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Dear Jon Stewart: Economists Are Happy To Tell You About Unemployment, So Locking Us In Closets Is Not Needed…

July 7th, 2010 · 29 Comments
Macroeconomics · Policy · The Simpsons

Jon Stewart often makes insightful economics-related comments on his show. Now I think that that’s because he has Nouriel Roubini, um, on retainer:

The Daily Show With Jon Stewart Mon – Thurs 11p / 10c
America’s Got Nothing
Daily Show Full Episodes Political Humor Tea Party

Seriously- despite the fact that empirical evidence suggests that economists like dark offices, we don’t so much appreciate dark closets, so cut it out. Now that we’ve cleared that up, allow me to give some commentary:

Point 1: You may have noticed that the first news screen reads “125,000 jobs lost in June; jobless rate falls to 9.5%.” Um, how is this possible? Shouldn’t the unemployment rate go up if the economy loses jobs? Well yes, theoretically, unless the U.S. is strategically shipping unemployed people off to other countries…but the unemployment rate excludes people who are not either employed or actively looking for work. In some ways, this makes sense- for example, a stay-at-home mom shouldn’t count as unemployed for the purposes of policy, since she is (presumably) choosing to stay at home, and may even be doing so because the economy is so good that her partner is making enough money for both of them. (Yeah, I giggled at that too.) On the other hand, this also excludes “discouraged workers” who had been looking for work at some point and have just given up and are no longer actively looking for work. Because the unemployment pollers don’t ask the question “would you be looking for work if the economy wasn’t so crappy?”, the unemployment rate tends to understate the true rate of unemployment. (The unemployment rate also gets understated when there are a lot of workers who are underemployed with regard to either hours or skill level.) It’s helpful to know this so that you can take reports of the unemployment rate with the appropriate-size grain of salt. (I keep a salt lick on my desk, for example.)

Point 2: I apologize on behalf of economists in general for not being able to predict the future- we may do it with models, but we don’t have crystal balls. We have to make assumptions just like everyone else in order to make predictions, and, despite the fact that the assumptions are generally more refined than those generated by a monkey and a dart board (though not as good as those of a seemingly clairvoyant octopus), sometimes those assumptions are inaccurate.

Point 3: I’m pretty sure that Christy Romer has a decent sense of humor, but I’m nonetheless curious as to how she feels about this:

All I can say is stop bogarting my schtick.

Point 4 (the important one): To quote Nancy Pelosi: “This is one of the biggest stimuluses* to our economy. Economists will tell you it injects demand into the economy and is job creating.” Roubini explains that Pelosi is right because the people on unemployment benefits spend all of what they get, which employs people to make whatever stuff these people buy and starts a virtuous cycle, whereas the employed people who Fox News argue are paying for the benefits would likely behave more like the following:

Mr. Burns and His Pile of Money

So let’s see…there are several points at issue regarding unemployment benefits:

  • People worry that unemployment benefits discourage people from finding jobs. People respond to incentives, and this is not an untrue statement. It’s also not an untrue statement that people would run faster if they had bears chasing them, but this doesn’t mean that we should hire a bunch of grizzlies to follow morning joggers around. By providing unemployment benefits, our society has decided that it’s worth having some freeloaders in order to make sure that people don’t live in fear of being out on the street if they get laid off from their jobs. As an economist, I would like to see information on what the freeloader to need ratio is in order to be able to better analyze the tradeoff. Also, if you have an idea for how to separate those who need the unemployment benefits from the freeloaders, I’m guessing a lot of policymakers would like to hear it.
  • People worry that extending unemployment benefits will make the deficit worse. Many economists argue that people are using the deficit as an excuse to be against unemployment benefits:

    …take it from David Walker, former US comptroller general and now, as president of the Peter G. Peterson Foundation, a leading deficit hawk. “While the current deficits are large, they don’t represent the real threat to the future of the country,’’ he said. “The real threat is the medium-to-longer term structural deficits that will be here after the economy has recovered.’’…

    No fiscal falcon with a proper balance of economic and fiscal priorities is going to fault you for supporting that extended aid.

    “As a deficit hawk, I wouldn’t worry about extending unemployment benefits,’’ said Bob Bixby, president of the Concord Coalition. “It is not going to add to the long-term structural deficit, and it does address a serious need. I just feel like unemployment benefits wandered onto the wrong street corner at the wrong time, and now they are getting mugged.’’

