Is the USA in recession?

[Naskra]

Show me the inconsistency.

Consistency is not your problem. Crappy concepts are. Tolkien's magical world of Middle-earth was consistent, but fantasy.

What is supply-side? Can you say what it is? Have you ever seen it? Do you know where to find it? No. no, and no.
Trade is reciprocal; I give you some of my bananas for some of your oranges. Expand on this, and soybeans in Texas are traded for Toyotas in Japan. There is no supply
side or demand side. Concepts! If you hold that all things are combinations of Earth, Air, Fire, and Water, you will not get far in chemistry. You need better concepts.
While all conventional macro-economics is BS, that doesn't mean that unorthodox BS is valid.

 

[Hygro]

Disagree but I get it, and I appreciate you spelling it out this time. I understand you hold an even more heterodox view of macroeconomics than I do.

I can definitely say what supply side is, its the physical things being made, shipped, sold, serviced, etc. If someone didn't show up for work that day, that's a day of supply that never happened. A lot of people didn't show up for work during covid. A lot of people in China aren't showing up when the government shuts down whole cities. That's a city of supply that never happened. Orthodox macroeconomics abstracts this decently with supply curves moving around, representing changes in total output, and how that intersects total money being spent.

The demand is, in addition to what people want, their aggregate money to spend it. We can account this. The money mediation is key. You won't commonly see an executive say "I'll give you 3 sheep for 2 wheat x toyotas for y soybeans" it has to be mediated in money, which is subject to rules and conforms to phenomenon. That includes, when lots of people don't go to work and therefore don't make/ship their wares, a very easy prediction that prices are going to go up.

As such, with money being the common denominator in these discussions, and with an economic framework decently predicting what's going to happen with the money, I do not agree that this a Greek elemental level proto-abstraction, but a decent one based on literal concepts. And in my case when I do venture from the orthodoxy to the heterodoxy, an even more literal one (like deficit spending is creating new money by virtue of depositing that spent money into bank accounts without a corresponding revenue source directly connected).

Still, I know that economic topics are among your favorite, therefore you give this stuff a good deal of thought, so if you have any better topics you are certain of or even have a hunch they are worth discussing, by all means shine light on them.

 

[El_Machinae]

Prices needn't go up if lots of people don't show up for work, because there will be a greater loss of money from the economy as dollars collapse. Sure, you'll need more toyotas to buy a soybean, but that needn't be represented as a higher dollar value for soybeans.

 

[Hygro]

Prices needn't go up if lots of people don't show up for work, because there will be a greater loss of money from the economy as dollars collapse. Sure, you'll need more toyotas to buy a soybean, but that needn't be represented as a higher dollar value for soybeans.

Implicit was "government didnt want people to lose homes, added a bunch of money (demand) while the output went down." It's true we wouldn't have had all that inflation if there wasn't also a trillions big mclarge huge stimulus.

edit 2: as the loss of the supply would have corresponded with the income loss and therefore the loss of demand. Not 1:1, I suppose the value of a person's work is greater than their income as there is profit etc, making non stimulus supply loss still inflationary. But certainly more in balance as "less stuff less money" rather than the real world outcome "less stuff more money"

 

[Lexicus]

Consistency is not your problem. Crappy concepts are. Tolkien's magical world of Middle-earth was consistent, but fantasy.

What is supply-side? Can you say what it is? Have you ever seen it? Do you know where to find it? No. no, and no.
Trade is reciprocal; I give you some of my bananas for some of your oranges. Expand on this, and soybeans in Texas are traded for Toyotas in Japan. There is no supply
side or demand side. Concepts! If you hold that all things are combinations of Earth, Air, Fire, and Water, you will not get far in chemistry. You need better concepts.
While all conventional macro-economics is BS, that doesn't mean that unorthodox BS is valid.

Supply-side is literally the production of good and the performance of services. It's not complicated. You know, you have to produce things before you can trade them, reciprocally or not.

 

[Joij21]

answer, 66% of Senate Republicans and like 90% of House Republicans are against it. More than 99% of Democrats are for it. So how are Republicans going to fix it?

Because Republicans consider it to be socialist (and therefore evil) to use the power of government (and not the free market via trickle down theory) to subsidize chip manufacturers.

All despite the fact the Donald Trump used government authority to create protectionist policies in order to boost American industrial capacity away from China. But I suppose he gets a free pass from this one because he slashed traditional income taxes for the rich and taxed the incoming goods from overseas (no good for nothing foreigner products) instead. Which despite the fact it may have led to an increase in consumer prices, it barely effected the rich.

The reason the rich (aka Republicans) don't like Biden's plan is probably because he intends to raise the funds for this via increasing income taxes again (thus reversing their gains under Trump) hence why they are so vehemently against it.

