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Mon Nov 5, 2012, 06:03 AM

The problematic basis for deficit phobias by William Mitchel

With the natural disaster in the US now in its clean up stage the discussions have turned, in a predictable way, to “how will the US pay for this especially when it has huge deficits and debts and has to fall off a fiscal cliff anyway to stop the sky from falling in” – and narratives like that. Remember when Hurricane Irene struck in 2011? The resurgent Republicans tried to push through bills, which would have required matching cuts in other federal spending. The other Sandy reminder is that when the chips are down who do we all turn to? Government. What do you think would have been the current state, if the Republican contender was President and followed through on his promise to scrap FEMA and put emergency relief in the hands of the private sector, which apparently does things better? Chaos at best is the answer. The fact is that the federal government will be able to provide whatever financial assistance is required beyond private insurance payments. The only constraint that might hamper the recovery is the availability of real resources, which can be brought to bear. Further, it seems that the whole fiscal crisis beat up, even with the terms of the mainstream paradigm, is a beat-up, courtesy of some spurious work done by the Congressional Budget Office, that much-quoted, but seemingly, errant organisation.

First, lets quickly deal with Sandy.

http://bilbo.economicoutlook.net/blog/?p=21559

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Reply The problematic basis for deficit phobias by William Mitchel (Original post)
Sam1 Nov 2012 OP
lapfog_1 Nov 2012 #1
Sam1 Nov 2012 #2

Response to Sam1 (Original post)

Mon Nov 5, 2012, 06:20 AM

1. I don't mind paying for the disaster and helping people rebuild

but, I think it's time we faced some unpleasant realities.

It's time to move INLAND.

All along the Gulf coast and eastern seaboard... it's time that when we rebuild, we move it to higher ground.

These types of storms are going to happen more frequently... "storm of the century" is going to happen every 3 to 5 years... and paying to rebuild on the same spot that is going to be hit again in 10 to 20 years is just not very smart.

Yeah, I live in California... and earthquakes are devastating too... but we haven't increased the frequency of big earthquakes... and we have increased the frequency and power of hurricanes.

We are not going to stop global climate change, not until we run out of fossil fuels or collectively jump off a cliff together population wise (7B -> 700 M), we just aren't that smart. So we are going to have to learn to live with the new climate reality.

And that means when we rebuild, we abandon the locations that were destroyed and relocate inland. remake the beach front into national parks... move people from areas that routinely (now) flood (New Orleans, Atlantic City, pretty much all of Florida).

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Response to lapfog_1 (Reply #1)

Mon Nov 5, 2012, 07:49 AM

2. I think you have missed the point of the post.

The post had to do not with where to rebuild but with the constraints to that rebuilding. There are already communities making decisions are where building can and can not take place.

The point of the post is that the availability real resources not the availability of money constrains the rebuilding because the Federal Government can generate all the money that is necessary to employ the resources to repair the damage. Presently there are alot of unemployed resources that can be turned to the project and the resulting incomes will contribute to the economic growth that every one is so concerned with.

The post also explains why the resulting Federal Government debt is of little or no economic consequence either short term or long term.

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