Bob Herbert piles the love on Obama:
There is always a tendency to underestimate Barack Obama. We are inclined in the news media to hyperventilate over every political or policy setback, no matter how silly or insignificant, while Mr. Obama has shown again and again that he takes a longer view.
There was no way, for example, that the Daschle flap was going to derail the forward march of a man who had survived the Rev. Jeremiah Wright fiasco. It’s early, but there are signs that Mr. Obama may be the kind of president who is incomprehensible to the cynics among us — one who is responsible and mature, who is concerned not just with the short-term political realities but also the long-term policy implications.
***The simple truth is that most Republican politicians would like Mr. Obama to fail because that is their ticket to a quick return to power. I think the president is a more formidable opponent than they realize.
Mr. Obama is like a championship chess player, always several moves ahead of friend and foe alike. He’s smart, deft, elegant and subtle. While Lindsey Graham was behaving like a 6-year-old on the Senate floor and Pete Sessions was studying passages in his Taliban handbook, Mr. Obama and his aides were assessing what’s achievable in terms of stimulus legislation and how best to get there.
I’d personally like to see a more robust stimulus package, with increased infrastructure spending and fewer tax cuts. But the reality is that Mr. Obama needs at least a handful of Republican votes in the Senate to get anything at all done, and he can’t afford to lose this first crucial legislative fight of his presidency.
The Democrats may succeed in bolstering their package somewhat in conference, but I think Mr. Obama would have been satisfied all along to start his presidency off with an $800 billion-plus stimulus program.
I guess the real questions are how long he is going to keep running rings around the GOP, and whether his policies are good and we are lucky he is playing the Republicans like a fiddle. It certainly does seem that President Obama couldn’t care less about the news cycle, and is, as always, thinking long term. From the presser last night:
Obama: Well, I don’t think — I don’t think I underestimated it. I don’t think the — the American people underestimated it. They understand that there have been a lot of bad habits built up here in Washington, and it’s going to take time to break down some of those bad habits.
You know, when I made a series of overtures to the Republicans, going over to meet with both Republican caucuses, you know, putting three Republicans in my cabinet — something that is unprecedented — making sure that they were invited here to the White House to talk about the economic recovery plan, all those were not designed simply to get some short-term votes. They were designed to try to build up some trust over time.
And I think that, as I continue to make these overtures, over time, hopefully that will be reciprocated.
***That doesn’t negate the continuing efforts that I’m going to make to listen and engage with my Republican colleagues. And hopefully the tone that I’ve taken, which has been consistently civil and respectful, will pay some dividends over the long term. There are going to be areas where we disagree, and there are going to be areas where we agree.
Compare that statement to the conventional wisdom last week in the media, in which Obama was rebuffed, the outreach had failed, and we were told that the dinner and drinks led to no Republican votes, and so on. The talking heads in the media are thinking short term, the President is not.
It will be interesting to see how this plays out.
Shygetz
I’m not as optimistic. I think the GOP strategy here is pretty obvious. Pass a stimulus bill that costs as much as possible yet is insufficient to turn the economy around by 2010. Do so with as few Republican votes as possible to make the bill designed to fail a purely Democratic endeavor in the public eye. Loudly and repeatedly say that the stimulus bill is too expensive and won’t work, after doing everything you can to make sure the stimulus bill is too expensive and won’t work. Then, when the mid-terms come, run hard on the fact that the stimulus bill wasted the taxpayer’s money to no effect.
And the thing is, I’m not convinced that they won’t get away with it. I really hope I’m wrong, but Obama seems to have the political handicap of needing to do what’s best for the country. The Republicans clearly have no handicap–they are actively (sometimes openly) rooting for the economy to fail.
cleek
truly, a man of extraordinary vision and brilliance approaching to genius!
i kid. i kid. mostly.
Walker
If the rumors about the bad bank plan are true, then Geithner is about to deliver a massive present to the Republicans. I am not sure that they will know how to use it effectively, but the bad bank is going to cost Obama a lot of political capital on the economy.
Someone needs to put a (metaphorical) bullet in Geithner and Summers.
John Cole
@cleek: Yeah, the man love from Herbert was embarrassing.
