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« Goldman Director Bill George: Top Bankers Are Like Movie Stars And Deserve To Be Paid Accordingly | Main | Yo Bob Rubin: Shut Your Freaking Pie Hole »
Tuesday
Jan052010

Marshall Auerback Just Called You A Deficit Terrorist

Keynesian loving nonsense follows.  You have been warned.

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By Marshall Auerback

In truth, today’s deficit hawks are nothing more than zealots — poised again to preach their nonsensical theology that government deficits are dangerous and need to be cut, without honestly explaining the full consequences of their recommendations. If households attempt to net save by spending less than they are earning, and businesses attempt to net save (reinvesting less than their retained earnings), then private sector incomes and real output will decline absent an increase in government spending. The danger of premature fiscal tightening was illustrated in the US in 1936-37, when the ending of a war veterans’ bonus and the introduction of Social Security taxes helped push the US back into recession when recovery from the Great Depression was far from complete.

The deficit terrorists only begrudgingly note (if at all) that absent the absorbing role of budget deficits over the last couple of years, we would have had a full Great Depression experience. Government deficits, as Paul Krugman has noted on numerous occasions, saved the world from a much more calamitous experience, yet these deficits are still characterized as something like Norman Bates’s murderous “mother” in the attic of Bates Motel, ready to destroy our helpless population under the nefarious guise of “socialism” or worse. The phobias created by supposedly apolitical organizations such as Pete Peterson’s Concord Coalition or the tea party brigades intimidate policy makers into modifying their fiscal responses to the point where they are insufficient to fill the spending gap left by private sector withdrawal.

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Video: David Walker Disagrees

 

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Reader Comments (10)

I'm getting tired of hearing people saying things like, "we need to do something before it's too late" or "this problem will bring America to its knees".

The fact is it's ALREADY 'too late' and America IS ALREADY 'on its knees'. Game over. Remind the last one out to turn off the light before they leave. And if you see Osama Bin Laden, congratulate him on his well-earned victory.
Jan 5, 2010 at 2:49 PM | Unregistered CommenterRecoverylessRecovery
The fact is it's ALREADY 'too late' and America IS ALREADY 'on its knees'. Game over.

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i think james quinn makes your point here

http://dailybail.com/home/dying-of-debt-a-road-to-perdition-by-james-quinn.html

the numbers are simply too large...
Jan 5, 2010 at 3:24 PM | Registered CommenterDailyBail
It would be different if Marshall Auerback actually understood basic economics. Ditto Obamabot model PK 2000. Mr. Auerback should be spanked for saying such dumb things in public. The idea that a reduction in GDP is necessarily a bad thing is probably one of the most destructive ideas in economics. One might say that the GDP zealots are in fact the root cause of our current problems. Imagine if Easy Al had allowed the recession of the 2000's to show up in GDP numbers. We had the recession, btw, we just borrowed our way to better GDP numbers. Or imagine if B-52 and Tiny Tim weren't irrationally afraid of a little recession in 2007. Instead, they let things run on for another year or so before it all collapsed massively in September 2008. And just think of what we've set ourselves up for in the next few years, just so Geithner and Obama could get a positive GDP number for Q3 and Q4 of this past year.

I'm sure Mr. Auerback doesn't read a quality site like this one, but if he does, he should consider the case of someone who maxes out his credit cards for several months just so he can increase his consumption of useless crap. At some point he will have to pay all this back (or default). How's his "personal GDP" going to look then? That's right, it's going to look even worse than it would if Mr. Credit Card had reduced consumption (his "GDP") and saved his money for a while.
Jan 5, 2010 at 11:37 PM | Unregistered CommenterJames H
keynesians hate recessions...marshall is a strong keynesian...he actually believes in Krugman... you are correct of course about GDP zealots...as you know and we've talked about, the root cause is 'politics' and the next election cycle...so politicians do everything under the sun to avoid recessions, some more than others...

i don't know if you were old enough to have been paying attention at the time, but conventional wisdom said george h. bush lost to clinton because he was unwilling to do anything drastic to fight the recession...

in reality he lost because Perot siphoned votes...but my point is that he was the last president to stare into a recession and not fight it...granted, he was upset with greenspan for not lowering rates quickly enough in response, but he did not resort to ridiculous stimulation to attempt to re-start the economy...it was noble, in a way...
Jan 6, 2010 at 3:23 AM | Registered CommenterDailyBail
he just so happened to write another article posted on clusterstock today...about rubin...

http://www.businessinsider.com/robert-rubin-is-back-noooooo-2010-1

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back to the recession-hating keynesians...i'm guessing auerback is part of the krugman-delong circle and was told to write in favor of more stimulus, deficits be damned...the word went out through the proper keynsian channels and marshall went to work...
Jan 6, 2010 at 3:30 AM | Registered CommenterDailyBail
Heh heh, right on cue, PK 2000's "It's 1937 Again" article was in my morning paper. Good call, DB. Yes, you're right. It is all about politics infecting economics.
Jan 6, 2010 at 9:31 AM | Unregistered CommenterJames H
"in reality he lost because Perot siphoned votes...but my point is that he was the last president to stare into a recession and not fight it..."

It also did not help him that he was one of the greatest gun banners we have ever seen, and the BATF under him were clearly "jack booted nazis".


http://www.nytimes.com/1989/07/08/us/import-ban-on-assault-rifles-becomes-permanent.html?pagewanted=1

http://www.boogieonline.com/revolution/firearms/enforce/nra_thug.html
Jan 6, 2010 at 10:32 AM | Unregistered CommenterS. Gompers
Jan 6, 2010 at 10:36 AM | Registered CommenterDailyBail
But...if Paul Krugman were to be a boat, he'd definitely be a Paddle King 2000.
Jan 6, 2010 at 2:16 PM | Unregistered CommenterJames H

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