Alan Krueger Says The Federal Reserve Would Kill Bernie Sanders' Economic Plans

[SecularMotion]

The criticism from the Democratic side of Bernie Sanders’ economic plans continues. And we’ve an interesting little series of revelations about it all. The first being, amusingly, that Gerald Friedman, the economist who prepared the study which insisted that Bernie would have kittens gamboling down sunbeams again, isn’t actually going to vote for Bernie. Nope, he’s a Hillary supporter. Obviously, he’s entirely at liberty to be so and his reasoning is equally understandable. While he likes Bernie’s economic policies he considers other things to be more important in the round. Obviously it’s possible to disagree with such judgments but not to say that they are wrong.

Friedman also tells us why his estimates are so implausibly large:

Here’s why, according to Friedman’s analysis: Sanders’ spending would ramp up faster than the new taxes that would pay for it, which means the plan would, under this model, run big deficits in early years, and then big surpluses to offset them in later years. That would amount to a classic short-term fiscal stimulus, one that Friedman says would be larger than the Recovery Act signed into law by President Obama in 2009. Also, the taxes in the plan would redistribute income from the very rich to the middle-class and the poor, who are more likely to spend the money and less likely to save it.

In Friedman’s model, both those effects would boost growth – particularly because data suggest the economy still has a lot of ground to regain from the Great Recession, including workers to bring back into the labor force who have stopped looking for jobs.

Well, that’s a judgement call again and while I do indeed think there’s rather more slack in the economy than the standard numbers are telling us I don’t think there’s as much slack as he is assuming. U3 unemployment may be misleading at a shade under 5% for we’ve still discouraged workers out there but even the most exotic estimates don’t think it’s much more than 2 or 3% of the workforce. Not enough room for that sort of expansion to take place.

http://www.forbes.com/sites/timworstall/2016/02/19/alan-krueger-says-the-federal-reserve-would-kill-bernie-sanders-economic-plans/#820110d734ad

[PatrickforO]

1. Interesting. So was your other post.

5.6% growth is in fact quite excessive.

But allow me to call you out on one thing. The Fed, which is not quasi governmental as we are told, is owned primarily by Citi and JP Morgan Chase. My question to you, and to anyone else reading this thread, is that if the national debt is by definition money we owe ourselves, why have we created a system where instead we are paying it back, with interest, to bankers?

Now we are under a system of fiat currency, which means that the dollar isn't backed by gold or silver or anything else. It is a dollar only because we all agree it is a dollar.

If we revoked the Fed's charter and instead decided, as several of the original American colonies and later Abraham Lincoln did, to print our own money as needed, then the economy would look quite different. Now, the bankers and other Wall Street people would screech their protests, saying words like 'massive inflation' and would initiate huge counterfeit operations, as they did in Lincoln's day, but in the end, the system would work much better for the people.

Instead of a system of scarcity created by people who hold profit higher than human life, we would then have a system of abundance where people had enough for their needs.

See, because the system of scarcity we have now, where money supply is determined by public debt, has been the primary vehicle by which wealth systematically flows from the hands of the many to the few. The present system is unsustainable and in fact is wheezing its way to a horrid halt.

When people realize that current banking is based on fraud, with banks creating money out of thin air, lending it out and then collecting interest on it, the unrest may drive a fundamental rethinking of the way we create and use money. This, coupled with accelerating technological advances whereby human labor is systematically being replaced with robotics, computers and other complex machinery, will drive these fundamental changes.

In fact, many thought leaders around the nation (and the globe) have been worrying more and more about these things.

Now, my point here is that this will quite likely be what the evolution of the national and global economies looks like over the next few decades. Such change can be relatively painless, as through a New Deal brought about by someone like Bernie, or very painful, in the form of massive and bloody revolution.

Kinda big picture for the 2016 primaries, I know, but the profound anger of the people this year that has been noted by pundits all over the world is part of that revolution. I believe nothing can stop it.

But, cheer up. If you're a banker, Bernie is not even talking about revoking the Fed's charter. He only wants to bring back the New Deal. Doing this would in fact expand the economy and ensure the bankers tidy profits for maybe a century or a little less, like FDR's New Deal did. Hope the bankers wake up here to the inevitability (and advisability) of such reforms necessary to regrow a strong middle class. Because if they do not, if they are caught in the tunnel vision of quarterly profits as they have been for decades, the alternative will not be nearly as palatable for them.

[joshcryer]

3. 5.6% growth is in fact quite excessive.

Yeah, no.

(Self deleted post below the exact contents as above.)