Also they don't want to vote for it because it could potentially give Biden and the Democrats a real political victory, meaning their own seats could come in jeopardy as Democrats could grow in popularity among voters if the program is successful. So it's easier to vote no and then blame it on Democrats in order to perpetually stay in power by making the opposition seem too incompetent under the leadership of "sleepy Joe". There would need to be something in the bill for them in which they could proclaim a victory for themselves to take credit for in order to make them even consider a yes vote. However Mitch McConnell is the chief coordinator among Republicans and ever since the Obama administration he has found it most politically advantageous to engage in zero sum blockage of the opposition's agenda in order to then spin the narrative (via Fox news and related conservative media) that the Democrats are so incompetent and "all talk and know action" when in reality the reason they can't accomplish anything is because he just c**k blocks it.

As long as voters can remain stupid enough to fall for McConnell's blockage tricks and then subsequent spin we'll never get out of this endless political stagnation. It will only when the voters of Kentucky grow braincells (and possible gerrymandering is ended within Kentucky) that McConnell will be dethroned and America can get back on track and hopefully become less divisive. Unfortunately many other Republicans from other states have learned from master McConnell in the art of obstruction.

 

[Farm Boy]

Hey the new Corollas are nice. How many for the soybean, again? I'll haggle.

 

[RobAnybody]

But there's at least 50-100 active OT members. And most of them have no idea that I've been calling it correctly in advance.

FWIW: "wow Hygro, thanks for preparing me to be able to understand exactly what is happening" I do appreciate your insight.

 

[El_Machinae]

edit 2: as the loss of the supply would have corresponded with the income loss and therefore the loss of demand. Not 1:1, I suppose the value of a person's work is greater than their income as there is profit etc, making non stimulus supply loss still inflationary. But certainly more in balance as "less stuff less money" rather than the real world outcome "less stuff more money"

Here's my thinking.

The value of your work is greater than your salary but your salary is more than the cost of your output, and the economic surplus of the production needn't be captured in dollars. So more 'money' gets taken out of circulation than 'stuff', when you're laid off (plus interest on debt). That said, a lot of our output doesn't seem to be in products that count towards inflation. When the teacher gets laid off and continues to buy bread, the whole of their salary is removed from their ability to purchase but the loss of their output doesn't significantly reduce supply (as inflation measures such things). Finally, if someone borrows to hire the teacher to produce bread, they're going to hire them at cost of labor not at value of labor. The real price of goods will skyrocket, obviously. Not necessarily the fiat prices.

I did miss that you were assuming counter-cyclical efforts by the government, though. Didn't mean to be pedantic.

 

[Hygro]

In all cases I agree we should target taxes to compress the total $4 trillion, for no other reason than to not widen the oligarchy-rest-of-us divide. I wonder which party will be more inclined? Some of the recent Democratic led bills have included tax hikes, before they get negotiated away to get those last couple senators.

Neither!

The reason the rich (aka Republicans) don't like Biden's plan is probably because he intends to raise the funds for this via increasing income taxes again

Well, which one of you is right?

 

[Birdjaguar]

I do not think that taxing the top 15% more has any significant impact on their spending. They just get richer slower and the government gets a bit more money to spend.

 

[Lexicus]

The federal government doesn't get money to spend from taxes. Doing a "payfor" is a ritual designed to satisfy the god Mar-Qet, a central figure in a religious cult called "austerity".

 

[Hygro]

the government gets a bit more money to spend.

Birdjaguar why you gotta do me like that.

 

[Farm Boy]

That's still how it works even if it's not how it works. The rich, if they have less money and get lesser returns on it, do speculate less. Housing. Land. Productive shares in business. Finite things that are bought. Venture capitalists drowning out established business despite chewing losses for years. That sort of crap. Which means government spending has more impact. If that's really what we care about instead of the asthetics of the number as written in decimal or hexadecimal or whatever?

 

[Lexicus]

Birdjaguar why you gotta do me like that.

Dollars actually are carted down by talking horses (who are friends of Hermes) from Mount Olympus, where the dollars are forged by Hephaestion. The federal government has a big pile of dollars but remember they actually come from the gods.

 

[Hygro]

I don't give a damn. It's easier to blame a siting president, especially if it's a president I do not like.

Well, carry on, then.

That's still how it works even if it's not how it works. The rich, if they have less money and get lesser returns on it, do speculate less. Housing. Land. Productive shares in business. Finite things that are bought. Venture capitalists drowning out established business despite chewing losses for years. That sort of crap. Which means government spending has more impact. If that's really what we care about instead of the asthetics of the number as written in decimal or hexadecimal or whatever?

Leave it to @Farm Boy for the "private investment crowds out government spending" take. I agree, but on the caveat that you started with the caveat. Uber lost money for years, all the backs of investors, who knew it was losing money, and still wanted in early, even though they were going to lose money, too. But they had to do something with their money, their too much, trickle down investment money. So inefficient. As long as their investments exist, the political will to put the government into the same space is limited. And that's where the crowding out happens.

