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51 Comments
- dieyoung, on 11/09/2009, -10/+46"It is fortunate that the planet now has forums such as the G-20 and reinvigorated multilateral institutions like the IMF to help in this regard."
Fortunate? G-20 is a joke and the IMF is a very dangerous institution. I hate Time. - eastwood24, on 11/09/2009, -8/+38FTA:
"No one quite knows where the world will end up in this new roundelay of policy decisions and feedback loops. What is clear is that there needs to be some measure of coordination among central bankers and policymakers as they exit stimulus measures and tighten monetary policy. It is fortunate that the planet now has forums such as the G-20 and reinvigorated multilateral institutions like the IMF to help in this regard."
Is anyone else concerned that continued integration and coordination of central bankers will create a global house of cards and undermine national sovereignties? - X9001, on 11/10/2009, -6/+31I really wish people commenting on monetary policy had taken classes on economic policy instead of deciding that they were experts after watching a video on youtube
- LinuxLiberty, on 11/09/2009, -10/+20Stimulus? More like grand larceny.
- sloppychris, on 11/10/2009, -3/+12It's a good thing we elected your 16 year old cousin to represent all supporters of Ron Paul.
-Business major - lukas88, on 11/09/2009, -12/+19USA stimulus plan: lets print more money so that we FEEL richer.
- Meor, on 11/09/2009, -13/+20If you think a government can solve an economic recession through income redistribution you're being lied to for political gain.
- niradg, on 11/10/2009, -0/+7it's important to realize that the vast majority of G20 nations didn't have nearly the same level of bad debt as the US. A lot of major economies, like Germany, are squarely out of recession and can probably begin to raise rates and reduce fiscal stimulus. OTOH, the US economy is still pretty dysfunctional: just look at what's going on with commercial real estate.
- ftc08, on 11/10/2009, -8/+15My 16 year old cousin is a Ron Paul nut.
He constantly is all "END THE FED!", until I asked him what the Federal Reserve did. He couldn't answer.
Economics, by nature, isn't something you can actually understand. It's a bizarre force that youtube conspiracy theorists can't comprehend entirely. People need to let the knowledgeable do the talking. - LinuxLiberty, on 11/09/2009, -4/+10Nathan Rothschild, is that you??
- csm888, on 11/10/2009, -5/+10Stimulus = borrow from the future, which means the bad times aren't so bad, they just last a really long time, this stability means whoever currently has the monetary power can retain it better, while we all have a ***** time with no hope of anything really changing.
- ruyn, on 11/10/2009, -2/+7Answer: So they don't become 15 trillion dollars in debt.
- Barackalypse, on 11/10/2009, -5/+9You don't need to have taken macroeconomics to understand that when interest rates are low people borrow more, and when they are high people borrow less, and that when a Country routinely deficit spends that its currency will devalue.
- BESTenemy, on 11/09/2009, -5/+9 Stopping the stimulus may be a strategic move, designed to allow some failures to occur in order to get support for the continuation of stimulus.
Lehman Bros. was allowed to fail, before secretary of treasury Paulson pulled out his bazooka and made a $700bn ransom demand. If there wasn't a single massive failure, or if Lehman was forced to merge with the competition (like Bear Sterns), how much money would he be able to get?
The support for stimulus is fading with many questioning the effectiveness of their quantitative easing programs. Maybe the central bank has chosen to step on the breaks to make an example of the situation. This could be a scare tactic, or could be a result of factored in inflation fears. I do not believe, however, that we've seen the end of intervention. This is merely an intermission. - Kwanijml, on 11/10/2009, -6/+9I know huh?! It's so retarded that those libertarians are angry that their children's future has been hi-jacked. . . who needs risk and reward, or the potential of being able to elevate one's self through entrepreneurial endeavors? This new world order will make sure that our right to not have to work so hard is protected. . . . it's gonna be great.
- Kwanijml, on 11/10/2009, -4/+7You know what I always say. . . .Never let schooling get in the way of your education.
- MWeather, on 11/10/2009, -0/+3"Is anyone else concerned that continued integration and coordination of central bankers will create a global house of cards and undermine national sovereignties?"
Didn't that already happen? - Barackalypse, on 11/10/2009, -6/+9What we do know for certain is deficit spending is unsustainable in the long term. The entitlement programs like Social Security, Medicare, and Medicaid will collapse at current spending and revenue levels and the dollar will steadily devalue under the weight of 3 trilion dollar deficits. I'll take my chances with whatever economic growth happens or doesn't in the absence of stimulus over certain destruction at the hands of the policies that have us spend beyond our means.