    Some economists even argue that cutting off unemployment benefits could make the deficit worse, since the cuts would give some workers an incentive to go on long-term disability rather than trying to re-enter the work force.

  • People worry that unemployment benefits do not make for effective stimulus. In fact, the opposite is likely to be true. Many economists** believe that it makes sense for the government to spend more during bad times and less during good times, since this means that the government is spending less (and thus contributing less to economic activity) when the private sector is spending more and vice versa. Their reasoning is that this would have somewhat of a smoothing effect on the economy. Put in terms of the budget, this concept translates to deficits during recessions and surpluses during booms. (Unfortunately, the government don’t seem to be so good at committing to the surplus part.) Unemployment benefits are convenient in that they work very mush in this fashion, since more people sign up for unemployment in bad times than in good times.

    Granted, this money has to come from somewhere. I would hope that the government doesn’t fund unemployment by cutting other programs, since then they are offsetting the stimulus by putting other people out of work…who then apply for unemployment benefits. Instead, the increased unemployment spending is usually financed by borrowing. On this up side, this means that there is a chance that people end up (at least partially) repaying their own unemployment benefits if the borrowing gets repaid when these people are gainfully employed. On the down side, if employed people realize that they will have to pay for this borrowing in the future, they might hunker down and spend less today. (See Ricardian equivalence for more.) Given that many people seem barely able to even say what country the U.S. declared its independence from, I am not so concerned with such sophisticated and forward-looking behavior occurring on a large scale.

There you have it. Now you can sound smart when someone foolishly decides to discuss politics at the dinner table. Or you could just pull out the picture of Christy Romer, since I’m confident that that would shut people up pretty quickly.

* I am trying my hardest to not be the grammar police here. On a related note, did Obama use the word “aight” in his speech?
** I have been asked to explicitly point out that not all economists share this view, at least not in a normative sense. (See Hayek, F.A.)

Tags: Macroeconomics · Policy · The Simpsons

29 responses so far ↓

  • 1 Rev. Pfloyd // Jul 7, 2010 at 3:28 pm

    Initially I would say I think I would be perfectly happy if Christine Romer became “unemployed” from the cabinet. But having met a couple of presidential policy economists a couple weeks ago and getting to ask them about working with some presidents, I get the impression that when their advice is ignored and the president does something silly, the economists get all the blame even though their advice is ignored but when their advice is accepted, the president gets all the credit.

    Or maybe they were just trying to cover their rears under my incessant question-asking (or simply just humoring me).

    Either way, I’m trying to be a little less harsh on presidential economists.

  • 2 Tristan T. // Jul 7, 2010 at 7:24 pm

    I have to agree with all of your points. I can’t count how many times I’ve had to either keep my mouth shut or explain how this stuff works (depends on the openness the conversation).

    I guess we all end up entrenched in our personal views of the world and have a hard time accepting different facts, even if they are correct.

  • 3 Highgamma // Jul 8, 2010 at 2:54 am

    …Unfortunately, the government don’t seem to be so good at committing to the surplus part…

    So, given this fact, how does that change your policy advice. In other words, if the government rarely runs surpluses in good times and cannot commit to such a policy (i.e., “reality”), what should we do in bad times?

  • 4 Nathan // Jul 8, 2010 at 6:14 am

    @highgamma. ummm not run surpluses? basic accounting will tell you that the government surplus (deficit) is exactly equal to the non-government deficit(surplus). it’s in general bad when the government runs a surplus and all six times it’s ever happened in us history has lead to a depression or recession

  • 5 Kaleberg // Jul 8, 2010 at 7:06 pm

    Nathan is obviously referring to the Bush surplus in the 2000s that has led to the current depression.

  • 6 Bruce // Jul 8, 2010 at 7:19 pm

    To quote the economist Russ Roberts of Gorge Mason University :

    “According to my Senator, Senator Cardin, every dollar of spending on unemployment benefits adds $1.50 to the economy. Magic. It’s clear what we should be doing. We need to extend unemployment benefits to the employed. I know. That’s the whole idea of stimulus…”

    We can think of it as “welfare” as much as we can think of it as “insurance”, and maybe we should.
    Defining “insurance”, as the pooling of quantifiable risk by a company (a group) of people each paying a premium in proportion to their risk and receiving a benefit only if they suffer the risk. If you want to define “insurance” otherwise, you may call anything you like “insurance”, of course, and statesmen routinely do, needless to say.
    The issue of “private viability” involves the profitability of an organization selling “insurance” as defined above. I don’t care whether you call it “private” or not. I care that the “premiums” are actually proportional to a rationally quantifiable risk and that the organization rationally expects to pay out no more than it takes in, thus being rationally “profitable”.