Normally the theory is government spending crowds out private investment. It's a purely economic argument, from the perspective of "if we already have full employment, and we have the government spend on XYZ, then that spending crowds out the private sector from buying the same XYZ". It's tautologically true in its abstract form, as long as the government gets to buy first or bid highest.

But it's dubious in the real world. The private sector underinvests, and so increased spending often leads to simply more economic activity. So instead of a displacement of supply, it's an increase.

So then returning to theory, from the real world, you would think to get the best of both we would just have government spending with relatively low taxes.

But you are arguing that the town halls up through the Senate floors, and in the Senate floors where it matters most, they won't spend an extra government dollar when they can spend 3 dollars on tax cuts for their friend's to do 50 cents worth of quality in the same space. And that the crowding
a) isn't economic but political
b) comes from the private sector crowding out the state
b) driven by what people see already being done, and don't want to interfere with

And this, my friends, is why economics never mattered did it, starting from the very top of the post.

Farm Boy I think you're right. It might not be how it works, but even then, it's how it works.

 

[Joij21]

Well, carry on, then.



Leave it to @Farm Boy for the "private investment crowds out government spending" take. I agree, but on the caveat that you started with the caveat. Uber lost money for years, all the backs of investors, who knew it was losing money, and still wanted in early, even though they were going to lose money, too. But they had to do something with their money, their too much, trickle down investment money. So inefficient. As long as their investments exist, the political will to put the government into the same space is limited. And that's where the crowding out happens.

Normally the theory is government spending crowds out private investment. It's a purely economic argument, from the perspective of "if we already have full employment, and we have the government spend on XYZ, then that spending crowds out the private sector from buying the same XYZ". It's tautologically true in its abstract form, as long as the government gets to buy first or bid highest.

But it's dubious in the real world. The private sector underinvests, and so increased spending often leads to simply more economic activity. So instead of a displacement of supply, it's an increase.

So then returning to theory, from the real world, you would think to get the best of both we would just have government spending with relatively low taxes.

But you are arguing that the town halls up through the Senate floors, and in the Senate floors where it matters most, they won't spend an extra government dollar when they can spend 3 dollars on tax cuts for their friend's to do 50 cents worth of quality in the same space. And that the crowding
a) isn't economic but political
b) comes from the private sector crowding out the state
b) driven by what people see already being done, and don't want to interfere with

And this, my friends, is why economics never mattered did it, starting from the very top of the post.

Farm Boy I think you're right. It might not be how it works, but even then, it's how it works.

This whole "government doesn't choose to invest because they feel the private sector can invest instead" is wrong. They actually do invest, place bids, and add more to the system. It's called the Military Industrial Complex.

 

[Hygro]

This whole "government doesn't choose to invest because they feel the private sector can invest instead" is wrong. They actually do invest, place bids, and add more to the system. It's called the Military Industrial Complex.

I didn’t think my post would be read that black and white. The government spends 3 trillion a year +/– some, so obviously it invests. Those trillions are a giant chunk of the economy. But to the extent that it invests meaningfully let alone optimally in all sectors that “it should” is the implication underlying the post.

 

[Farm Boy]

Well, carry on, then.



Leave it to @Farm Boy for the "private investment crowds out government spending" take. I agree, but on the caveat that you started with the caveat. Uber lost money for years, all the backs of investors, who knew it was losing money, and still wanted in early, even though they were going to lose money, too. But they had to do something with their money, their too much, trickle down investment money. So inefficient. As long as their investments exist, the political will to put the government into the same space is limited. And that's where the crowding out happens.

Normally the theory is government spending crowds out private investment. It's a purely economic argument, from the perspective of "if we already have full employment, and we have the government spend on XYZ, then that spending crowds out the private sector from buying the same XYZ". It's tautologically true in its abstract form, as long as the government gets to buy first or bid highest.

But it's dubious in the real world. The private sector underinvests, and so increased spending often leads to simply more economic activity. So instead of a displacement of supply, it's an increase.

So then returning to theory, from the real world, you would think to get the best of both we would just have government spending with relatively low taxes.

But you are arguing that the town halls up through the Senate floors, and in the Senate floors where it matters most, they won't spend an extra government dollar when they can spend 3 dollars on tax cuts for their friend's to do 50 cents worth of quality in the same space. And that the crowding
a) isn't economic but political
b) comes from the private sector crowding out the state
b) driven by what people see already being done, and don't want to interfere with

And this, my friends, is why economics never mattered did it, starting from the very top of the post.

Farm Boy I think you're right. It might not be how it works, but even then, it's how it works.

I swear, I could kiss you.

 

[GenMarshall]

Well, I'm going to have to eat humble pie on this one. But I think because I have a bias against Biden, that I was very quick to blame Biden for both the inflation and the recesson. With the graph shown to me, I realized that it happened during the tail end of the Trump Administration during the pandemic and the resulting money printing caused a delay for the inflation and recession to creep up.

Sorry for being so bad faith with you, @Hygro .