Captain Cranks
Footballguy
Is this all political or do most economists really believe we should be perpetually cutting interest rates and implementing economic stimulus to avoid a recession even after a 10 year growth cycle?
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Why are we so hellbent on avoiding a recession? (1 Viewer)
- Thread starter Captain Cranks
- Start date
IvanKaramazov
Footballguy
Recessions are no big deal if you're not the guy losing his job or if you're not the kid graduating from college into a depressed labor market. For those folks, recessions are extremely costly and it would be nice to avoid that harm if we can reasonably do so.
dkp993
Footballguy
Depending on the size of the recession I would add those retiring and relying on 401k’s are hit pretty hard too.
Captain Cranks
Footballguy
Do you feel the current tactics of cutting interest rates which are already historically low and encouraging deficit spending in order to sustain our longer than normal economic boom cycle are reasonable?
Captain Cranks
Footballguy
Keep in mind those people used to rely on safer assets like government bonds before government purchases to foster future economic growth have forced them into higher risk assets.
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dkp993
Footballguy
Sure, those same people also used to rely on pensions set up by their companies for their retirement, but those are days long past.
Captain Cranks
Footballguy
Captain Cranks
Footballguy
Right, and it's the same for anyone in office. There's no tolerance for a downturn in the economy despite the fact that, in my opinion, it would be healthier for long term growth.
E Street Brat
Footballguy
I do not. I think it leads to what should be normal cycles become more extreme.
I normal recession in 2006 or 2007 could have prevented the "Great Recession" of 2008
dkp993
Footballguy
IvanKaramazov
Footballguy
Just to clarify, I'm not necessarily arguing for either of those. I would definitely argue against additional deficit spending, and I'm agnostic on rate cuts. Just explaining why it's a real issue and not just political.
Captain Cranks
Footballguy
Yeah...I think people miss the reality that this constant meddling and pulling forward of demand has longer term consequences. A little pain now means less pain in the future. A recession now means better growth going forward. We need to look no further than Japan for what our future holds at this pace.
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The Commish
Footballguy
In 2018, the projection for a recession/pullback was 2022-23ish. I don't know many credible economists arguing we SHOULD cut rates. I think most say it's unwise given the thin margin we have to work with after the tax cuts to the rich.
That said, the reason many want to avoid it is political. It's the last thing Trump has to hold on to and all he's managed to do is speed up the process so that now we are looking at recession on 20/21. That should be enough to give anyone pause, but here we are. From a practical standpoint, it's like IK says...recessions mean people lose jobs and that sucks for those people. I'm sure they'd like to avoid going through that if at all possible. All of this SHOULD have been considered when the last tax bill was passed, but it seems that didn't happen. This admin can't seem to see more than a step out.
KCitons
Footballguy
Exactly. Back when we got married, I remember interest rates on cars, houses, credit cards were much higher. But, I could also earn 8-9% on a bank cd. Spend less, save more. Reap the rewards. Cash is king.
Captain Cranks
Footballguy
I would argue that even though there are real negative implications of a recession, it's still a political determination that we try to avoid them. Politicians could explain that a normal, yet healthy correction is ahead but that we will pull through it together and come out of it stronger. However, since people don't want to hear that, politicians are forced to act on what's best for the short term. To use a crude analogy, our leaders are like a dentist who's unwilling to tell his/her patient that a tooth needs to be removed in order to promote a healthier mouth. We just tell them to take some pain killers and that better days are ahead.
Agreed, a down turn in the economy this close to the election is not good for any party.
The Narrator
Footballguy
Because they want to put it off until the next president is in office even though doing so will make it worse?
Juxtatarot
Footballguy
Gradual, measured growth is better than boom and bust cycles. In theory, we should try to stop recessions.
The Fed deciding to lower interest rates again makes sense to me.
I would be hesitant to apply tax cuts and revenue spending measures at this time due to our current deficit and debt situations.
The Fed deciding to lower interest rates again makes sense to me.
I would be hesitant to apply tax cuts and revenue spending measures at this time due to our current deficit and debt situations.
Alex P Keaton
Footballguy
Exactly why we are supposed to have an independent Fed.The Commish said:
Stealthycat
Footballguy
Democrats need a recession for 2020 Presidential election
The Commish
Footballguy
Captain Cranks
Footballguy
Not really. They just need Trump to keep mishandling the economy. His approval ratings on the economy are slipping despite the fact that we're not in a recession. Most intelligent people realize that this trade war is a bad thing.
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