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[MetalSlimeHunt]

I don't have enough hands for this facepalm.

[Darvi]

Cut off your roommate's. It's a win-win situation.

So yeah, how did he even qualify to be nominated for this position?

[SealyStar]

http://blogs.nature.com/news/2012/11/lamar-smith-wins-nomination-for-top-house-science-position.html

Lamar Smith, noted AGW denier is now the chairman of the house Science, Space and Technology committee.

Denying AGW on a science committee? Common.

But do you realize that this is the man who introduced freaking SOPA, serving on a technology committee?! Priorities, man!

[RedKing]

Who better to serve on a science and technology committee than a man who HATES SCIENCE AND TECHNOLOGY. Hates them, we do! They stole our preciousssss....

[GreatJustice]

Barring the Great Depression (in which interventionist methods were used), certainly nothing before 1913 was quite so economically damaging as, say, stagflation.

....you do realize that the Great Depression occurred after 1913, right? Just sayin.

You do realize that I said "Barring the Great Depression", right?

Beyond that, let's see:

1807 - Jefferson embargoes ALL foreign trade, triggers a six-year recession

Pretty dumb move from any perspective, post 1945 or not. For reference, though, this one was three years, not six.

1836 (Panic of 1837) - Jackson insists on use of silver currency, triggers six-year recession, massive unemployment, agricultural price failures, and a decrease in the money supply of 58%

An increase in the monetary supply by around 35% (!!!) prior to the panic, followed by issues stemming directly from the Second Bank of the United States and from various issues with state-chartered banks had quite a bit more to do with it.

Oh, and while this one was pretty bad, it only lasted two years.

1873 - Stock prices collapse in Vienna, economic panic spreads to US, dovetailed into some banking/railway collapses in the US, triggers a six-year recession which marked the start of a 23-year period known as the Long Depression.

There's a pretty good quote on this one:

Spoiler (click to show/hide)

As economists Friedman and Schwartz have noted, the decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. Even the alleged "monetary contraction" never took place, the money supply increasing by 2.7 percent per year in this period. From 1873 through 1878, before another spurt of monetary expansion, the total supply of bank money rose from $1.964 billion to $2.221 billion—a rise of 13.1 percent or 2.6 percent per year. In short, a modest but definite rise, and scarcely a contraction.[46] Although per-capita nominal income declined very gradually from 1873 to 1879, that decline was more than offset by a gradual increase over the course of the next 17 years.

Furthermore, real per-capita income either stayed approximately constant (1873–1880; 1883–1885) or rose (1881–1882; 1886–1896), so that the average consumer appears to have been considerably better off at the end of the "depression" than before. Studies of other countries where prices also tumbled, including the US, Germany, France, and Italy, reported more markedly positive trends in both nominal and real per-capita income figures. Profits generally were also not adversely affected by deflation, although they declined (particularly in Britain) in industries that were struggling against superior, foreign competition.

So if you even consider it a recession, let alone a depression, it wasn't even close to being as bad as the 70s for people.

Honestly, if you look at most economic failures in US history, they're caused when the Fed (or before the Fed's creation, the US government through the Bank of the United States) shrinks the money supply and raises interest rates. We've never had a period of hyperinflation like Weimar Germany, in part because the wealthy have always exerted considerable pressure in this country to KILL INFLATION WITH FIRE. Why? Because inflation is the enemy of accrued wealth. Deflation is the enemy of a functioning economy, but if you can afford to sit tight on your money, you'll make out like a bandit when the economy recovers.

Yet the wealthy were (and still are) instrumental in supporting the Federal Reserve system. Why is that?

Remember, the very first people to receive new money aren't affected by the price inflation that comes with the inflation of the monetary supply. Hence the concept of "negative interest rates". The very first people who receive the new money, coincidentally enough, are the exceptionally rich, who in turn would rather not have deflation. Money supply decreases wouldn't be as harmful were there not false expectations created by easy lending in the first place. Deflation isn't necessarily a bad thing.

[mainiac]

Depends on what you mean by "ended the depression". If you mean in the literal, GDP sense, then that's mostly because GDP is driven by spending. Hence, the government spending a gigantic amount of money on tanks, planes, etc will drive up GDP even if the economy is in a bad shape. The same thing could be done if the Obama administration decided to spend a couple hundred billion/trillion dollars digging ditches in Nebraska, but it certainly wouldn't improve the economy in a meaningful sense.