The thing is, Obama is clearly trying to change the way the game is played, but when folks like Herbert attribute everything to some guru like performance, it just looks like silly hero worship.
TheHatOnMyCat
It’s going to play out the way you wanted: Obama will be a popular and successful president, and the GOP will be marginalized until it grows up and becomes responsible. Republicans are going to have to walk away from the people who think Teri could write a book, and that dinosaurs helped build the pyramids. They are going to have to figure out what their "conservative movement" is really about, since they clearly have no idea right now.
Then, in ten or fifteen years, they will win you back and BJ wll become a righty blog again.
Okay, kidding about the last part.
Dave
What I continue to be shocked by is how people underestimate Obama.
He cut his political teeth in Chicago. That’s like taking physics classes at MIT; it doesn’t get better than that. DC isn’t showing him anything he hasn’t already seen on a smaller scale. Do you think Boehner and his ilk are going to outmaneuver him?
El Cid
Again, I don’t think this is an up/down division between either (A) OMG Obama iz idjit he iz fail and (B) Obama is the secret Matrix-controlling magic dude for whom no sparrow falls without his willing it.
When people make noise and dissent from certain things Obama appears ready to do (and remember, in government and politics things are usually signaled before an actual decision is made or policy implemented), maybe it’s the case that that dissent is, when smart and focused, one of the tools Obama makes use of to learn, adapt, and move forward.
In fact, to adopt some "Hey man, Obama’s got this" attitude is to fail in your duties to the President many claim to support.
For my own sake, I’ll be more willing to trust (i.e., watch less nervously) Obama’s governing style and instincts when he’s been in there a while and we have an objective record of success to reassure our trusting instincts.
Finally, this is still a country with policies overwhelmingly dominated by its uppermost classes, and the presence of a liberal and decent politician at the government’s head does not make that fact vanish nor does it make the interests of the vast majority now synonymous always (though occasionally) with those of the uppermost classes.
nylund
What I don’t get is that in the world of political theater, the media is part actor, part writer, part director, and part producer, yet every single day, even though the plot never ever changes, they still act shocked and surprised by every new plot twist, uncertain how any of it will play out.
Not to mix metaphors, but they’re like that guy in Memento, unable to form any long-term memories, only capable of recalling what just happened, still getting all shocked each time it happens again, and again, and again.
But ultimately, what I am saying was that it would make my day if every single time CNN, Fox, MSNBC, etc. came back from a commercial break, the very first thing the talking head said was, "We are inclined in the news media to hyperventilate over every political or policy setback, no matter how silly or insignificant."
Maybe if you force them to say it 1,000 times a day they’ll actually stop behaving that way.
SpotWeld
Is it just me, or is the attitude that Obama needs to take with the Repbulican minority very much in the same theme as the one he will need to take with Iran?
woody
Geithner’s covering for the Banker/Bosses, saving salaries and bonuses for the elites..
Is he acting on his own? Or at the behest of Obama?
Does it matter?
If on his own, then so much for the influence from the top.
If at the behest of Obama, or with his knowledge, then so much for the change…
Which it gonna be?
The Other Steve
I was watching CNN this morning before work, and they had on the mayor of Eckhart, Indiana where Obama was yesterday.
He laid it on the line, he said this bill is about Jobs, Jobs, Jobs. That is all they care about right now. He went on that he’s got $92 million in projects ready to roll right now but no money. It’s necessary projects for the community and would employ about 2300 people.
This was followed up later listening to Charlie Crist from Florida saying this is about Jobs, Jobs, Jobs. And another Mayor in Florida saying the House version of the bill was much better, as it had money that would come directly to his city because if it is filtered by the state he’ll likely see nothing.
This is a new game, and it looks like the Republicans don’t know how to play anything but bitch-slap.
Balconesfault
@SpotWeld:
Yep. Come to the table. Appear reasonable, while your opponent looks like a lunatic. Don’t threaten, don’t humiliate, so that you don’t give extremists on the other side something to rally around. Let the moderates drive the extremists out of power on their own.
The problem is, this strategy is more likely to wokr with Iran, than with the Republican Party – because Iran seems to have a lot more moderates.
