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(The Weekly Standard)   The good news is we're not Greece. the bad news is we're worse off than Greece. 4 MORE YEARS   (weeklystandard.com) divider line 68
    More: Sad, percent higher, Greece, U.S. per person debt, U.S., Senate Budget Committee, federal laws  
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538 clicks; posted to Politics » on 06 Nov 2012 at 10:46 AM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2012-11-06 09:29:02 AM
as usual, conservitard false equivalency. Know why Greece is farked? because, as a member of the european union, cannot simply sell more bonds to cover debt, nor print money, or any other economic fix like the US can.
 
2012-11-06 09:29:26 AM
No we're not.
 
2012-11-06 09:36:03 AM
Ah, good old disingenuous cherry-picking. Good thing out GDP per capita is 50% higher than Greece's (and that's only as of 2011), and our economy isn't contracting at an annual rate of 6%.
 
2012-11-06 09:41:23 AM
It's so bad that any t-bill under 10 years is yielding less than a 1% return.

The horror.
 
2012-11-06 09:43:51 AM

kronicfeld: Ah, good old disingenuous cherry-picking. Good thing out GDP per capita is 50% higher than Greece's (and that's only as of 2011), and our economy isn't contracting at an annual rate of 6%.


Not to mention that the end of Bush's "temporary tax cuts" and ending the land wars in Asia will magically almost balance the budget by themselves.
 
2012-11-06 10:03:43 AM

Lurking Fear: as usual, conservitard false equivalency. Know why Greece is farked? because, as a member of the european union, cannot simply sell more bonds to cover debt, nor print money, or any other economic fix like the US can.


Printing money is an economic fix?
 
2012-11-06 10:12:11 AM
So vote Republican?

Next year, with any luck, the Bush tax cuts will expire and unemployment will improve. That will impact lots of things related to the deficits. And then...2014, we're out of Afghanistan.

Those are things we'll have without Congressional help. I'd love to see the sequestrations in defense, but it isn't going to happen. Congress is going to continue to be a logjam - we need to vote those GOP farkers out of Congress.
 
2012-11-06 10:48:09 AM
And people will eat this lie up, as usual.
 
2012-11-06 10:48:14 AM
t1.gstatic.com

NATIONAL DEBT DOES NOT WORK THAT WAY. GOODNIGHT.
 
2012-11-06 10:48:38 AM
Keep on a'herpin that derp all the way to 10PM, Weakly Substandard.
 
2012-11-06 10:49:19 AM
We're just like Nazi Germany because people drive Volkswagens.
 
2012-11-06 10:50:24 AM
No we're not.
 
2012-11-06 10:50:42 AM
Psst, I'l let you in on a little secret. We can close the deficit today, save Social Security, Medicare, Medicaide, and start to pay down the debt without affecting GDP growth.

How you ask it is one simple solution and is really quite easy.

RAISE TAXES! A 60% top marginal rate on income, remove the cap on Social Security taxes, and set capital gains taxes at 33%.

I know it is amazing, but the only problem is the white welfare queens and corporate whores who think they are Taxed Enough Already.
 
2012-11-06 10:51:33 AM

CreamFilling: Lurking Fear: as usual, conservitard false equivalency. Know why Greece is farked? because, as a member of the european union, cannot simply sell more bonds to cover debt, nor print money, or any other economic fix like the US can.

Printing money is an economic fix?


When the problem is a massive crunch in the money supply, yes.
 
2012-11-06 10:51:56 AM
What is US GDP per person compared to Greece? Don't want to show THAT number, do you right-wing douche?
 
2012-11-06 10:54:00 AM

Fart_Machine: We're just like Nazi Germany because people drive Volkswagens.


You laugh, but have you ever see the "jews per capita" figures for the US? It's frightening!
 
2012-11-06 10:55:42 AM
A long, protracted war with Iran, increased defense spending and some hefty tax breaks for the top bracket would fix eliminate that debt in no time! Romney/Ryan 2012!!
 
2012-11-06 10:55:47 AM

Slaves2Darkness: Psst, I'l let you in on a little secret. We can close the deficit today, save Social Security, Medicare, Medicaide, and start to pay down the debt without affecting GDP growth.

How you ask it is one simple solution and is really quite easy.

RAISE TAXES! A 60% top marginal rate on income, remove the cap on Social Security taxes, and set capital gains taxes at 33%.

