Re: [lwside1] Re: Here yah go, Congress is against short selling !

["Sean Reilly" <seanjreilly@xxxxxxxxxxx>]

Deficit spending has to be financed somehow and that is via issuance of
bonds to the general public.  This creates a vacuum in which private savings
are ciphoned out of the money market from where businesses typically borrow.
Since there is less savings to be borrowed by firms, the price of money
(i.e. the interest rate) goes up, which makes it more expensive for firms to
finance capital expenditures.  When the cost of capital increases, the
Marginal Productivity of Labor falls and it follows that the Unemployment
rate rises (the crowding out effect), because Labor remained constant.  So,
the notion that we can have a Zero UE rate (an ideal of the Post-Keynesians)
and deficit spending is not coherent.

The natural solution to this dilemma would have to be that the Government
would make loans to these idle persons to go into business for themselves.
My problem with that is that if the persons were not efficient enough at
whatever it is they do by trade to remain employed as a legitimate factor of
production, then these loaned dollars are being wasted on inefficient
factors of production.  It is evident that this does not behoove the nation
in our plight of expanding the Production Frontier.

If the government starts to spend itself into deficit, then we will shoot
ourselves in the foot, because it will hinder our ability to acquire more
resources.  The necessary outcome of deficit spending is that taxes will
rise, consumption will necessarily fall because of the tax increase,
aggregate efficiency will suffer, and the economy will suffer, which is
ironic since one would assume that the Government would only be trying to
behoove the economy.

Sean

----- Original Message -----
From: "stephen block" <stephenb@xxxxxxxx>
To: <pkt@xxxxxxxxxxxxxxxx>
Sent: Tuesday, September 25, 2001 4:06 PM
Subject: Re: [lwside1] Re: Here yah go, Congress is against short selling !


>
> Well Henry, it says "House Democrat", singular. But we can hope. In the
same
> vein, when the market climbed 360+ points yesterday, without following
> precipitously today, I had this sense that the rules of the game had been
> (temporarily?) reset and that perhaps there is the opportunity to
> reintroduce discussion not heard in a decade or more. As I mentioned last
> time, the phrases "deficit spending" and "stimulus package", remarkably,
> have cropped up recently in tv discourse. And I have a sense that it is
> quite different than what happened in 1987 when all the usual suspects
fled
> to the hills and were unavailable for comment for weeks after the Oct
market
> dive; but then returned, nearly unruffled by the episode . This time it
> seems as if they are compelled to recognize at the least the medium term
> implications of the psychological transformation which has befallen the US
> and the fact that war profiteering will not be tops on people's lists of
> patriotic duties.
>
> But best, it may allow PKians to regain some steam in a period where the
> fundamentalists of many different kinds (except the militarist variety)
are
> on the defensive and even on the ropes. In many cases it is they, and
> journalists, who are raising questions Keynesians traditionally have (re:
> various types of stimulus and their relative successes). There is no
reason
> why the discussion cannot be prolonged. Unfortunately Democrats are still
> too timid and are obviously trying to hide behind patriotic messages.
That's
> fine in the moment, but this analysis obviously needs to be expanded to
> discussions which lie beyond war efforts.
>
> Stephen Block
>
> >
> >
> > Short sellers targeted
> > House Democrat asks SEC to put a temporary halt on short selling
> >
> > Market fundamentalism appears to be the collateral damage of the 911
attacks.
> >
> > Henry C.K. Liu
> >
> >
> > Dennis Shumaker wrote:
> >
> >> Dennis Shumaker wrote:
> >>
> >>> Are you short?
> >>> Did you know that you are a terrorist?
> >>> They're coming to get yah!
> >>>
> >>> Dennis
> >>
> >> Here's the article:
> >> http://cnnfn.cnn.com/2001/09/24/news/wires/shortsell_re/
> >>
> >> To Post, send to: lwside1@xxxxxxxxxxx
> >> To Unsubscribe, send a blank message to:
lwside1-unsubscribe@xxxxxxxxxxx
> >>
> >> Your use of Yahoo! Groups is subject to
http://docs.yahoo.com/info/terms/
> >
> >
>
>