How do you spell stagflation?

[Bob Cook]

Paul Volcker recommends interest-rate shock to kill the stagflation beast.

It might stop the inflation trend, but gawd almighty, what would it do to the already-sick-as-hell real estate markets?

We're already in the midst of a housing crash and foreclosure epidemic, throw in interest rate shocks and the housing industry might just COMPLETELY shut down for a couple years. That idea ought to scare the hell out of every homeowner.

Volcker's idea was that all the diddling around at the edges didn't solve the stagflation problem. So drastic action was necessary if the country was to ever get out of its economic malaise. And, oh yeah, it KILLED the housing market, then, too. Imagine a home loan with a 30-year fixed rate as high as your highest credit card. That's how the 3-year, and 5-year variables came into popularity. I remember in my brief time living in Fort Wayne, Ind., that the subdivisions in our area were full of streets that had no houses, or streets that had names but were only intersections. (Fortunately, the company my dad worked for bought our house whenever it made us move.)

I'm not saying Volckermania should return. I don't know enough about economics to figure that out. But I've seen others make the argument that's it better, collectively, to take our medicine now and have this disappear in a few years, rather than let it drip, drip, drip for a decade.

 

[Lyman_Bostock]

Is this a trick question?

Only to the Bush presidency... This is going to be the cherry on top for him. It's not entirely his fault, just as it wasn't entirely Jimmy Carter's fault. But when you're the president and everything falls apart economically at once, you don't get remembered very kindly. Bush isn't going to shoulder it entirely. I don't envy Obama or McCain, if they get elected. They are walking into a mess and whatever they try to do--other than ride it out and stand aside and watch people suffer--they are going to create more of a problem. It's what Carter found out when he did just about everything wrong. If you try to create economic growth, you pour gasoline on the inflation problem. If you try to address to inflation, you cripple the economy even more. There is nothing you can do. I don't have an absolute crystal ball, but I will bet that whoever gets elected president next has a very rough presidency and leaves with some major scars.

Oh, and Ace, I only brag about how well hung I am... Who really cares all that much about spelling?

Bush has been in the saddle eight years. It's on him. ****ing incompetent moron.

Only if he gets credit for the growth from 2002 to 2007.

 

[Stoney]

The best way out is to do nothing.

But isn't that the belief that was largely discredited in the 1930s? At least that's the way I remember my history books telling it:

That the Hoover administration believed the way out of the Depression was to avoid govt interference and allow the free market and Adam Smith's invisible hand to guide us out. Things only got worse and worse.

Then FDR's Keynesian-inspired New Deal went the opposite way and tried to steer us out with massive govt spending, stimulus programs, and tinkering with just about everything. Things gradually got better.

 

[Evil Bastard (aka Chris_L)]

Full employment in economic terms is usually defined as between 4-6.5% - yet Chicken Little's on the board seem to think 5.5% spells doom.

All I have to say is be careful what bars you set because the next President or any other for the foreseeable future will have trouble being deemed a success if you try to paint the W years as an economic wasteland. Thanks to the Internet people can't call 5.5% doom anymore yet glory about a Democratic reaching 5.5% levels and being labeled a savior.

Just for fun compare the first years of the Bush 43 years against the first term of Bill Clinton 42

 

[old_tony]

Everything was grand with the economy when it was Bush in the White House and the GOP in charge of the House and Senate.

Six years of a stagnant stock market.

Gasoline prices that had more than doubled from 2001 to 2006.

Miniscule growth in low-paying jobs.

Average household income (adjusted for inflation) LOWER by about $3,000 from 2001 to 2006.

Care to rethink that post? Or will a simple "delete" suffice?

The stock market was over 14,000 and hardly stagnant until the credit problem, which had nothing to do with any Bush or GOP policies. In fact, the credit problem came about from lefties whining that less-qualified people had more trouble getting loans -- which was as it should have been.

As for gas prices, your 2006 figure relies heavily on the spike caused by Katrina. Gas was back down to the low 2-dollar range before the latest run-up, which occurred again, when? After the Dems took over control of congress. Before the latest run-up, gas was nowhere near double what it was in 2001. And besides that, do you really want to blame Bush for the increased demand in China and India? That would be telling.

No, I don't care to rethink my post. Things have gotten much worse since Pelosi and Reid took over. To deny it is simply to lie.

 

[dixiehack]

The best way out is to do nothing.

But isn't that the belief that was largely discredited in the 1930s? At least that's the way I remember my history books telling it:

That the Hoover administration believed the way out of the depression was to avoid govt interference and allow the free market and Adam Smith's invisible hand to guide us out. Things only got worse and worse.

Then FDR's Keynesian-inspired New Deal went the opposite way and tried to steer us out with massive govt spending, stimulus programs, and tinkering with just about everything. Things gradually got better.

The New Deal helped, but the economy never truly recovered until WWII soaked up a lot of the labor pool.

 

[2muchcoffeeman]

Is this a trick question?

