U.S. Senate Passes $838 Billion Stimulus Plan!

we'll see

we never learn from our mistakes, do we?

"As Franklin Roosevelt's own Treasury secretary, Henry Morgenthau, lamented in an address to Congressional Democrats in May of 1939: "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong ... somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises ... I say after eight years of this Administration we have just as much unemployment as when we started ... And an enormous debt to boot!"*

It is commonly believed that the Second World War finally ended the Great Depression, but this is not true -- the Depression didn't finally end until government controls were eventually relaxed after the War."

are you going to provide an actual source for your right-wing propaganda, or are you just going to post this as if it is fact sent down by God? contrary to your post, by the middle of roosevelt's second term US GDP had recovered to its pre 1929 peak. that's a fact. things were still difficult in the late 30s, but nothing like the early 30s.

Hurry up and start a war already... I pick North Korea... that guy totally deserves it... he like kidnaps "actors/actresses/directors" and shoots movies as a hobby... do we need any more justification?

that's great news!! must be why the dow is down over 400 points today!

But of course, it will work THIS time!!

Surely.

Especially since the very same people who screwed up and got us into this mess are the masterminds of this brilliant plan.

You see, the pilots have crashed the plane and many people have perished. And what do we do? We give them a new plane to fly all the survivors in!

"contrary to your post, by the middle of roosevelt's second term US GDP had recovered to its pre 1929 peak."

please, those are in Nominal terms. at the rate we're printing today, the DOW could go up to a trillion, and so could Gold. but that doesn't mean jack now, does it?

just like those who argued sooooo vehemently that NO! there is no recession!!! (kudlow included), there are those who are so short-sighted that they try to argue.. NO! there will be no depression!!!

it's not even a question anymore. the REAL question should be:

are we heading into a deflation-style depression ala 1930s? or are we heading into inflation-style depression, ala zimbabwe?

gov't "learned" from the 30s, so monetary inflation is its MO. hence, we'll end up with the inflation-style depression, which ironically, they think is the better of the two.

still no source for your quotation. must come from somewhere really reputable.

by the way, your comment makes no sense. if the 30s was a deflationary depression, then if GDP recovered in 'nominal' terms by the mid/late 30s that means the economy was larger, not smaller, than it had been in 1929. which was my exact point. it is in an inflationary period that nominal equality would be meaningless. in a deflationary period it means a lot.

That is not true MMafia. Complete garbage. During FDR's first term, he got unemployment down from 24$ to 17%. It is absolutely disgusting that idiots are trying to detroy the legacy of one of the country's greatest presidents!

Actually, MMA, the New Deal was quite successful. The unemployment rate did fall from 25% to 17%, but that 17% does not include the millions working on government programs at the time, so the actual rate was much lower.

The problem was that in 1937-38 Roosevelt tried to balance the budget, which constricted funds.

You are also wrong about lifting the controls after WWII - there was a recession right after WWII, as the economy tried to absorb newly delisted soldiers. Hence the Veterans Bill.

I'm very curious about your economics: you rail against fiat currencies (though gold is nothing more that a fiat in its own sense), you rail against a fundamental pillar of Keynesian economics, you don't seem to be a supplier-sider, either, so I'm curious exactly what you believe in terms of economic policy.

I reveled this morning watching Dick Armey try to talk down the stimulus, because supply-side economics has no answer for times like this, and neither do those who support the gold standard. Supply side lowering tax rates was very effective when the top marginal rate was 90%, not so effective now.

You sound like you watched the same segment on MSNBC last night as I did steve...

"monetary inflation is its MO"

That's ridiculous, as well. Some degree of inflation is necessary for the economy to grow. "Printing money" only occurs when the Central Bank deposits money with banks for which it doesn't have an offsetting entry: it has a debit - the asset - but no offsetting liability. What the government is doing now is monetizing illiquid assets or selling bonds, meaning that every asset has an offsetting liability. It increases the money supply, but does not "print" money in the strict sense, and therefore need not be inflationary, as shown in Japan's "Lost Decade."