I know it is amazing, but the only problem is the white welfare queens and corporate whores who think they are Taxed Enough Already.


All you really need to do is remove the cap on SS taxes like you said and treat capital gains as regular income. But hey, at least we're in the same ballpark!
 
2012-11-06 10:56:08 AM
Why is Japan not on the graph?
 
2012-11-06 10:56:21 AM

Slaves2Darkness: Psst, I'l let you in on a little secret. We can close the deficit today, save Social Security, Medicare, Medicaide, and start to pay down the debt without affecting GDP growth.

How you ask it is one simple solution and is really quite easy.

RAISE TAXES! A 60% top marginal rate on income, remove the cap on Social Security taxes, and set capital gains taxes at 33%.

I know it is amazing, but the only problem is the white welfare queens and corporate whores who think they are Taxed Enough Already.


60% eh? No matter how much you make, a person should be able to keep AT THE VERY LEAST half of what they make.
 
2012-11-06 10:58:29 AM

GentDirkly: Why is Japan not on the graph?


Because European Socialism and, with Obama the US is worse than EUROPEAN SOCIALISM!!!
 
2012-11-06 11:03:09 AM
Yes, the United States, still the largest economy in the world, with umpteen million square miles of territory in several climactic zones holding all manner of natural resources and arable land, with an entreprenurial economy and one of the larger R&D expenditures on the planet, is JUST LIKE a mountainous country the size of Alabama spread over several small islands and peninsulas.
 
2012-11-06 11:04:57 AM
'U.S. Per Person Debt Now 35 Percent Higher than that of Greece'
However US Per Person Income now 85% higher than that of Greece. In addition, US Per Person Wealth is considerably higher than in Greece, though I cannot find any numbers on Greece because it is not in the top 10.

ScouserDuck: 60% eh? No matter how much you make, a person should be able to keep AT THE VERY LEAST half of what they make.


A 60% rate would likely leave people in the bracket bringing home between 30 and 40% of what they make.
 
2012-11-06 11:06:22 AM

dywed88: ScouserDuck: 60% eh? No matter how much you make, a person should be able to keep AT THE VERY LEAST half of what they make.

A 60% rate would likely leave people in the bracket bringing home between 30 and 40% of what they make.


Stpuid mistake, meant paying between 30 and 40% and bringing home 60-70%.
 
2012-11-06 11:06:52 AM

ScouserDuck: 60% eh? No matter how much you make, a person should be able to keep AT THE VERY LEAST half of what they make.


dywed88: A 60% rate would likely leave people in the bracket bringing home between 30 and 40% of what they make.


Someone doesn't understand "marginal tax rates".
 
2012-11-06 11:07:32 AM

dywed88: Stpuid mistake, meant paying between 30 and 40% and bringing home 60-70%.


Oopsie, sorry 'bout including you in my reply.
 
2012-11-06 11:08:11 AM
I have 0 debt

none

zip

nada.

Perhaps you should have thought about how you were going to finance that shiny new car and 4 year degree in underwater basket-weaving before you spent $100,000 you didn't have on them.

National debt and per capita debt is different.

The nation of Greece is in debts to it's people because they made a bunch of promises to keep money around to take care of people when they got too old to work. This is a wonderfully noble idea that belongs in any advanced society. Unfortunately, their corrupt politicians, embezzled all that money meant for the people and now their government is completely broke.

America HAD a surplus we could have saved for things like infrastructure improvement, hardening cities against hurricanes, healthcare and taking care of the elderly.

We are spending it on drone strikes and military equipment the military doesn't even want.

/I wonder where that will get us in the long run.
//If only we had saved all that surplus in some kind of... Lock box.
///nah, that's a silly idea. We can just spend it and pay it back later.
 
2012-11-06 11:08:13 AM

ScouserDuck: 60% eh? No matter how much you make, a person should be able to keep AT THE VERY LEAST half of what they make.


Why? What are your reasons for a 50% max marginal tax rate?

The only tax rate I think is conceptually or philosophically unjustifiable would be 100%. Otherwise, rates should be empirically determined, progressive in nature, and high enough to cover the costs of society.
 
2012-11-06 11:08:56 AM

theorellior: dywed88: Stpuid mistake, meant paying between 30 and 40% and bringing home 60-70%.

Oopsie, sorry 'bout including you in my reply.


No worries, a stupid post deserves to be treated like a stupid post, whether it was intentional or not.
 
