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Cliffs, Ceilings, Bombs, and Explosions…. …When Metaphors Go BAD.

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Presentation on theme: "Cliffs, Ceilings, Bombs, and Explosions…. …When Metaphors Go BAD."— Presentation transcript:

1 Cliffs, Ceilings, Bombs, and Explosions…

2 …When Metaphors Go BAD

3 Cliffs, Ceilings, Bombs, and Explosions: When Metaphors Go BAD. Jim Luke LCC Economics January 30, 2013 Blog: Info: Courses: Download: (or search at Twitter: @econproph Twitter: James Luke

4 DISCLAIMERS & Legal Fine Print While many phrases have been tortured, no actual words have been destroyed. Yet. IANAWP – dont quote me on metaphors vs. similes vs. analogies vs. other stuff.

5 Metaphors and stories help us think about things – like the economy.

6 Metaphors can limit thinking too.

7 Lets Look At Some Examples What Have You Heard?

8 metaphor trouble

9 Economy Going Off The Fiscal Cliff

10 But Why? Debt and Spending? NO. This is double BAD.

11 BAD: Fiscal Cliff was about debt and deficits hurting the economy.

12 Reality: Fiscal Cliff was automatic spending cuts & tax increases. Spending cuts & tax rises SLOW the economy

13 BAD: The Debt Ceiling has to do with spending.

14 Reality: Budget mandates spending, taxes, and borrowing. Debt ceiling is a silly law.

15 Reality: The debt ceiling is a charade and kabuki theater.

16 Reality: Not raising the debt ceiling would be catastrophic for U.S., the world, and you.

17 BAD: Govt debt is a bomb, just like private debt is a crushing burden.

18 Reality: One of these is not like the other. Credit Cards (private debt) US Government Bonds US Federal Reserve Notes

19 Reality: U.S. Cannot Go Broke or Go Bankrupt

20 Reality: U.S. is not like Greece, or Ireland, or Spain, or Argentina. It is like Japan, UK, Canada, Australia, etc. – sovereign in money.

21 Reality: Default can only happen by choice. Non-convertible (floating) rates Debt in own currency.

22 BAD: Govt budget should be balanced just like your household budget.

23 Reality: Government is NOT like a household.

24 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.

25 BAD: Cutting spending can balance budget.

26 Reality: Austerity slows an economy and worsens deficits. Taxes are % of GDP Automatic stabilizer effect UK & Ireland proving it (again)

27 Reality: Deficit will shrink as employment returns. Growth heals.

28 BAD: We can balance the budget by cutting waste. check out the zeros in *illions.

29 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

30 BAD: Spending has exploded under Obama.

31 Reality: Recovery and Obama budgets have cut spending.

32 Ignorance Politics Ideology Hide the real agenda

33 Good sources for facts. FRED at

34 Others…?

35 Sources & Images great-chain-of-being.html/graph3 great-chain-of-being.html/graph3 ved=0CAIQjBw& 9AsX6qwGE6YGoDg&bvm=bv.41524429,d.aWc&psig=AFQjCNEsodTvHsJ674IwCKvPtv3MjmjE0g&ust=1359494550883237 ved=0CAIQjBw& 9AsX6qwGE6YGoDg&bvm=bv.41524429,d.aWc&psig=AFQjCNEsodTvHsJ674IwCKvPtv3MjmjE0g&ust=1359494550883237$50_1993_Federal_Reserve_Note_Obverse.jpg

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