  • 7 ArL // Jul 9, 2010 at 6:39 am

    @Nathan: Ummm, I think the correlation might be iffy there.. The Swiss seem to be able to run a surplus without having a depression.

    Using the same logic you could say positive GDP is bad for the economy, because EVERY time we’ve had positive GDP for a stretch, we have a recession.

    EVERY time! Growth MUST be the cause of contractions! Let’s lock wages and production down at the open this morning.

    The last quote’s in this piece is the view fiscal conservative’s should be championing. Billion’s spent on the bottom rung during a deep recession is what you should be busting the budget on. Social Security and Medicare are 100% going to bring the country down in 20 years. The changes that need to be made are not even difficult. Grammy’s cost of living increase just needs to be tied to inflation. And honestly, if you’ve managed to be successful enough in life that you can easily support yourself in retirement, or you have some crazy golden pension, you don’t get social security.. it’s not for you.. that extra $2k a month, is not going to make a big difference in your life. Yeah, it kind of sucks, but not really. Your hard earnedd savings and wealth becoming worthless because it’s, in fact, just paper printed by a government that spends 150% of gross annual production on viagra would suck more.

  • 8 Nathan // Jul 9, 2010 at 8:08 am

    @art. i’m sorry my answer was more flip then anything else. i will bring you through the accounting that brings me to that conclusion and show you why the swiss is a little different. lets start with the basic gdp equation
    c= consumption
    g= government spending
    ne= net exports ( exports-imports)

    y=c+i+g+ne (regular gdp equation)
    y=c+s+t (alternative gross domestic income equation)
    c+s+t=c+i+g+ne (consumption cancels out)

    what does this show? it shows that all three sectors (the government sector, domestic private sector and foriegn sector) must be in balance. if the foriegn sector is in surplus with the united states and the government sector is in surplus with the private sector then by identity the private sector must be running a deficit which causes an incredible run up in debt until a recession happens that pushs the foriegn sector or the government sector (or both) into deficit with the private sector. the swiss government is able to run a surplus with the private sector because of the large deficit the foriegn sector runs with it ie the trade surplus. you may say that we should run a trade surplus to make a government surplus possible. i would disagree with that position because first (and obviously) not all countries can run a trade surplus. second a trade deficit is a net benefit because other people are willing to hand over real goods and services for numbers in a bank account. i like being able to enjoy a higher standard of living then i would otherwise be able to and having more room for fiscal policy (because the trade deficit takes money out of the domestic private sector). there is other things i could say but i think this is enough for now.

  • 9 econgirl // Jul 9, 2010 at 12:05 pm

    @ Bruce: The government does in fact often extend unemployment benefits to the employed during recessions, it just calls them stimulus checks or tax cuts so people like Russ Roberts don’t complain. 🙂 At the end of the day, money is fungible to a large degree, so it doesn’t so much matter what the transfer is called.

    In addition, this quote illustrates the importance of thinking critically and trying to understand the subtleties present in a lot of these policies. In the above quote, for example, Senator Cardin’s error for the most part is in his use of the word “every.” While it may be true that there is a significant multiplier effect on unemployment benefits, it’s because the people receiving the money (theoretically) have no other source of income and thus the vast majority of the unemployment funds are getting spent on things that are more or less necessary. In contrast, if you were to give this same money to employed people, they would likely either save more of it or spend it on porn.

  • 10 Dave // Jul 9, 2010 at 3:44 pm


    “if the foriegn sector is in surplus with the united states and the government sector is in surplus with the private sector then”…

    The only problem with your assumption is that none of those things have been true when we’ve had the last few recessions. Heck, they haven’t been true in many decades.

  • 11 Forest // Jul 9, 2010 at 3:46 pm

    I cant argue that extending the unemployment benefits will have no stimulus effect, because it will truely have a priming the pump effect. However I have to question the effectiveness compared to other forms of stimulus such as government procurement, or even tax cuts. Many of those affected would still buy a large portion of their lifestyle through other means either by breaking the piggy bank, living with friends and family, or lastly going to a shelter. After all people are not going to cease consuming the necessities even if they dont have money.

