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Principles of Macroeconomics

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Title: Principles of Macroeconomics


1
Principles of Macroeconomics
  • Economic Crisis

2
COST/BENEFIT OF CHOICES
  • BENEFITS
  • COSTS
  • QUESTIONS

3
COST/BENEFIT OF CHOICES
  • BENEFITS

4
COST/BENEFIT OF CHOICES
  • Households received up to 1200 tax rebate check
    from Bush tax rebate plan of 2008
  • Less FIT withholding and more disposable income
    per paycheck up to 800 under Obama plan for 2009

5
COST/BENEFIT OF CHOICES
  • COBRA Health Care Subsidy Continues health
    insurance coverage if laid off since September 1,
    2008
  • Workers pay 35 of their health-insurance
    premiums and the government pays the remaining
    65
  • If laid off since September 1, 2008, but didn't
    sign up for COBRA coverage, get a second chance
    to choose COBRA and benefit from the subsidy

6
COST/BENEFIT OF CHOICES
  • Federal law requires most companies with 20 or
    more employees to let former employees keep group
    health-insurance coverage for up to 18 months
    after they leave their jobs
  • 65 COBRA subsidy lasts for nine months, with
    premiums then rising to the full price

7
COST/BENEFIT OF CHOICES
  • Unemployment insurance benefits have been
    extended 3 times.
  • For example, a California employee who previously
    would be eligible for 26 weeks of benefits, can
    now collect unemployment for up to 79 weeks.

8
COST/BENEFIT OF CHOICES
  • Some households will be able to refinance their
    home loan if they have enough income and good
    credit to qualify for a new loan at a lower rate
    of interest
  • Other households will be able to get both the
    principle balance on their mortgage lowered and
    the interest rate lowered

9
COST/BENEFIT OF CHOICES
  • Some households experience foreclosure and lose
    the burden of a mortgage and related housing
    costs
  • Foreclosure is commonplace today given the number
    of ARMs
  • Would you want to be stuck with a 600K mortgage
    on a property with a market value of 400K?

10
COST/BENEFIT OF CHOICES
  • More for highways, police, parks and schools
  • College tuition tax credit
  • More Pell Grant money
  • Use 529 College Saving Plan to buy computer and
    software, not just pay for tuition and books
  • Tax credit for energy efficient windows and
    appliances
  • Extended food stamps programs

11
COST/BENEFIT OF CHOICES
  • UAW jobs and their benefits are protected
  • UAW may ultimately gain partial ownership of
    Chrysler and possibly General Motors

12
COST/BENEFIT OF CHOICES
  • Fed currently committed to low interest rates
  • Financial Institutions bailouts prevent
    insolvency or allow for takeovers
  • Stability in our financial system

13
COST/BENEFIT OF CHOICES
  • Effective oversight and regulation of financial
    institutions
  • Federal Reserve Board of Governors undertaking
    Bank Stress tests for 19 US large banking
    institutions, report was delayed and now is due
    May 7, 2009
  • Using Assumptions

14
COST/BENEFIT OF CHOICES
15
COST/BENEFIT OF CHOICES
  • Tax breaks for small business include two
    provisions, designed to encourage business
    spending, come in the form of bigger depreciation
    write-offs
  • ONLY FOR TAX YEARS 2008 AND 2009

16
COST/BENEFIT OF CHOICES
  • Section 179 Deduction almost doubled
  • Maximum write-off is generally increased to
    250,000 (up from only 128,000 before the new
    law).
  • For 2009-2010, the maximum deduction will revert
    back to 125,000 (plus inflation adjustments)
    unless Congress takes further action.

17
COST/BENEFIT OF CHOICES
  • 50 first-year bonus depreciation
  • For new qualifying assets that are acquired and
    placed in service during calendar year 2008 with
    the placed-in-service deadline extended through
    Dec. 31, 2009, for certain long-lived assets.
  • Under the 50 first-year bonus depreciation, a
    business can immediately deduct half of the cost
    of a new asset if it is purchased and placed in
    service during 2008.

