Did Stimulus Avert 2nd Great Depression?

I was a mere glint in my daddy's eye when the stockmarket crashed....but have heard tales and have read about it. I personally do not feel the stimulus avoided anything, because it was too packed with extras and wasteful spending. If it had been written with a specific purpose and without all the frills, and also worked on by both parties, and everyone had read it, line by line and removed the "trash" before passing it, then I might agree that it really did stimulate our economy. As a Congress watcher for many years, our elected officials aren't there to serve the American people, they are there as a career, and with that as their aim, they don't make decisions for us, they make decisions for "THEM." Our country has abandoned the belief that they can do things on their own, that they can start over, that they can budget, that they can save, that they can work hard, that they can take care of their families on their own...now it is what can I get for free and who can I get to take care of me. Where is the personal self control, in number of children one has, in what house can I really afford, what model of car do I drive, how many times I use my credit card and max it out? I realize I am from another generation, but I really think we had it better because we accepted that we were the master of our own ship...we were responsible for our actions and our decisions and we looked to ourselves for that helping hand. I know I got off subject but felt like rambling this morning.

I was a mere glint in my daddy's eye when the stockmarket crashed....but have heard tales and have read about it. I personally do not feel the stimulus avoided anything, because it was too packed with extras and wasteful spending. If it had been written with a specific purpose and without all the frills, and also worked on by both parties, and everyone had read it, line by line and removed the "trash" before passing it, then I might agree that it really did stimulate our economy. As a Congress watcher for many years, our elected officials aren't there to serve the American people, they are there as a career, and with that as their aim, they don't make decisions for us, they make decisions for "THEM." Our country has abandoned the belief that they can do things on their own, that they can start over, that they can budget, that they can save, that they can work hard, that they can take care of their families on their own...now it is what can I get for free and who can I get to take care of me. Where is the personal self control, in number of children one has, in what house can I really afford, what model of car do I drive, how many times I use my credit card and max it out? I realize I am from another generation, but I really think we had it better because we accepted that we were the master of our own ship...we were responsible for our actions and our decisions and we looked to ourselves for that helping hand. I know I got off subject but felt like rambling this morning.

Great post, EG. I am probably of the same generation but possibly a little "more elderly" than you. The only thing I would add is we were a generation that took care of those really in need. Welfare was a "dirty word" because you were expected to work if you were able to do so. The one difference is jobs were plentiful then, so some slack is due those capable of work but unable to find it. Back to the question at hand and it is a personal opinion. I really don't think the stimulus package has accomplished much due to the way it has been handled. Much of it is still unspent and it has been as much a grab of control by the executive branch as a stimulus to those in need.

I think it helped, but not as much as they claimed or hoped.

Those who are for government intervention will say 'yes' and those who are not for government invention will say 'no.' However, I don't think these stimulus bills did anything to improve or grow GDP. Growth is cyclical. And, the definition of depression is six consecutive quarters of reduced GDP.

It is suggested that the psychology and effects of the word 'depression' will cause panic and that sometimes the numbers are manipulated to offset an impending depression. The nerve!!

Those who are for government intervention will say 'yes' and those who are not for government invention will say 'no.' However, I don't think these stimulus bills did anything to improve or grow GDP. Growth is cyclical. And, the definition of depression is six consecutive quarters of reduced GDP.

It is suggested that the psychology and effects of the word 'depression' will cause panic and that sometimes the numbers are manipulated to offset an impending depression. The nerve!!

I don't know why you'd assume people stating their opinions would put objectivity aside. This may be an issue that can be proven one way or another.

I don't no why you'd assume people stating their opinions would put objectivity aside. This may be an issue that can be proven one way or another.

And it is just as possible it cannot be proven one way or another, as I'm sure you're well aware. Also, I don't think anyone is putting objectivity aside.

I don't no why you'd assume people stating their opinions would put objectivity aside. This may be an issue that can be proven one way or another.

Sure, and in a few years when we are out of the woods, we can all look back objectively and say, 'yes.' Nah.