Only to the Bush presidency... This is going to be the cherry on top for him. It's not entirely his fault, just as it wasn't entirely Jimmy Carter's fault. But when you're the president and everything falls apart economically at once, you don't get remembered very kindly. Bush isn't going to shoulder it entirely. I don't envy Obama or McCain, if they get elected. They are walking into a mess and whatever they try to do--other than ride it out and stand aside and watch people suffer--they are going to create more of a problem. It's what Carter found out when he did just about everything wrong. If you try to create economic growth, you pour gasoline on the inflation problem. If you try to address to inflation, you cripple the economy even more. There is nothing you can do. I don't have an absolute crystal ball, but I will bet that whoever gets elected president next has a very rough presidency and leaves with some major scars.

Oh, and Ace, I only brag about how well hung I am... Who really cares all that much about spelling?

Bush has been in the saddle eight years. It's on him. ****ing incompetent moron.

If you want to be that simplistic, I can play that game, too.

Everything was grand with the economy when it was Bush in the White House and the GOP in charge of the House and Senate.

What change in government has coincided with the downturn in the economy?

Anyone? Anyone?

2001: Bush takes office with an $86 billion budget surplus thanks to sound economic management by the previous administration.

2008: The surplus was wasted. Bush's budgets have run up a $527.9 billion budget deficit, 4 percent of the United States' annual gross domestic product.

Under the Bush-Cheney administration, American real gross domestic product has grown at an average annual rate of 2.8 percent. In the 51 years prior to that, real GDP grew at an average annual rate of 3.5 percent.

Under the Bush-Cheney administration, personal income has grown at an average annual rate of 1.8 percent. In the 51 years prior to that, personal income grew at an average annual rate of 3.4 percent.

Under the Bush-Cheney administration, payroll jobs have grown at an average annual rate of 0.2 percent. In the 51 years prior to that, payroll jobs grew at an average annual rate of 1.8 percent.

 

[The Big Ragu]

Your history book was wrong. Stoney. The Depression lasted from 1929 until about 1940. More than a decade of misery. Things got "worse and worse," as you put it, through two rounds of FDR's New Deal. Where was the magic exactly?

FDR was great at boosting his popularity. And it's why your history book remembers him fondly. He still didn't do anything but create a bunch of long-term problems that created very little relief from the inevitable, which the country had to deal with anyhow.

WWII is what dragged us out. Most of what FDR did created unanticipated long-term problems, some of which we are still paying for.

I'm not going to touch it beyond that, though.

Either way, you aren't comparing apples to apples. The great depression was a severe recession, not a recession combined with runaway inflation. It's a much different prospect, trying to heat up an economy than trying to heat up an economy at the same time inflation is running rampant. If anyone tries New Deal type measures right now, it is a formula for absolute disaster--the New Deal in today's environment might actually make people start having to shop for groceries with a wheel-barrel full of gold bullion. It would blow up the dollar and create a global crisis.

Thankfully, even Barney Frank understands that much about history and isn't THAT stupid.

 

[The Big Ragu]

Chris, 5.5 percent unemployment TODAY doesn't spell doom.

It's an increase in .5 percent in one month at the same time people are feeling the squeeze of prices starting to go through the roof that is scary. What you just did was look at an approaching tornado and ask, "Why is everyone so afraid? It's barely even raining right now."

 

[BTExpress]

Just for fun compare the first years of the Bush 43 years against the first term of Bill Clinton 42.

It's a bull**** comparison, and you damn well know it.

Unemployment was at 7.5% when Clinton's term started.

So to get it down to 6.2% in 3 years is PROGRESS. And it was 3.9% when his term was over.

That 3.9% was the starting point for Bush43. So of course his "number" after the first three years will be better than Clinton's. Bush43 had a 3.6% "starting-point advantage."

This is mathematics 101, guys.

A president has ZERO say in what numbers he inherits. All he can do is show a positive trend for those numbers during his term.

You want short term numbers?

LAST three years of Clinton vs. LAST 3 years of Bush43.

Get to work.

The stock market was over 14,000 and hardly stagnant until the credit proble.

The Dow has NEVER ended any month above 14,000. It spent about three nanoseconds there. You can look it up.

http://www.econstats.com/eqty/eqem_mi_3.htm

 

[2muchcoffeeman]

A president has ZERO say in what numbers he inherits. All he can do is show a positive trend for those numbers during his term.

Please scroll back to Reply #46, previous page.

 

[Evil Bastard (aka Chris_L)]

Chris, 5.5 percent unemployment TODAY doesn't spell doom.

It's an increase in .5 percent in one month at the same time people are feeling the squeeze of prices starting to go through the roof that is scary. What you just did was look at an approaching tornado and ask, "Why is everyone so afraid? It's barely even raining right now."

Ragu - we both know that 2 months from now they will release revised numbers that won't be that bad. Those new numbers won't get any press though. These numbers are almost always wrong when first released.

