Comments about ‘Letter: From Roosevelt to Obama: The truth about job creation’

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Published: Wednesday, June 6 2012 12:00 a.m. MDT

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Shaun
Sandy, UT

Everyone has their version of history, but that is irrelevant. Our monetary system is debt. There is no such thing as cash(meaning it wasn't introduced as debt) and there is no economy on the planet who can operate debt free.

With a debt based monetary system, our money supply(debt) has to constantly expand because debt must be payed backed with interest. Banks(who create our money supply in the form of loans out of thin air) only create the principal but not the interest. Where does the interest come from? From other people taking out loans so that there is enough new money to pay off the principal plus interest. What happens when everybody in this recession has decided to pay off debt and avoid taking out new loans? The money supply shrinks. We are simply fighting for more dollars to pay our debt with less money circulating in the economy.

  • 5:19 a.m. June 6, 2012
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ugottabkidn
Sandy, UT

Sorry but lower taxes don't create jobs. Lower taxes create a fatter bottom line but unless you increase the demand no jobs are created. The result of this fatter bottom line has been a bigger deposits in Swiss banks. If your premise was correct then the Bush tax cuts would have stimulated the economy which they didn't much. Less taxes are being paid now than the past 50 years. Companies that have fled our shores will tell you it's because of taxes but in fact it's cheaper labor costs. Don't fret though Gordon. We can still get Chinese stuff. I just hope you can get in on the Republican jobs program, the only one they have ever promoted, the military.

chilly
Salt Lake City, UT

Taking from the productive and giving to the unproductive, in order to achieve "fairness", is the basis for all current liberal economic theory. JFK wouldn't measure up as a liberal today.

Esquire
Springville, UT

I have studied this issue for a very long time, and I will say your facts and your conclusions are wrong and do not reflect reality. Yours is a position based on your philosophy, not a proper assessment and interpretation of the facts. But no amount of discussion will change your pre-determinations.

Ultra Bob
Cottonwood Heights, UT

The only thing wrong in the referenced letter is the limitation to “government” spending. Spending of money from any source is the key to creating jobs.

Businesses, investors and other people with money to risk in the commercial world will only do so when they can participate in the garner of some of the spending. They have no concern from whence the money came from. Taxes, regulations, health insurance costs, have no more effect on their actions, than any other costs.

Economic cycles are a normal part of the business strategy. Business promotes the cycles as a way to make money without the cost of actually creating products or services.

Government, in it’s job of protecting the people, can and should work against the cycles. It does this by spending when the cycle is set to recession or depression.

Blue
Salt Lake City, UT

Here's a simple, straightforward fact that any of you folks can look up for yourselves:

Since the Truman era, growth in government spending is slower and unemployment claims are lower when Democrats are in the White House.

SEY
Sandy, UT

Shaun, I get it that our currency system is based on debt. That's what a bank note is, after all, an acknowledgement of a debt owed. What I don't get is how you expect such a system to succeed into perpetuity without experiencing hyperinflation. At what rate should the money supply be forever expanding and how do you get the manufacturers of new money to maintain a favorable rate of expansion?

You do know what we're talking about here, don't you? It's called inflation. Not price inflation, but inflation of the money supply. You advocate an inflationary policy. Another fact about such a policy: it's a form of default on debt and it is a sinister way to steal wealth from the general populace. The benefactors of an inflationary policy are those who have access to new money first, and the people who are victimized by the policy are those who receive it last. That's why government and their bankster cronies love inflation. It's the perfect tool for what's called "crony capitalism." There's another name for it, but I don't want to provoke even more.

louie
Cottonwood Heights, UT

Gordan if low taxes result in low unemployment why do we now have high unemployment? Taxes are lower now than even during the Reagan administration. There are several inaccuracies in your article. During the Carter and Clinton administrations there were actually higher job gains per year. The unemployment under Carter was barely above 7 percent at the worst. During the second year of Reagan it hit 9.7 percent. The rate came down below 5 percent but remember Reagan almost tripled the national debt. If we were to do that now we would have to about double our deficit spending. Is that really a good idea.

PeanutGallery
Salt Lake City, UT

Good letter. Lower taxes and less regulation result in lower unemployment, because people are more willing to start or expand businesses.

What in Tucket?
Provo, UT

Mr. Christiansen is absolutely correct. When government spends money to stimulate the economy is never works. It cannot work. Lower taxes work as has been noted because it allows the owner to increase R&D, buy more equipment and hire more workers. Sending money to Switzerland is what you see in them movies, not available to most of us. Reducing government workers as we probably have 50% more than we need and reducing red tape will help a lot. Countries like those in Europe are socialist and cannot bring themselves to cut spending, taxes, and red tape. If we can't do we will be in the same boat.

SEY
Sandy, UT

The Keynesian notion of economic "pump-priming" has merit only for the short run. But, as Keynes himself famously (and cynically) said, "In the long run, we're all dead." Economic stimulus will work under certain conditions, as it did for Reagan. The money supply had contracted dramatically after Paul Volcker of the Federal Reserve allowed interest rates to skyrocket. That set the stage for Reagan's re-expansion of the money supply, resulting in another pseudo-boom. He got credit by being in the right place at the right time. The boom would've happened no matter who was president.