And it is just as possible it cannot be proven one way or another, as I'm sure you're well aware. Also, I don't think anyone is putting objectivity aside.

Lynnie clearly stated that she thinks people are doing just that. She said "Those who are for government intervention will say 'yes' [stimulus averted depression] and those who are not for government invention will say 'no [stimulus did not avert depression].' That sort of thinking is subjective.

The article opens up by saying, "officials from both the Bush and Obama administrations have trumpeted how the government?s sweeping interventions to prop up the economy since 2008 helped avert a second depression". That would indicate that interventionist and non-interventionists alike were able to put their feelings aside and look at the data analytically.

in the good ole days the great generation could only dream of going to branson on the government's dime. back then everyone worked for a buck a day and the coloreds couldn't vote. it was a wonderful white bread world of repression, fear, and guilt on sunday. of course the stimulus didn't work because there were no freebies for the blue hairs.

Officials from Bush and Obama administrations have contend the government?s sweeping interventions to prop up the economy since 2008 helped avert a second Depression.

Now, two leading economists say,
?without the Wall Street bailout, the bank stress tests, the emergency lending and asset purchases by the Federal Reserve, and the Obama administration?s fiscal stimulus program, the nation?s gross domestic product would be about 6.5 percent lower this year. In addition, there would be about 8.5 million fewer jobs, on top of the more than 8 million already lost; and the economy would be experiencing deflation, instead of low inflation.?

Not surprisingly, there are voices on the other side. A Stanford professor says Obama's stimulus has had ?very little impact and not much to show for it except a legacy of higher debt.?

I was going to write a big long response, but decided it wasn't worth it.

Some simple points -

1) Stimulus masks over core problems. It's temporary, it's like welfare for the economy.
2) Effective fiscal policy should solve the core problem or problems with the economy.

Did Stimulus Avert 2nd Great Depression?

Have we averted Great Depression II? Ask yourself -

1) Are the overleveraged banks that were too big to fail still overleveraged and still too big to fail?
2) Are consumers still over burdened with debt?
3) How did all the stimulus help deal with these two problems?
4) If debt was eliminated in #1 or #2, where did it go?

Woot Wooot, next stop, "double dip depression"! All aboard!

1) Are the overleveraged banks that were too big to fail still overleveraged and still too big to fail?
2) Are consumers still over burdened with debt?
3) How did all the stimulus help deal with these two problems?
4) If debt was eliminated in #1 or #2, where did it go?

1) Yes, but hopefully, the Financial Reform Act did something to address this.

2) Yes, but...
The Stimulus put money into the hands of consumers via funding gov't projects And by cutting taxes (1/3 of the stimulus was tax cuts, proposed largely by Repubs).

3) When gov't spent $ to hire folks to (e.g.)do road/bridge repairs & other projects it puts $ in their pockets. The tax cuts kept $ in their pockets. The extra $, in principle, can help people pay down debt and/or keep from sliding deeper into debt.

4) Personal Dept was transferred to The Deficit (& there seems to be a lack of consensus as to whether the Deficit really matters; many economists think that the gov't Should run a deficit during economic downturns)

Edgy Grammy you do my heart good. The President sold his $862 Billion economic stimulus by promising it would keep unemployment down, never to get above 8%. Where is it now? 9.5% and rising and the President says this will last several years. A net of 2.2 million jobs have been lost since President Obama signed his stimulus bill.

Late on Friday, last week,a report was released on the budget.
The report, ?Mid-Season Budget Review? states the deficit at 1.47 TRILLION which
is 10 % of our economy - the largest deficit in our history.

The Secretary of the Treasury said, on TV, that raising taxes by $3 TRILLION is needed
and would have no effect on economic growth.

How can he say that with a straight face after the report showed the Stimulus was a
failure is amazing. For objective thinkers the failure of this stimulus is not easy to
sweep under the rug. Unless you are Vice President Joe BiteMe. He claims the
stimulus is ?an absolute success.?

Despite this claim massive government spending did not stimulate job creation. The
President does not have a Scrooge McDuck cave of money to pass out to the American
people. The money the government spends comes from the economy.