Conservatively Liberal
I saw the First Lady on a blurb that C-SPAN played this AM where she was giving a speech in front of an Indian tribe. She was talking and at one point she spoke a line with the words "President Obama" in it. She paused, smiled and said "I like to say that" to applause from the audience before resuming her speech.
Made me grin like sin, it did. :) I like her.
This is not a president who is going to be pushed around easily, he is his own man, he makes decisions and stands behind them but still knows when to back down if need be. He isn’t proud, he is smart. He doesn’t feel the need to control the press but rather is quite happy to let them blather on while he finds a way to turn their blather to his advantage.
While he has not been without flaws he is a pretty damn competent man who I feel just might have what it takes to straighten out this mess. Whether he will or not is another matter due to the fact we don’t know if this is even solvable, but I do believe that President Obama is more than competent to do the job.
Time will tell but I do like what I am seeing so far and that sure beats the hell out of dreading nearly every second of it like I did with Chimpy.
ChrisB
Perhaps not intentionally, but Obama has the Republicans right where he wants them on this bipartisanship thing. He’s reached out and they’ve slapped his hand away. They’ll either come on board over time or become even more isolated. Either way Obama wins.
Zifnab
@woody: Geithner is acting on behalf of the banking industry. That’s a world away from acting on behalf of the banking bosses. His plan is designed to salvage the institution, even if it saddles the US Government with the lion’s share of the damage. But he’s no Paulson, simply dolling out money to all his best friends.
I honestly don’t think the Bad Bank plan is going to make it. Obama is pushing an $800 billion plan that has received massive disruption from GOP lawmakers. You think they’re going to get more friendly with a $4 trillion bill? If the GOP really does want the economy to die off by 2010, or if they want to play "Party of No", a plan like this seems like it would get completely devoured in the Senate. And if it really is such a bad plan, I can see more than a few of the progressive Dem Senators bucking the idea on their end. So I don’t know if the plan will pass in any way that it is currently envisioned.
ChrisB
@Conservatively Liberal: Completely agree with your post. A couple of things:
1. This is a really bad economy but it’s not the Great Depression and our policy responses aren’t making it worse. We should stop the slide and begin pulling out in 2010, hopefully in time for the midterm elections.
2. Obama is smart and competent and he handles himself in a way that shows he learned what you were supposed to learn in kindergarten. Unlike the Republicans and the media, who have shown over the past several weeks why they need to repeat the grade.
3. And yes, thank God President Bush is no longer running the country and, for my sanity, that we no longer have to see him in charge. Stating the obvious I know but, as everyone else has said, just think if Bush had been at that podium last night.
Wings of Oatmeal
I’m with Herbert. Obamaman may be too establishment for my ultimate tastes, but he’s not like any recent Democratic candidates or presidents (there have been one or two, right?). This "outreach" isn’t remotely a sign a weakness. And he knows that trying to CRUSH his opponents only builds them up (basic metaphysics).
Very different. I doubt many of us are hip enough to see just yet. I don’t think there’s any "guru thing" involved. He’s just — as you say — trying to change the game, and it isn’t a casual enterprise.
4jkb4ia
I applauded that statement by Obama vigorously as I had been saying it weeks ago.
Karmakin
@woody:
http://www.dailykos.com/storyonly/2009/2/9/234340/6189/142/695504
If that story is true (and I see no reason to doubt it), everything has to be looked at from that light. The threat of a potential run is too great to go looking for punitive measures. I find it very distasteful. But right now I don’t see an alternative.
Samuel
The issue for Obama is going to be how he handles the leftist fringe of the party.
The TARP II debate essentially comes down to the Krugman types with the liberal netroots behind him who are calling for a bigger and better stimulus and nationalizing the banks versus the "bad bank" idea. From the Times article, it looks like
Karl RoveDavid Axelrod was pushing for the former. Geithner seems to have won this battle, and will has effectively poked Krugman and his band of nationalization heroes in their collective eye. In that sense, Geithner is looking more and more like Clinton’s Rubin–holding the left-wing at bay.This probably explains Obama’s executive-pay cap on bailed-out banks—he was throwing some red meat to the left wing to keep them happy.
As for the Republicans, they really can’t do anything more than wait for the plan to fall apart again.