18
COST/BENEFIT OF CHOICES
  • Small Businesses
  • Businesses that employ less than 500 employees
    will increase as they have during the last 3
    recessions, why?
  • Increases in energy efficient automobiles
  • Increases in energy efficient appliances and
    devices

19
COST/BENEFIT OF CHOICES
  • Expectations may improve
  • Stock market prices may rise
  • Household wealth may rise
  • More labor market opportunities
  • Paradox of Thrift More savings for business
    investment

20
COST/BENEFIT OF CHOICES
  • COSTS

21
COST/BENEFIT OF CHOICES
  • Increasing Size of
  • Government

22
COST/BENEFIT OF CHOICES
  • CBO Estimates we will add 11.1T in debt by 2019
    MORE THAN DOUBLING OUR CURRENT US NATIONAL DEBT
  • September 30, 2008 US DEBT 10.0T
  • Estimated Debt Increase 11.1T
  • TOTAL PROJECTED US DEBT 21.1T

23
COST/BENEFIT OF CHOICES
  • Ratio of US Debt to US GDP as of September
    30, 2008
  • Current ratio of debt to GDP is 78
  • What will it rise to?

24
COST/BENEFIT OF CHOICES
  • Using CBO Real GDP estimates
  • US debt may be 22.4T by 2019
  • Rise to equal to or more than
  • 100 of GDP

25
COST/BENEFIT OF CHOICES
26
COST/BENEFIT OF CHOICES
27
COST/BENEFIT OF CHOICES
28
COST/BENEFIT OF CHOICES
  • 2008 Social Security Trustees Annual Report about
    the status of Social Security and Medicare reads
  • The report on the state of entitlement programs
    is rather grimthe combined unfunded liabilities
    of both programs are 101T

29
COST/BENEFIT OF CHOICES
  • Unfunded liabilities are the amounts government
    must be able to pay in order to make good on its
    promisesthere are no assets available to cover
    these liabilities.

30
COST/BENEFIT OF CHOICES
  • Pensions of employees working for bankrupt firms
    are covered by the (PBGC) Pension Benefit
    Guaranty Corp
  • The PBGC created in 1974 insures 44 million
    workers covered by defined benefit pension plans

31
COST/BENEFIT OF CHOICES
32
COST/BENEFIT OF CHOICES
  • Increasing Size of Government
  • April 2008 sixteen economists from The Brookings
    Institute and The Heritage Foundation authored
    Taking Back Our Fiscal Future in which they
    made policy recommendations generated by a deep
    concern about the nations long-term fiscal
    outlook, they agreed that

33
COST/BENEFIT OF CHOICES
  • Unsustainable deficits in the federal budget
    threaten the health and vigor of the American
    Economy. The first step toward establishing
    budget responsibility is to reform the budget
    decision process so that the major drivers of
    escalating deficitsSocial Security, Medicare,
    and Medicaidare no longer on autopilot.

34
COST/BENEFIT OF CHOICES
  • April 2009, Number of Federal Subsidy Programs
    Tops 1,800
  • Chris Edwards, Director of Tax Policy Studies,
    Cato Institute, reported the rise in government
    subsidy programs

35
COST/BENEFIT OF CHOICES
36
COST/BENEFIT OF CHOICES
  • In 8 short years, from 2000 to 2008,
  • there has been an increase of 27 in
  • government subsidy programs
  • How should we expect this number to change after
    2008?

37
COST/BENEFIT OF CHOICES
  • USA Today, January 2008 Subsidies Keep
    Small-Airport Flight in the Air reported
  • The Department of Transportation (DOT) pays a few
    small airline 110 million a year total so that
    they can profitably carry as few as four
    passengers per day to nearby hubs, often for
    rock-bottom fares.

38
COST/BENEFIT OF CHOICES
  • For example, a roundtrip in Montana from Mile
    City to Billingsa two-hour drive awaycosts
    passengers just 88 on Big Sky Airlines because
    the government kicks in 779.
  • Flying roundtrip from Lewistown Montana to
    Billingsalso a two hour drivecosts 88 as well
    on Big Sky. The government cost 1343 per
    passenger. Just two people per day took the
    Lewistown-to-Billing flights on average in 2006.
    according to the DOT.