 

[Stoney]

Your history book was wrong. Stoney. The Depression lasted from 1929 until about 1940. More than a decade of misery. Things got "worse and worse," as you put it, through two rounds of FDR's New Deal.

http://ingrimayne.com/econ/EconomicCatastrophe/GreatDepression.html

Um, NO, things gradually IMPROVED through two rounds of of the New Deal.

While I'll agree that the Depression did not end until WWII began, that was NOT when signs of recovery began. Virtually every economic indicator (unemployment, GDP, the market, etc.) points to around 1933 as the worst point in the depression, and then those indicators began gradually improving from around 33 onward.

Not coincidentally, 1933 was also the year that FDR became president and we switched from an Adam Smith-inspired economic policy to the New Deal. That suggests to me that his policies probably had something to do with it.

 

[buckweaver]

No, Stoney. The economy deteriorated again in 1936-38 ... not to the levels of 1932-33, but certainly not to call it "improvement". The 1930s were NOT a period of gradual economic improvement, that's for sure.

World War II deserves a lot more credit than FDR's New Deal for the end of the Depression, no matter how the history books write it.

 

[Football_Bat]

Where do we start?

As for gas prices, your 2006 figure relies heavily on the spike caused by Katrina.

The Katrina spike had spent itself by the beginning of 2006. I paid $2.04 a gallon in March of that year.

Gas was back down to the low 2-dollar range before the latest run-up, which occurred again, when? After the Dems took over control of congress.

You mean, after your oil buddies dropped prices in a bald-faced bid to swing the outcome of the mid-terms.

Before the latest run-up, gas was nowhere near double what it was in 2001.

More bull****. Gas prices had dropped back to near $1 a gallon at the end of 2001 after 9/11.

And besides that, do you really want to blame Bush for the increased demand in China and India? That would be telling.

Since supply is much more than adequate worldwide, demand is not a part of the equation at all. In fact, demand has dropped significantly.

 

[The Big Ragu]

Your history book was wrong. Stoney. The Depression lasted from 1929 until about 1940. More than a decade of misery. Things got "worse and worse," as you put it, through two rounds of FDR's New Deal.

http://ingrimayne.com/econ/EconomicCatastrophe/GreatDepression.html

Um, NO, things gradually IMPROVED through two rounds of of the New Deal.

We were mired in a depression for more than a decade. How exactly did things improve for the people without jobs, who were eating ketchup soup? The first round of New Deal programs were short-term fixes that did squat. That's why there was a second round. The second round of the New Deal were a bunch of radical things that had bad long-term effects.... but didn't end the depression. FDR was creating government agencies throughout 1935 and 1936. The economy started to heat up, and then got whacked by recession all over again in 1937. It lasted until WWII.

FDR boosted his popularity, got his name in your history book, and created a bunch of problems for future generations to deal with. The depression lasted more than a decade, and it was certainly no thanks to him that it ended.

The greatest proof of what I am saying is the UK. Labour got voted out and the conservatives got voted in--kind of the opposite of what happened here with Hoover giving way to FDR. They did absolutely nothing but ride out the depression, which amazingly without FDR or the New Deal lasted more than a decade until WII dragged them out.

 

[Stoney]

Your history book was wrong. Stoney. The Depression lasted from 1929 until about 1940. More than a decade of misery. Things got "worse and worse," as you put it, through two rounds of FDR's New Deal.

http://ingrimayne.com/econ/EconomicCatastrophe/GreatDepression.html

Um, NO, things gradually IMPROVED through two rounds of of the New Deal.

How exactly did things improve for the people without jobs, who were eating ketchup soup?

But there were far FEWER people without jobs and in that position after the New Deal programs were implemented than before, a fact which is undisputable statistically.

Look, obviously the entire decade was one of enormous economic despair. I'd never dispute that, and I've never claimed that the New Deal alone cured the Depression. I was only contesting your claim that things just got "worse and worse" through two FDR terms. That appears to be false.

In terms of trends: 1929-33 (when Hoover was in office) was a complete free fall--EVERY economic indicator was FAR worse at the end of that period than the beginning. And nearly every indicator began improving around 33, and ALL were far better after the 2d New Deal term was complete than they'd been when it began eight years earlier, even with the downward period from 36-38 taken into account. I do believe that fits the definition of "improvement."

 

[BTExpress]

But there were far FEWER people without jobs and in that position after the New Deal programs were implemented than before, a fact which is undisputable statistically.

That's what I thought, too. Until I checked.

1936 unemployment rate: 16.9%

1938 unemployment rate: 19.0% (only a slight improvement on 1934's 21% rate).

Now here's where it gets interesting.

In 1940 it dropped to 14.6%. We were not at war yet . . . so obviously things were improving.

But war accelerated the turnaround tremendously.

1944 unemployment rate: 1.2%

 

[Stoney]

But it was around 25% in 1933, when the New Deal programs were first implemented.

 

[BTExpress]

But it was around 25% in 1933, when the New Deal programs were first implemented.

True, but I do not call going from 25% to 19% in five years a rousing success.

I call it "things have to get better . . . so they did."

FDR could have instituted Lenin's Five Year Plan . . . and things would have probably gotten a little better.