Punchy
I hope Herbert had a large supply of tissues necessary to clean himself up after writing that.
El Cid
@Samuel: Well, since the leftist fringe has been correct about every policy issue over the last 30 years, the question is more about what politicians are to do about the consequences of bad policies.
Napoleon
Check out the video of Morning Joe over at TPM where Joe says this morning that "maybe we don’t know what we are talking about".
No $–t
Samuel
Really? The Great Society was a "correct" policy? I thought Social Security and Medicare/Medicaid were bankrupt…..I guess I was wrong…
liberal
@Zifnab:
Nonsense.
liberal
@Samuel:
You’re certainly wrong about Social Security. It’s fully funded until circa 2040, after which time it will pay about 75% of mandated benefits.
horatius
Still fighting the DFHs eh Samuel?
What Krugman proposed is what every pragmatic economist has proposed. What Giethner is doing is bullshit. But hey, sticking it to the lefties is what this game is all about, the outcome be damned. Who are you, David Broder?
slag
@Samuel: Yes. You were and are wrong.
liberal
@Zifnab:
That’s not so clear. While I’m very liberal on the American spectrum of ideologies, it’s pretty clear to me that a lot of progressive Dem congressmen understand financial matters even less than they understand economic matters.
horatius
Yes. You were completely wrong on Social Security.
liberal
@Balconesfault:
Given that the Iranians were prepared to make a very reasonable negotiating offer to the US earlier this decade, and the US wouldn’t hear of it, and given the US invasion of Iraq, it’s we who appear to be the lunatics, at least insofar as international relations are concerned.
Samuel
The TARP II implies that private capital will be utilized–hedge funds, private equity, etc, which stand to profit enormously from buying toxic assets if the depressed values recover. And I’m sure there will be compensation aplenty.
It will be interesting to see the politicians, especially which Democrats, will be crying about that when the payoffs come—if they come.
horatius
@liberal:
True. They even offered help with logistics in Afghanistan, but were rebuffed by the dumfuck from Texas.
Adrienne
Geithner is doing a pretty good job of explaining the following:
1. What went wrong.
2. What was wrong with the response.
3. What would have happened if we hadn’t done anything.
4. What is still going wrong.
5. How he’s going to change the government response.
6. Why we need to do more.
7. What we need to do.
8. What will happen if we don’t do anything.
9. What we are going to do.
All in all, he’s doing pretty well. He obviously knows his shit. He speaks pretty clearly and coherently when he isn’t getting grilled about Turbotax.
horatius
CDS and SIV and other such ponzi schemes were leverages as much as 60 to 1. Those TARP assets are called "Super Shitpile" for a reason. There’s no way those assets will ever recover to above the market value aka whatever firesale prices they will go for now. In the absence of a re-inflation of the real-estate bubble, they won’t be worth shit. And even after the re-inflation of the said real-estate bubble, the prices of those CDS/SIV shit won’t be sustainable.
El Cid
@Samuel: I’m not going to get drawn into another blog debate this morning, but yes, absolutely, the Great Society was an outstanding success, Medicare most amazingly, and Social Security is astoundingly secure. I mean, just by the numbers alone. Good grief, it’s like people have forgotten what a starving wasteland we had across regions of the country such as the American South and Appalachia. (Though Social Security of course was a New Deal program.) The number of elderly people lifted out of starvation in a generation rivals the best stories of rapid development worldwide.
However, I will agree if you want to argue that dumbass right wingers who freaked out about the jobs programs of the New Deals made our aid to the poor much less efficient by pushing (via racism among segregationist Southern conservative Democrats and Republican right wing freaks) to stop those jobs programs, which led to the creation of the welfare programs which would allow Reagan’s racist mythology of Black Welfare Moms With Cadillacs to succeed so well.
If it hadn’t been for conservative opposition to the New Deal jobs programs, we would have saved a ton of money, had much better infrastructure, and would have lifted far more people out of poverty than welfare, but then that would have allowed people to trust government, so as always for conservatives ideology and blind hatred trump the national interest.
So, yes, on every significant issue of the past 30 years, from the economy, to foreign policy, to the environment, the leftist fringe has been spot-on, while the mainstream and the treasonous right simply make the problems worse.
