John Maynard Keynes (pronounced /ˈkeɪnz/ "cains") (June 5, 1883 – April 21, 1946) was a British economist whose ideas, called Keynesian economics, have had a major impact on modern economic and political theory as well as on many governments' fiscal policies. He advocated interventionist government policy, by which the government would use fiscal and monetary measures to mitigate the adverse effects of economic recessions, depressions and booms. He is one of the fathers of modern theoretical macroeconomics and considered by some to be the most influential economist of the 20th century.
I say if not $1 trillion why not $10 trillion? Why not $13 trillion? A stimulus that doubles our GDP. I mean, we can borrow at will, the world gives us money at 0% and deficits don't matter. Why are we fussing around at stimulus that will only bump up GDP by 8%?
- President-elect Barack Obama's team is considering a plan to boost the recession-hit U.S. economy that could be far larger than previous estimates and might reach $1 trillion over two years, the Wall Street Journal reported on Saturday.
- Obama aides, who were considering a half-trillion dollar package two weeks ago, now consider $600 billion over two years "a very low-end estimate," the newspaper said, citing an unidentified person familiar with the matter. The final size of the stimulus was expected to be significantly higher, possibly between $700 billion and $1 trillion over that period, it said, given the deteriorating state of the U.S. economy. (I vote for $13 T)
Civil Engineering reports I've read over the past few years indicate $1.6 Trillion is needed to fund the nation's infrastructure needs over next 20 years - in the past we could not "afford it". Now we can. Money from the great eternal spigot rains upon us. We can afford anything we put our minds to. Now instead of one in 7 Californians owning a Realtor's license (true stat I posted in 2007), 1 in 5 will be a construction worker. Old school jobs are back. A Butterfly Museum in every town over 100K population awaits us! The pork attached to this one, when we look back in retrospect around 2013 shall be eye popping (but don't worry, the future administration already warns us - there shall be no pork. Nope, government = no pork)
For comparison sake, the original New Deal Public Works projects cost approx $10 Billion over a 8 year span. (1935 to 1943) That alleviated the pain but not until the real public works project, World War II (where money actually flooded into the US from outside the country - interesting concept) did we really regain our footing. But I was curious what that would run in today's dollars - assuming $10B in 1935 with a 3% interest rate, it would be approximately $85 Billion in today's terms. Assume a 5% inflation rate (which I'd consider generous) and you have $350 Billion. So on the CONSERVATIVE end, we are going to do double, in 2 years, what we did in 8 years in the Great Depression. So you can either say (a) wow, this is going to really end all our problems since we are putting this much firepower at the problem or (b) holy smoke - how big are the problems that we are going to spend that much more, in 25% of the time frame and we might still only be plugging a few fingers in the dam? I won't argue either way - just understand the scope of what we're doing. And leave the grandchildren a thank you letter.
*note, instead of an inflation rate one could use the yearly GDP growth rate which also should fall in a 3-5% yearly growth rate range over decades.
*note, the numbers above would actually be lower if I started $10B in 1939/1940 or "halfway" through the stimulus as $10B was not all spent in 1935, hence I am overstating the value in today's dollars so one could not argue I am exaggerating the claims. It's really probably closer to a $70-$300B range depending on your growth rates.