    This is not to say I disagree with the measure. Far from it, Econgirl’s point “By providing unemployment benefits, our society has decided that it’s worth having some freeloaders in order to make sure that people don’t live in fear of being out on the street if they get laid off from their jobs.” is reason enough for us to have it, extend, and use it. I am just afraid that using the “stimulus factor” of it will give conservatives strong enough footholds to tear it down, since the rest of the population doesn’t seem to enthused with the way the other stimulus packages went.

    @ Nathan I think you are making a pretty big mistake when you use that formula. the g in that equation has absolutely nothing to do with deficits or surpluses. A government that spends 10 million a year with a surplus of $10 is not going to have a g-10 it will have a g of +10 million the same goes for a deficit if it has a deficit of 10$ and spends 10 million.

    You are confusing the difference between wallet size and consumption patterns. In the end its the consumption that matters . . . in this case anyways.

    The problem that generally stems from Government surpluses (once the debt has been paid) is what does the Government do with the extra money? Do they buy stocks and influence the stock market? Do they subsidize businesses? In Norway’s case they invested the money for their people. Luckily enough their populaiton relative to the world stock market is fairly low . . . The US does not have that benefit.

  • 12 Nathan // Jul 9, 2010 at 4:09 pm

    @ dave. first both of these things were true in the run up to the 2000 recession; indeed it is my contention they caused it. you misunderstood what i meant by ” the foriegn sector is in surplus with the united states” that means that the united states is running a trade deficit, which it has been. second the point was simply to explain the accounting in the context of the historical event being talked about, not to go through all the possible account balances possible and their results. third the ultimate point is that for every dollar the government deficit shrinks, the private sector or foriegn sector’s surplus (deficit) must shrink (increase). if the private sector is unwilling to run up it’s deficits higher/shrink it’s surplus incomes will fall since one firm’s/household’s spending is another one’s income ie the paradox of thrift which consequently will force a larger budget deficit/shrink the budget surplus of the government or the foreign sector through decreasing revenue and increasing government outlays (like unemployment insurance or Medicaid coverage) in the government’s case or decreasing imports/increasing exports.note: i am not saying that all of these things will happen just the possible things that might happen.

    @ forest. you haven’t made any actual critiques of the accounting. i obviously never said that g represented the deficit or surplus. it’s quite clear from the accounting statement (and logic) that government spending minus taxation represents the governments net position ie government deficit or surplus. at the end of the accounting period yes there will be people who have earned income from the government spending but taxes will have also been paid from the private sector that offsets some all or even more of that spending. at the end of the accounting period the domestic private sector must be running a surplus or deficit equal to the combined surplus/deficits of the government and foreign sector your comment about consumption patterns is erroneous. i was talking specifically in response to a comment about government surpluses. to me consumption is a function of income and the private sector’s desire to save. i think the accounting is very relevant

  • 13 Forest // Jul 9, 2010 at 4:41 pm

    @ Nathan

    In that respect that can really only be true for a closed economy (ie. the world) and in the long run. In reality domestic consumers arent the only ones who lend money the government. This effectively gives governments and consumers the ability to deficit spend simultaneously, while other consumers and gvmnt’s in other countries save. . . Thereby nullifying your results.

    But to give you some credit there are instances where your accounting stands true.

  • 14 Nathan // Jul 9, 2010 at 4:57 pm

    @ forest. i don’t mean to be disrespectful but frankly your last post reads incoherently to me. first it’s very explicit that i’m not talking about a closed economy and i’m unsure what you mean by the “long run”. i never said that consumers and governments couldn’t run deficits at the same time. the corporate sector might be running a large surplus or there maybe there is a very large trade surplus or both (or something else). the savings rates of other countries and there net position with their private sectors is only indirectly related in terms of the balance of trade. again you haven’t critiqued the accounting at all, simply stated that it’s inaccurate a lot of the time. please show me what’s wrong with the accounting. if the private sector’s desire to save is very low and an investment boom happens/the propensity to consume increases rapidly incomes will rise which will result in higher tax revenues, lower outlays and a smaller budget deficit/larger budget surplus and/or more imports from the higher consumption, lower exports from inflationary pressures coming from the rising, consumption, incomes and increased investment ultimately leading to a larger trade deficit/ lower trade surplus. the investment boom/ consumption boom will run it’s course from the mounting debt obligations and shrinking net income of the private sector until investment stops/the propensity to consume falls and a recession/ financial crisis occurs.