I was one who argued that there was no recession under the standard definition of 2 quarters of declining GDP growth, and that was correct. We entered a slowdown which turned into a collapse when Paulson let Lehman fail. That is why we are where we are today - the credit markets froze.

Ron Paul has no answer for that, either. He believes that since the Constitution says the government can "coin money," that it can only mint coins, not paper money.

welcome back, steve. where have you been?

and good points--totally correct.

"You sound like you watched the same segment on MSNBC last night as I did steve..."

I did see it, but I already knew it.

happyrenter,

the gov't in 1933 decoupled the U.S. dollar from gold which resulted in a serious devaluation of the dollar (you know the drill, confiscate gold from people, then people wake up one morning and the USD is worth half of what it used to be worth). by the mid/late 30s, this monetary inflation caused the nominal value of GDP/GNP to go higher, but as we all know, the quality of life, and rate of unemployment did not really change. and that is the point i am making.

when you say:

"things were still difficult in the late 30s, but nothing like the early 30s."

i ask you how much better life had improved in 1939 when unemployment was STILL at 19% in 1939? in 1931, it was at 15.9%, and it peaked at 24.9 in 1933.

nothing like the early 30s?

I don't think so when you look at the data. not that much of an improvement if you ask me. worse than in 1931, and not that far from the peak in 1933.

Henry Morgenthau's famous line is quoted everywhere...

http://online.wsj.com/article/SB122636879415716127.html

"the gov't in 1933 decoupled the U.S. dollar from gold which resulted in a serious devaluation of the dollar"

Another mistake being avoided this time, MMA: "beggaring thy neighbor."

You twist the reasons for the unemployment rate increase in 1938 - it was because Roosevelt tried to balance the budget, and raised taxes. Exactly the opposite of what is happening now. AND the figures do not include people who worked on the New Deal programs.

There is also no Smoot-Hawley Tariff, which led to further decreased economic activity during the Depression.

The scenario is vastly different between now and then, and it has nothing to do with the gold standard. Nixon dropped the gold standard, the price of gold shot up in that case, and it has never, ever recovered.

Your analogies simply do not work. Gold is no less a fiat than paper or stainless steel. It's worth what people will pay for it, and the gold standard - whose purpose is to provide discipline - breaks down during times of economic stress.

MMAfia is a Jim Rogers disciple. You know the guy that has been long China for the last 12 months? I wonder how that’s working out for old Jimmy boy? Have a look and you will see where MMAfia gets most of his "inspiration"

http://jimrogers-investments.blogspot.com/

I wonder if I can apply for a $500k stimulus apartment..

You can julia. Just as long as it is "Shovel Ready."

mmafia,
it is not morgenthau's quote that i want the citation for, it is the quoted analysis after:

It is commonly believed that the Second World War finally ended the Great Depression, but this is not true -- the Depression didn't finally end until government controls were eventually relaxed after the War."

or is that just a misplaced quotation mark?

you can't have it both ways--was the depression inflationary or deflationary? you are now trying to tell me that it was both?

lol stevejhx, here we go with gold again.. =D never gets old does it?

... but Juice, you're partially correct- i do listen to what Jim Rogers has to say, along with Nassim, Nouriel, Marc and the rest of the anti-goldilocks crowd. but trust me, i'm not their disciple. i value their opinion because they warned of what we are going through now... along with Shiller.

that's better than most. of course, nobody is perfect, and we are still in the beginning of the crisis (yes, BEGINNING), but all the others who started with:

1. there is no housing bubble.. then
2. there is no financial crisis, it's only a small contained sub-prime issue... then
3. there is no recession... then
4. there is no depression...

I don't really put much faith in. and that includes Lereah, Bernanke, Paulson and Greenspan (although he admitted). they struck out 3 out of 4. BIG TIME. and the 4th is still slowly unfolding before our very eyes.

Those are the people I don't listen to. Unfortunately, those are the people trying to fly the plane now after they crashed it hardcore with their policies in that past three years.