Adrienne
I don’t give a damn if we profit. They can keep ALL of it. As long as we recoup our outlays (in real $) overall and break even, I’ll see it as a good investment. If that is the case, that means that it ultimately cost us nothing to avert an economic catastrophe. I’ll take it.
Brick Oven Bill
I believe that the primary outcome of the stimulus will be inflation, as the Federal Reserve is now buying Treasury Bonds and the money supply has already recently been doubled.
Railroad electrification would be stimulus, as it would immediately put people to work, and would provide a long term benefit. Local government slush funds and social programs are not stimulus.
This inflation will rightly be blamed on the President.
Notorious P.A.T.
It’s all about race! ! ! ! Now hand me my Oxycontin!
/RushLimbaugh
horatius
@Adrienne:
The Ponzi finance-based economy is done. We have to undergird our econmy with real-value producing goods that will stand the test of time. Time to get back to basics. Even if we get out of this crisis with even money, we need to ensure this doesn’t happen again. The next time, we may not even be this "lucky".
Rick Taylor
@Shygetz:
I don’t think they’ll get away with it. American tends to turn to Democrats in times of economic turmoil, and I don’t think the Republicans will have helped themselves by bragging how they killed foodstamps and aid to states right before an economic crises. However I am concerned with how much damage they do on the way out. And while I admire Obama and think he’s the best Democrat we could have at the helm right now, I can’t agree that this was some sort of master-stroke, or that having an already modest bill cut wasn’t a setback (of course it isn’t over yet).
horatius
@Brick Oven Bill:
Dread the S word BOB. Stagflation. That’s what a stimulus bill with very little long-term infrastructure spending in it will beget.
Karmakin
One final thing for Sammy. The problem with Medicare/Medicaid is basically massive inflation in the health care sector. Which is by and large caused by a lack of regulation and effective competition. (There can’t be real competition in a life or death industry)
gwangung
The stupidest Republican meme is NOT that the New Deal was a failure. The stupidest Republican meme is that the Great Society was a bust.
It got a LOT of people out of poverty, most specifically major segments of the black community. You may not want to hear this, but the emergence of the black middle class came during Great Society programs. And the segment of the black community that was poor was shrinking during the Great Society—and it began to rise again when those Great Society programs were cut.
Samuel
Ensure what doesn’t happen again? Market bubbles? Greed in the marketplace? And who will do the "esnuring"?
Balconesfault
@liberal:
See previous comment regarding number of moderates in Iran, versus number of moderates in the Republican Party.
gwangung
BTW. FTW.
Xenos
@Samuel: Sammy, what you see as an unworkable solution is not a bug, but a feature.
Geithner will put together the best plan the avoids nationalizing the banks. That plan, as some sort of unholy TARP II / Bad Bank deal will fail politically. It just can’t be justified, and there is no reason that private interests, or the Chinese, would feel like playing the role needed to get it to work.
That will leave… nationalization (also known as receivership, in this case). Socialism by default. Obama does not intend to nationalize the banks, that is just the unavoidable consequence of no better scheme being imagined. Obama can’t lose. Is that not clear?
Now if the conservatives have a better scheme they had better come out and present it. Being passive, timid whiners achieves nothing except to reinforce the message that Obama really has no choice but to claim control over the banking system.
This is what losing at chess looks like – while you are not realizing it, all avenues for escape and for counterattack are blocked off and made useless. There is nothing left to do but to submit gracefully. Get used to it.
Clutch414
@Adrienne:
Am I the only one who is glad that we now have super-nerds running the country? I say this as an aspiring super-nerd myself.
Adrienne
@horatius:
Oh, I agree totally. However, without a healthy and functional financial/banking system we have NO economy. If we don’t have a healthy banking system, we CANNOT and WILL NOT be able to produce the goods to "get back to basics". Production and manufacturing depends on the financial sector. Manufacturers need capital, and capital comes from the financial/banking institutions. It’s an interdependent system. Neither can survive without the other.
Xenos
@Brick Oven Bill: Here is a quick quiz, BOB: How much has the M3 ( a way of calculating not only all the money in circulation, but all the electronic accounts, government funds and funds ‘created’ by fractional reserve lending) grown in the last five years?