  • 15 Forest // Jul 9, 2010 at 8:25 pm

    First I would like to start out by apologizing for being incoherent. I want to retract the portion of my first post regarding your statement. I say this because I misunderstood what you were trying to say. My second argument overlooked the presence of NX in your equation. Nevertheless I still disagree with your point if not in the abstract arguments of economics but in the real world.
    In any case the point I disagree with is this: Government surpluses lead to imminent recessions. My contention is of course that that is incorrect. There are considerations such as those which you pointed out in your statement which would lead one to believe that government surpluses would lead to recessions but there are a number of underlying elements that do not easily transfer from the abstract world of economics.
    To begin the equation which you provide is a staple to all of economics (Y=C+I+G+NX (you have NE I prefer NX)). This statement combined with the follow equation you provide assumes that I=S . . . which generally speaking in the long run must be true. In the short to midterm however this rarely if ever happens. This statistical anomaly is relatively small but yet still exists. If you don’t believe me please take a look at chart b32 of the following link, and compare the national savings vs. investment.
    Before you go and start talking about the fact that foreign manufacturers are coming in and selling their goods on credit (which no doubt they are) which makes up for much of the government deficits, which they do, there are still a number of statistical discrepancies. (table b103 will provide you with the trade balance).
    In any case, the point in bringing up this annual discrepancy is to show
    1 that we live in a dynamic and stochastic world where there is no such thing as an equilibrium. If they do exists they only exists for very short periods of time.
    2 that abstract equations and economic theories do not always translate easily over to the real world because of a number of 3rd party factors. Legal factors, hysteresis, and other factors have made the US the focal point of world investment (read S) and as such has been able to deficit spend (government or private) at saving’s rates much lower than would be determined by the simple accounting equation you provide.
    Lastly my argument is that government surpluses may be a factor that can cause a recession but they are by no means determining factors for recessions.

    In any case Im tired I don’t feel like working any more I hope this link helps to illustrate my point

  • 16 Nathan // Jul 9, 2010 at 9:20 pm

    first i would like to say that i am not using any economic theory in my arguments. my points are strictly based in accounting which must be true by identity. again you either misinterpret the identities or simply state that the equations don’t apply. again these equations are accounting identities and simply refer to a certain time period. there is no assumption of equilibrium; that assumption is yours. second of all i never claimed that investment must equal savings. in fact the whole point of the equations is that they don’t. savings, for example can be greater then investment if the combined net positions of the foriegn sector and the government sector on net provide financial assets to the domestic private sector and generate savings. “the US the focal point of world investment (read S) and as such has been able to deficit spend (government or private) at saving’s rates much lower than would be determined by the simple accounting equation you provide.” agian you simply made a claim without providing any evidence to back it up or to explain what in the united states case contradicts the accounting. you keep on misinterpreting my argument. argue with me about the accounting, or ask me to clarify my argument. until then i am unconvinced there exists any real critique of my argument besides the unwillingness to accept it instinctively.

  • 17 Bruce // Jul 10, 2010 at 12:20 am


    Are you insinuating that you want my money because your unemployed ;-). If so I should tell you that all my money is either in savings or its invested. Now, you claim I should give you some of said money because you would spend it quicker than I would. However, economies don’t grow just because you consume more, you consume more because the economy grows.
    This is a simple concept but its amazing what economist can do with a simple concept. Most economist think that demand can be increased by giving people more money to spend. But that doesn’t change real demand, just how much people can spend on items that have been produced. Only by increasing supply can people actually get what they demand.
    By taking money out of (or from) my savings and investments you take away capital from the industries and banks that can use that money for capital investment and growth. The lack of jobs is the direct result of people not saving and spending beyond our means.
    Encouraging more spending form a market that can’t sustain the current level except through government intervention just prolongs the problem.
    The economy can’t grow without savings and investment.

  • 18 Timothy Cullen // Jul 10, 2010 at 9:12 am

    Isn’t a good way to separate out the freeloaders from the unfortunate to place a cutoff time prior to up to 99 weeks? Is 26 weeks not enough time to find a job? Wouldn’t the proportion of freeloaders likely rise the longer such benefits are extended and thus more likely raise the problems opponents of extension suggested, possibly even outweighing the stimulative value if it exists? I’m fairly certain that the problem with the logic of stimulus is that it doesn’t distinguish between increasing the demand for malt liquor and porn, feeding a struggling family, and the present and future costs of borrowing to fund the stimulus; as one of the former doesn’t seem to justify the latter.

