@Mark That link to the OMB numbers is not working for me.

@Pilli: "You MUST keep in mind that the money that the government spends first came from someone in the private sector."

Of course that's not true. All the dollars in existence were produced by the Federal Government, they have a monopoly on the production of dollars. Every dollar in the private sector came first from government spending there is no other way for people to get real dollars.

I can see what  you mean about lack of efficiency in government spending, but okay let's cut taxes then, the effect is the same, if perhaps more efficient. I mean real taxes not taxes for a few bizillionaires. Let's have a complete FICA holiday for business and employees.

@EJHill:

Sorry about the failure to reply, I've been trying to get some work done lately and so have been doing my best to resist the temptation to internet. You are right that it was rude of me to start this conversation and then ignore it. 

In any event. What I was hoping for were some actual predictions of future economic performance resulting from cutting government spending and I'm not seeing any in the comments. 

@Rosie: 

Yes it has occurred to me. I just wish conservatives would remember that when they talk about California teachers being the highest paid in the nation. 

I think Mr. De Seno's first reflex was probably correct. It is a common experience in the practice of law to have bilingual witnesses testify in their native language, purely for comfort's sake. Imagine having to testify before a committee of the Mexican congress on a matter of life and death importance to your family, would you prefer testifying in your high school spanish or in english?

Perhaps there is more to it than, that but I've seen no evidence of the conspiracies which seem to spring up so easily in the conservative mind.

As for assimilation, I'm still wondering when Mark Steyn is going to assimilate. A foreigner, living in the United States, taking jobs Americans would gladly have, and actively trying to influence our political processes. And why did it take John Derbyshire over 20 years in this country to become a citizen? Is that part of some grand conspiracy as well?

Wow! A full on conservative intellectual barrage…how underwhelming. I suggest you stop repeating platitudes and referencing credentials and try thinking for a second. Here's a good place to start.

Try and answer this question: If you have a special tax on elementary school teachers of 10% is the effect on the economy any different than cutting school teachers salaries by 10%?

As the unofficial pointer-outer-of-the-obvious around here, let me be the first to say that both of these solutions (To a problem best described as the right's version of Global warming scare tactics.) operate on the demand side of the equation. 

Perhaps St. Paul of Wisconsin could spend a few moments looking at the supply side of the equation, since price is a function of not just demand but supply. 

Here's a hint at what the future of medicine could be if conservatives could set aside their obsession with making sure that Mrs. Slayton from the 5th grade doesn't have too cushy a retirement long enough to examine a healthcare regulatory environment designed to conserve the wealth of the wealthy.

You need to include the libertarians and their "singularity" in this group as well.

If you read the article then you know it wasn't just Democrats it was Republicans as well. Doesn't the name Hank Paulson ring a bell?

Yeah I think that's about right. The thing is by starting with the teachers we're starting at the bottom of the economic pyramid, picking on those least able to defend themselves, and leaving the rich and powerful for some time in the future when we get around to it. It just doesn't smell right. 

Let's for once start at the top and leave the poor and middle class till we get around to it.

@ Aodhan beat me to it. But I suspect that for a certain kind of restaurant it's about fashion. The fashion industry isn't about making a pair of jeans you can manufacture for 40 years it's about what's new, what's hip. Perhaps we're seeing the same thing in the restaurant business.

Even in small town America, where I live, the new restaurant is packed until the newer one opens. I think with restaurants in upscale trendy areas it might make sense to close after the trendiness wears off, and reopen as the next trendy restaurant.

@Diane @Cas

I've added a graph of M1 vis-a-vis CPI to the original post since I couldn't include it here in the comments. Here's the link to the graph at the St. Louis Fed site.

As you can see from the graph, M1 exploded from June of 2008 to about December of 2008 with no apparent effect on CPI afterwards, in fact CPI flattened i.e. turned negative in 2009. Why? According to your theory it should have caused inflation but it didn't.

It is true that M1 has been growing lately but it's been growing for well over 6 months now with still no effect on CPI. That people are having to look for alternative measures of inflation tells you that CPI has not gone up in spite of the growth of M1.

Rather than searching for alternate inflation measures so you can fit the facts to your theory you should be asking why, if M1 has gone up so much, hasn't CPI gone up at all? That's the real issue. We've poured huge amounts of dirt into a hole and the hole still looks empty…why?

@Cas

I'm not sure what you mean by " It is true deflation favours those holding cash and debt, but it does so at the expense of those holding assets…"

As I understand it the real value of assets is unchanged by either deflation or inflation. What a deflation does is effectively raise the rate of real interest to those who owe money, thus raising the value of debts held by lenders. It is a direct transfer of money from people who owe money to people who are owed money. As the money is deflated it becomes more valuable over time so the value of the money paid to creditors goes up even though the nominal value of the payment remains the same.

The opposite happens in an inflation.

@Kenneth maybe you should read this: http://en.wikipedia.org/wiki/Homelessness_in_Japan

Diane

Diane: My policy prescription would be a one year payroll tax holiday.

Diane: If you think inflation is 10% and you advocate polices to reduce inflation by 6-8% but inflation is really 2%, guess what… you've just caused deflation, all to the very much, and purely coincidental I am sure, delight of the Deutsche Bank, the Saudi Royal Family, the Government of the People's Republic of China and the other holders of cash and debt as Mr. Cas Baliki correctly answered.

One other often overlooked fact, CPI was actually negative for most of 2009. Here's the link.