w/this “Lets use government outlays to invest, not to spend.”

as opposed to: “The best way for the government to run a deficit and be more likely to get us out of this is cut taxes.”

and your ex. “we build additional lanes on the Interstate in or around Nashville.”

wouldn’t you agree that, after Tax Cuts, if the People of Nashville, and Tennessee, thought that was a good Idea, they have the ‘Cash’ to build it themselves?

or, in other words, where, or when, has a Command-and-Control Economic model proved effective?

or, differently, When all Roads lead to D.C., the People, of the serveral States, are left in the dust..

BTn – I appreciate your comments and I do not disagree. General tax cuts would be a much better solution than the creation or expansion of governmental programs and they would be effective in stimulating the economy quickly. Further private sector investment should be promoted through tax cuts and no through government attempting to “guess” at which industries will succeed or even worse, targeting industries that will not succeed but that are politically correct. (Much of that has happened in the stimulus bill and much of it will end up being wasted resources that the private sector could have invested far more wisely.)

There is some concern that individuals would not necessarily spend tax cuts and thus there would be less consumption or job creation. Much might be saved, used to pay down debt (although in the long run these are not a bad things either) or would promote consumption of imports at a time when we would be better off to be stimulate domestic sectors.

My point is that if we are going to spend future tax dollars (and that is in essence what we are doing), it should be for things that will improve our economy and our ability to create jobs in the future. Investments, not-one time outlays.

Obama’s stimulus package increased funding for police officers. OK this is good, but after the funding goes away, so do the police officers, so does the economic value of the stimulus. It is a one time shot.

But lets say we build additional lanes on the Interstate in or around Nashville. When the project is done, trucks and commercial traffic (and commuters) will save time and money and the Nashville economy will be a somewhat better place to conduct business because transportation costs have been permanently lowered.

That is my point. Lets use government outlays to invest, not to spend.

In that time I can count 9 cars that my wife and I have owned over the same period. The automobile is still king of the economy. I don’t buy that cars are too small a part of the economy to matter.

What’s the next single largest part of the economy?

I’d take the other side of your thesis. The best way for the government to run a deficit and be more likely to get us out of this is cut taxes. Allows the most efficient use of the extra money to the consumer/taxpayer/businessman. Government pork, it should be obvious, is not the long term solution.

Raise taxes when things are better…

Probably the most important take away. It explains why so many people are advocating “balance the federal budget”, “stop quantitative easing”, “raise interest rates”.

They fail to understand that this time it is different from past recessions and extremely similar to the great depression. There is no private sector demand today and it will not be forthcoming until balance sheets are painfully repaired. The “tough love” responses that are appropriate during a typical business cycle recession would be a disaster in today’s economic environment.

The question is not should be stimulate the economy through deficit spending. Yes, we must. The question ought to be, “How do we stimulate the economy in a manner that results in long term investment rather than one time government outlays?

Germany has used past recessions as an opportunity to stimulate their export industries by providing lavish investment tax credits. Perhaps we should be looking at similar ideas. We should be identifying what sectors of our economy where we have the greatest comparative advantages and how we can promote their development to become efficient exporters (agriculture as one comes to mind.) We should be identifying what sectors of our economy we can develop to strengthen domestic production over imports (domestic oil production is an obvious response) and we should be identifying what public sector investments will strengthen our domestic economy (highway capacity to eliminate bottlenecks to commercial traffic in urban areas).

Stock Rally Just Getting Started Before Rates Rise

Nov. 9 (Bloomberg) — Stocks around the world are falling at the fastest rate since the worst of the credit crisis on concern central banks will start raising rates, a signal that triggered the biggest rallies over the past three decades.

Benchmark indexes from New York to Tokyo to Frankfurt have lost an average of 4.4 percent since Oct. 19 on speculation policy makers will curtail stimulus measures before the global economy revives. History shows stocks have climbed 92 percent of the time in the six months before government borrowing costs began the biggest increases, data compiled by Bloomberg show.

http://csis.org/event/great-recessions-lessons-learned-japan

Some key take away points being a) interest rates are very unlikely to rise because net demand for money is unlikely to increase anywhere until balance sheets are repeared. b) Non recourse loans on US households represent a huge hazard should house prices fall further c) Only governments can fill the demand gap while balance sheets area being repeared d) Currency fluctuations are likely to be wild and not easily predictable while all countries try to achieve an export advantage and all there are no strong economies e) Neoclasical economic theory is not an adequate framework for a balance sheet recession

Why not save your money and then buy a car. Once you have that car, save a little money for the 10 years you are driving it so you will have the money to buy a new car when you need it.

How did Americans get sold such a scheme to not only have to pay for the things they need but to pay an added charge on top for everything. And some of those charges (30% interest on credit cards) can add up with enough time to exceed the actual worth of what was originally purchased.

Being in debt must be like living in Hell. Owing money on things you bought in the past must be like being a slave. A modern day nation of slaves.

How did we become so fooled?