Government encouraged the overspending that led to the bubble.  When the bubble popped we had a contraction in the economy.  So what does Keynes prescribe?  Why more spending/lending of course.  

Let’s pay off Credit Card A with Credit Card B. 

Overspending/mad expansion/misallocation of capital  of credit was the cause of the bubble and Keynesians want to fix it with more spending (stimulus, quantitative easing).  

Overspending brought on by government policies, lax lending standards initiated by congressional fiat/bills/laws/coercion, the Creation of Fannie/Freddie long ago by Congress (which morphed into a quasi private institution with the basic guarantee that if it were to fail – the Federal Government, i.e. the taxpayers, would be there to foot the bill). 

Much of this could have been avoided if many of these Government Created entities were never created in the first place. 

IF congress had never created FnF – they never would have been around to over-confidently purchase 75% of the bullshit mortgage backed securities. 

IF congress had never repealed Glass-Steagal we wouldn’t have seen the bubble get as out fo control. 

IF Congress had never created the quasi private national central bank (THe Fed) we never would have seen the housing bubble.  

IF the SEC was never created would people have such a strong false sense of security as the “watchdogs” are watching? 

FnF are currently getting billions (around $160 billion last I checked) from taxpayers to bail them out.  They should have been allowed to fail and go bankrupt. 

Also you fail to recall that Government pushed the idea of “Affordable Housing” through various legislation/bills that practically forced/coerced Lenders to go after lower income people with less than stellar credit.    

You also forget to acknowledge that the Federal Reserve (a quasi private central government bank) was controlling interest rates.  They were WAY TOO LOW for TOO LONG.   Low rats made Credit/money CHEAP and affordable.  Seriously just go to interest.com and play around with their loan calculators.  Try plugging in rates at 3-5% on a $250,000 home.  Then do the same with rates around 8-10%.
at 4% on $250k the monthly payment is $1193
at 8% on $250k the monthly payment is $1834
at 10% on $250 the monthly payment is $2193As the interest rate goes up – it’s more expensive to borrow money/credit and vice-versa. 
This is why interest rates were a HUGE factor as low interest rates makes credit/money cheap to borrow. 
For more reasons on why the Fed deserves much of the blame: 
http://ochousingnews.com/news/bernanke-erroneously-claims-federal-reserve-didnt-cause-the-housing-bubble  

Yes it is! Did you even read my comment?

Squeeze the poor = the economy suffers = less taxes collected.
Squeeze the rich = poor spend more = economy improves = more taxes collected.

A suffering economy means there is less money being spent, less money flowing through the economy, less profits being made, less income for people. All of these things mean less taxes being collected.

Relative tax burden is extremely important because it has huge impacts on whether the economy is strong or weak.

I’m certainly not arguing that a low dollar is good for economies in general, just pointing out that its more complicated than “strong currency = good”.

My point was that the guy takes more time participating in political bashing rather than taking objective critiques.

Please take a moment to review your own comments.

By comparison, full time minimum-wage workers in the $15K-$17K category pay 76% of their disposable income in taxes, and middle-class workers in the $40K-50K category pay 48%.

(2008 IRS figures, Added: 12.4% SS to $100K, 2.9%Medicare, 10% state taxes (incl. sales, etc.) to 100K, 5% on portion above $100K .  Estimates of total extra taxes may be off by about 3% either way.)

With about 2/3 of the Greek debt already held by the ECB, the problem could be solved by them alone without any default, pushing the repayment schedule out to around 8 years. The Greek debt crisis is entirely manufactured.

What has wrecked the Greek budget is insane interest rates, not overspending. Austerity does nothing more than wreck the tax base and worsen the problem.

It would be nice if you could explain what’s wrong with the government-interventionist stance without resorting to cartoonish caricature. One need not believe anything about the benevolent motivations of politicians or their moral virtuousness to believe that Keynes was basically correct, and that in a strictly utilitarian sense government intervention in the economy are good for countering depressions (look at this bit of evidence for example, or the fact that since the recent downturn, countries which made use of stimulus pretty consistently had better recoveries than those which went for austerity) and also for producing better average living standards (look at all the graphs towards the end of this article).