- bacon_skoda, on 11/10/2009, -2/+4that made no sense. i hope that was a joke.
- dumptaker, on 11/10/2009, -2/+4Dammit! Stop devaluing the dollar before I go on vacation next month! This exchange rate is killing me!
- Barackalypse, on 11/10/2009, -3/+5Considering the article mentions "interest rates", we're clearly also talking about monetary policy. Low interest rates are the monetary policy response to a recession, and stimulus spending is the fiscal policy response.
- Meor, on 11/10/2009, -1/+3If we're going to discuss economics it would be good to be accurate with our depiction. A shrinkage in savings doesn't necessitate a reduction in company profits. Savings is a buffer to spending; a reduction in spending could reduce profits but that depends on a lot of things. It depends on whether people change demand on elastic items, it depends on the industry e.g. the gun and ammo industry had a huge increase in sales during a recession. It's important to identify why the recession happened in the first place but this is based on axioms and research that many people reject, i.e. the hand of the market, structural unemployment.
Based on those axioms the market (the aggregate choice of everyone who is involved in the economy) slowly shifted away from certain industries. Once the shift passed the point of no return a company fails and those people become structurally unemployed and get new jobs.
Assuming a failing economy is an "avalanche" that needs to be stopped is a false analogy. Even during the heat of the banking crisis while the biggest bankruptcy in history was happening, other banks were doing successful and buying the failing banks. The mechanism, which is another axiom and research field that some people reject, is competition and deregulation. Allowing deregulation means new players can enter a market and compete with others. Increasing regulation means existing players have an easier time staying around so they have no incentive to be competitive and have the best interests of the customers in mind.
Government spending doesn't exist in a vacuum. Every dollar spent by the government is a dollar taxed. There are graphs as to who's taxed how much but basically taxation hits middle income by the biggest dollar amount and affects poor people in the most life-threatening ways. Taxing corporations necessarily means their prices will increase. Increased prices means it's harder for the poor to live. Basically the government fiddling with the economy at very best will do nothing and will do varying degrees of harm. - spyd3rweb, on 11/10/2009, -7/+8An economy totally dependent on bailouts and government stimulus is no economy at all, which is what you create by meddling in economical affairs with things such as subsidies, low interest rates, incentives, bailouts, stimulus checks, all of these things create artificial bubbles of unsustainable industry.
- 3tcp, on 11/10/2009, -3/+4Agreed. This isn't about monetary policy, it's about fiscal policy.
- bacon_skoda, on 11/10/2009, -4/+5they are stopping their stimulus because they are out of the recession. read a newspaper.
- 3tcp, on 11/10/2009, -2/+3Which markets are you referring to, the stock market? The stock markets have nothing to do with gdp or economic depression. The hording of money by banks means that the credit markets are not liquid and economic recovery will not occur until they are. The value of your assets invested in the stock market may have recovered but gains in wealth do not contribute to economic activity.
- Insightful, on 11/10/2009, -2/+3"But at the end of the day, governments will make decisions based on what they believe is best for their economy and people. The winners will be those who can draw the correct lessons from the still unfolding economic crisis and can act on them speedily — yet also have the flexibility to change tack as the decisions of other policymakers and other external events change the economic picture. Brace yourselves for more uncertainty and volatility."
Really? People will do what they think is best? Winner can learn from lessons past, act quickly but be flexible? Be ready of change?
Wow, thank you TIME magazine for providing another content less article and proving why your circulation deserves to go down. - PeppermintPig, on 11/10/2009, -2/+3Sure, people trying to encapsulate all of economics in a few formulas or charts are going to fail. Could you tell me something informative about economics? Maybe an economic law or two??
- PeppermintPig, on 11/10/2009, -5/+6"Economics, by nature, isn't something you can actually understand."
Economics is NOT mysticism. One might not be able to understand or manage all aspects of the marketplace, but that does not mean it is impossible to understand the principles upon which wealth is grown or squandered.
"It's a bizarre force that youtube conspiracy theorists can't comprehend entirely. People need to let the knowledgeable do the talking."
You just got done saying people can't understand economics, then made a fallacious argument deferring to 'knowledgeable' people to understand it?? What? - tgc1, on 11/10/2009, -5/+6Don't waste your time. I've been trying to tell people until I was blue in the face about this. Nobody gives a *****. It's like trying to talk to a flock of sheep. They don't speak the language and they don't comprehend what the hell you're on about. You keep talking, they keep giving you that look. That "What's his problem" look.
Games over mate. The people have been made dumb. And those who have not been taken in are no better. Because there is nothing we can do. - 3tcp, on 11/10/2009, -0/+1That is a normal function of the fed. These changes in fiscal policy are not.