    It is precisely the fungible nature of money that implies that wealth transfers should be confined to the poor, as the public benefit of them largely relies upon them spending that money to get them through hard times such that when those who can take care of themselves or have had plenty of time to find a job get transfers it is precisely the metaphorical porn that is being subsidized contrary to what the program is sold as.

    As for Hayek, I am pretty sure he supported the notion of a social safety net as I suspect many economically oriented conservatives and libertarians do; just not for the reason of economic stimulus.

    Mr. Burns and the employed people likely have investments, which do provide capital for those seeking it; and it may be less bang for the buck in terms of aggregate spending but it also likely has fewer potential negatives like encouraging dependency or subsidizing spending of questionable value relative to alternatives. I doubt they have a pile of cash just sitting in their living room; and if private actors “aren’t lending” by taking more conservative portfolios might it be because of things like regime uncertainty or the fed paying interest on reserves? Might a tax cut or a halt to the expansion of government influence such people’s propensity to invest or spend?

  • 19 ArL // Jul 10, 2010 at 9:28 am

    @Nathan : From what I read (and it’s been a LONG time since I’ve been involved with economics academically) it’s that while your accounting is true over the VERY long run, the government & private sector would actually need to run a surplus AT THIS POINT IN TIME in order for the long run calculation to be realized. Either that or huge piles of savings that have built up in developing countries will increase in perpetuity while the majority of the their populace languish in poverty.

  • 20 Nathan // Jul 10, 2010 at 9:39 am

    @ arl: you haven’t actually said anything at all. you have not made any critique of the accounting, you like forest has simply stated that it is wrong. the accounting period can be any length of time from a year to a quarter to a decade.” the government & private sector would actually need to run a surplus AT THIS POINT IN TIME in order for the long run calculation to be realized” why? you simply stated that this was a fact, haven’t shown any evidence to support that statement and haven’t presented your logical steps towards that conclusion. as for the conclusion itself, it’s completely incomprehensible, at least without seeing what lead you there. will someone back up there critique with logical steps?

  • 21 Nathan // Jul 10, 2010 at 9:40 am

    *rather then grandiose statements with no backing in logic, reason or empirical data?

  • 22 ArL // Jul 10, 2010 at 12:38 pm

    Well.. asking for empirical data to back economic theory is a logical fallacy.

    have NEVER been factual because none of it is actually measurable.

    We’ve provided as much “evidence” as you have, it’s a theoretical discussion only. I can definitely appreciate your desire to see logical steps in the thought process as it’s something I’m consistent poor at producing.

    I was actually agreeing with your theory in principal, but stating that the present state is currently out of balance, and will continue to get more so as structural deficits increase.

  • 23 Nathan // Jul 10, 2010 at 12:54 pm

    @arl: i don’t know how many times i have to say this; i am not using any economic theory, just simple gdp accounting and some basic algebra. do you disagree with gdp accounting? do you disagree with my logic? i’m sick of simply being told i’m wrong and no reasoning behind it.

  • 24 forest // Jul 10, 2010 at 1:03 pm

    I’ve given up trying to argue that the earth is not square . . . if you’re so certain about your assertion then show us the data . . . I would like to see correlations, f-tests, academic articles . . . give me what you got!!!

  • 25 Matt // Jul 12, 2010 at 1:19 am

    Ever notice how, despite the fact that he hates political pundits and wants them all to stop, John Stewart sounds a lot like a political pundit? He’s basically a left-moderate, funnier Glenn Beck now.

  • 26 AJP // Jul 16, 2010 at 4:04 pm


    I think people are getting hung up on the statement that if the government runs a surplus, a recession will follow. I don’t think you stated clearly enough (or perhaps “high” enough in your posts) that you are referring specifically to the government running a surplus with c, s, t, i, and nx at their current levels.

    I understand what you’re arguing and, in principle, I think this is correct. It is certainly possible for the US to have a budget surplus and not be in recession, but perhaps not with the current values of these variables. Also, perhaps there is confusion from the fact that many of these terms don’t refer to the same thing as their colloquial counterpart.

  • 27 holmegm // Jul 23, 2010 at 2:59 pm

    Whew! For a minute I thought any pro-extension arguments would be pie in the sky.

    But no, we’ll just repay all the borrowed money when people are (magically) back to work, like, uh, we’ve never done before. That makes perfect sense!

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