Fed balance sheets

It is interesting how increased spending doesn't go with prosperity. The only other times the Fed pumped this much in was when we had real crises like big wars. I suppose Obama is kind of fighting a war against Republicans, but I don't think that counts. Read more here.

Posted by Christine & John at March 19, 2013 4:38 PM
Comments
Comment #363043

Is this another one of those conservative charts that doesn’t count the War in Iraq as part of the spending?

Posted by: phx8 at March 19, 2013 9:10 PM
Comment #363045

phx8

The chart shows how much money the Fed has pumped in to support spending. The spending on the Iraq war would also need to be covered. The government could hide the spending in the accounts, but it would still affect these figures.

We spend relatively little as a % of GDP on defense in general compared to earlier times.

In any case, it doesn’t much matter now. That is in the past and we have to deal with the spending we have today. We pulled our troops out of Iraq in 2011. It is now 2013. TODAY we are spending more than we did when the wars were raging. We can try to use the wars of the past as an excuse, but it doesn’t hold for the spending of today. We should spend less today. If we spent too much in the past, that is only another argument for spending less today.

It is like saying that I am spending more today because I used to spend a lot five or ten years ago.

BTW - net interest on the debt is only 7.6% of the budget today as opposed to 9.7% in 1960, so we cannot even find much of a “hangover”

Finally, I don’t think we have conservative or liberal charts.

Posted by: C&J at March 19, 2013 9:29 PM
Comment #363047

When conservatives use charts for the purposes of discussing spending, and leave out the War in Iraq, then it seems fair to call that a conservative chart. Meanwhile, we continue paying for the War in Iraq. Spending to date runs $1.6 trillion, and spending on the associated costs will continue. Total costs by the year 2050 are estimated to be $6 trillion. By the way, today is the 10th anniversary of the start of the War in Iraq.

Romney caused some excitement at CPAC the other day because he referred to the War in Iraq as a war of liberation. That is not true. It was sold to the American people as necessary to stop Iraq from using Weapons of Mass Destruction against the US and its allies, and to prevent Iraq from working with Al Qaida. None of this was true.

You seem anxious to avoid seeing conservatives blamed for spending. Unfortunately for all of us, conservatives still own it. The War in Iraq was only part of the problem. Tax cuts in 2001 and tax cuts in 2003 drove a stable budget and economy out of whack; increased defense spending, the TSA, and out-of-control medical costs in the private sector drove up federal spending, along with a prevailing philosophy of deregulation, culminated in the financial meltdown of 2007 - 2009.

Like the War in Iraq, associated spending from the meltdown continues to this day. It continues in the forms of unemployment compensation, people on SNAP, and other causes. According to Nobel Prize winning economist Paul Krugman, about half of the currect deficit spending comes from variable costs associated with the financial collapse. Fortunately, that stimulus has worked. The economy has been growing faster than the stimulus spending, which means spending during the Obama administration has declined every year, both in absolute terms with the deficit, and as a percentage of GDP.

I’m suprised you have so little to say about CPAC, which boasts that it had an all-star line-up of conservatives. (Gov Christie from NJ, the keynote speaker of the 2012 convention, was not welcome; Gov McDonnell from VA was not welcome either). A lot is happening with conservatism and the GOP right now. Do you no longer associate with either?

Posted by: phx8 at March 19, 2013 10:10 PM
Comment #363048
Tax cuts in 2001 and tax cuts in 2003 drove a stable budget and economy out of whack

Rewriting history now?

Posted by: Rhinehold at March 19, 2013 10:20 PM
Comment #363049

C&J,

The Federal Reserve hasn’t pumped new money into the economy as you would appear to imply nor has it monetized the debt. Either would be illegal. It has exchanged cash for an already existing financial assets, i.e., $10,000.00 cash for a $10,000.00 treasury bonds already purchased. It is a net financial wash. It simply has altered the nature of assets held by the banks. A good explanation can be found here: https://www.kitcomm.com/showthread.php?t=70374

Posted by: Rich at March 19, 2013 10:28 PM
Comment #363051

Rhinehold,
The Bush tax cuts were supposed to spur growth and spending. The promised results failed to materialize enough to justify the cuts. Much of the 2003 - 2007 employment gains came through government spending on jobs, esp the TSA & defense. It put the Federal Reserve in a difficult position. The Fed kept interest rates artificially low in order to not jeopardize the weak recovery. Unfortunately, those low interest rates poured additional fuel on the housing bubble, and commodity fueled inflation finally forced the Federal Reserve’s hand.

