Was Scarborough listening when Krugman explained why "we can't" fix economy by doing "the things we did in the '80s"?
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SUMMARY: Joe Scarborough stated that "the average unemployment rate for 1984" was the "same that the unemployment rate is right now" and then added: "[A]nd ... 1975, it was nine [percent]; 1982, it was about 11 percent, and we didn't nationalize everything then and ... we didn't say we're going to put a stimulus bill out there to get people back to work right now and spend money we didn't have." But during a Morning Joe appearance with Scarborough less than a month earlier, Nobel Laureate Paul Krugman explained why "we can't do the things we did in the '80s" to fix the economy.
In criticizing the U.S. government for addressing the current economic crisis by "spend[ing] trillions of dollars that we don't have," Joe Scarborough stated during the March 3 edition of MSNBC's Morning Joe that "the average unemployment rate for 1984" was the "same that the unemployment rate is right now" and then added: "[A]nd ... 1975, it was nine [percent]; 1982, it was about 11 percent, and we didn't nationalize everything then and ... we didn't say we are going to put a stimulus bill out there to get people back to work right now and spend money we didn't have." But contrary to Scarborough's suggestion that the U.S. could address the current economic downturn by enacting similar policies to those of the 1980s, as Nobel laureate Paul Krugman explained during an appearance with Scarborough on the February 6 edition of Morning Joe, "Right now, the interest rate is zero. The [Federal Reserve] can't rescue us this time, and that's why we can't do the things we did in the '80s."
On the February 6 edition of Morning Joe, Krugman stated:
[I]n 1982, when the economy was deeply depressed, the Federal Reserve said, "OK, we've got to do something about this," and they cut interest rates from 13 percent to around 7 percent, and the economy took off. Right now, the interest rate is zero. The Fed can't rescue us this time, and that's why we can't do the things we did in the '80s. We have to have an approach that harks back to the things that worked very well in the first four years of the New Deal until Franklin Roosevelt was persuaded to go orthodox all over again.
Indeed, as noted on the website of the Federal Reserve Bank of New York, the federal funds rate peaked at 20 percent in late May 1981, was approximately 13 percent in mid-July 1982, and dropped below 7 percent by April 1986, while the discount rate peaked at 14 percent in early May 1981, dropped to 9.5 percent in mid-October 1982, and dropped below 7 percent by early March 1986. As of mid-December 2008, both the federal funds rate and discount rate were at 1 percent or lower.
According to an August 1983 Congressional Budget Office (CBO) report, the "[l]ower interest rates after mid-1982 permitted the recovery to begin":
The Economy At Mid-1983
Recovery started in December 1982 from the deepest postwar recession, the second of two since 1980. Both recessions were brought on by monetary restriction aimed at bringing inflation under control. Lower interest rates after mid-1982 permitted the recovery to begin. Real GNP grew at a 2.6 percent annual rate in the first quarter and at an 8.7 percent annual rate in the second quarter of 1983.
The CBO report also concluded: "A dramatic decline in inflation, a fall in interest rates from levels that were extraordinarily high to levels that are merely high, and the stock market boom have contributed to the improvement in economic conditions."
Additionally, Michael Mussa, a member of Reagan's Council of Economic Advisers, wrote in an essay for American Economic Policy in the 1980s (University of Chicago Press, 1995) that when the Federal Reserve cut the discount rate a half percentage point on July 20, 1982, it "signal[ed] the beginning of what would become a four-and-a-half-year period of quite rapid monetary expansion. During this period, interest rates, both short and long term, would be driven significantly lower, and the U.S. economy would substantially recover from the devastation of both inflation and recession."
From the March 3 edition of MSNBC's Morning Joe:
SCARBOROUGH: Mark, I went back and looked at unemployment rates and other economic indicators to see just how -- 'cause I've heard that this is the worst recession since the Great Depression, and so, yes we have to spend trillions of dollars that we don't have.
I went back and I saw that, in 1984, remember "morning in America"? Farmers throwing hay; America's getting back to work. Everything -- steelworkers doing their thing and everybody was happy. Ronald Reagan wins 49 out of 50 states.
MARK HALPERIN (Time senior political analyst): Root beer in the water fountains.
SCARBOROUGH: Root beer coming out of the water fountains, whisky waterfalls -- boy, those were the days.
MIKA BRZEZINSKI (co-host): OK. Get to the point now.
SCARBOROUGH: Did you know the unemployment rate for 1984 -- the average unemployment rate for 1984 -- the same that the unemployment rate is right now?