39
COST/BENEFIT OF CHOICES
  • GAO July 2007 Report looked into the Student
    Loan Program
  • August 1, 2007 Press Release from Senators
    Kennedy and Durbin titled NEW GAO REPORT
    UNDERSCORES ADMINISTRATION'S FAILURES TO
    SAFEGUARD FEDERAL STUDENT LOAN PROGRAM read

40
COST/BENEFIT OF CHOICES
  • The U.S. Department of Education has failed to
    safeguard the nations federal student loan
    programs and should immediately increase its
    oversight of lenders and schools and fully
    enforce the law.
  • Todays report comes after months of
    congressional and state investigations have
    uncovered unethical financial relationships among
    lenders, school financial aid officers, and
    public officials responsible for overseeing the
    federal student loan program

41
COST/BENEFIT OF CHOICES
  • Under current law, lenders participating in the
    federal loan program are prohibited from using
    inducements or gifts to curry favor with colleges
    or universities.
  • The report found that the Department does not
    have a sufficient oversight program in place to
    identify and address questionable lender
    behavior, such as inducements.

42
COST/BENEFIT OF CHOICES
  • In addition, the report found that despite
    repeated requests from lenders for the Department
    to provide direction on inducements, the
    Department had not updated its inducement
    guidelines in nearly 20 years and, in some cases,
    did not respond to lenders inquiries at all.
  • http//www.gao.gov/new.items/d07750.pdf

43
COST/BENEFIT OF CHOICES
  • U.S. Office of Management and Budget, 2008
    reported
  • Medicare and Medicaid made an estimated 23.7
    billion in improper payments in 2007.  These
    included 10.8 billion for Medicare and 12.9
    billion for Medicaid. 
  • Medicares fee-for-service reduced its error rate
    from 4.4 percent to 3.9 percent.

44
COST/BENEFIT OF CHOICES
  • Medicare and Medicaid lose an estimated 60
    billion or more annually to fraud, including 2.5
    billion in South Florida. (Miami Herald August
    11, 2008)
  • U.S. Department of Health and Human Services
    estimated, Every 1 spent on Medicare fraud
    prevention would stop 10 in fraud.

45
COST/BENEFIT OF CHOICES
  • Inspector General report, Department of Health
    and Human Services, August 2008 reported,
  • Nearly one of three claims (29 percent) Medicare
    paid for durable medical equipment was erroneous
    in FY 2006
  • American College of Radiology, 2004 reported,
  • Medicare and private health insurers pay up to
    16 billion a year for needless imaging tests
    ordered by doctors.

46
COST/BENEFIT OF CHOICES
  • Medicare spends less than 0.2 cents of every 1
    of its 456 billion annual budget combating
    fraud, waste and abuse. (Miami Herald, August 11,
    2008)
  • U.S. Senate Permanent Committee on
    Investigations, 2008 reported
  • Medicare paid dead physicians 478,500 claims
    totaling up to 92 million from 2000 to 2007.
    These claims included 16,548 to 18,240 deceased
    physicians

47
COST/BENEFIT OF CHOICES
  • THE US GOVERNMENT IS GETTING BIGGER
  • Besides our 22T projected national debt, why is
    it important to understand the effects of
    increasing size of government?

48
COST/BENEFIT OF CHOICES
  • SHORT ANSWER
  • Empirical evidence indicates
  • that the size of government as a percent of GDP
    is negatively related to economic growth

49
COST/BENEFIT OF CHOICES
  • Gwartney, Lawson and Holcombe April 1998 in The
    Size and Functions of Government and Economic
    Growth prepared a report for the US Joint
    Economic Committee which concluded
  • There is overwhelming evidence that both the size
    of government and its expansion have exerted a
    negative impact on economic growth during the
    last several decades.
  • As government outlays in the United Stated have
    grown from 28.4 of GDP in 1960 to 34.6 in 1996,
    investment as a share of GDP, labor productivity,
    and real GDP growth have fallen.

