Is that a fiscal cliff ahead in the distance?

[DGuller]

The math of that statement eludes me.

Can't tell if joking.  It's the basic macro national income identity.

How is investment equal to spending according to that equation?

[Razgovory]

Most people don't refer to themselves using terms of contempt.  That's all.  Struck me as odd.

Sometimes I can't tell if you really don't get it or you do get it and just like to make bad arguments.

Occupy Wall Street proclaimed that We Are the 99%.  There is absolutely no doubt that I am a member of the 99%.  That doesn't mean that if I mock the slogan for being simplistic, wrong-headed, stupid, or all of the above that I am showing contempt for myself.  Exactly the same with the Schumer class.  I make much, much less than $200,000 a year.  That doesn't mean I am prevented from criticizing the Schumer/Obama construction of dividing the American people into "hard working middle class Americans" who earn less than that amount and fatcats and billionaires who earn more, and promising to tax only the latter.

What the hell do I have in common with someone making 200K?  Why should I feel great sympathy and empathy for him or her and animosity for someone making a little more?

I guess I just don't get where you are coming from.  I never gave the Occupy crowd any thought in this discussion and have never heard the phrase "Schumer Class", except for you.  Just weird I suppose.  I don't consider having only the rich pay higher taxes optimal, but I recognized it as a useful strategy that will at least get some revenue.

[Admiral Yi]

How is investment equal to spending according to that equation?

It's not equal to spending, it's a type of spending.  Consumption is a kind of spending.  Government is a kind of spending.  Investment is a kind of spending.

[Admiral Yi]

I guess I just don't get where you are coming from.

A person who just doesn't get where someone else is coming from doesn't conclude that they have contempt for themselves based on their statements.

[DGuller]

How is investment equal to spending according to that equation?

It's not equal to spending, it's a type of spending.  Consumption is a kind of spending.  Government is a kind of spending.  Investment is a kind of spending.

Ok, consumption, not spending. 

[Ed Anger]

I've made my financial preps. I took profits on all capital gains that I could grab before it jumps up and jabs me in my eye.

Other stuff was done that I'm not going to talk about.

[Admiral Yi]

How is investment equal to spending according to that equation?

It's not equal to spending, it's a type of spending.  Consumption is a kind of spending.  Government is a kind of spending.  Investment is a kind of spending.

Ok, consumption, not spending. 

[Jacob]

Ok, consumption, not spending. 

Replace the "spending" in "[r]ight now the lack of spending, and not lack of investment, is what's holding the economy back" with "consumption."

The is for focusing on semantics while ignoring the substance of the point.

[Admiral Yi]

Replace the "spending" in "[r]ight now the lack of spending, and not lack of investment, is what's holding the economy back" with "consumption."

The is for focusing on semantics while ignoring the substance of the point.

But even that is short bus thinking.  The economy doesn't particularly care whether the spending comes from government, private consumption, or investment.

[The Minsky Moment]

Three, we need to reduce the deficit, but not as abruptly and to the magnitude that the fiscal cliff entails. 

This is the right one.

[The Minsky Moment]

The economy doesn't particularly care whether the spending comes from government, private consumption, or investment.

It matters because of balance sheet effects.
More private consumption means consumers reducing savings/increasing debt.  That is probably not a good thing right now because consumer balance sheets are still weak in the aggregate.
The business sector, however, is relatively awash in cash and thus there is room for more business investment (corporate dissaving) without unduly imperilling corporate balance sheets.

BTW the accounting identity also forms part of the demonstration why the fiscal cliff matters.  If G goes down, either C or I or both must go up (or the trade balance improve).

[Jacob]

How long before we see the Republican proposal?

http://www.washingtonpost.com/blogs/wonkblog/wp/2012/11/29/obama-to-gop-i-wont-negotiate-with-myself/

[Sheilbh]

What premise?  That the fiscal cliff will be bad?  Yes, I'm buying into it.  What I'm disagreeing with is the suddenness of the disaster as implied by the word "cliff".

Tell me if I have this right.  You're worried that an increase in taxes and a cut in spending will push the economy into recession.  So you're hoping that to avert this disaster politicians agree to a compromise that increases taxes and cuts spending.

Yes, but less.  Speed and severity of austerity matters in balancing the need to reduce the deficit and, eventually, the debt and the need to avoid an economic collapse through tax rises and spending cuts that are counter-productive.

[Admiral Yi]

Yes, but less.  Speed and severity of austerity matters in balancing the need to reduce the deficit and, eventually, the debt and the need to avoid an economic collapse through tax rises and spending cuts that are counter-productive.

I could take your and Joan's positions a little more seriously if you were deriving your position from some model of optimal deficit levels.  Instead you seem to be reacting much like Greens do to pollution: the amount of deficit reduction we need is whatever amount is being proposed (or in this case, defaulted to), but considerably less.  If our deficit were 2 trillion a year and the fiscal cliff were set to reduce it by 50 billion I expect you would be saying the same thing.

[Sheilbh]

I don't have models for anything.  Nothing would make me more unlikely to vote for someone than if they mentioned that sort of thing.  Your views often remind me of that great Garret Fitzgerald question, that's all very well in practice but how does it work in theory?

In the UK I supported Labour at the last election.  I thought halving the deficit over one Parliament was about the right pace.  The Tories wanted to eliminate the deficit over the Parliament and, in Gordon Brown fashion, to eliminate the structural deficit in this 'fiscal cycle'.

Edit:  I also thought that Darling was an impressive Chancellor while Cameron and Osborne were shallow, callow and political.  They destroyed any respect I had for them when they opposed recapitalising the banks in 2008.  It was, like the Republican vote against TARP, a moment when I stopped considering them as a respectable party of government.