Okay... let's follow this idea.

You agree that stimulus would return the economy to full employment.  Once the economy is at full employment that would mean more private spending and Fed policy would gain traction.  So we would stay at full employment even once the government starts firing ditch diggers to prevent inflation.  This would mean hundreds of billions of dollars in additional economic output that was not there before.

How is hundreds of billions of dollars in additional economic output not a meaningful improvement?  Or do you disagree with something in my previous paragraph?

Please be succinct, on point and do not reference some historical event to change the subject if at all possible.

[Reelya]

There's a pretty good quote on this one:

Spoiler (click to show/hide)

As economists Friedman and Schwartz have noted, the decade from 1869 to 1879 saw a 3-percent-per annum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. Even the alleged "monetary contraction" never took place, the money supply increasing by 2.7 percent per year in this period. From 1873 through 1878, before another spurt of monetary expansion, the total supply of bank money rose from $1.964 billion to $2.221 billion—a rise of 13.1 percent or 2.6 percent per year. In short, a modest but definite rise, and scarcely a contraction.[46] Although per-capita nominal income declined very gradually from 1873 to 1879, that decline was more than offset by a gradual increase over the course of the next 17 years.

Furthermore, real per-capita income either stayed approximately constant (1873–1880; 1883–1885) or rose (1881–1882; 1886–1896), so that the average consumer appears to have been considerably better off at the end of the "depression" than before. Studies of other countries where prices also tumbled, including the US, Germany, France, and Italy, reported more markedly positive trends in both nominal and real per-capita income figures. Profits generally were also not adversely affected by deflation, although they declined (particularly in Britain) in industries that were struggling against superior, foreign competition.

So if you even consider it a recession, let alone a depression, it wasn't even close to being as bad as the 70s for people.

They're justifying the recession of 1869-1879 on good shit that happened 20 years later! by that reckoning the 1970's wasn't so bad because of good growth in the late 90's. That kind of quote doesn't really justify the "it should be fixed by now!" rhetoric.

And for their logic "there was no contraction of the money supply!" - the money supply was increasing at a MUCH slower rate than growth; that's a contraction by any sensible economic definition - less money per unit of production.

[Reelya]

Sorry to double post, but this is really a separate topic and I didn't want to mix it with my other post:

Another interesting thing is fiscal multipliers: economists estimate how much GDP will be affected by government spending or tax cuts - a tax cut is stimulus, as is direct spending: Both attempt to improve the economy by fiscal multiplier flow-on effects on GDP:

In congressional testimony given in July 2008, Mark Zandi, chief economist for Moody's Economy.com, provided estimates of the one-year multiplier effect for several fiscal policy options. The multipliers showed that any form of increased government spending would have more of a multiplier effect than any form of tax cuts. The most effective policy, a temporary increase in food stamps, had an estimated multiplier of 1.73. The lowest multiplier for a spending increase was general aid to state governments, 1.36. Among tax cuts, multipliers ranged from 1.29 for a payroll tax holiday down to 0.27 for accelerated depreciation. Making the Bush tax cuts permanent had the second-lowest multiplier, 0.29. Refundable lump-sum tax rebates, the policy used in the Economic Stimulus Act of 2008, had the second-largest multiplier for a tax cut, 1.26.[6]

As can be seen from the modelling, $1 in food stamps increases GDP by $1.73 and $1 to the Bush Tax Cuts increases GDP by $0.29.

It doesn't take a rocket-scientist to see that not extending the bush tax cuts but expanding food subsidies would grow GDP without massively increasing the money supply. There ARE taxes with a large economic stimulus effect, but the Bush Tax Cuts are NOT one of them.