HALPERIN: Maybe a little higher, like nine --
SCARBOROUGH: Yeah. Yeah, and we -- 1975, it was nine; 1982, it was about 11 percent, and we didn't nationalize everything then and we didn't have -- we didn't say we're going to put a stimulus bill out there to get people back to work right now and spend money we didn't have.
HALPERIN: Well, there's no question that part of the bigness of this involves an effort to exploit the weakness of the Republicans and do things on health care, on education, and on the environment that are trying to take advantage of the crisis to grow the role of government.
Asking Joe to do homework, much less math homework, is a fool's errand.
Neither he, Mika, nor the producers in his IFB seem to have a clue about basic math or finance, much less comprehend the depth of our current financial mess.
It appears that the top 20 banks which represent 90% of all US assets are literally insolvent - they do not have sufficient capitalization to cover their liabilities, and the value of their assets is declining faster that we can pour in money.
I don't think Joe could sit still long enough to comprehend the implications of that statement. If you can comprehend it you, too, will wish you were wearing an adult diaper, it is literally frightening.
And, how much of our manufacturing base has disappeared since then?
Tax Cuts won't save us, Joe... and there's no evidence that they did then.
NERZOG, Amen to that. All REPUBLICAN tax cuts do is make the rich richer.
Was Joe paying attention during the past 8 years?
the economy was just fine for most of the last eight years.
No it wasn't. It was sputtering the whole way through. It was 2004 it was so bad that Kerry was able to say truthfully that not one net job had been created in the four years Bush was president.
Revisionists are out in force I guess.
Sure it was, mr log in yer eye.
I don't concur that the inflation rate is the best measure of whether the US economy was doing fine.
You could use the incomes of the bottom 90% of Americans, their net worth (which would embed the rise then loss of home value), personal indebtedness, the federal trade deficit, or the Federal Debt which went from $5 to about $10 TRILLION under Bush, etc.
Greenspan willingly agreed with Bush & Cheney to lower home loan rates to historic lows in an effort to spur the economy and reward key Bush supporter groups in the finance, real estate and construction industries. For most of the Bush years construction workers who barely graduated high school were making 6 figure salaries, while Masters of Computer Science were unemployed.
"For most of the Bush years construction workers who barely graduated high school were making 6 figure salaries"
Ridiculous! Such a statement must be supported. I don't think you can.
It was a house of cards. It's pretty clear now that the "recovery" after 9/11 was not spurred on by Bush's tax cuts, but by a consumer spending spree financed by an over-inflated housing market and credit cards.
It has collapsed around our ears now...so much for Trickle Down.
During those years of "prosperity", we created more wealth for the wealthy (just fine for them I'm sure) while the middle class shrunk and poverty increased. And the latter two could only watch as Bush and de-regulation destroyed the rest of the economy.
im sure it was for yourself. i didn't see much in benefiting myself. but then again im just a guy who had to borrow my way through college, work two jobs while doing it. and then three more at home during the summer, and upon graduation i had to remain living with my parents and when i did get a steady job i still didn't make enough to either move out or get rid of my second job. so, while it wasnt good for me, im sure it could have been good for you.
Which economy? You're clearly not talking about the US.
Hey! Don't go all protectionist on us now! [/sarcasm]
We can't build our way out this time. I have no idea how this story is gonna end but as long as the repugs are kept out it has a chance.
Did you know that Scarborough's pay rate for 1984 -- his average pay in pesos for 1984 -- the same that he's getting paid in dollars right now?
I would guess that Krugman's plan is more radical than Obama's. So how does this bolster Scarborough who would likely object to Krubman's plan even more?
Krugman doesn't like Obama's plan simply because in his view it isn't big enough.
well i would listen to krugman myself....i mean the guy did just win the nobel prize in economics
You and Scar would like Krugman's plan even less. He's probably right, but we'll see to what extent.
Scarborough is a mental lightweight. He'd make a good conservative poster on here, considering his limited grasp of logic.
Stop using percentages for the employment rate. Start giving us numbers of actual unemployed people.
Of course Scarborough listens to Krugman...while he's on the crapper. Look, the one thing the neocons in the GOP know how to do is to get their ducks in a row vis-a-vis talking points. Haven't you noticed they're all saying exactly the same thing. Just take tax and spend, for example, their litany for aeons. They have silly people like Brit Hume and that Beck guy tell the American people that it's the top 5% who pay "all of the taxes now," ignoring the fact that the kind of people Obama wants to stimulate belong to the middle class and pay on average 17%, while the super rich pay about 8%.
Because the Rush-CPAC bunch have vested interests in seeing the top 2% keep their money, It will be hard to make them see that trickle down economics harmed the nation and that, when coupled with pork barrel spending and the war in Iraq, all but destroyed the economy. Trickle down did not work then and it will not work now. This may be Obama's greatest challenge, to overcome the right wingnut propaganda machine. The Limbaughs and Hannity's of this world know that the greater the lie, the more often it must be told.