As long as the money supply has not overexpanded to the point of diminishing returns, a stimulus will create a boom. Once the expansion reaches a certain point, no stimulus, regardless of its size, will sustain the boom. Every boom created by expansion of the money supply WILL EVENTUALLY collapse. It's axiomatic. That's what the Keynesians in charge don't understand, and that's what we're going to experience until people refuse to let them run the economy like they do now.

marxist
Salt Lake City, UT

Yes, Gordon, but remember that the 1929 crash happened under conservative Republican rule, not because they caused it necessarily, but rather because capitalism is UNSTABLE. As for Roosevelt, the New Deal created 11 million government sponsored jobs (a lot for those times). The conservative argument is of course that the New Deal prevented more jobs than it created. But the crash occurred under conservatism - how do you conservatives explain that?

Shaun
Sandy, UT

@Sey.I do not like our monetary system. In fact I hate it. As you stated, it is inflationary and that is by design. My entire point is most people say we have to pay off our debts publicly and privately. It would be impossible to pay off our debts, public and privately, in our current monetary system. Also when people advocate that the government stop spending money during a recession they do not realize why it is necessary to spend. When the money supply is shrinking because people are not taking out new loans, the government needs to spend in order to avert a severe money contraction.

I think it is horrible that our political leaders would allow a monetary system where either the government or it's citizens has to go in debt in order for the economy to move along but banks have always had the power.

SEY
Sandy, UT

marxist, it's not that hard to understand. As I mentioned in my comment right above yours, the Roaring 20's resulted from a period of monetary expansion. Loans were extremely easy to obtain, and people were leveraged far beyond their abilities to pay in the event of a crash. This had almost nothing to do with the political party in power. It had everything to do with the Federal Reserve banking system and whatever securities system existed with the stock market. And as I said, every boom created by an expansion of the money supply will always crash at some point. There is simply no escaping it. This is where you need to read Murray Rothbard regarding the Great Depression.

SEY
Sandy, UT

@marxist: I meant to add that it's not capitalism that's unstable. Under true capitalism, banks would not be able to create fiat money and expand the money supply at will. The economy would be based upon savings, not debt. It's the central banking system that makes ANY political or economic regime unstable.

@Shaun: I agree with you up to a point. From what you've said, you would favor the Ellen Brown version of debt-free currency, am I correct? That's another matter that has its own problems. It looks good on paper, but it leaves out real-world considerations. Probably the best critique of the idea comes from Gary North. I recommend that you read what he has to say before you get too enamored with the idea of debt-free paper money.

marxist
Salt Lake City, UT

@SEY "Loans were extremely easy to obtain, and people were leveraged far beyond their abilities to pay in the event of a crash. This had almost nothing to do with the political party in power. It had everything to do with the Federal Reserve banking system and whatever securities system existed with the stock market. " This is how modern capitalism works. Make you a deal - I'll read Rothbard (already read some) and you read Marx Vol 1.

marxist
Salt Lake City, UT

Moreover, SEY, your (and Rothbard's) vision of capitalism based on non-fractional reserve money is one WHICH HAS NEVER EXISTED.

Eric Samuelsen
Provo, UT

The level of historical ignorance displayed in this article is absolutely staggering. It would be like arguing that Democrats are a particularly lethal party, because of all the young American men who died from 1942-1945.

It just astounds me how many people in this forum seem intent on arguing that the New Deal didn't work. It worked splendidly. The only real argument anyone presents is a counter-factual one--'if we'd done thus and such instead, it would have had THIS outcome. From 1933-1940, the economy grew 8-12 percent every year except 1937, which was the one austerity year. Unemployment fell. It's just the hole we dug for ourselves in 1929 was so very very deep. To cite Murray Rothbard on this point is frankly irrelevant. It's part and parcel of the circular reasoning of libertarianism--if we all cite each other, all our articles will have lots of impressive footnotes.

But it's all theory. That's it. Economics is the one discipline where facts unlucky enough to contradict a theory are summarily dealt with.

nonceleb
Salt Lake City, UT

I taught AP American History and have never seen so much distortion in such a short letter: 1) Lumping Hoover and Roosevelt together? Hoover continued the mostly laissez-faire policies and low taxes of Coolidge. After the bubble burst he established the RFC, but used a miniscule amount of funds for public projects (less than .001 of the GNP). Under Hoover unemployment skyrocketed to about 25%. 2) FDR's "stimulus" (the New Deal) helped reduce unemployment to 14% (about a 40% drop) by 1937. Ironically because of worries over deficits, programs were cut in 1937. The private sector was not strong enough yet, we had a mild recession in 1938 and unemployment went up to 19%. 3) You claimed unemployment was 16% in December of 1941. It actually averaged 9.9% in 1941 and 4.7% in 1942. War production (starting in 1939 with European war orders) increased employment. 4) After the Reagan tax cuts, revenues dropped in both 1982 and 1982. He eventually had to increase some taxes because of the in huge deficits.

atl134
Salt Lake City, UT

"In the days of Hoover and then Roosevelt, taxes and spending were increased with a resulting significant increase in unemployment."

Completely false. Spending was not increased until after the recession had decimated Hoover. Hoover barely increased it and it was too little too late. Roosevelt's spending made things a bit better until he prematurely pulled back on spending in 1937 and as a result the unemployment rate improvement was largely erased.

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