WombatControl: Tigger: WombatControl

money moving around is precisely what creates wealth - goods and services are moved from lower to higher valued utilities.

Did you literally fall asleep ten minutes into your first economics class?

No, it's not, and being wrong with snark is still wrong.

"Moving money around" does not equate to moving it from lower to higher utilities, especially not when government is moving the money by fiat. You can move money around all you want, but persistent malinvestment of that money will not produce economic growth.

Oh dear. You didn't even make it to the class to fall asleep in did you?

o5iiawah: You also dont understand who the wealthy really are in this country and would probably be surprised to find that most of them dont eat caviar, drive Bentleys and live in gated communities. Most of them are former middle class folk who saved, played good defense with their money and have something on which they can retire. Those kinds of people still shop at Wal-Mart, eat at TGI-Fridays and go bowling every other month or so.

You're not talking about the wealthy, you're talking about the middle class.

You have a gross misperception of what wealth really means.

WombatControl: What did Ford do? He created automobiles - he was in the business of supplying goods. And what did that supply create? That's right - demand.

Just supplying the goods by itself did not create demand. As if people would magically want a $800 car they could not afford just because there were a lot of them stashed in a warehouse somewhere.

There was no demand until he started paying his workers $8 a day. There was fierce opposition to what he did, because his radical new "higher wages" plan cut into his competitors. At the next business summit he calmly told them "Gentlemen, if I do not pay my workers $8 a day, there will be nobody with any money to buy my cars."

WombatControl: For all the talk about how "supply side doesn't work", the historical record says the exact opposite. From JFK in 1961 to Reagan in 1983 to Clinton in 1996 to Bush in 2001 and 2003 you see supply-side tax cuts leading to economic growth.

Yeah, but none of those were sustainable economic growth that changed the quality of living. Except for one (and I'd hardly call Clinton's boom a staple of supply side theory), all of those were finance bubbles based on nothing but speculation, relegated to the profit motives of an elite minority, and did nothing to enrich the lives of the average citizen. And they popped without helping anyone either.

WombatControl: If Keynesianism worked, the stagflation of the 1970s should never have happened.

Stagflation had nothing to do with Keynesianism. It was due to a whole bunch of global policies (ie: Nixon Shock) and social affectations (ie: the boomers) that affected economic and political circles, not the least of which was:

- The dissolution of the Bretton Woods financial contract (1973)
- The removal of the Gold Standard in the World Bank (1971)
- OPEC flexes its muscle/oil crisis (1973)
- America has its last trade surplus, turns from production/manufacturing to service/consuming (actually 1975)
- Roe vs Wade -- evangelicals become politically active (1973)

The most important thing, however, was the fact that the Boomers were the first dual-income generation (both men and women worked) and were entering the workforce en masse, which meant high unemployment because the labor force doubled, and high inflation because dual income families had more money (and no kids). Real estate prices tripled in three years as they settled down and bought homes (and most of them staved off having children until the 80s).

It was demographics that caused the stagflation of the 70s. No theory is safe from the onslaught of the Boomers moving through age brackets.

o5iiawah: My argument was never about the business it is about the customer getting a reduction in the price thanks to a moratorium on tax collection

No, your point was about businesses lowering costs if a tax burden is removed (because apparently taxes hamper business and they'll operate much more cheaply and much more efficiently without them). I asked you to provide an example, and you seem to think it means lower retail prices because of no sales tax. That doesn't mean the business lowered costs, it just means there's no taxes.

WombatControl: Stimulating demand doesn't work because Say's Law is right -- supply comes first.

*headdesk*

o5iiawah: Actually, you're the one who is misinformed. Wealth refers to assets minus liabilities. A person who makes 75k is seen as middle class yet he could easily be worth millions. Most millionaires in the US fit into this category.

Technically, there is no middle class. There's just richer poor people. Millionaires are not people who are worth a million dollars (because it's easy to become one of those these days). A millionaire is someone who makes a million+ a year. And none of them live the way you purport.

o5iiawah: A hotshot banker or lawyer can make $550k/yr and be worth nothing because he pisses it away on frugalities that do not beget a responsible lifestyle.

That would be good, because at least he's spending it. Most of the rich are not doing that.

o5iiawah: The point is, the 'rich' still eat, shop, buy cars and go on vacation and you're willing to say a big fat "FU" to the people who work in those industries

Yes, I am willing to say a big fat FU to those industries because their quantitative value to the economic health of the country as a whole is a pittance. It doesn't matter what choices you make in any political or economic context, there's going to be a class of people who get the shaft. I would prefer it to be the people who provide luxuries to the wealthy than have 300+ million suffer for the sake of protecting their interests.

So Ferrari only gets to sell 5000 cars next year instead of 6000. But Honda will sell several million more civics. Which do you think is better?

o5iiawah: I said that businesses dont pay taxes, customers do, then provided an example of a tax moratorium reducing customer prices

No, you said "Often times, if a tax burden is lifted, a company will cut prices".

Show me where a company has done that -- actually reduced the price of a product when the state removed taxes on the company.

GeneralJim: It's worse than that. WAY more than a dollar is removed from the economy to get a dollar to a poor person, whether through food stamps or welfare. I have heard figures as high as $8 removed from the economy to get a dollar to a poor person.

