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Cliffs, Ceilings, Bombs, and Explosions…
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Cliffs, Ceilings, Bombs, and Explosions…
…When Metaphors Go BAD
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Cliffs, Ceilings, Bombs, and Explosions: When Metaphors Go BAD.
Jim LukeLCC EconomicsJanuary 30, 2013
Blog: econproph.comInfo: jimluke.comCourses: econproph.netDownload: http://wp.me/pR94N-gj (or search at jimluke.com)
Twitter: @econproph
Twitter: James Luke
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DISCLAIMERS & Legal Fine Print
While many phrases have been tortured, no actual words have been destroyed. Yet.IANAWP – don’t quote me on metaphors vs. similes vs. analogies vs. other stuff.
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Metaphors and stories help us think about things – like the economy.
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Metaphors can limit thinking too.
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Let’s Look At Some Examples
What Have You Heard?
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metaphor trouble
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Economy Going Off The Fiscal Cliff
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But Why? Debt and Spending? NO. This is double BAD.
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BAD: Fiscal Cliff was about debt and deficits hurting the economy.
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Reality: Fiscal Cliff was automatic spending cuts & tax increases.
Spending cuts & tax rises SLOW the economy
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BAD: The “Debt Ceiling” has to do with spending.
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Reality: Budget mandates spending, taxes, and borrowing. Debt ceiling is a silly law.
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Reality:The debt “ceiling” is a charade and kabuki theater.
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Reality: Not raising the debt ceiling would be catastrophic for U.S., the world, and you.
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BAD: Govt debt is a “bomb”, just like private debt is a “crushing burden”.
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Reality: One of these is not like the other.
Credit Cards (private debt)
US Government Bonds
US Federal Reserve Notes
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Reality:U.S. Cannot “Go Broke” orGo Bankrupt
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Reality:U.S. is not like Greece, or Ireland, or Spain, or Argentina.It is like Japan, UK, Canada, Australia, etc. – sovereign in money.
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Reality:Default can only happen by choice.
Non-convertible (floating) rates Debt in own currency.
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BAD:Govt budget should be balanced just like your household budget.
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Reality:
Government is NOT like a household.
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Reality:Deficits are NOT bad, but surpluses are.
Surpluses are followed by recessions. Necessary if private sector wishes to save. Supply of safe financial assets.
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BAD:Cutting spending can balance budget.
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Reality:“Austerity” slows an economy and worsens deficits.
Taxes are % of GDPAutomatic stabilizer effectUK & Ireland proving it (again)
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Reality:Deficit will shrink as employment returns. Growth heals.
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BAD: We can balance the budget by cutting “waste”.
check out the zero’s in *illions.
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Reality:The U.S. government is an insurance company with an army.
Big Social Security (self-funded) Defense (unfunded) Medicare (part funded)
Medium – income transfers Interest Medicaid & Income Security
Insignificant Everything else
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BAD:Spending has exploded under Obama.
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Reality:Recovery and Obama budgets have cut spending.
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Ignorance
Politics
Ideology
Hide the real agenda
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Good sources for facts.
Econproph.com Tax.com CalculatedRiskBlog.com NakedCapitalism.com AngryBear.com
Presimetrics.com
Krugman.blogs.nytimes.com“FRED” at research.stlouisfed.org
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Others…?
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Sources & Images• http://www.nakedcapitalism.com/2013/01/philip-pllkington-purging-economics-of-religion-a-rebuttal-to-robert-nelsons-defence-of-the-
great-chain-of-being.html/graph3• http://radio.foxnews.com/wp-content/uploads/2013/01/1-6-debt-ceiling.jpg• http://www.sleuthsayers.org/2011/11/metaphor-hunting.html• https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&docid
=72fwfKqKE32n7M&tbnid=0ZoZLXH6UyTraM:&ved=0CAIQjBw&url=http%3A%2F%2Fimages.businessweek.com%2Fcms%2F2012-12-20%2F0803_cliff_630x420.jpg&ei=6u0GUa-9AsX6qwGE6YGoDg&bvm=bv.41524429,d.aWc&psig=AFQjCNEsodTvHsJ674IwCKvPtv3MjmjE0g&ust=1359494550883237
• http://netrightdaily.com/2012/12/fiscal-cliff/• http://www.wlwt.com/image/view/-/17343332/medRes/2/-/maxh/460/maxw/620/-/41bw25/-/Fiscal-cliff-notes-jpg.jpg• http://upload.wikimedia.org/wikipedia/en/f/f5/US_$50_1993_Federal_Reserve_Note_Obverse.jpg• http://img.wpdigital.net/rf/image_606w/2010-2019/WashingtonPost/2012/12/10/Editorial-Opinion/Graphics/toles12112012.jpg• https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcTYtn5eycKKLe51EwkeoIyoDby2F7sSfNL08QSEzq_6glpYveeX• https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcTnLcEfK3HDFlutcFOr2T4Th3VlJBcRSUtr8hkbY67vtFlWgeoY1Q• https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcRrEvhRfftkWFxwJK2SvKGRAi4ILVBFSeou8paXonv_CZuxLqVN• https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcSIvgD10FL5tzHs7pnOzt1QKUWIhefomNwMlqmSa8pDulgOYsn8pQ• https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcQYKURNQI3vm_hZYXxDRgZ8T3RVKKXzS2tRL3oY5o5YIRc0cv7CtQ