50
COST/BENEFIT OF CHOICES
  • Data for 23 OECD (Organization of Economic
    Cooperation and Development) countries also
    revealed that higher government expenditures were
    correlated with both less investment and lower
    rates of growth during the 1960-96 period.
  • An analysis of data for a larger set of 60
    nations illustrates the same thing.

51
COST/BENEFIT OF CHOICES
  • Moreover, the size of government in the worlds
    fastest-growing economies is generally less then
    20, and their non-investment government
    expenditures are approximately 13 of GDP, far
    less than the comparable figures in the US and
    other OECD countries.
  • All of the evidence suggests that the level of
    government that maximizes the performance of the
    economy would place government expenditures at
    15 or less of GDP.
  • www.house.gov/jec/growth/function/function.htm

52
COST/BENEFIT OF CHOICES
  • Center for Economic Research October 2005 at ETH
    Zurich, working paper 05/44 The bigger the
    better? Evidence of the Effect of Government
    Size on Life Satisfaction Around the World
    concluded
  • A rather simple policy implication governments
    interested in maximizing the life satisfaction of
    their voters should, regardless of their
    ideology, limit their direct interventions in the
    economy to allow voters a high degree of personal
    freedom

53
COST/BENEFIT OF CHOICES
  • "Big, Not Better?" by economist Keith Marsden of
    the Center for Policy Studies, former operations
    adviser at the World Banks, a senior economics in
    the ILO (International Labor Office) has
    completed advisory missions in over 60 countries,
    during April of 2008 summarized his research of
    20 countries, 10 were labeled slimmer
    governments compared to 10 bigger government
    economies and he concluded

54
COST/BENEFIT OF CHOICES
  • Slimmer governments have on average, reduced
    personal and corporate tax rates at a faster pace
    then bigger governments. They are now 30 and
    22 respectively, compared to 45 and 29 for
    bigger governments.
  • What are the highest corporate and personal
    income tax rates now in the US?

55
COST/BENEFIT OF CHOICES
  • What are the highest corporate and personal
    income tax rates now in the US?
  • CA Corporate 8.84 38 46.84
  • CA Personal Income Tax 9.3 35 44.3
  • How will these rates change?

56
COST/BENEFIT OF CHOICES
  • Slimmer governments have a lower average
    government spending ratio
  • 32 of GDP compared to 48
  • Slimmer governments have significantly higher
    growth rates
  • Their GDP increased by an average of 5.4 per
    year between 1999 and 2008 compared to 2.1 for
    bigger governments

57
COST/BENEFIT OF CHOICES
  • Abundant positive economic research that
    quantifies the negative relationship between the
    size of government and economic growth, life
    satisfaction, and social welfare
  • New studies are examining the optimal size of
    government

58
COST/BENEFIT OF CHOICES
  • Richard W. Rahn, Chairman of the Institute for
    Global Economic Growth analyzed the results in an
    article The Optimum Government, November 12,
    2008 wrote
  • Rather than increasing the size of government,
    the empirical evidence show that sharply reducing
    taxes, regulations and government spending down
    to at least 25 of GDP would do the most to spur
    economic growth and create more jobs over the
    long run.

59
COST/BENEFIT OF CHOICES
  • Those members of Congress and parliamentarians
    in other countries who vote for a stimulus
    package that increases the size of government
    will be voting for slower economic growth and
    higher rates of unemployment over the long run,
    based on both solid empirical evidence and
    theory.
  • http//ime.bg/en/articles/the-alternative-budget-o
    f-ime/

60
COST/BENEFIT OF CHOICES
  • January 2009, economists at the Institute for
    Market Economics in Sofia, Bulgaria provided new
    estimates of the optimum size of government using
    standard models with the latest data and
    concluded
  • There is a 95 probability that the optimal size
    of government is less than 25 of GDP. Because
    most governments areand have been for may
    yearslarger than the optimal, there are
    insufficient data to give a point estimate as to
    the best size, other than it is less than 25.

