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Home Publications Blogs Beat the Press What Money Does David Brooks Think Has Been Spent?

What Money Does David Brooks Think Has Been Spent?

Tuesday, 01 June 2010 03:59

I'm not sure of the point of David Brooks' column today other than to fill space and earn his paycheck, but one of the items on his list of complaints simply does not make any sense. He tells readers, presumably in reference to the stimulus, that "the money is spent."

It's not clear what Brooks thinks he means by this. Insofar as the country still suffers from high unemployment (Brooks tells us in the next paragraph, "unemployment will not be coming down soon") there is no lack of money for additional stimulus. The government can have the Fed hold the debt issued to finance the spending so as not to increase the interest burden on the Treasury in future years. (The Fed refunds its interest to the receipts.) So there is no plausible meaning to the idea that "the money is spent". This just seems to be a case of Brooks wanting to express his generic unhappiness with the current situation.

Comments (4)Add Comment
written by izzatzo, June 01, 2010 8:37
"The money is spent" is another term for sunk cost, meaning whatever it's spent on is irretrievable going forward, since all economic costs are forward costs to be incurred or avoided at the margin, so sunk costs are not economic costs for the same reason.

This is how accountants came to be known as bean counters, because they dabble in the recovery of sunk costs. Economists regard accountants equivalent to the untouchable classes in India, where in the US they're known as "The Sunken".

In this case Brooks was referring to certain socialist economists who do include sunk cost as an economic cost, for example, "Whose Your Nanny" Dean Baker who claims the money is not spent and even if it is, it can never become sunk because when debt is monetized by the Fed, the government ends up paying itself back for the interest and the principal is disposed of in a high security burn bag after the recession is over.

Stupid liberals.
written by skeptonomist, June 01, 2010 9:53
The Fed is currently holding about a $trillion in MBSs, largely for the benefit of banks.
an affront to labor
written by bdbd, June 01, 2010 3:28
you call that stream of gibberish "earning a paycheck?"
written by diesel, June 01, 2010 5:37
"We have known for a long time that regulation is about balance. The proper regulatory regime has to be set case by case and year by year."

Who is this "We" Brooks is talking about? Can these words have really emanated from the mouth of a propagandist for the party that has been categorically and ideologically opposed to regulation of any kind for the last thirty years? Has Brooks undergone some kind of conversion? Seen the Light?

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.