It’s useful to compare that recovery period with the 2009 - 2013 recovery. Both have been weak. An important difference comes from the nature of the jobs created. Instead of government jobs, the Obama administration’s policies have created jobs in the private sector. Interest rates are extraordinarily low, NOT to fuel a housing bubble, but to prevent deflation. The Federal Reserve policy is publicly stated. It intends to keep rates low until unemployment drops…

BTW, Rhinehold, Sen Rand Paul has attracted a lot of national attention lately. The Libertarian cause has received a major boost. Hard to say whether Paul will untimately split the GOP in half or thirds, but despite some horrible rookie errors, he’s at last pointing a way for conservatives that makes a lot more sense than their current self-destructive mess of a party platform.

Posted by: phx8 at March 19, 2013 11:03 PM
Comment #363053
The Bush tax cuts were supposed to spur growth and spending.

I’m supposing you are forgetting 9/11… It’s a little hard to denegrate tax cuts when you leave out that less than a year after they were implemented (to fix a recession that was left by the previous administration) we had the stock market being closed after two large financial institutional buildings were destroyed by terrorists and the resulting ‘drag’ on the economy that created.

BTW, by 2003 the cuts had started bringing in tax revenue far above the growth of GDP. By 2007 the deficit was almost eliminated. May can argue that had the cuts not been in effect when 9/11 happened, the recovery from it would have been worse. Well, those who don’t have partisan skin in the game I guess…

The Fed kept interest rates artificially low in order to not jeopardize the weak recovery. Unfortunately, those low interest rates poured additional fuel on the housing bubble, and commodity fueled inflation finally forced the Federal Reserve’s hand.

Yep, the fed did create a situation where to try and make money without having interest rates to use (they were nearly zero) that the housing bubble was created. This was not ‘deregulation’ as you claimed, it was bad regulation/over regulation. BTW, the same person who stood over the Fed and watched all of this happen without taking the proper actions to mitigate it was renominated by this administration and is doing THE EXACT SAME THING today…

And you ignore that during the 2007-2009 collapse, both houses of congress were controlled by Democrats. Who again, watched it all happen under their noses. When called upon to help the banks out by relaxing the overregulation caused by mark-to-market accounting rules (which shouldn’t have been in place, fair value accounting which was in place should still have been there), they said NO. Well, until Obama was elected, then they did. By then the damage was already done. Once the banks could accurately record their assets on their balance sheets, their were able to pay back the TARP funds and continue on. Had they not had to do that, TARP would have been unnecessary and only a small handful of banks would have been in trouble (deservedly so). We would have not had many businesses not be able to get operating loans, stay more financial viable and unemployment would not have gone up as much as it did.

It’s a shame that the left which presided over this collapse refuse to accept their share of the blame for it…

BTW, Rhinehold, Sen Rand Paul has attracted a lot of national attention lately. The Libertarian cause has received a major boost. Hard to say whether Paul will untimately split the GOP in half or thirds, but despite some horrible rookie errors, he’s at last pointing a way for conservatives that makes a lot more sense than their current self-destructive mess of a party platform.

The Republicans will cock it up like they did with the Tea Party (which was originally libertarian and existed before Obama was elected) but it is nice to see the notion of individual/civil rights being discussed by someone in political power today, the left surely isn’t up to the task anymore unfortunately. Sen McCain and Graham are examples of how they will screw up their chances.

I think the only hope is for the GOP to use this chance to evolve on civil liberties, as many in the party are wanting to do in a way to save political face, and reject the moronity of opposing gay marriage, abortion and perpetual war. The last is now firmly in the play of the Democratic Party… Perhaps the Libertarian Party will no longer be necessary if one of the two major parties start talking sense finally.