[misko27]

Sorry to double post, but this is really a separate topic and I didn't want to mix it with my other post:

Another interesting thing is fiscal multipliers: economists estimate how much GDP will be affected by government spending or tax cuts - a tax cut is stimulus, as is direct spending: Both attempt to improve the economy by fiscal multiplier flow-on effects on GDP:

In congressional testimony given in July 2008, Mark Zandi, chief economist for Moody's Economy.com, provided estimates of the one-year multiplier effect for several fiscal policy options. The multipliers showed that any form of increased government spending would have more of a multiplier effect than any form of tax cuts. The most effective policy, a temporary increase in food stamps, had an estimated multiplier of 1.73. The lowest multiplier for a spending increase was general aid to state governments, 1.36. Among tax cuts, multipliers ranged from 1.29 for a payroll tax holiday down to 0.27 for accelerated depreciation. Making the Bush tax cuts permanent had the second-lowest multiplier, 0.29. Refundable lump-sum tax rebates, the policy used in the Economic Stimulus Act of 2008, had the second-largest multiplier for a tax cut, 1.26.[6]

As can be seen from the modelling, $1 in food stamps increases GDP by $1.73 and $1 to the Bush Tax Cuts increases GDP by $0.29.

It doesn't take a rocket-scientist to see that not extending the bush tax cuts but expanding food subsidies would grow GDP without massively increasing the money supply. There ARE taxes with a large economic stimulus effect, but the Bush Tax Cuts are NOT one of them.

As A totally unbiased party, I would like to say that Food Stamps are incredibly helpful to the Economy, and to poor people in general. I have not, and most likely never will, understand the economic argument against them. It's very simple really. Imagine one person had everything. All the money, all the stuff, all the everything. The Economy, therefore, is dead, because no one is spending anything. Poor people instantly spend any money they recieve, because they are poor, while rich people horde, because they can afford to. Money is only really relevant to a economy if it is being spent. I have money, That doesn't help me at all! Only with the rich does having money become a scoring system of life.
 
This, AND the moral argument of feeding poor people, means tha food stamps is, in conclusion, the best idea ever.

[Leafsnail]

That's certainly an argument for welfare, but the problem with foodstamps is that it creates a black market commodity for no real benefit (other than "punish those lazy poors").

[Reelya]

Some relevant data is from that drug testing for Florida welfare recipients, that didn't turn up more than a couple of percent of recipients using illegal drugs, and almost all of those were marijuana. It actually cost more money to administer the tests than the taxpayer saved in people thrown off welfare xD

The bottom line is that yeah, maybe a few people are swapping the food stamps food for other items, but it's a almost certainly very small minority who are doing that, and the stamps are still being spent in the economy, which is already proven to be the biggest possible GDP positive effect of any government program ever conceived, and not (on the whole) inflationary, since it creates more new GDP than the amount spent.

"feeding the poor" is just a beneficial side-effect. The stamps are justified by the economic modelling alone. Don't forget all that spending creates a lot of jobs, thus decreasing the total # unemployed. Some of the people serving the food stamps people would have been unemployed themselves otherwise.

Anyway, they almost all go to families with kids. That has benefits for the kids - or do we hold children fiscally responsible for their parents being poor? Feeding kids improves their school performance and health, which has benefits for the whole economy years down the track, the short-term fiscal multiplier don't take these benefits into account.

[misko27]

Anyway, they almost all go to families with kids. That has benefits for the kids - or do we hold children fiscally responsible for their parents being poor? Feeding kids improves their school performance and health, which has benefits for the whole economy years down the track.

I can attest to this.
 

[GlyphGryph]

That's certainly an argument for welfare, but the problem with foodstamps is that it creates a black market commodity for no real benefit (other than "punish those lazy poors").

I can't help but suspect that just giving people money would be even more effective. Anyone have the multiplier for direct poor-person-cash-infusion?

[Reelya]

The problem is that cash can be hoarded, spent in the informal market or used directly to buy black market products. They therefore do not have the same dollar for dollar benefit as food stamps on the retail economy.

Food stamps are "use it or lose it", similar to tax credits, which only kick in if you do the taxable activity.

[mainiac]

I can't help but suspect that just giving people money would be even more effective. Anyone have the multiplier for direct poor-person-cash-infusion?

Well you are basically talking about unemployment benefits there.  They have a high multiplier but not as high as food stamps: http://voices.washingtonpost.com/ezra-klein/2010/06/research_desk_whats_a_dollar_o.html

Of course the specifics of an individual policy might matter so it shouldn't be the case that all cash transfers are worse then all food stamp spending.  But food stamp spending is pretty darn stimulative.  It has to be spent within the month and it goes to those who are most financially constrained.  Those are pretty much exactly the conditions you'd want to fulfill.