With increased government spending, business owners are crowded out of resources
they would have invested in their enterprises. Private investment has fallen by 19%.
This stimulus has not been the ?be all to end all?. The depression looms if government
does not stop this wild and crazy spending. And we haven?t even mentioned Obamacare, financial regulations, coming tax hikes and the increasingly unpopular EPA carbon regulations.

1) Yes, but hopefully, the Financial Reform Act did something to address this.

I does nothing to address the problem. About the only thing we've done to address this is purchase, through the FED, about 1.4 trillion in mortgage backed securities from these banks.

2) Yes, but...
The Stimulus put money into the hands of consumers via funding gov't projects And by cutting taxes (1/3 of the stimulus was tax cuts, proposed largely by Repubs).

3) When gov't spent $ to hire folks to (e.g.)do road/bridge repairs & other projects it puts $ in their pockets. The tax cuts kept $ in their pockets. The extra $, in principle, can help people pay down debt and/or keep from sliding deeper into debt.

4) Personal Dept was transferred to The Deficit (& there seems to be a lack of consensus as to whether the Deficit really matters; many economists think that the gov't Should run a deficit during economic downturns)

This is where it gets murky. Yes, tax cuts do help solve this problem! Stimulus spending also helps, although it's less efficient than tax cuts. 300-400 billion in temporary spending is pretty much a wash as the debt we incur at the federal level crowds out normal government spending and the money borrowed and spent goes to offsets state level cuts. (It's a temporary fix with long term negative effects.)

Gains at the consumer level help a little, although consumer debt currently sits in the trillions. Writing down mortgage debt helps, but that hurts the too big to fail banks. Keeping people in homes they can't afford also hurts. Reforming credit markets help to insure consumers don't get into added trouble, but it also cuts down on what people can borrow and spend. We also added to consumer debt through programs like "cash for clunkers" and the home buyer tax credits.

When we add it all up, did we do more damage than good? Economists will write volumes on this subject alone.

Let's just summarize it this way - we had some pretty basic, very serious problems. What we did to solve them was a mixed mash of good and bad. One thing is for sure we didn't completely solve our core problems.

The great depression didn't play out over six months, it lasted eleven years. (With good times and bad mixed in.) IMHO, this downturn isn't over yet. I wouldn't get complacent.

Shopper,

Thx for trying to help me understand this.

I think economics of this sort is very/very complicated.

I envision "the economy" as a huge collection of boilers,pipes, knobs, valves, etc., w/ hundreds/thousands of gauges at various points. When you turn one knob here, it changes the readings on all the gauges throughout the system.

You say, "don't get complacent".

It certainly doesn't help that there seems to be no consensus even among professional economists on what to do.

Shopper,

Thx for trying to help me understand this.

I think economics of this sort is very/very complicated.

I envision "the economy" as a huge collection of boilers,pipes, knobs, valves, etc., w/ hundreds/thousands of gauges at various points. When you turn one knob here, it changes the readings on all the gauges throughout the system.

You say, "don't get complacent".

It certainly doesn't help that there seems to be no consensus even among professional economists on what to do.

Yep. I couldn't agree more.

Shopper,



It certainly doesn't help that there seems to be no consensus even among professional economists on what to do.

Historically, lowering taxes stimulated the economy.

in the good ole days the great generation could only dream of going to branson on the government's dime. back then everyone worked for a buck a day and the coloreds couldn't vote. it was a wonderful white bread world of repression, fear, and guilt on sunday. of course the stimulus didn't work because there were no freebies for the blue hairs.

Opinion from a blue hair, who doesnt expect free freebies but does accept the "freebies" that she earned over a lifetime of working. (ages16-72).
Glad I didn't live in "bobby's neighborhood", if I remember correctly the Blacks got the vote before Women did...I grew up in a small community that took pride in family, friends and our country. The schools and churches were the heart of the community. If a family was in need, everyone jumped in and helped, didn't matter what brand of "bread" you were. I don't remember any repression or fear or quilt on any day including Sundays...we trusted our leaders, we believed the news that came into our homes over the radios, it was a honor to serve our country, we pulled together in times of war. As a community we didn't expect "goodies" from the government, yes I know it was a simple time-----but it was a wonderful time.
Today's way of doing things is really shameful...too many are only out for themselves...starting at the political top and working its way all the way down...money isn't the fix for everything. Taking our great grand kids into debt is not the answer...