But no, I am not holding my breath.

Posted by: Rhinehold at March 19, 2013 11:23 PM
Comment #363055

Rhinehold,
What makes Rand Paul so interesting to me is that he represents a new and viable direction for the GOP. The other day a talking head described the current GOP as driving in circles around an ideological cul-de-sac… and the car they are driving is a clown car. Paul is latching onto issues that have been popular with Americans- sometimes the majority of Americans- esp Libertarians and progressives (and if you think the left represents nothing but knee-jerk partisanship and support for Obama, check DailyKos sometime), issues that have been ignored by ‘moderate’ corporatist Democrats and the GOP. I’m talking about issues like drone warfare, wiretapping, spending ridiculous amounts of money on defense to maintain an empire, prosecuting a War on Drugs that stopped being useful decades ago… It also offers the GOP a way out of its self-destructive stands on so many social issues.

Not so long ago, Rove ran a presidential campaign for Bush based on ‘God, guns, and gays.’ Today, even as the Republican base continues to push a constitutional amendment to ban gay marriage, the majority of Americans have concluded that there’s simply no reason to mistreat fellow Americans that way. Again, the far left and libertarians coincide in their views, but it could be the GOP that ultimately becomes the beneficiary, and makes the changes that it so desperately needs to make.

I’d like to see it. I’d like to see a Republican party that actually stands for something half-decent, rather than protecting Too Big to Fail banks in Congress, or ridiculous personhood amendments, or the wealthiest one percent.

Rambling on… when conservatives can look at an illegal immigrant from Mexico or Central America and say, ‘hey, that guy may be poor, and he may not even speak English, but man, he works hard, and he’s looking for the same kind of opportunity we all look for- let’s make him an American citizen right now!’, then you’ll know the needed changes are finally on the way.

Posted by: phx8 at March 20, 2013 12:23 AM
Comment #363057

It’s irritating when speeches of yesterday no longer apply today in the minds of politicians and their fan base. Back in ‘08 there was a speech that Obama gave talking about the amount of debt George W. Bush added to the deficit. The comment wasn’t about why, but about how could one president add so much debt, more than any other president in past history. Now, Obama is going to bury this country under 20 trillion by the time he leaves office surpassing George W. and all we are going to hear is “well that’s different” or “when he made those comments he had no idea what would be involved…” etc. etc.

Posted by: BZA at March 20, 2013 3:14 AM
Comment #363067

BZA,
The difference between the debt Bush added and the debt Obama added is simple. Bush added debt through gross mismanagement. Obama added debt to fix that mismanagement. The root problem remains Bush’s mismanagment, and nothing can change it. That mismanagment is the cause. The resulting debt is the symptom.

And let’s be clear. When we say ‘Bush’ include conservatives and Republicans.

During the 2004 presidential campaign, virtually the only positive thing Bush could say about the economy in his first four years in office was this: home ownership had risen to an all-time high. He took full credit for it, and pushed an agenda to make it rise even higher.

Conservatives and Republicans voted for that guy, most of ‘em twice. They voted for those policies. They approved of those tax cuts in 2004, even as the debt started to increase. They supported the War in Iraq, and vigorously denounced Democratic suggestions that taxes should be increased to pay for the war. The cost of the war was carried off-budget so that it wouldn’t show as part of the increasing deficits.

It was a miserable failure.

Posted by: phx8 at March 20, 2013 2:15 PM
Comment #363070

phx8 writes; “The difference between the debt Bush added and the debt Obama added is simple. Bush added debt through gross mismanagement. Obama added debt to fix that mismanagement.”

What an interesting and humorous statement. It is called “mismanagement” when Bush gives refunds to taxpayers, and called “fixing mismanagement” when obama gives money to non-taxpayers.

Posted by: Royal Flush at March 20, 2013 5:22 PM
Comment #363072

phx8

Bottom line is that we are spending more now, whether or not you include the cost of the Iraq war. It doesn’t much matter anyway, since we are spending more now. If you can produce a time machine to go back and change the past, maybe your objection would be relevant.

