that a smaller increase than previously proposed equates to less spending.

Sorry, can't read one of your tomes that you call a post. Too much drivel. If you cut spending, you'll swamp the economy stupid. You'll get your religious right wing end of the world scenario though.

So tell us Numbnuts - why did cutting tax rates and cutting spending lead to a recovery from Depression of 1920/21 in 18 short months if cutting spending swamps the economy?

PrintSmith wrote: So tell us Numbnuts - why did cutting tax rates and cutting spending lead to a recovery from Depression of 1920/21 in 18 short months if cutting spending swamps the economy?

Oh yes, the roaring twenties that led up to the Great Depression. You really want to cite that particular tax cut? You create a bubble economy and then are surprised when the bubble pops.

Science Chic wrote: Good god people, really? Is this how you'd speak to each other in person? :faint:

Its all right SC, PS just has thin skin.

I thought Sheldon viewed such things as terms of endearment given his liberal use of what would ordinarily be considered insults. My bad - I was merely attempting to speak with him in the fashion he appeared to be comfortable with.