Sure, and in a few years when we are out of the woods, we can all look back objectively and say, 'yes.' Nah.

It's one that people will be able to look back on and say either yes or no whatever the case may be.

Yes.

Government intervention is OK with some people, as long as it's our government intervening in the affairs of some other country. Doesn't seem to matter how much money is wasted and lives needlessly lost. No that's what makes America great, right??? Oh, but try to inject a little liquidity into our banking system to prevent financial disaster. Try to cut the unemployed a little slack. Oh no, that's unthinkable, that's unAmerican.

Lucifer, my hope is that people will look at everything objectively, but many will not, choosing instead to 'formulate their opinions' based upon what someone else believes. Same concept of a straight party ticket-could voting straight party be deemed laziness or just plain stubborn?
Regarding post 19, there are many who feel exactly as you state. There are some who will be yes and some who will be no simply because that's what they are told they should feel.

I am much more impressed with someone who disagrees with me or mainstream anything because that person actually thinks for him/herself.

Carry on with the sarcasm.

I'd like to see them bring back the ol' CCC and WPA.

I think there are a lot of people out there who would jump at the chance to get a paycheck instead of an unemployment check and rebuild America at the same time.

When I did the historic Point Washington tour, I kept hearing over and over how those programs were a huge boon to this area.

Government intervention is OK with some people, as long as it's our government intervening in the affairs of some other country. Doesn't seem to matter how much money is wasted and lives needlessly lost. No that's what makes America great, right??? Oh, but try to inject a little liquidity into our banking system to prevent financial disaster. Try to cut the unemployed a little slack. Oh no, that's unthinkable, that's unAmerican.

The LESS government is in one's life the better. They can't even run the post office - a monopoly . The only reason we need government is for the military. They protect us. They make us safe. I don't need some government yahoo telling me what light bulb to use in my house, where my thermostat should be set, yadda, yadda, yadda.

People, left to their own devices prosper. Lowering taxes works. America is the greatest country in the world. We help each other and people less fortunate. We have everything to be proud of. Edgy Grammy's generation was truly the best. They showed the world that being free, working hard, and having strong families was a fine model. Obama and his crowd are doing everything in their power to tear that up forever. Open your eyes and mind. It's happening.

CBO's Grim Diagnosis: Enemy Is Us
?

Debt: In the long debate over financial reform, proponents repeatedly argued that an overhaul was needed to "prevent the next financial crisis." Who'd have thought the real threat for another crisis was government itself?"

That stunning assessment comes not from a think tank or political group, but the government itself. The nonpartisan Congressional Budget Office, whose job it is to make reasonable projections about the economy and budget, now says it's not the financial sector that's putting us at serious risk ? it's government's almost insatiable desire to spend ever larger sums of money.

In a new report this week, the CBO grimly summarizes America's fiscal future: "Unless policymakers restrain the growth of spending, increase revenues significantly as a share of GDP, or adopt some combination of those two approaches, growing budget deficits will cause debt to rise to unsupportable levels."
"Unsupportable." Let that sink in for a minute.

To read more: CBO's Grim Diagnosis: Enemy Is Us - IBD - Investors.com

I'd like to see them bring back the ol' CCC and WPA.

I think there are a lot of people out there who would jump at the chance to get a paycheck instead of an unemployment check and rebuild America at the same time.

When I did the historic Point Washington tour, I kept hearing over and over how those programs were a huge boon to this area.

These two programs were two of the few programs FDR instigated that were well founded and successful. They built many projects that still stand today all over the nation, including my home state of Colorado. It is a different time, SB44, but I agree that many people would accept and take part in such a program. Extending unemployment benefits to over almost two years is not the answer to the employment problem.