"Obama has been on a spending binge" has he? In your country does the President decide what will be spent and where? My gosh, he must be a busy fellow!

I had sort of thought that he'd have committees that do such work and decide what gets spent and where.... that Obama wouldn't have more than a figurehead role to play in day to day economic decisions.

Not that it matters, the elite make all the real decisions about these matters and just gives the politicians their orders; order they dare not disobey if they want funding for re-electiuon - and they ALWAYS want funding!

;-)
.

You are right that the elite give the orders and Obama and every other president jump to make them happy.

Fort me this is a key portion of Your blog post:

"Obama is a big spender because, Nutting’s irrelevant analysis aside, he is still outspending his big spending predecessor. Just because the rate of spending increase under Obama is small does not make him a responsible custodian of the federal purse strings."

Furthermore, I believe there are tons of hidden expenditures hidden in "supplemental" fundings.

Either way, with the presses running full-speed printing increasingly less valuable fiat money, there is NO way this can end well.


-R-

"...The bottom line is that Obama can’t have it both ways. He can’t claim his spending has kept us out of depression while at the same time claim that his spending has been meager by comparison to other administrations...."

The above portion presumes two false things. First, it says that Keynesianism says that spending alone prevents or alleviates negative growth. It doesn't. Second, it says that the President has stated that spending uniformly corrected the financial crisis and its economic damage. That's not a view from 30,000 feet, but rather like 30,000 miles. It is hard to know where to begin with that. It simply misstates both.

"...The economy is not improving. Analysts have been warning about a double dip recession for years now. In order to maintain the charade Obama must continue to spend lavishly or the economy will collapse..."

Here is another of your comments. As you charged regarding the President, here is an example of you trying to "have it both ways" yourself. On one hand, you say that the economy is not improving. You follow that by saying that analysts warm about a "double dip recession..." It is not a small point that you can't have a "double dip recession" without improvement in the middle. You also say that the administration has to continue to spend or the "charade will collapse." That principle that you are standing on endorses Keynesiamism which you seek to refute. I'll say it another way. Clearly you want to use the word "charade" for its impact. If it has the effect that you claim, it is not a charade. You are trying to "have it both ways" again.

"...At some point our current rate of spending will become unsustainable. Given that we will be many more trillions in debt and have a lot more mal-investment in our economy, the next crisis will make the last look like a walk in the park..."

More of your words. You have stated that spending is decelerating. At the "current rate", if it is decelerating, your conclusion can't be reached. Furthermore, this implies that the current "crisis", again, your word, was caused by debt. It wasn't. The current crisis, or more specifically the current situation caused by the crisis of 2008 was a financial crisis. It was about leveraging and a shadow banking system which was/is unregulated and outsized for the stability of the system. It was about risk management by private institutions which leaned upon public backing when the risk could not be sustained. It was not caused by public debt. This is an apples and oranges shift that you have done here. Government is the public sector. The public sector stepped in to keep the private debt from crushing the world economy. Your piece implies that the "binge" is/was public sector spending which is/was the problem. That is simply false.

QE1, QE2, QE infinity - pop goes the bubble; and EVERYBODY loses except the 1%.

Trust in helicopter ben - he's been wrong on everything his entire career.

AND once again, a disappointing jobs report, today, shows no headway in curing the economy under obamanomics.

GDP revised downward to 1.9% from 2.2%; "Jobs data point to loss of momentum in recovery" Yahoo News

Bill, the 2008 crisis was caused by the easy credit policies of the Greenspan Fed. He kept rates too low for too long and many consumers got into loans they could not afford long term. This is called mal-investment. It is money that otherwise would not have been borrowed and spent on something that would otherwise not have been purchased if the market was determining interest rates and therefore the price of money. Having said that, our leaders both Bush and Obama and the Congress have attempted to stabilize everything that needs depreciating, especially housing, in order to return to normalcy. It ain't gonna happen. It didn't happen under Hoover and FDR during the Great Recession and it ain't gonna happen now. The mal-investment of the phony boom needs to be liquidated. Prices need to drop from their phony highs to what would be considered real fair value by the market.

Obama's spending and Bernanke's money printing have only floated the economy for a while. It's like 1930 all over again. But when rates go up as they inevitably will, the current spending and Fed induced bubble will pop. And that crisis will be worse because there is even more mal-investment and debt in the system.

If you are really interested in my perspective look up Austrian Business Cycle Theory or go to mises.org.

If anyone doesn't think this sound like the current chaotic hole that has been willfully dug by our dear "leaders," than they, simply are not paying attention or need to do more homework:

"According to the theory, the boom-bust cycle of malinvestment is generated by excessive and unsustainable credit expansion to businesses and individual borrowers by the banks. This credit creation makes it appear as if the supply of "saved funds" ready for investment has increased, for the effect is the same: the supply of funds for investment purposes increases, and the interest rate is lowered.

Borrowers, in short, are misled by the bank inflation into believing that the supply of saved funds (the pool of "deferred" funds ready to be invested) is greater than it really is. When the pool of "saved funds" increases, entrepreneurs invest in "longer process of production," i.e., the capital structure is lengthened, especially in the "higher orders", most remote from the consumer.

Borrowers take their newly acquired funds and bid up the prices of capital and other producers' goods, which, in the theory, stimulates a shift of investment from consumer goods to capital goods industries. Austrians further contend that such a shift is unsustainable and must reverse itself in due course. Proponents of the theory conclude that the longer the unsustainable shift in capital goods industries continues, the more violent and disruptive the necessary re-adjustment process."

