best explain by this guy

&feature=player_embedded

going to take to re-tool and re-educate the entire country to some more prosperous model and remove the debt that we are dragging around with us. (It took the financial sector 40 years to steal and plunder us to this stage. And it assumes we CAN develop new models where people can work and make enough to buy things, maybe in energy, or biotech, or ?). All those millions of jobs that used to provide a home, education for the kids, taxes for the community are gone, period, and have been permanently replaced by baristas and home health care aides and people trying to live a normal life on unemployment and/or food stamps. There are still millions of foreclosures in the works, millions of homes being held off the market by banks that are keeping them at pre-financial crisis values, 401(K)s being spent down, 8000 people a day turning 65, 30+ million people idle that would be better off working, poverty still increasing, and the population keeps getting bigger.

The question about payback for the investment is quite uncertain. We got here by employing millions of people to "do", yet our success in technology makes it almost certain we can't repeat that. So will a future mean we discover some new energy technology that frees people from needing so much work? Or maybe there is no payback, as we all move toward subsistence...

Until we can generate demand again, which is going to take at least all those things, I doubt there will be much "generation" - more like can-kicking.

For a starter package, would you up that figure to $2 trillion, or try for higher ? Thanks

I don't think $2 trillion would even fix the housing market. And even if it did, then what? Millions of people no longer have the capacity to buy.

We have been selling off our capacity to work and create wealth along with our dignity since the 80's. Trillions upon trillions of dollars of wealth and knowledge have been shipped out of this country, and it is not coming back. The technology in the factory has improved such that instead of employing thousands they now employ hundreds, and robots. It was the overabundance of those jobs that paid enough to retire, send kids to school, by a home, pay taxes and support your government. That is gone. We did well as a country when we were selling others our production. They no longer need us for much of that, so even if we brought some stuff back, we still wind up selling it to each other.

All those jobs and assets that were moved out of the country were sold with the idea that all that "hard work" would be done by someone else, and everyone here would be engineers and architects and finance people. Instead, most people are now coffee servers and hotel workers, with no capacity to generate the income needed to pay for homes, schools, taxes to support communities. Along with that we got rid of many of the classes in school that taught people how to do things other than go to college for non-existent jobs, and retraining of all those millions of people might be tougher than one thinks.

The entire structure needs to be replaced with something that would take us into the next century, something that could create demand, and provide the income to make it possible. Which is very likely to take a severe cultural change we might not be able to accomplish.

A trillion or two dollars might just be a shiny thing to watch while we continue to spend down the 401(k)s, watch housing continue to decline, turn out students with no place to work. It could pay the 30 million people who want work $50K for a year, and we would then be in a worse position with more seniors, higher population, very likely with no long-term result.

So I'm really not kidding when I say we should be talking in the tens of trillions. But that's just money. The amount of forward thinking, political will and agreement it would take makes that number pale in comparison.

Jobs are not Enough -

http://www.washingtonmonthly.com/magazine/julyaugust_2012/features/the_future_of_success038509.php

and a Galbraith article from 2009, where he talks on a timeline of 20 years. We have done little to nothing toward that.

http://www.washingtonmonthly.com/magazine/julyaugust_2012/features/introduction_jobs_are_not_enou038416.php

The first stimulus they said created or saved about 3 million jobs. A doubled version of it should create or save about 6 million jobs. We currently run about 1 to 1.5 million jobs per percentage point of unemployment. Six million additional jobs should drop unemployment by at least 4 percentage points, into the 4-something% range. A "good" economy begins at about 6% unemployment. 5% unemployment is generally considered prosperity.

So what you're looking at with a super-stimulus is PROSPERITY.

With low unemployment, people need less help from the government--less unemployment benefits, less food stamps, less assistance of many kinds. Businesses begin to have to compete for workers at about 6% unemployment. That's when they have to start sweetening compensation packages--offering higher pay and better benefits. (Republicans will complain that such low unemployment could spur inflation, yet it never has in the past.) More people with paychecks means commerce picks up, and private hiring picks up. A lot of the job gains will come from private sector hiring as the economy expands. All of which means greater revenue and lower expenditures for government.

In other words, such a stimulus would quickly PAY FOR ITSELF.

If we get a $1.5T stimulus package, I predict incredible economic growth, and a balanced budget within 3 years.

#1 New Orleans sea wall. We are talking Holland level construction.

[img][/img]

Federal taxes function to regulate aggregate demand and counteract inflation. We currently have low inflation and low demand.

The federal government doesn't need to issue new debt (or raise taxes) in order to spend money. It can simply credit accounts, which is essentially what it did when it bailed out the banking sector in 2008 ("printing" between $13 and $21 Trillion, depending on your preferred accounting).

The government sector can increase spending as desired to restore balance to our economy, which is sinking under the burden of private debts built up over the past few decades when the FIRE sector grew out of control while wages stagnated. Much structural reform is also needed, as has been addressed in other posts in this thread.

I'm definitely no economist, so here goes. I always thought that *somehow*, all government expenditures had to be "paid for" either with taxes or bonds or T-bills. Debits = credits kinda thing, but it's been many years since my Accounting class.

Can you give me a link to explain this ? Thanks.

We're not on a gold standard any more. Since the end of the Bretton Woods system in 1971, we've had a sovereign currency issued by the federal government and all of our "debts" are denominated in this sovereign fiat currency which trades at a floating rate. The federal government has no need to balance its budget. In fact, doing so while the private sector is deleveraging (now) would lead to economic disaster.

One popular analogy is to imagine our private sector net financial assets as water in a bathtub. When the water level is too low, the federal government can turn on the tap by spending money into the economy (which it does by crediting accounts). When the bathtub gets too full (inflationary pressures), the government can drain money out of the economy via taxation.

I think Scott Fullwiler is a good read:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1723198

Also Stephanie Kelton has a good paper which details why it is technically impossible for the government to fund spending through taxation and bond sales:

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=115128

But if you want something which targets a more general audience, this is okay:

http://monetaryrealism.com/understanding-mmr

The first two links I'm afraid will be far too advanced for me, but the 3rd one is reading very well.

Thanks !