You can blame Bush if you wish for the past, but the problem remains the same. We are spending too much today.

As you know, about 2/3 of our spending is related to transfer payments and only about 20% is related to defense. This is much lower than it was in most of the post WWII past.

If you compare the recovery of 2003 to what passes as recovery now, you must notice that unemployment at the worst in 2003 was better than the best from now.

Re Obama’s mismanagement - how did that stimulus thing work out? Unemployment after the stimulus was higher than before.

Posted by: C&J at March 20, 2013 5:55 PM
Comment #363073

“It is called “mismanagement” when Bush gives refunds to taxpayers…”
Yes. The refunds were paid at the same time government spending increased- for defense, the TSA, the wars in Iraq and Afghanistan, and for medical costs passed to federal programs from the private sector. Much of those ‘refunds’ went to the wealthy, and a policy of wealth capture did not serve the economy well. With wealth capture, the money goes to forms of investment which do not go back into the economy very quickly; they have a low velocity, a low multiplier effect on economic activity.

“… and called “fixing mismanagement” when obama gives money to non-taxpayers.”
Yes. Non-taxpayers (and we’re just talking income tax here, as opposed to the various regressive fees that everyone pays) are more likely to spend the money immediately. Unlike wealth capture, this spending has a high velocity. It re-enters the economy quickly, and has a high multiplier effect on economic activity.

I think the point you’re trying to make is that the wealthy deserve to keep more of their money, and the working poor do not deserve any. The problem with that thinking is that the working poor DO deserve to be rewarded for their labor and for increases in productivity, but that reward never happened. Over the past few decades, virtually all of the increase in wealth has been taken by the richest of the rich, while the wages of the working poor have remained flat or even declined.

(The non-working poor consume about 5% of the budget. If you’d like to rail against those the mentally and physically handicapped, feel free).

If the goal is to see American wages decline enough to compete with the poor of China and South America, then by all means, keep advocating the same policy. It eventually creates a fabulously wealthy 1% of the population. It also tends to create a need for brutal repression and authoritarian rule, in order to keep those poor people from getting uppity and aspiring to their fair share.

Ever wonder why conservatives hated Chavez so much? The Venezuelan stock market outperformed all others in the entire world in 2012. There have been a lot of positive economic statistics for their economy, statistics that normally would be applauded by conservatives. Not only that, Chavez, twice democratically elected by his countrymen with large majorities, used the greatest source of wealth of his country, petroleum, to help ALL of the people, especially those who needed help the most- the poor.

He nationalized the oil industry and used the wealth of his country to help the poor. That is why conservatives hated Chavez so much.

Posted by: phx8 at March 20, 2013 5:57 PM
Comment #363075

My statement; “It is called “mismanagement” when Bush gives refunds to taxpayers, and called “fixing mismanagement” when obama gives money to non-taxpayers.”

Phx8’s answer; “I think the point you’re trying to make is that the wealthy deserve to keep more of their money, and the working poor do not deserve any.”

What a sorry-ass comment. phx8 immediately gives his knee-jerk response about the deserving poor versus the evil rich. Never mind that millions of middle class taxpayers such as me received a small refund on taxes paid. Never mind that those millions used the tax refund to buy stuff with money that belonged to them; not to someone else.

Only a confounded liberal would consider the partial refund of taxes paid as “mismanagement” while giving tax refunds to those who paid no taxes as being “fixing mismanagement”.

White is now black and right is now wrong in the disordered mind of some libs.

Posted by: Royal Flush at March 20, 2013 6:26 PM
Comment #363076

phx8 writes; “He nationalized the oil industry and used the wealth of his country to help the poor. That is why conservatives hated Chavez so much.”

No doubt this is the same reason he is revered by phx8. Many libs would be happy to nationalize (steal) our oil industry. Living under the thumb of a dictator is not so bad if one values a government stipend over freedom.

Chavez was buddy-buddy with Iranian madman Mahmoud Ahmadinejad and defended Tehran’s drive for nuclear weaponry. And while much of the globe moved toward free markets and free people, Chavez allied himself with the family-run dictatorships of Cuba, Syria and North Korea

Be my guest phx8…feel free to relocate to any of those workers paradises.

