21 Replies to “http://2ndthotz.dr-mikes-maths.com/2011/11/why-europe-is-collapsing/”

  1. I just really, really don’t understand how anyone thinks the way to fix things is to spend more money that you don’t have. Eventually you have to pay the piper. No stimulus efforts will work, a major day of reckoning must be dealt with…as painful as it may be.

  4. Well, thus far the recessiona/depression/label of choice has worked out quite well for me…when I had lower paying contracts, I stopped spending as much on things, when I had higher paying gigs, we saved money…worked out pretty well.

    It’s not just cutting spending, it’s WHAT you cut, and making sure you get the best for the money you do spend…that is where gubment fails…epicly.

  5. yes, but the question of what the government spends on and whether they’re good at choosing is quite separate from the broad effect of government spending on the economy. It seems plain as day to me that if the government spends, the private sector gets a boost. The strange thing though, is that 90% of the time, you’re right – when the government spends or cuts spending, it has little effect on the economy except to move money around. The strangest thing of all is that we are now living in one of those 10% of times when spending or austerity has a big effect

  6. True, but the simple fact remains that in order to spend, they should actually HAVE the money to spend…that’s where the problem lies today…and by “HAVE the money” I don’t mean to just speed up the printing press. Likewise, the gubment should not influence the private sector outside of very basic, simple, common sense regulation and laws, the private sector should ebb and flow on it’s own.

  7. I’m inclined to disagree. It would be better to borrow/run the press now, when interest rates are low and the US dollar is too high for American exporters, then cut back when the economy is doing fine. Or, it would have been better to pay back the debt in 2000-2008, instead of cutting taxes on the rich, fighting an expensive war, and causing a housing bubble. http://zfacts.com/p/1170.html

    I’m curious – why is it that in the US, right-wing pollies spend, but left wing pollies save? In Oz it’s the other way round.

  8. Wow, you disagree with not spending money you don’t have? That is kind of how this world has gotten where it is. I can’t even begin to understand how anyone could disagree with that…that is just basic common sense…and look what borrowing has done, right now 3 or 4 european countries are on the brink of total bankruptcy…so how does one borrow from? Another country that has no money? That is pretty much kicking the cane down the road…and how does one create money? One doesn’t, you speed up the printing press to liquidate the value of the currency. Fiat currency is baseless, it’s only valuable because a government said it is, it has absolutelty zero true value if not based on something of value…which is why every Fiat currency fails at some point, and the euro is about to, and the US dollar isn’t too far behind.

    Additionally, your view of American politics is very wrong. If either side of the aisle in the US saved anything we wouldn’t be where we are…the right wing spends on wars and the left wings spend money it take from the achievers and pays people that do nothing. Certainly not the makings of a motivated, thriving social and economic construct.

    However, based on the stereotype, which is wrong, the left-wing are the spendthrifts that encourage large government and cradle to grave entitlements and the right wing claims to want to save and have smaller government and less entitlements…of course, like most sterotypes, they are of limited accuracy.

    As far as taxes, cutting or raising, there are multiple theories on what actually is more productive in the big picture, all of which have pros and cons. Personally, I am a proponent of a flat tax rate, regardless of wealth or lack of it.

  9. I’m not very familiar with US politics, I just look at the graph that showed the US deficit growing under Reagan and Bush^2, and shrinking under Clinton.

    As for not spending money one doesn’t have, I distinguish spending on consumption vs spending on investment. I won’t use my credit card to buy a TV, I’ll use cash in the bank or do without. However, I’ll happily take a $100k loan to build a house I can sell for $150k in a year, or a $300k loan to buy a house that will either earn me rent or enable me to not pay it.

    …. and even then, analogies between governments and households should be treated with caution.

    …. interestingly, one can argue that Greece and Italy are in trouble precisely because they do not have their own fiat currencies – the value of the Euro is at the mercy of the ECB, which refuses to deflate it.

    what would you base a currency on? Gold? Doesn’t that have almost zero true value also?

  10. I saw one somewhat convincing argument that it’s not important whether or not a government taxes. What’s important is whether or not they spend. Once they spend, they’ve committed to either raise taxes, borrow, or cause inflation. At least, during normal economic times – as I said at the start, things are a little weird now.

  11. I see some merit in most economic theories, but flaws as well…there is no perfect theory…but as a whole, I believe in very small and very limited government, no entitlements, no charity, and only concerned with infrastructure and security.

    As far as the graphs you have seen, well, you could Google around and find graphs and charts supposedly analyzing the same thing and get opposing views…you are a mathematician, you have to know how easy it is to slice, dice and report what you want the results to be if you look for enough. Many times, policies that have been enacted by left wing administrations didn’t really show their true colors until years later…Carter and Clinton were great for that, decades after they were out of office, their policies, in large part, caused the fall of the banking and real estate markets…

    I do, to some degree, agree with the difference, and value of, investment, as opposed to spending…that said, our left wing uses the word “investment” pretty loosely and justifies as “investments” basically throwing money down a rat hole…a true “investment” I could live with…but paying people to continue to do nothing is not an investment. Nor is funding scamming, failing businesses through government subsidies (current scandal of the Obama administration), nor is it using government dollars to pick and choose winners and losers in the private sector…

  12. Currency…that is a conundrum…in my admittedly simpleton mind, I believe what people say has value, has value…”stuff” has the value of what someone is willing to pay for it. Fiat currency is doomed to fail from it’s very inception, it’s only a matter of when.

    Gold is one of the few “things” that have held some form of intrinsic value for centuries because people want it for it’s beauty, rarity, or any other reason…I have about 5k baseball cards from my youth, at one time they were worth big money cuz it was a trend and people were willing to pay for them…now, along with collectibles like comic books, they have dropped, because people are not willing to pay as much.

    I do believe gold is a better base than no base at all, which the US dollar, and most fiat currencies, currently have. That being said, I am open to also believe if I raise chickens, and you are hungry, that chicken may be of more value than gold.

  15. Haha, well, gold isn’t fiat, since it doesn’t have a value placed on it, it’s valued by those that buy it…of course, excluding the games that are played with it buy those that own it…but yeah, interesting question, a quick googling has some interesting theories.

  16. ” it doesn’t have a value placed on it, it’s valued by those that buy it” with what shall I buy it, dear liza, dear liza? With gold, dear henry, dear henry, with gold 🙂

  18. All (monetary) value is relative. A chicken may be worth three bananas to a rich man and a starving man alike. But that doesn’t mean the chicken and the bananas are equally valuable to either…

  21. Ok, testable prediction time : Will Europe’s Austerity measures save the Eurozone? I say no, the ECB will need to print some Euros, or at least promise to in order to guarantee member state debt.

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