Answer: Nobody knows! Because the Bush Administration decided to stop publishing an estimate of M3 back in 2005, so it could not be criticized for its incredibly loose monetary policy.
Homework assignment: Look at the graphs halfway down this page. Then, using your math skills, estimate what the inflationary effect of an 800 billion stimulus package would be. Now, adjust that result by the amount of deflation that has already occurred since September.
I am no economist, but that 800 billion has got to be a lot less that whatever that deflation already realized has been. If anyone has a good number to put on the deflation we would suffer should there be no stimulus package, I would love to hear it.
Adrienne
@Clutch414:
You are NOT the only one. I am a supernerd who majored in this stuff and it took me a little while to totally get my head around it. I understand all the parts but to fully grasp the enormity of this collossal failure took some time. As such, I don’t want ANYONE who isn’t a supernerd anywhere near this shit. Honestly, I wish we could bypass the Congress because most of our elected officials don’t know shit about economics or finance. They are not equipped to handle this.
LA Confidential Pantload
I am so utterly sick of:
he’s a chess master
he’s a Jedi knight
he’s a basketball superstar
he’s a jiu-jitsu black belt
he’s a Chicago tough guy
he’s two steps ahead of everybody else
he’s holding his enemies close
he’s so much smarter than you and me
100% bullshit. All of it.
SGEW
To wit:
Bullet. Dodged.
Adrienne
There. Fixt.
We would have had a President who is dumb as a doorknob replaced by another President who is twenty pounds of dumb in a five pound bag, who would have had Clueless Caribou Barbie™ as his VP, both of whom would be advised by the guy whose legislation kickstarted the shitstorm and proceeded to call us "a nation of whiners" and who called the worst economic situation since the Great Depression a "mental recession".
I *shudder* to think about it. It’s frightening.
Brick Oven Bill
Xenos, M3 stopped being tracked on March 23, 2006, not 2005.
Here is, what I understand to be, a St. Louis Fed graphic of the Money Supply. If this is accurate, and I suspect it is, M3 has doubled in the last few months.
jenniebee
You don’t have to be some all seeing masterful guru to do what Obama is doing. All he does is take that calm, long term view, and pick his battles. Look, Karl Rove figured out a very winning strategy for a few years and some people worshiped him for it and some people were terrified of him for it, but there were a couple of things that were pretty clear about what Rove was doing: 1 it made effective politics but lousy policy, 2 even though Rove wanted a permanent Republican majority, his long term thinking was that he could keep using a short term strategy on the same population indefinitely and it would never lose its effectiveness, even as the fruits of the bad policy came to light.
It looks to me like Obama is taking a two-pronged approach. He has to pick his battles short term in order to survive until the long term when his strategies bear fruit. In the meantime, R’s are setting themselves up for the blame for opposing a popular stimulus package. They think that no matter what happens, the economy will be bad so they’ll look good, but it’s more likely, I think, that no matter how good or bad things are, Republicans are going to get the blame for it not being better.
Ivan Ivanovich Renko
@LA Confidential Pantload: How about- he ain’t a dumb-ass, venal fucking bigoted conservative Republican?
Notorious P.A.T.
*30* years? We were correct about civil rights, getting out of Viet Nam, the Marshall Plan, not bombing the USSR, the New Deal, big business in the 20s, etc. etc. etc.
"Really? The Great Society was a "correct" policy? I thought Social Security and Medicare/Medicaid were bankrupt…..I guess I was wrong…"
You guess right. Social Security is decades away from even having to lower its payouts, let alone being "bankrupt". And poverty fell by 50% after the Great Society.
Xenos
@Brick Oven Bill: John Birch Society? That is where you get your information?
And no, "monetary base" /= M3.
What the Fed during latter-day Bush and now Obama has been doing is to greatly increase the monetary base. This is intended, in part, to offset the much larger collapse of the M3. Go back to my comment here: @Xenos: and re-read it, and try answering the question as posed, instead of introducing irrelevant information.
FWIW, that is all I have. I beg some economist type to address this, even if it means dealing with crap from the John Birch society.
