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: econproph.com Info: jimluke.comeconproph.comjimluke.com Courses: econproph.neteconproph.net Download: http://wp.me/pR94N-gj (or search at jimluke.com)http://wp.me/pR94N-gjjimluke.com 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. Econproph.com Tax.com CalculatedRiskBlog.com NakedCapitalism.com AngryBear.com Presimetrics.com Krugman.blogs.nytimes.com FRED at research.stlouisfed.org

34. Others…?

35. 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/graph3http://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=1359494550883237https://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