Perhaps it's time we saw some talking points handed out to MSNBC and, if they're interested, CNN as well. Propaganda can only be stopped by counter-propaganda. Ask the Germans and Russians.
Joe is NOT the sharpest pencil in the drawer. Listen to his exposition of an issue and you get a picture of how his mind functions. 1) Name the problem, as sensationally as possible 2) Describe it with a scattering of emotional statements 3) Speak in a sorrowful, despairing tone 4) Generalize and ending with with doom-laden speculations about the future. This man is not a problem solver and, most important, he is not a clear thinking newsman. The Repubs couldn't win the election against the colored guy so they're trying to lie him out of office. In effect they are trying to call into question the validity of the wisdom of the majoritiy of voters. I hope they keep on. Let their supporters see who they themselves are. Maybe they can become the true minority party they always were. Let the Green's become the 2nd party in the land. Let's have sensible debates not Henny-Penny stories.
I.m no economist but this mess has lasted long enough that I feel able to comment with as much precision as anyone else! It seems in fact that we have been in depressive economix for about 40 year, with only minor reversals and all again with allmost all in times of increasing GDP. There is no excuse for the results.
Generally I liked a bite of inflation if it helped pay of old expensive debt. My sympathies where with the elders screwed by Nixon when he changed the rate for indexing of the cost of living. However now we must get real, get a handle on the big fix. We are destined to be from now on more Socialistic. For one that allways chased the carrot because I believed competition was more competative it has in retro-spect been all for not. A more humain mix of the two looks great to me at this point. My end game is to provide my little guy's a respectable system of government.
Below please find a paste of a few recent post I've made relative the economy.
Good luck one and all in this boat.
Tom J. Flaherty
Name: Tom J. Flaherty E-mail: oflaherty@ieee.org comments:
Following please find my paste as mentioned above.
Dear Speaker Pelosi,
The other night I wrote to my congressman. Please find below a copy of the letter. First let me say to you that I had such great hope upon the democratic victory. The bottom up idea of President Obama has come of age. The same powers be, it family money of Rothschild’s, Mellon’s, Morgan’s, Getty's or the G-30, G-20, and the ministers of trade, the time has come to have a new card dealer. It is clear to me that the politics of division are still being dealt from the same peaks of power and money. Make no mistake they enslave not only our parents, spouses, but our children and children’s children if not more. There is no justification for supporting on the backs of our citizens the AIG, and Citi Bank types because more private money even to the tune of hundreds of billions in European banks is threatened. Throwing good money after bad in my mind is gross negligence. Nobody should have the right to subject the least able to the wrath of interest in this way. It seems that receivership with hard executive punishment would give us the ability to by low and sell high. The tables should be reversed in this special moment in time and the dealer should be a strong, just, and Intelligent government reassured by the majority of it's people thrilled in the clarity of a government not for sale but rather doing the right thing. Please be our strong voice and leader through this period. This country longs to support the good representatives. Below Please find a paste of the original not to my congressman referred to above. Dear Congressman Delahunt, It seems to me Rep John Conyers is spot on with the legislation to allow a judges review of home loans. The current situation with 3rd parties more interested in there own interest that that of either the lender or the borrowers is just wrong. Further they were in fact the grease in this whole mess with their amoral short sighted greed ways. Please vote with Rep. Conyers on this one. Thank you, Tom J. Flaherty 9 Homestead Ave. Quincy, MA 02169 617 372-5176 oflaherty@ieee.org A final thought is that if we concern ourselves with the real 70 trillion dollar economy and not the artificial 700 trillion we will be well. The good structure of the government went with the sale of well being to credit default swaps. The government in it's first bailouts I think in the tarps said they guarantee all loans made in the next three years! Still no flow!!!. There is an ideological difference between the money and the majority citizenry. (The money is picking up it's toy's and playing with itself) The TARP included a provision that if the government changes it's mind and terms of the buy-out/loans programs the bankers shall be bound to the new terms. So I question now that so many of us are so well educated in this economix, might it not be time to bring in the B TEAM with less allegiance to the old and a commitment to the solution. Tom J. Flaherty
submit: SendI wish to "join the discussion" simply to say that Joe Scarborough is a pea brain and anyone who listens to his drivel is also brainless.
If anyone can pull off being both peabrained and brainless, its our legume of choice.
:)
I'm still laughing at " Was Scarborough listening when...". He rarely listens. It's pretty hard to be impressed by him or his opinions.