But that's good, because for every $1 given to a poor person, there are $7 given to people along the chain who work in administration, HR, payroll, distribution and promotion of the food stamp service, and they all get paid and they all spend their money, getting the money into circulation and helping the economy.

It's a lot better than having the money sit in an interest account somewhere, not doing anything for anyone.

KhanAidan: By your creation of popsicles you increased the demand for the input goods. Supply created demand, just as demand creates supply.

You can put a million flavors of Baskin Robbins at the North Pole, you still aren't going to sell any ice cream. Demand does not create supply, however advertising would like to suggest otherwise.

Ishkur: Demand does not create supply,

err...other way around: Supply does not create demand.

I've been off my game today.

KhanAidan: If you did that, then you created the demand for the input goods required for a million flavors of Baskin-Robbins.

Yes, you have. By a factor of x2 or x3, at least!

But multiplying those factors by zero is still zero.

KhanAidan: If you produce those million flavors, you have increased the demand for the input goods. Regardless of what you do with those flavors, you have still generated demand that was not there. It may or may not be with your final product, but you did generate demand through the input industries.

I'm not talking about input goods, I'm talking about farking ice cream. Consumers don't demand input goods, you do. You are not the economy -- you need the consumers to demand the end products that compel you to order the input goods to make the end products to sell to them. What good is demand for input goods if the end product generates no sales? Great, so Ed's Rock Salt Emporium moved some inventory your way one time. And then what? ....no more demand.

I haven't seen this much confusion between demand and quantity demanded since... you know - the Anita Bryant concert.

KhanAidan: Again, I never said what the magnitude or length of the effects would be, I only said that supply will create demand just as demand will create supply.

I think we can both agree that a self-sustaining demand is far more important than a one-time demand. In this context, then, supply does not create self-sustaining demand.

The demand must be there first. Necessity is the mother of invention.

GeneralJim: What does handing money to people producing NOTHING do for the economy? What does wasting several times that much do for the economy? Not a damned thing

I agree, which is why we should seize all the money from rich people as soon as possible because they neither produce anything with it nor spend it frugally.

We have to get the money in the hands of people who do genuine good with it: The middle and working classes. Only then will we turn our economy around.

GeneralJim: Oh, so you're a grubby little class warrior, huh?

Uhh... no. I'm Canadian. We are adept at recognizing deficiencies in financial and political systems and then making adjustments to them to ensure there's no systemic collapse. It's called "Peace, Order and Good Government". You should listen to us one of these times.

o5iiawah: Living in a society where technocrats like you dont get to decide where people work, where people shop and how much wealth or property they can attain? Some of us would rather be free than equal.

I agree. But you didn't answer my question. And I'm not a technocrat.

o5iiawah: So you've taken 8 dollars out of one sector of the economy and moved it to another sector of the economy

As I've explained countless times, it doesn't matter who has the money so long as it keeps moving. If the money is taken from a static state and moved into a state of fiscal liquidity, that is good for the economy.

o5iiawah: You also refuse to acknowledge that private holdings in banks and private ownership in stocks and bonds of companies is used to spur growth and investment.

No I haven't. The problem is that not all the money is used in that manner. You give 100% of the tax cuts to poor people, ALL that money will be spent, quite possibly in one day, recirculating into the economy. But if you give 100% of the tax cuts to rich people, you'll be lucky if more than 10% of it finds its way into general circulation again.

Rich people are rich because they don't spend money, which is bad for down economies. While I am a big advocate of savings during boomtimes, in a recession you need to restore fiscal liquidity, and the best way to do that is to improve the purchasing power of the average consumer.

o5iiawah: Good for the Honda mechanic, bad for the Ferrari Mechanic.

Good for 10 million Honda mechanics, bad for a few thousand Ferrari mechanics. You gotta think about scale here. Which policy helps the most numbers of people?

Send up any personal anecdote you want, the sane fact is that any industry that depends on the wealthy remaining wealthy is completely dwarfed by the industries that depend on the middle and working classes remaining solvent, tenfold.

WombatControl: And who do you think employs the middle class and the poor? Where do you think the middle class and the poor get their income?

To be perfectly fair, the vast majority of the poor and middle class employ themselves. Small businesses are still the backbone of this economy, although that is changing fast. Rich people technically don't employ anyone or need to. The bulk of their wealth is generated through finance, property speculation, interest upon interest and inheritance. They create nothing. They own.

GeneralJim: Erm, the difference being....?

Canadians are just like Americans, but without all the stupid shiat.

GeneralJim: You also have a couple of GLARING missed pixels in your economics graphic. First, there is a LOT more to financial well-being than the velocity of money. If that's all it was, the government should e-deposit a trillion dollars into my account, and I'll e-transfer it back to them.I'll sit at a terminal for a couple hours, and I'd bet we could ping-pong that trillion back and forth a thousand times in an afternoon, using softkeys. Then, on the last trade, I'd only send back 99% of the trillion, and keep 1% for my saving the economy.



No. No, that's not what fiscal fluidity is at all. In fact, what you just purported is one of the most insanely idiotic ideas that I've ever heard being advocated as an economic strategy.

You have an incredibly dense, severely warped and pitifully myopic understanding of modern economics if that's what you think.