Obviously, you can take this scenario to the extreme and say that we could never export anything because relative prices would be too high for foreigners.  I don’t know if that is true though, because foreign USD holders have to spend their money somewhere: the USA.

Also, wouldn’t Zimbabwe’s economy begin to thrive when they hyperinflated their currency? Why wouldn’t every country inflate their currency if it were beneficial.

http://www.salon.com/2001/02/15/estate_tax_2/ 

(yes, that’s a classy way of saying “tldr”)

The New Deal? That’s the politics of Keynsian thinking. Thatcher’s Britain? That’s classic Neoliberal economic thinking.

If you squeeze money from the poor they have less to spend on the sorts of things that keeps the economy afloat. You squeeze the rich they have less sitting in their banks, and slightly less to spend on the sorts of things that make stuff all difference to the US economy.

You think $500,000 on a Ferrari has the same impact on the over all economy as 20 people spending $25,000 on new cars? Same amount spent, but type of spending has much larger flow on effects.

Also you call $75,000-$500,000 middle class? I mean perhaps the $75,000 end is middle class but anyone earning over say $200,000 per year in my books is certainly upper class. Maybe not uber-rich but certainly capable of paying more taxes and not receiving any handouts*.

*just for the record I don’t consider a public health system as a handout, I consider that a right.

Navin’s said it best. The economy depends on most citizens having a little money to spend.

What it doesn’t rely on is rich people being rich. Which is precisely why the rich need to be taxed more, while the poor continue to receive handouts. Following that route eventually means there are less poor, ergo, less handouts.

Handing it to billionaires to haul away = Very, very stupid.
Handing it to the poor so they can spend it on living = Smart.

Obama*’s biggest bailout mistake wasn’t that he handed out money in the hopes of starving off the lending crises, his mistake was who he handed it to. If he’d handed it to the poor that weren’t able to make their mortgage payments then most of them would have been able to make their mortgage payments. They also would have bought food, spent a bit of money on goods and services, created jobs! Instead he handed it to the banks themselves so they would “keep lending”. Except the banks knew people had no money make repayments, so instead of continuing to lend they paid out huge cheques to their executives and stuffed their coffers temporarily.

*By Obama I actually mean the mess that is the US political system.

Rising unemployment means less people earning, which means less people spending. Less people spending means further reductions in less people earning. It’s all a downward spiral with austerity during times of depression.

Australia, has by many economists been looked at from abroad as the country that best handled the GFC (our Treasurer was named Treasurer of the Year by Euromoney magazine). It had a stimulus package that was pretty damn simple. Instead of handing huge corporations massive handouts it handed each and every person that had filed a tax return or received a welfare or pension payment the year before $900.

At the time it was blasted as wasteful by every right wing politician in the country. However one thing happened very quickly. The retail sector went berserk. Job losses that had started, quickly stopped and even started to reverse in some places. The economy, in short, kept ticking. 

There were other initiatives, huge, expensive infrastructure projects. The sorts slammed for their waste (of which some are indeed stupidly expensive that could have been done a lot cheaper, enabling other infrastructure to also get built) however, the expense of the projects means more money in the hands of those building them. A lot of labourers earned good money. Money that was spent. Money that was taxed. Money that has helped the economy grow.

Now Australia’s budgets are about to return to a surplus. That means debt will start going down. Unfortunately the surplus has resulted in a lot of austerity. As a result the economy is slowing again. The problem of course isn’t that we’ve started cutting spending. It’s that we’ve cut spending too soon, and too much.

Yeah!  Bring on the next debt crisis!

ChicagoD, people pay interest on borrowing trillions of dollars that we haven’t produced yet, forcing them to work to produce the value to repay the funds. Honestly, what’s the difference here?

I better go double check.  O_o

The other 50% cover 4% of the tax burden. 

How you interpret those results is what shapes your opinion on how to solve the debt problem in the US (and perhaps other countries).