Notorious P.A.T.
*Iran mourns America’s dead*
"September 18, 2001: Ordinary Iranians hold candles during a vigil in Terhan to mourn the loss of life in the United States after hijackers crashed airliners into the World Trade Center in New York and the Pentagon in Washington DC. Iran’s supreme leader Ayatollah Ali Khamenei condemned the attacks "
http://www.time.com/time/europe/photoessays/vigil/
But, the Decider needed a third for the Axis of Evil, so a historic chance at new friendship had to be thrown away.
Brick Oven Bill
Actually, I saw that chart on the Glenn Beck TV show Xenos. The only place that seems to have it on the Internet is the John Birch Society. If the John Birch Society is the only organization willing to run with the data, assuming it is correct, then good for them. Nobody has disputed this graph, to my knowledge.
I have dutifully looked at your information, and have humbly gathered that M3 was around $10 trillion on March 23,2006. This agrees with my link. Putting the pieces together, I then will assume that we have created another $10 trillion since. Another $1 trillion for the stimulus bill, and another $2 trillion for our friend Tim this morning.
I believe in a thing called supply and demand, so if the money supply has gone from $10 trillion to $23 trillion in a few months, this would equate to a 56% inflation rate, more or less, when the smoke clears, assuming that there is no more spending for the year.
I am an engineer, not an economist, but this makes sense to me. I welcome alternative analyses.
SGEW
Not to mention slavery, women’s suffrage, Native American rights, the income tax, the safety net as a concept, Democracy, etc. etc. etc.
Basically, everything Thomas "Original DFH" Paine said, back in 1774.
liberal
@Samuel:
LOL!
One simple example would be to use statute to force mortgage brokers to accept fiduciary responsibility towards their clients.
That would take care of one small, dusty corner of the problem rather quickly.
liberal
@Adrienne:
That’s just downright stupid (as regards the bank bailout).
Financial history shows that throwing money at banks in this manner is an inefficient means of repairing the credit system.
So your implicit dichotomy—throw taxpayer money at the loathesome criminals who created this mess to begin with, or watch armageddon unfold—is a false one.
liberal
@Adrienne:
You left out
10. Why what he plans to do will probably not work, and is certainly less effective than taking insolvent banks into receivership, and
11. Why giving fraudsters cheap loans backed by taxes paid by working people is unjust.
Chris Johnson
BOB: I need to tell you that I don’t know shit about electrifying railroads, but because of the manner in which you bring it up over and over, I’m increasingly convinced that it’s a bad, stupid idea that should be avoided at all costs.
You might want to be VERY careful about that broken-record, lone-screwball quality if you seriously want that idea to ever fly anywhere, because from where I’m standing you’re un-selling it and I’ve pretty much pegged it as ‘easily debunked screwball idea’ WITHOUT doing my own research, based only on the sayso of a few posters who’ve said ‘this is dumb’ ONCE and cited relatives in the railroad industry, mountain routes etc.
I’m just saying…
John S.
Repeat after me:
I. AM. A. WINGNUT.
If the entire premise of your argument is based on something you saw on GLENN BECK and the only other place you can find it is on the JOHN BIRCH SOCIETY, then YOU ARE A WINGNUT chasing pearls of wisdom that only exist in the closed-loop system of the Right-wing Noise Machine.
Reasonable people do not base their thinking on either of those two sources. They just don’t. Only wingnuts look to either of those outlets for anything other than comedy.
Brick Oven Bill
John S, why do you think that the Federal Reserve stopped tracking M3? Do you believe the Fed’s stated reason that it costs too much to collect the data?
I suspect the reason may be because bankers wanted to print money to save themselves, as the CDOs began to unravel.
Xenos
BOB – The issue of inflation relates to how much money, in total, is in circulation. That chart from Glenn Beck (double yikes – you are doing yourself no favors with that citation) describes monetary base, not the total amount of money.
If you double the amount of currency in circulation, does that necessarily mean there will be inflation? No. Not in the present case, where banks are writing off trillions and trillions of debts, money that has gone to money heaven, so to speak. This can lead to deflation, which we are starting to experience. The solution to deflation is to offset it by increasing the money supply.