- freakFlag, on 11/10/2009, -0/+1Debt has no bounds
- Meor, on 11/10/2009, -0/+1Really? Bankers and investors, whos lives are centered around and depend on understanding economics and how to move money, had an irrational fear that politicians, whos lives are centered around getting reelected by convincing people they're doing something, spotted? Really? That's how it happened?
- PeppermintPig, on 11/10/2009, -2/+3Fiscal policy and monetary policy should be addressed together, particularly when the monetary policy allows for defying economic growth via inflation and the fiscal policy ignores budgetary concerns.
- Aquileria, on 11/10/2009, -0/+0If you stand outside NYSE, you'll notice that several guys going in kiss their hand and touch the bronze bull's horns.
Bankers and investors are very superstisous people, so yeah, "really dude". - Barackalypse, on 11/10/2009, -7/+7If anything the current economic situation ought to make it clear to you that these "knowledgable" people are extremely fallible individuals. Economics is not some obtuse voodoo, monetary policy follows basic rules of supply and demand just like everything else, you're either expanding or contracting the money supply via interest rate manipulations. Low interest rates mean more borrowing and that increased investment usually yields to higher economic growth, high interest rates cool borrowing and slow economic growth.
- yerrago, on 11/12/2009, -1/+1Stimulus? You mean propping up the gamblers who lost the wager so they can continue their gambling operations and continue to employ people who may not know they have jobs with the least job security.
Why not destimulate? So the good companies survive and the bad ones fold. Then jobs created are the ones that will give security. - Samueul, on 11/10/2009, -0/+0***** it, just cut the head off another chicken.....
- axiomata, on 11/09/2009, -7/+7If you're not concerned you haven't been paying attention.
The coordination of central bankers internationally will set up a house of cards an order higher than the one that the coordination of private bankers in the US in the form of the Fed previously set up, and which we are now witnessing the collapse. - ALiberalMind, on 11/10/2009, -4/+4Why can't it? If firms cannot bring in sufficient profits, then they lay off workers, who's savings shrink, which in turn reduces profits for other businesses, who then lays off more workers, who's saving then shrink, and so on. This extreme downward spiral was common with recessions in the past before government stimulus and they would often hit hard.
Now, before I get with the "Fed creates recessions", it's important to note that many recessions occurred before the Fed's creation.
http://en.wikipedia.org/wiki/List_of_recessions_in ... - bacon_skoda, on 11/10/2009, -3/+2it is the way it is.
OTOOH. with the lower dollar, we get better export and tourism.
the key is to flip the switch on interest rates at the right time and the right speed. - TheInformer, on 11/10/2009, -6/+5Other countries look at the USA and see how the "stimulus" has failed and as such they've dropped their own stimulus.
- bacon_skoda, on 11/10/2009, -3/+1we've been redistributing since 1776.
- bacon_skoda, on 11/10/2009, -3/+1Lehman Bros bankrupted because the last resort, a bank in England backed out of buying it moments before it failed.
And no, he did not make LB fail to get $700Bn. He got $700bn to unfreeze the inter-bank lending.
However, Paulson's execution was terrible. - NoLibertarians, on 11/10/2009, -6/+4@Pig, economics is mostly theory. period.
- enantiodromia, on 11/10/2009, -4/+1yeah, what we need is a WAR!
- Aquileria, on 11/10/2009, -6/+3They've kept the markets liquid during a time when consumers and bankers alike became Shylocks: hording money and refusing to spend out of irrational fear. In my opinion, the G20 countries, especially China, have done a commendable job keeping business alive and their economies liquid... It's very likely that 2010 will be a very prosperous year. Personally, I've already recovered all my losses from fall '08 and we're not even firmly out of the recession yet. Jobs and consumer recovery are traditionally always the last things to recover from a recession, stop worrying so much and just be patient.
- LinuxLiberty, on 11/10/2009, -15/+11The greatest enemy of knowledge isn't ignorance, it's false knowledge. Not sure what economic policies you are referring to, but my guess they probably taught you some ***** Keynesian model. Not saying everybody is an expert by reading a few articles on the Internet, but most what passes for economics in college is nothing more than government propaganda.
- NoLibertarians, on 11/10/2009, -11/+6This isn't rocket science. Countries will pull back their stimulus as their economy recovers. This is a worldwide recession. Each economy will heal in it's own time frame!
- Khiva, on 11/09/2009, -21/+10Oh boy, it's an article about fiscal stimulus ....I can already hear the libertarian anger-parade stomping it's way over.
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