Comments on: Fiscal policy and the “vicious” business cycle http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/ for students and teachers of AP and IB Economics Sat, 22 Nov 2008 13:42:43 +0000 http://wordpress.org/?v=2.6.3 By: Michael Daily http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/#comment-4096 Michael Daily Wed, 13 Feb 2008 13:04:03 +0000 http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/#comment-4096 Wow...Alice's comment. But anyways I think the government should have just picked one of the extremes: either include government spending in the package and actually give the economy a significant boost, or just scrap the plan all together. I'm leaning towards forgetting the plan because it seems as if the government is aiming to just get the US out of this recession as quickly as possible rather than slowly digging out of it. Rather than having a tax rebate that just stimulates "short-term spending" it would be better if a measure was placed to help the US in the long run so it would be harder to enter a recession all over again. Ultimately though the stimulus package will help the US economy in its current situation, but I'm not sure if it will truly help America avoid future falls back into a recession. Wow…Alice’s comment. But anyways I think the government should have just picked one of the extremes: either include government spending in the package and actually give the economy a significant boost, or just scrap the plan all together. I’m leaning towards forgetting the plan because it seems as if the government is aiming to just get the US out of this recession as quickly as possible rather than slowly digging out of it. Rather than having a tax rebate that just stimulates “short-term spending” it would be better if a measure was placed to help the US in the long run so it would be harder to enter a recession all over again. Ultimately though the stimulus package will help the US economy in its current situation, but I’m not sure if it will truly help America avoid future falls back into a recession.

]]> By: Alice Su http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/#comment-4045 Alice Su Tue, 12 Feb 2008 10:22:51 +0000 http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/#comment-4045 It seems to me that this tax rebate is not truly addressing the problem of recession--undoubtedly, it does, as Nancy Pelosi said, "put money in the hands of hardworking Americans", and this looks like a nice act done under a bipartisan agreement that makes lots of citizens feel better. But only in the short run. Offering a one-time tax rebate like this is like trying to stick a band-aid on a bullet wound. So the question isn't "Why put more medicine in now than is necessary?" but rather, "Does this medicine actually do anything to help?" It looks like all it does is temporarily reassure Americans, maybe make the recession a little more cushioned and make the government able to say "LOOK we're cutting back on taxes! Don't you love us", but it won't actually do anything that will feasibly fight against the "vicious cycle." So does this mean that recessions are inevitable there really is nothing you can do to fight them except.. wait for it to get better? In the podcast they mentioned something about fine-tuning interest rates and such to prevent occurrences like the Great Depression. How does that actually work though? And how is the government supposed to know how they should "fine-tune" taxes and interest rates and government spending if they're in a period of growth/peak? They won't know what's needed until they've entered the recession, and by then it seems like it's too late to stop it and all they can do is try methods like the tax rebate in this blog post to just "slightly offset the negative effects." It seems to me that this tax rebate is not truly addressing the problem of recession–undoubtedly, it does, as Nancy Pelosi said, “put money in the hands of hardworking Americans”, and this looks like a nice act done under a bipartisan agreement that makes lots of citizens feel better. But only in the short run. Offering a one-time tax rebate like this is like trying to stick a band-aid on a bullet wound. So the question isn’t “Why put more medicine in now than is necessary?” but rather, “Does this medicine actually do anything to help?” It looks like all it does is temporarily reassure Americans, maybe make the recession a little more cushioned and make the government able to say “LOOK we’re cutting back on taxes! Don’t you love us”, but it won’t actually do anything that will feasibly fight against the “vicious cycle.” So does this mean that recessions are inevitable there really is nothing you can do to fight them except.. wait for it to get better? In the podcast they mentioned something about fine-tuning interest rates and such to prevent occurrences like the Great Depression. How does that actually work though? And how is the government supposed to know how they should “fine-tune” taxes and interest rates and government spending if they’re in a period of growth/peak? They won’t know what’s needed until they’ve entered the recession, and by then it seems like it’s too late to stop it and all they can do is try methods like the tax rebate in this blog post to just “slightly offset the negative effects.”

]]> By: Richard T. http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/#comment-3988 Richard T. Mon, 11 Feb 2008 09:58:53 +0000 http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/#comment-3988 Instead of responding to the question, "why put more medicine in now than is necessary?" I think, this problem wouldnt be issued or lets say so severe, if the government allocates the money efficiently and not waste it on meaningless pride or events, as previously mentioned. Instead of responding to the question, “why put more medicine in now than is necessary?” I think, this problem wouldnt be issued or lets say so severe, if the government allocates the money efficiently and not waste it on meaningless pride or events, as previously mentioned.

]]> By: optional.xu http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/#comment-3983 optional.xu Mon, 11 Feb 2008 07:21:40 +0000 http://welkerswikinomics.com/blog/2008/01/31/fiscal-policy-and-the-vicious-business-cycle/#comment-3983 I feel like a big reason for this recession is overspending by the government in such areas as the Iraq war where its spending billions. If perhaps this money was allocated to alleviating the economy, then maybe the "medicine" put on this economic disease would be more effective. While government spending does increase overall GDP, the spending on military is using up the government budget and causing an overspending and depreciation of the dollar. Areas that need to be reformed like Social Security and even moreso the general receding economy cannot be adequately funded. I feel like a big reason for this recession is overspending by the government in such areas as the Iraq war where its spending billions. If perhaps this money was allocated to alleviating the economy, then maybe the “medicine” put on this economic disease would be more effective.

While government spending does increase overall GDP, the spending on military is using up the government budget and causing an overspending and depreciation of the dollar. Areas that need to be reformed like Social Security and even moreso the general receding economy cannot be adequately funded.

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