Is it inflationary to increase the money supply? Sure – that is the whole idea! Because the risk of overcompensating for the demonstrated deflation is a lot lower than the risk of letting the deflation get out of control. Letting the deflation get out of control is a very. bad. idea. See Hoover, Herbert.
Brick Oven Bill
Perhaps some validity to that Xenos, but why no inflation when housing was appreciating at 20% per year?
But, assume the theory that dropping home values actually destroy 100% of the money supply they represent is valid. This would only apply to that portion that was mortgaged, which is 30% of $10 trillion, or $3 trillion.
In this case, my theoretical inflation rate would be 50%, instead of 56%. Because the money supply would now be $20 trillion, instead of $23 trillion.
I predict 18 months of slight deflation, during which the money supply will continue to be expanded by a government that cannot help itself, and then rapid inflation as people try to preserve their wealth by purchasing tangibles.
Samuel
LOL…ok. Good luck with that as Chris Dodd hugs it out with Angelo Mazilo on yet another VIP loan.
Balconesfault
@Brick Oven Bill:
Isn’t housing appreciating at 20% per year a form of inflation?
Xenos
BOB – I hate to get personal, but you are playing a type – the arsehole engineer who goes way outside of his specialization and does not know crap about what he is talking about. When I was an archaeologist, whenever some idiot came up with the latest theory about vikings walking around Wisconsin in 700 AD., it was an engineer. When practicing law, when I get a client who just will not understand how and why the courts do things, and how and why a court of equity will sometimes not follow the letter of the law, it is an engineer.
Engineering is a profession where there are well defined problems, for which there are clear answers, some definitely right, some definitely wrong. When engineers get to the matter of human affairs, whether history or economics, they just can’t process it. They make stupid category errors and fail to account for the wide ranges of probability that have to be accounted for when making decisions.
So I am not going to argue economics with you. I know the subject only generally, enough so that I have a basic idea what sort of information and sources are likely to be trustworthy. It is just not worth my time to explain the distinction between inflation as a general phenomenon and inflation as described by CPI. And why housing is not counted in inflation or deflation statistics, and why at any given moment there might be inflationary and deflationary forces at work in the economy. It is pointless when you are stuck on the idea that inflation is bad, worse than deflation, so god forbid we intentionally cause some inflation.
Either educate yourself enough so that you comprehend the parameters of the debate, or forget it. Learn why some sources are considered to be more rigorous and reliable than others. And understand that other professions have their cranks and fools, and that you need to learn how to look to good journalist, good economists, and good thinkers for guidance. If I told you an engineer convinced me that a perpetual movement machine could be built, you would laugh at me. That is what you sound like.
SGEW
@Xenos:
re: engineers’ (unfair?) characterization as nutjobs. Don’t forget about global warming denialists and intelligent design proponents. So many engineers, so little clue.
And Dilbert. We must never forget Dilbert.
gwangung
See Salem Hypothesis.
Adrienne
You’ve obviously never even glanced at a graph where Money Supply and Money Demand do business. In short, money supply went up by 13T because we shifted along the demand axis to a higher level of demand FOR money. Since the supply axis for money supply is VERTICAL the ONLY way to meet that demand while keeping interest rates low is to have the Fed pump money into the system.
It’s not my anything. I haven’t expressed an opinion regarding this plan. I was simply commenting on how I felt about whether it makes us money or not. To be honest, even if we lose a little bit of money, it’s still a small price to pay to stop this downward spiral.
Xenos
My God I love the intertubes. I have been walking around for 20 years now pulling my hair out dealing with engineers driving me crazy, and now I can learn there is a whole theory describing and dealing with the very problem.
Brick Oven Bill
Re: The Salem Hypothesis
There are essentially two branches of engineering. The first is where you crunch numbers and draw pictures, the second is where you advocate for your Client on the playing field of interpersonal dynamics. The second pays better, by the way, if you can pull it off.
The way I see it, economics can be best viewed as a combination of these two branches of engineering, with the additional guidance provided by history.
All fiat currencies fail. We have apparently doubled the money supply in the past few months. The closest modern world parallel I can find to America-2009 is the Weimar Republic. This time it is more complicated though, this time it is world-wide.