Kenn, the crisis was not caused by by easy credit, or loans that consumers could not afford. Your comparison to the holding companies of the 1930's is apt, but it misunderstands both. Both cases are examples of over leveraging of private sector debt. There is not enough money if all of the mortgages of the world to raise the sum that the shadow banking system was leveraging in securitized loans. You call yourself a libertarian, which is a focus on the size of government, and spending, but the crisis had zero to do with government spending. The crisis was caused by the over reliance on credit default swaps, and other such exotic investment that financial institutions used to bundle and sell loans on the open market. It was not the loans themselves. It is like someone being shot in the head by a machine gun and claiming that the death of that person was caused by iron atoms. No, it was not iron atoms. It was a bullet, shot from a weapon at a target. The degree of magnitude completely misstates and misunderstands the issue. Research the Deloitte report. It discusses the size of the shadow banking system then and now, and will explain what that is. Bernanke did not cause the crisis with low interest rates. Again, your own analogy of the Holding companies of the 1930's makes my case. The 1930's situation does not fit your case at all. It wasn't easy money, it was multiplying the leverage 40 to 1, then and now. Furthermore, Glass Steagall was used to remedy that in the 1930's. It was a regulation which kept stability of the banking system for more than half a century. A regulation. Removal of that regulation made the leveraging that caused the crisis, then and now. You are a libertarian making a case for regulation. I agree on the comparison, and the need for regulation. But, I am not the libertarian.

"Obama's spending and Bernanke's money printing have only floated the economy for a while. It's like 1930 all over again. But when rates go up as they inevitably will, the current spending and Fed induced bubble will pop. And that crisis will be worse because there is even more mal-investment and debt in the system."

This is from your 10:19 am comment from yesterday. The comment attempts to make the case that the Fed's low interest rates caused the problem. That is a weak argument, but on top of that weak case you tack on the Obama part. This ties in to your title regarding Obama's spending. The Fed's interest rates are not government spending. You never even try to say how they are. You just tack that bit on to make a political point. Furthermore, even if it were a result of low interest rates, wouldn't that be your title, rather than a "spending spree?" What spending, Kenn? What government spending had anything to do with the credit crisis of 2008? How is government spending since then connected to over leveraging of private debt? Your piece does not attempt to address the private sector growth versus the public sector drop. Why not? Could it be that the answer and refutation of your argument is precisely there? I bet it is. If government spending were higher, in order to raise the level of growth of the public sector, the economy would grow faster than it is currently growing, admittedly at a meager rate. Strait line, simply stated, more spending would mean more jobs. The President's political opponents have blocked spending for public sector growth because it would improve the economy in the short term which would defeat their political aims. The economic growth, however meager, is not a long term fiscal issue. It just isn't. And as for the Austrian School, watch Germany spend to support Greece and the European market. They are not going to be following their Austrian School philosophy. They will be following Keynes.

" Funny thing is that under Hoover real government spending rose by 12.3 percent per year and we still had the Great Depression. According to Keynesian logic, with Obama’s paltry spending increase we should already be in another Great Depression. "

This portion is particularly interesting. This small portion seems to imply that according to Keynes, spending will always prevent negative growth, which is not the case. It attempts to take down the principle by use of an over simplification. What I find interesting about that is that it is the mirror opposite that tax cut fetishists use regarding Arthur Laffer's "Laffer Curve." Just as mistakenly, this crowd says that tax cuts always create growth. The Laffer Curve does not say that. Supply side economics does not say that. But that does not prevent propagandists from saying that the "curve" represents a straight line progression. It is false logic used to put forth a falsehood. The statement about "under Hoover real spending rose 12.3 percent but we still had a Great Depression..." is just a pushback along the same line, in the opposite direction, using the same false logic. It is a complete falsehood meant to set up the either tax cuts or spending paradigm.

Think about it. Economists world wide have been working with trying to manage the business cycle for centuries. The greatest success in doing so occurred between the 1930's and the 1980's. Hundreds of years of study, theory, and practice, by brilliant women and men in this area of study. But this argument for and against reduces the mechanism to the simplicity of a simple lever. Push down on one side and the other side goes up. Pull up on that side and the other side goes down. That is how a simple lever functions, but that is not how macro economics function. Between those two extremes is micro economics. Propagandists also like to use principles from micro to make points regarding questions or problems on the macro level. An example is conflating, or baiting and switching kitchen table economics with national economics. This is the gateway through which supply side supporters are likely to say that debt causes downturns. (Another over simplification). It is important to note that part of that theory is that inflation will ensue to erode the growth. They have been saying that for several years now. The fact is, there is not enough inflation currently. Interest rates are low because growth is slow. The rate creep that has been warned has not occurred. Now there is an attempt to have it both ways. The inflation rate, and the inflation rate trend are observable bits of evidence used to demonstrate economic reality. The trend seems to indicate that inflation is not around the corner, as this post suggests (and points to no evidence).

It concerns me greatly that people attempt politically ideological arguments under the guise of economics because much harm can be done by misinforming people. You get voters making decisions based upon flawed logic and false concepts. Some such concepts are things like "the free market." So such thing exists, nor has one ever exist. It is a manifestation of magical thinking. It is superstition. It is unattainable, and not even desirable, but people base theories as if it is possible. The normative assertion in this piece about real estate pricing having to come down, etc, is based upon a free market superstition. It is actually an absurdity. Economies are always managed, and they should be. A "free market" is not only unattainable, but it makes one vulnerable to infinite forms of corruption and manipulation. The only question is the degree to which an economy should be managed. Eschewing the concept of regulations when we don't like the particular regulation, and favoring them when we do is yet another attempt to "have it both ways."