61
COST/BENEFIT OF CHOICES
  • US Government increasing size with the debt
    projected to double in the next 10 years up to
    21 trillion
  • Often cite Keynesian economics
  • Keynes is turning over in his grave at how his
    theories have been the support for bigger
    government

62
COST/BENEFIT OF CHOICES
  • Keynes believed the
  • BUDGET WOULD BE BALANCED OVER THE BUSINESS CYCLE
  • From peak to peak
  • When was the last time the budget was balanced?
    And before that?

63
COST/BENEFIT OF CHOICES
  • Greater market power among banking
    institutions, bank will be more concentrated in
    the hands of relatively few
  • 1984 14,400 banks
  • 2008 7,200 banks
  • 2012 ? banks

64
COST/BENEFIT OF CHOICES
  • Milton Friedman researched the relationship
    between growth of the money supply and inflation
    using the equation of exchange and concluded
  • Inflation is always and everywhere a monetary
    phenomenon
  • Excessive money supply growth causes inflation

65
COST/BENEFIT OF CHOICES
  • US Debt today is more than 11T
  • US Government is projected to be running budget
    deficits until 2019
  • Interest rates are going to rise

66
COST/BENEFIT OF CHOICES
67
COST/BENEFIT OF CHOICES
  • Market for Loanable Funds with Supply and Demand
    for funds
  • Households are saving more
  • Business competes with government for the
    savings of households
  • Other nations are running large budget deficits

68
COST/BENEFIT OF CHOICES
  • How will the US attract foreign investors to
    purchase US Treasury securities?
  • Which nation has lent the US more money than any
    other country?
  • Could this affect US monetary policy?

69
COST/BENEFIT OF CHOICES
  • CBO now estimates cost of TARP to be much higher
    than originally estimated
  • Is this situation an aberration?
  • Is it unusual for government estimates to be too
    low?
  • How reliable are the estimated bailout costs?

70
COST/BENEFIT OF CHOICES
  • Government estimates typically understate the
    actual cost
  • Sept. 2003 report Government Schemes Cost More
    Than Promised by Chris Edwards, Director of
    Fiscal Policy, CATO Institute concluded
  • Governments are wasteful users of resources
    because they tend to replace competition with
    monopoly and market pricing with bureaucratic
    regulation.

71
COST/BENEFIT OF CHOICES
  • Also, since public officials do not risk their
    own personal funds, they are more likely to
    support unsound schemes and be less interested in
    keeping programs on budget.
  • As a consequence, we would be better off if
    Congress scaled back entitlement programs,
    privatized infrastructure such as airport and
    energy projects, and let entrepreneurs put up
    their own capital for risky pursuits.

72
COST/BENEFIT OF CHOICES
  • Included in his report was an analysis of 22
    government projects in a wide variety of
    categories

73
COST/BENEFIT OF CHOICES
74
COST/BENEFIT OF CHOICES
  • Possible Fraud in TARP, ARRA, and PPIPs
  • April 23, 2009 Gordon Grigg, a Tennessee
    investment advisor, has agreed to plead guilty to
    embezzling more than 10 million in first
    TARP-related fraud case.

75
COST/BENEFIT OF CHOICES
  • Neil Barofsky, Special Inspector General,
    overseeing the TARP Troubled Asset Relief
    Program, released a 250-page report detailing a
    long list of concerns about government efforts to
    prop up hundreds of banks, Wall Street firms and
    auto companies.
  • Quarterly Report to Congress dated April 21,
    2009

76
COST/BENEFIT OF CHOICES
  • Barofsky stated Tuesday April 21, 2009 that he
    has opened 20 criminal investigations and six
    audits into whether tax dollars are being
    pilfered or wasted

77
COST/BENEFIT OF CHOICES
  • Among Barofskys recommendations
  • Treasury should set tough conflict of interest
    rules on PPIP fund managers to prevent investment
    decisions the benefit them at taxpayer expense.
  • Treasury should disclose the owners of all
    private equity stake in a PPIP.

