About a year and a half ago, I downloaded the entire catalog of econtalk episodes with the goal of listening to every episode.  I am about 200 episodes in. I listen in the car, when I am exercising, while I am doing house or yardwork, or wherever. 

The experience has had a significant impact on my life for the better.

If you need more Epstein, go here.

http://www.econtalk.org/archives/_featuring/richard_epstein/

Right, it's more indirect than them just using taxpayer funds directly.The argument is that they are able to finance their operations at below market costs because their is an implicit guarantee on their debt.  In other words, they are more or less Government Sponsored Enterprises.

Pent up demand.  I love that argument. Even Great Depression scholar David Kennedy falls for that:

World War II fuels the phenomenal economic growth of the quarter century after 1945 in all kinds of ways. It creates a big pent-up consumer demand, which is explosively powerful after 1945, and people are seeking to buy products that weren't available in wartime, and they've got all these fat paychecks from the war era that they weren't able to spend then, that they spend after the war.

By that rationale, the way to generate economic growth is to just make it illegal for people to purchase goods and services that they want, and then all of a sudden remove those restrictions. That is even more incoherent than the Keynes story. 

Great. GDP seems to be a terrible measure of prosperity when you have widespread price controls and rationing as we did in WWII. 

Also of interest is the period in the early 1920's when Federal spending plummeted after WWI. 

[Quick note:  Maybe I am wrong, but I don't think David Henderson is a faculty member at George Mason.]

My high school album that I keep going back to is Loveless by My Bloody Valentine, which recently celebrated it's 20th anniversary. Best album of my lifetime.http://m.wired.com/underwire/2011/11/my-bloody-valentine-loveless/

About a year and half ago, Meredith Whitney appeared on 60 minutes predicting hundreds of billions of dollars in municipal bond defaults in the next 12 months. This never happened.

The flaw in her analysis was that she never accounted for the fact that municipalities also saw these problems and many of them made adjustments  - they cut spending and looked for way to raise revenue.

Whitney saw a car headed off a cliff and never took into account the fact that the driver may start applying the brakes.

I think this kind of analysis makes the same mistake. It does not take into account people changing their behaviors.  Some people will adjust their lifestyles and slow their spending down to account for the fact that it's not likely to last until their life expectancy. 

So, yes, there is a problem, but perhaps not as significant as this study implies.

Does the young Obama remind anyone else of this character from a memorable Cosby Show episode?

David: I think I'm going to just spend some time trying to find myself.

Cliff: And how long do you think that's going to take?

David: About five or ten years.

Cliff: Well, you'll be able to find yourself, plus a couple of more people...

Video clip here.

Brilliantly done by Jonah.   

Wonderful review.  I can't wait to see it.  Whit Stillman's first two movies (Metropolitan and Barcelona) are two of my favorite movies ever. Also of note, Metropolitan, was on NR's best conservative movies of the last 25 years list.

Blue Yeti said in one of the threads that it will be Thursday.

"war materiel was valued incorrectly and therefore the GDP data overstate economic conditions."

I love this point.  My understanding from Higgs and Russ Roberts' teaching of Higgs, is as follows: GDP has no mechanism for valuing the utility of the goods we produce, so it relies on prices to approximate utility (higher prices mean higher utility).  But when the price system is more or less rigged because of price controls and rationing and government spending, as it was in WWII, GDP becomes meaningless in terms of measuring our economic well-being.

I thought that inventory only shows up in GDP only to the extent that it shows up in someone else's income - the suppliers of the materials and the labor. The difference between the market value and the cost of the inventory (i.e. profit) only shows up in GDP after it is sold. 

But if an item is not consumed - sold - than how can it show up in GDP? For an item to show up as being produced, it has to have been sold.   I think we are talking about different things. 

There is a good reason that most economists omit that fact! (Well, almost all economists.)  Just because we borrow from ourselves, doesn't make the burden go away.  The burden of the spending is reflected in the fact that taxes still need to be raised to pay the money back, regardless of who the lender is. 

Saying that the debt is not a burden if we borrow it "from ourselves" justifies any level of government spending. It implies that the government can spend an unlimited amount of money as long as only Americans are allowed to lend the money. But we know that's not true.

Someone above made the comment that the GDP measures what we produce, not what we consume. I think that's half right. It does measure what we consume, but it does not directly measure the utility we get from the consumption of those items. What it does is use prices to approximate this. It assumes that the utility we get out of those items produced/consumed is reflected in the price of those items. In other words, higher priced items reflect greater utility. But in WWII, prices were meaningless, primarily because of rationing. There were many items that were just not available at any price. As a result, GDP was not very meaningful.Listen to Econtalk episode with John Papola for more on this.