I have no problem with gold, MMA, just with the gold standard. It does nothing, and what happened in the Great Depression is that the US abandoned the gold standard while other countries kept it, which is what caused our currency to fall. Under Nixon, Bretton Woods was abandoned by all, and the opposite happened: gold spiked, then collapsed, and it has not recovered in 40 years, nominally or inflation adjusted.

There is no depression, nor will there be. Marc Faber predicted 200% inflation recently. Roubini sells a newsletter. Jim Rodgers has been wrong about just about everything recently except selling his Manhattan brownstone. Might as well watch Fox & listen to Wayne Rogers.

1. The housing bubble was obvious.
2. The financial crisis was real, but greatly exacerbated by Lehman.
3. There was no recession under the standard definition until Lehman.
4. There is no Depression, nor will there be.

Sorry.

In any case, the bottom line is, this is NOT the bottom in real estate, not even close.

We are headed into a much more serious crisis (aka the main course of the meal).

The dollar will be shot dead, and so will the Treasuries "bubble"

Capital markets are shot, and will continue to trend lower.

and my favorite...

Gold will continue to go higher!! =D

Now, check back in 2010-2011 and see where we are.

stevie... 1)yes,2)not lehman then someone else... look at the other shoe that's gonna fall when one of the insurance cos. goes under (that's a real mess) 3) didn't matter when you called it, surely as the bubble was gonna pop, a "recession" was gonna follow....

4. hmmmmmm.... Depression... no we won't be cooking and eating the dead, but for most of the population whose last memory of a serious recession was the one in the 80s', it sure feels like a "depression" for all the youngins that's grown up with microwave NOW meals and 2 vacations/yr and never knew a long term unemployment :) (forced, not one in which you "retire" early :))

Speaking as simple folk who has an understanding of econ about as far as intro 101 took me in college, can someone explain the following to me:

If the economic problems we have today are essentially (or at least partly) due to the fact that we are collectively spending beyond our means, how does spending EVEN FURTHER beyond our means help the situation? Isn't this like treating the crack addict with more crack?

I am puzzled by the direction of the government's solutions to our debt problems and I find that some of the regular contributors to this boards are sometimes helpful in making things clearer.

"And the reason for F.D.R.'s limited short-run success, which almost undid his whole program, was the fact that his economic policies were too cautious.

Now, there’s a whole intellectual industry, mainly operating out of right-wing think tanks, devoted to propagating the idea that F.D.R. actually made the Depression worse. So it’s important to know that most of what you hear along those lines is based on deliberate misrepresentation of the facts. The New Deal brought real relief to most Americans.

That said, F.D.R. did not, in fact, manage to engineer a full economic recovery during his first two terms. This failure is often cited as evidence against Keynesian economics, which says that increased public spending can get a stalled economy moving. But the definitive study of fiscal policy in the ’30s, by the M.I.T. economist E. Cary Brown, reached a very different conclusion: fiscal stimulus was unsuccessful “not because it does not work, but because it was not tried.”

This may seem hard to believe. The New Deal famously placed millions of Americans on the public payroll via the Works Progress Administration and the Civilian Conservation Corps. To this day we drive on W.P.A.-built roads and send our children to W.P.A.-built schools. Didn’t all these public works amount to a major fiscal stimulus?

Well, it wasn’t as major as you might think. The effects of federal public works spending were largely offset by other factors, notably a large tax increase, enacted by Herbert Hoover, whose full effects weren’t felt until his successor took office. Also, expansionary policy at the federal level was undercut by spending cuts and tax increases at the state and local level.

And F.D.R. wasn’t just reluctant to pursue an all-out fiscal expansion — he was eager to return to conservative budget principles. That eagerness almost destroyed his legacy. After winning a smashing election victory in 1936, the Roosevelt administration cut spending and raised taxes, precipitating an economic relapse that drove the unemployment rate back into double digits and led to a major defeat in the 1938 midterm elections.

What saved the economy, and the New Deal, was the enormous public works project known as World War II, which finally provided a fiscal stimulus adequate to the economy’s needs."

http://www.nytimes.com/2008/11/10/opinion/10krugman.html?_r=1&th&emc=th&oref=slogin