Tuesday, May 18, 2010

James Galbraith Thinks we Aren't Digging Ourselves a Deep Enough Fiscal Hole. What an A$$HOLE! - UPDATED

From Shakes the Clown at Cesspool of Humanity comes the following almost unbelievable post on a recent interview with the son of one of the leading a-caca-demic gods in the "Progressive" pantheon: John Kenneth Galbraith. Well, what can I say but that James absolutely succeeds in proving himself a chip off the ole block. As Bugs Bunny would likely have opined: What a "Maroon"


An appropriate cartoon for this post:

Image H/T James and Credit: Go Comics

Ran at Si Vis Pacem comments extensively on Galbraith's hallucinatory economic theories here

Thursday, May 13, 2010

James Galbraith Will Prove To Be The Most Ignorant Man In America

James Galbraith actually said this to Ezra Klein:

EK: But putting inflation aside, the gap between spending and revenues won't have other ill effects?

JG: Is there any terrible consequence because we haven't prefunded the defense budget? No. There's only one budget and one borrowing authority and all that matters is what that authority pays. Say I'm the federal government and I wish to pay you, Ezra Klein, a billion dollars to build an aircraft carrier. I put money in your bank account for that. Did the Federal Reserve look into that? Did the IRS sign off on it? Government does not need money to spend just as a bowling alley does not run out of points.

What people worry about is that the federal government won't be able to sell bonds. But there can never be a problem for the federal government selling bonds. It goes the other way. The government's spending creates the bank's demand for bonds, because they want a higher return on the money that the government is putting into the economy. My father said this process is so simple that the mind recoils from it.

EK: What are the policy implications of this view?

JG: It says that we should be focusing on real problems and not fake ones. We have serious problems. Unemployment is at 10 percent. if we got busy and worked out things for the unemployed to do, we'd be much better off. And we can certainly afford it. We have an impending energy crisis and a climate crisis. We could spend a generation fixing those problems in a way that would rebuild our country, too. On the tax side, what you want to do is reverse the burden on working people. Since the beginning of the crisis, I've supported a payroll tax holiday so everyone gets an increase in their after-tax earnings so they can pay down their mortgages, which would be a good thing. You also want to encourage rich people to recycle their money, which is why I support the estate tax, which has accounted for an enormous number of our great universities and nonprofits and philanthropic organizations. That's one difference between us and Europe.

EK: That does it for my questions, I think.

JG: I have one more answer, though! Since the 1790s, how often has the federal government not run a deficit? Six short periods, all leading to recession. Why? Because the government needs to run a deficit, it's the only way to inject financial resources into the economy. If you're not running a deficit, it's draining the pockets of the private sector. I was at a meeting in Cambridge last month where the managing director of the IMF said he was against deficits but in favor of saving, but they're exactly the same thing! A government deficit means more money in private pockets.

The way people suggest they can cut spending without cutting activity is completely fallacious. This is appalling in Europe right now. The Greeks are being asked to cut 10 percent from spending in a few years. And the assumption is that this won't affect GDP. But of course it will! It will cut at least 10 percent! And so they won't have the tax collections to fund the new lower level of spending. Spain was forced to make the same announcement yesterday. So the Eurozone is going down the tubes.

On the other hand, look at Japan. They've had enormous deficits ever since the crash in 1988. What's been the interest rate on government bonds ever since? It's zero! They've had no problem funding themselves. The best asset to own in Japan is cash, because the price level is falling. It gets you 4 percent return. The idea that funding difficulties are driven by deficits is an argument backed by a very powerful metaphor, but not much in the way of fact, theory or current experience.

Speechless. James Galbraith and I live in different worlds. I find it hard to believe that people believe him.

As Michael Kinsley noted, if deficits aren't the problem and will never be the problem, why not spend more? Why aren't we doing more for the poor? Why aren't we doing more for the unemployed? If deficits don't have any drawbacks, why not double the deficit? Even that would be wrong if you could triple or quadruple the deficit instead without any ill effects. The reason we don't is because the whole system could collapse.



  1. Pathetic- just the type of slush head that's enabling Obama's ongoing date-rape of this country

    Thank God for the New Media to stand up to this crap... cuz the MSM is completely in the tank for the hopenchange junta.

    BTW- you are in "Hot Topics" at RR all this week... keep up the good fight, my friend

  2. Heh...
    Galbraith's love of "comprehensive doctrine" - AKA marxist tautology - rather undermines his credibility. Poor sod.

  3. So, what exactly has been the problem with running a deficit for most of the history of the nation? Has anyone asked you to pay up?

  4. Yes, Anon, we are paying up - up the wazoo in taxes and regulations. Just because *you* are getting something for "free" does not mean payment isn't necessary. Because of people such as *you* my daughters will be paying heavily, thank you very much. Want fries with that, @$$h---?

  5. Hey Ran: I'm fairly certain that Anonymous posted out of Cancun Mexico. My Sitemeter stats indicate a visit from Cancun around the time the post was left with an outclick in the comments section. Perhaps a little research will reveal whether Jaime Galbraith owns some real estate in Mexico. I know for a fact that papa had a very nice Chalet in Gstaad. Not bad for a rich socialist.

  6. Hey - you have indeed been asked to pay-up, by the way: 17% of the unsecured trillion-dollar loan to the EUnuchs over Greece, Portugal...

  7. OOPS! um, thank-you for the link.

  8. Check out my friends blog at www.outspokenlibertarian.com

  9. Thanks for the link!

    If it doesn't matter if the government runs a deficit, why do any of us pay taxes? Galbraith and his father shouldn't even be called economists.