78
COST/BENEFIT OF CHOICES
  • Barofskys recommendations
  • Fund Manager should have investor screening
    procedures to prevent asset purchase transactions
    from being used for money laundering.
  • NB PPIP could cost taxpayers up to 2T

79
COST/BENEFIT OF CHOICES
  • QUESTIONS

80
COST/BENEFIT OF CHOICES
  • Does the mortgage bailout use taxpayer money?
  • Given the government spending increases and
    growth of the money supply, do you think there
    will be more scams, tax cheats, and identity
    theft?

81
COST/BENEFIT OF CHOICES
  • Do the bailouts reinforce or retard moral hazard?
  • Can the government make choices based on moral
    hazard?

82
COST/BENEFIT OF CHOICES
  • How do these bailouts stimulate small business
    defined as those business with less than 500
    employees?
  • Firms with less than 500 employees create 58 of
    all the US jobs

83
COST/BENEFIT OF CHOICES
  • Are you concerned about the efficacy of the
    governments oversight of the biggest spending
    programs in US history?
  • Consider the 2004 Fannie Mae/Freddie Mac hearings
    and Frank Raines, the extent of Medicare fraud,
    the student loan program, Neil Baroskys recent
    report, and the SL Crisis of the late 1980s

84
COST/BENEFIT OF CHOICES
  • Does it bother anyone that some of the
    individuals making these momentous
    history-making decisions did not pay their
    personal income taxes?

85
COST/BENEFIT OF CHOICES
  • Does the US Government waste money?
  • Many organizations track waste
  • Presidents have tried to cut waste and have not
    succeeded
  • Waste is a vague word, so here are just two
    examples out of many

86
COST/BENEFIT OF CHOICES
  • The infamous Bridge to Nowhere
  • CASE OF THE MISSING 25 BILLION
  • Buried in the Treasury Departments 2003
    Financial Report of the United States Government
    is a short section titled Unreconciled
    Transactions Affecting the Change in Net
    Position, which explains that these unreconciled
    transactions totaled 24.5 billion in 2003.

87
COST/BENEFIT OF CHOICES
  • The unreconciled transactions are funds for which
    auditors cannot account
  • The government knows that 25 billion was spent
    by someone, somewhere, on something, but auditors
    do not know who spent it, where it was spent, or
    on what it was spent.
  • Blaming these unreconciled transactions on the
    failure of federal agencies to report their
    expenditures adequately, the Treasury report
    concludes that locating the money is a priority.

88
COST/BENEFIT OF CHOICES
  • Do you suppose they ever found the 25B?
  • The unreconciled 25 billion could have funded
    the entire Department of Justice for an entire
    year.

89
COST/BENEFIT OF CHOICES
  • What would have happened if the government had
    not bailed out the financial institutions and the
    mortgage holders?

90
COST/BENEFIT OF CHOICES
  • How many more firms do you think will need to be
    bailed out?
  • Is there a limit to the number of firms that the
    government can bail out?

91
COST/BENEFIT OF CHOICES
  • Is there a limit to the amount of money the US
    government can spend?
  • Is there a limit to the amount of money the US
    government can borrow?

92
COST/BENEFIT OF CHOICES
  • Haste Makes Waste
  • Given the speed and magnitude of current
    legislative changes, do you think that is this
    the way significant fiscal policy should be
    enacted during the second largest contraction in
    US history?

93
COST/BENEFIT OF CHOICES
  • The Feds assumptions for the Bank Stress Tests
    for the 19 largest US banks are based on
  • 2009 2010
  • Unemployment 8.9 10.3
  • Real GDP Growth -3.3 -0.5
  • How do these assumptions differ from the those
    used by the CBO for their budget projections?

94
COST/BENEFIT OF CHOICES
  • If the Feds assumptions are correct, how will
    that affect projected future budget deficits and
    the estimated US national debt?