Posted by: Royal Flush at March 20, 2013 6:42 PM
Comment #363080

RF,
Nationalize American oil? I don’t think anyone is seriously considering it. However, Venezuela, Brazil, Saudi Arabia, Mexico, and Iraq all nationalized their oil. Even Canada- gasp!- yes, Canada- has its own state-owned oil company, Petro-Canada.

There are a lot of benefits. Maybe it should be considered.

At times, Chavez was a clown. He was corrupt, siphoning $2 billion for himself. He severely restricted freedom of the press. Of course, if the American press supported a coup overthrowing the government of the United States, and the coup failed, I imagine freedom of the press would suffer some severe restrictions here, too.

But Chavez was no dictator. Venezuelans overwhelminglly voted for him in fair elections. Calling him a dictator is a good example of noise coming from the right-wing echo chamber. Republicans and conservatives are owned lock, stock, and barrel by Big Oil. Republicans and conservatives will even support US actions in overthrowing a democratically elected government, which is precisely what we attempted at the beginning of the Bush administration.

By the way, the United States of America has allied itself with many, many unsavory regimes. Let us hope we’re not remembered by prosperity for our association with Batista, Somoza, Pinochet, the Shah of Iran, and the apartheid government of South Africa.

Posted by: phx8 at March 20, 2013 8:56 PM
Comment #363081

Royal Flush,

Phx8 made an interesting point about the fact that capital in Venezuela has prospered (highest stock market performance in world in 2012) while at the same time using the abundant natural resource of the country (oil) for the benefit of all its citizens.

Instead of that information giving pause to common conservative, knee jerk reactions to Chavez, you proceed on a typical rant against Chavez as though the data didn’t exist. You call him a dictator when he was democratically elected twice under international supervision. You say nationalizing the oil industry is “stealing.” Huh! How does a country steal from itself?

By the way, Chavez did not nationalize the oil industry. It was nationalized two decades before Chavez even took office. Chavez, however, did reform the nationalized industry.

Posted by: Rich at March 20, 2013 9:02 PM
Comment #363113

C&J,
Re Spending:
As I mentioned earlier in this thread,a lot of the current spending is a variable cost. It will go down as the economy continues to improve, for things like unemployment payments and SNAP. In addition, some of the spending during the economic collapse consisted of one-time items, such as TARP, the stimulus, and bailouts for AIG, GM, and so on. Since Obama took office, the size of government has shrunk, the deficit has shrunk (from $1.4 trillion to $845 trillion), and national debt as a percentage of GDP has shrunk dramatically. A growing economy produces more revenues, and that will also improve the situation, especially the recovery of the housing market.

All the trends are good.

Having said that, I’m still fine with the sequester. I agree with Howard Dean on this one. Despite the pain of reducing social programs, it will reduce defense spending, and this may be the only way anything significant will ever be done to reduce it.

Posted by: phx8 at March 20, 2013 11:22 PM
Comment #363120

phx8

Good.

Let’s get adjusted spending levels around to 2000 levels and tax sufficiently to pay for this.

In good times, we should run slight surpluses. In bad times we should allow slight deficits. The problem is that politicians will never admit that times are good enough to justify a surplus.

Re entitlements - We need to reduce them. SS, for example, should be changed because conditions have changed so much. We should raise retirement ages. It makes no sense for young taxpayers to pay for ten, twenty or more years of leisure for old people.

This is something we need to address in general. We now live much longer than we used to and we remain healthy longer. The idea that you work around 30-40 years and then quit makes no sense anymore. I would raise retirement ages even if there was no financial need.

I also worry about dependency in general. It is not good to allow people not to work or get too many things free. It corrupts them.

Transfer payments are making up bigger shares of our budget. This is what I worry about. As government gets bigger, it is not doing its core functions as well as it used to. We did infrastructure better a generation ago than we do today, even though government costs a lot more.

Posted by: C&J at March 21, 2013 6:34 AM
Post a comment