Short Quiz

Post Reply
johnkarls
Posts: 2034
Joined: Fri Jun 29, 2007 8:43 pm

Short Quiz

Post by johnkarls »

.
1. What is fiscal policy (or Keynesian economics) vis-à-vis regulating the level of economic activity?

2. What is monetary policy (aka The New Testament championed, if not invented, by Prof. Milton Friedman and his U/Chicago boys) vis-à-vis regulating the level of economic activity?

3. With regard to monetary policy, how does controlling interest rates relate, if at all, to printing money?

4. Do countries that do not have their own currencies (e.g., most European countries which, with the notable exceptions of the U.K. and Switzerland, have joined in the Euro as a common currency) fight recessions “with one arm tied behind their backs” because they can’t simply print more money to stimulate their economies?

5. In trying to balance an economy’s consumption and production at the Nirvana junction of full employment without inflation, what is the impact of each of the following: (A) governmental deficits or surpluses? (B) interest rates? (C) increases/decreases in the money supply? (D) consumer confidence? (E) the velocity of money? (F) a surplus/deficit in foreign trade? (E) oil & gas imports as a special case of Item F? (F) exporting American jobs to low-wage countries such as China and India as a special case of Item F? (G) the TRillions of dollars of profits of multi-national companies that have piled up in their tax-haven subsidiaries as a special case of Item F?

6. What is the impact, if any, of a failure to fund future governmental obligations such as: (A) social security? (B) Medicare/Medicaid? (C) Defense (NB: although a great deal of fuss is made over Items A and B, nobody fusses that future defense expenditures are not already funded/endowed)? (D) U.S. government pensions (NB: although a great deal of fuss is made over Items A and B, nobody fusses that not a penny’s worth of future USG pension liabilities has been funded, as distinguished from an infinitesimally-small quasi-Sec. 401 plan for USG workers that will supplement the pensions of those who have participated)? (E) state & local governmental-pension under-funding?

7. Was the Federal Reserve lending (and printing the money that was lent) $7.7 TRillion to U.S. financial institutions during 2008-2009 which was many times the magnitude of lending to those same institutions under the Troubled Asset Relief Program (TARP) passed by Congress?

8. Was the Federal Reserve lending (and printing the money that was lent) an additional $600 Billion during the first half of 2011 -- this time to purchase U.S. governmental debt which, inter alia, masked the extent of governmental deficits?

9. Was the Federal Reserve lending (and printing the money that was lent) to provide untold TRillions of dollars (A) commencing September 2011 to bail out the Italian and Spanish governments through 12/31/2011, and (B) commencing October 2011 to bail out all European banks, not just Italian and Spanish banks, through 2/1/2013?

10. Did the Federal Reserve have legal authority to perform Item 9?

11. Has the Federal Reserve been lending (and printing the money that was lent) $85 Billion/month to purchase long-term debt in general and U.S. mortgages in particular -- for a total of $1.3 TRillion and counting (since Chairman Bernanke announced earlier this week that this program will continue for the foreseeable future)?

12. The American public has been plagued by the notion perpetrated by the media that the recovery period for a “financial crisis” is much longer than a mere “economic crisis” -- (A) is this true since the only example of a “financial crisis” they cite is the Great Depression which occurred before fiscal policy (aka Keynesian economics) was understood and long before monetary policy was understood so that, of course, President Roosevelt didn’t have a clue what to do? (B) or is this merely an excuse used by the policy makers to excuse their failure to appreciate the severity of the crisis (which, incidentally, was NOT underestimated by Princeton U. Economics Nobel Laureate & NY Times OpEd Columnist Paul Krugman who argued for stronger economic stimuli from the outset!!!)?

13. Although both Prof. Krugman and Prof. Lawrence Summers (who, until last weekend, had been the leading candidate to become Federal Reserve Chairman early next year) argue in their book reviews that are posted on http://www.ReadingLiberally-SaltLake.org, for more and greater economic stimulus at least in the short term, is there a danger that excessive governmental debt cannot be borne by the U.S. economy?

14. In other words, with U.S. governmental debt exceeding the level of 100% of annual national output (aka Gross Domestic Product), won’t the debt reach “junk bond” status which would mean interest rates in excess of 20% of national output which is the normal level of U.S. governmental revenue -- which means ALL of the U.S. government’s revenue would have to go toward paying interest and nothing would be available for anything else?

15. Isn’t Prof. Krugman, in his review, being disingenuous in casting in class-warfare terms the effect of austerity (reducing governmental deficits and expenditures) as favoring capitalists over workers? After all, the holders of capital are retired workers, their pension plans, and university endowment funds.

16. If interest payments on our national debt become too burdensome (please see Item 14), won’t the Federal Reserve be forced to print money in order to buy up much, if not all, of our national debt? And wouldn’t this mean disaster for any holders of dollar-denominated assets including retired workers, their pension plans, and university endowment funds?

17. And, though a small point, isn’t the mainstream media’s constant chatter about record stock-market prices really a classic case of looking through the wrong end of the telescope? In other words, markets usually anticipate the future and the stock markets may only be anticipating how badly the U.S. dollar is likely to plummet as the Federal Reserve continues to print more money to keep interest rates down so that the U.S. government has something left to spend on other items -- so aren’t record-high stock prices really record-low plummeting-dollar values?

18. And, a major point, isn’t this whole imbroglio, despite the occasional obligatory reference to higher unemployment rates among inner-city residents in general and inner-city youth in particular, a testament to how the U.S. has created a permanent under-caste comprising approximately 30% of our population which is unparalleled in any other developed country in terms of the lack of upward mobility from that permanent under-caste?

Post Reply

Return to “Participant Comments - Austerity: The History of a Dangerous Idea - Oct 9th”

Who is online

Users browsing this forum: No registered users and 1 guest