95
COST/BENEFIT OF CHOICES
  • What is the fair share of taxes the rich should
    pay?
  • What is the elasticity of taxable income?

96
COST/BENEFIT OF CHOICES
  • Huge opportunity costs have been incurred by many
    individuals during this economic contraction.
  • Who have not been bailed out?
  • Have those that have been bailed out made
    rational well-thought-out reasoned decisions?

97
COST/BENEFIT OF CHOICES
  • Are fiscal policies rewarding irresponsible
    behavior at the cost of those who have behaved
    responsibly?

98
COST/BENEFIT OF CHOICES
  • Do you think the government can do a better job
    of restoring the economy to full employment than
    the private sector?
  • Is it preferable to have the government spend a
    dollar in the economy or for business and
    households to spend a dollar?

99
COST/BENEFIT OF CHOICES
  • Economists agree that fiscal policy may be
    effective in the short to increase Real GDP, but
    in the long run causes complete crowding out.
    For every dollar the government spending, one
    dollar of business investment is not undertaken.
  • Why are the words may be effective so important?

100
COST/BENEFIT OF CHOICES
  • What do economists think about the fiscal
    policies being pursued?
  • Ask Krugman, Reich and Summers you will get one
    answer.
  • However, if you were to ask Becker, Barro, and
    Sowell you will get quite a different answer.

101
COST/BENEFIT OF CHOICES
  • Article Training the Brain To Choose Wisely
    regarding individuals health choices.
  • Do you believe there should be a significant
    change in formal education that teaches people
    about consumer and household economic choices
    particularly those involved with credit and debt?

102
COST/BENEFIT OF CHOICES
  • Who will bear the costs for the fiscal policies
    implemented today?
  • Do you believe the benefits of current fiscal
    policies outweigh the costs?
  • Or is it the case that the costs outweigh the
    benefits?

103
COST/BENEFIT OF CHOICES
  • And as Milton Friedman said,
  • Our country would be far better off with a
    federal budget of 1 trillion and a deficit of
    300 billion than with a fully balanced budget of
    2 trillion.
  • Do you understand the significance of this
    statement today?

104
COST/BENEFIT OF CHOICES
  • Ideological Debate
  • Capitalism vs socialism

105
COST/BENEFIT OF CHOICES
  • To date, I have visited 140 countries with visits
    to 46 countries more than once
  • There are 5 Communist countries in the world, I
    have been to all but one.
  • China Vietnam Cuba North Korea Laos

106
COST/BENEFIT OF CHOICES
  • Sabbatical visited 14 ex-Soviet countries and
    China to see how economics was being taught in
    their universities since the collapse of the
    Soviet Union.
  • If anyone believes that Socialism is preferable
    to Capitalism, I strongly recommend that you
    visit China, Cuba, Laos, North Korea, and
    Vietnam.
  • Also, visit any of the ex-communist or self
    proclaimed socialist nations, I have been to most
    of those as well.

107
COST/BENEFIT OF CHOICES
  • My travels have taught me two important lessons

108
COST/BENEFITS OF CHOICES
  • The idea for this series was conceived during
    mid-March and has caused me to bear huge
    opportunity costs
  • But I must consider the benefits and hope

109
COST/BENEFITS OF CHOICES
  • That you have gained knowledge about the current
    macro economic crisis
  • That you have developed critical thinking skills
  • That you have learned how to think, not what to
    think
  • That you will read and fully examine and
    critically evaluate fiscal and monetary policies
    that will affect the US economy

110
COST/BENEFITS OF CHOICES
  • ERRORS AND OMISSIONS
  • Events are occurring daily that affect the US
    economy and it is not possible to include all
    events and changes that have occurred
  • While every effort has been made to ensure the
    accuracy of the information supplied, any errors
    and omissions are my sole responsibility

111
COST/BENEFITS OF CHOICES
  • WHAT IS GOING ON v
  • HOW DID WE GET HERE v
  • WHAT ARE WE DOING v
  • COSTS AND BENEFITS OF CHOICES v
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