850 Billion Dollar Stimulus Package

Discussion in 'Free Speech Alley' started by PURPLE TIGER, Dec 17, 2008.

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  1. red55

    red55 curmudgeon Staff Member

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    A recession is based on psychology? How do you figure?
     
    red55, Dec 23, 2008
    #21
  2. CParso

    CParso Founding Member

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    A recession is due to a consumers spending less money. The reasons behind consumers slowing (or increasing) spending are psychological.
     
    CParso, Dec 23, 2008
    #22
  3. CParso

    CParso Founding Member

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    When you said "public works", I took that to mean uncontracted - government managed labor. Just a misunderstanding.
     
    CParso, Dec 23, 2008
    #23
  4. red55

    red55 curmudgeon Staff Member

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    It ain't that simple. Consumer confidence may have a psycological element, but there are many other factors at work to make a recession--GDP growth, real personal income, employment, trade balance, dollar strength, industrial production, and wholesale-retail sales. The 1981 recession is thought to have been caused by the tight-money policy adopted by Paul Volcker. The current one was brought on by irrational exhuberence by buyers and sellers of mortagages . . . not by consumers spending less, but by them borrowing more.
     
    red55, Dec 23, 2008
    #24
  5. Bandit88

    Bandit88 Old Enough to Know Better

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    You're talking in circles, Red. On the one hand, you're saying that the current recession was brought on by "irrational exhuberence" (which I think is correct) and on the other had you're saying the psychological element isn't paramount. Economics is ALL psychological in a capitalist democracy. The stock market is one huge emotion mill.
     
    Bandit88, Dec 24, 2008
    #25
  6. red55

    red55 curmudgeon Staff Member

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    The two are not mutually exclusive.

    I'd like to see you prove it. Economics is far more complex than that, especially in the international economy that we live in.

    You are confused, sir. The stock market and the national economy are two very different things.
     
    red55, Dec 24, 2008
    #26
  7. CParso

    CParso Founding Member

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    Consumer confidence may have a psychological element? Confidence is a psychologic feature by its very nature.

    I'm not saying that real factors don't affect consumer confidence, but ultimately consumer confidence is what defines a recession. GDP growth, income, and employment are all determined by confidence.
     
    CParso, Dec 24, 2008
    #27
  8. lsu-i-like

    lsu-i-like Playoff advocate

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    The value of money is now totally abstract, so the entire system is built out of dreams, trust, and hot air.
     
    lsu-i-like, Dec 24, 2008
    #28
  9. red55

    red55 curmudgeon Staff Member

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    You are misinformed.
     
    red55, Dec 24, 2008
    #29
  10. CParso

    CParso Founding Member

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    I am, of course, going to have to disagree.

    GDP growth is primarily driven by consumer spending, while employment & income are driven by expected GDP growth (on a micro-level).

    It's all based around perception. If people perceive the economy being bad, they stop spending. If businesses perceive a slow down in spending, they lay off employees and slow pay-growth.

    The reverse is also true. During a boom, when everybody is happy about the economy - people spend more, and businesses hire and pay more.
     
    CParso, Dec 26, 2008
    #30
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