2012-11-06 11:13:25 AM
CreamFilling


Fiat currency, how the ___ does that work?

ICP.jpg
 
2012-11-06 11:16:34 AM

ScouserDuck: Slaves2Darkness: Psst, I'l let you in on a little secret. We can close the deficit today, save Social Security, Medicare, Medicaide, and start to pay down the debt without affecting GDP growth.

How you ask it is one simple solution and is really quite easy.

RAISE TAXES! A 60% top marginal rate on income, remove the cap on Social Security taxes, and set capital gains taxes at 33%.

I know it is amazing, but the only problem is the white welfare queens and corporate whores who think they are Taxed Enough Already.

60% eh? No matter how much you make, a person should be able to keep AT THE VERY LEAST half of what they make.


They should be, but that is not an option when the same people who want to keep taxes low are refusing to allow cuts to 1/3 of the US budget. You don't want your taxes to increase then all government expenditures, including the military, will need to make deep sacrifices to bring the US budget in-line with US tax revenue.

Of course we could keep going on like we are, we will probably last at least another 20 years and maybe a little longer before the whole house of debt comes crashing down. We could fix it now though, several grand bargains could be made that shares the pain of getting our financial house in order around, but that would require the Republicans to become suddenly reasonable. Least you forget there was a bargain on the table in 2011 that for every one dollar of tax increase gave ten dollars of spending cuts. It was the Republicans who refused the deal.
 
2012-11-06 11:18:24 AM

Arkanaut: CreamFilling: Lurking Fear: as usual, conservitard false equivalency. Know why Greece is farked? because, as a member of the european union, cannot simply sell more bonds to cover debt, nor print money, or any other economic fix like the US can.

Printing money is an economic fix?

When the problem is a massive crunch in the money supply, yes.


You can't print wealth. You can print currency, but I don't think a lack of currency is our problem. You might as well cut a pizza into smaller pieces to see if it will feed more people.
 
2012-11-06 11:19:18 AM
america is MUCH better off than those european countries that are in the midst of an austerity-induced double-dip recession.
 
2012-11-06 11:19:46 AM
Man, I can't believe Obama created our national debt. Whatever happened to the good old days when we had Republican presidents and no national debt?
 
2012-11-06 11:22:11 AM
The way the US creates and borrows money has become a flawed concept. Technically if you're creating value with education, healthcare, and infrastructure you could simply create those dollars in the economy without any ill effect as it's introducing equivalent economic value in the society. There is no sense in paying interest on deficit spending in those areas. But the spending would still need some sort of counter balance so it didn't get out of control. It should be safe to create as much money as you want, as long as demand doesn't outstrip supply at which point inflation would occur, but we are currently facing the opposite problem, which is somewhat of a first for humanity.

However defense spending, legal, and correctional institutions should be kept on the books in a conventional manner. As they create very little economic value, and added spending creates markets that potentially have a negative impact on the economy.
 
2012-11-06 11:22:25 AM

CreamFilling: You can print currency, but I don't think a lack of currency is our problem.


Consolidating wealth amongst a tiny percentage is a problem. It stagnates the economy.
 
2012-11-06 11:23:29 AM

The Dog Ate My Homework: Man, I can't believe Obama created our national debt. Whatever happened to the good old days when we had Republican presidents and no national debt?


Ronald Reagan.
"Deficits don't matter."

/Ronald Reagan was the devil.
 
2012-11-06 11:24:05 AM

The Dog Ate My Homework: Man, I can't believe Obama created our national debt. Whatever happened to the good old days when we had Republican presidents and no national debt?


Deficits don't matter when a Republican is in power silly.
 
2012-11-06 11:25:53 AM

Arkanaut: CreamFilling: Lurking Fear: as usual, conservitard false equivalency. Know why Greece is farked? because, as a member of the european union, cannot simply sell more bonds to cover debt, nor print money, or any other economic fix like the US can.

Printing money is an economic fix?

When the problem is a massive crunch in the money supply, yes.


THIS.
 
2012-11-06 11:32:58 AM

CreamFilling: You can't print wealth. You can print currency, but I don't think a lack of currency is our problem. You might as well cut a pizza into smaller pieces to see if it will feed more people.


To use your (stupid) pizza analogy... If I have 10 people with a normal 8 slice pizza, I have a "pizza crunch". A pizza crunch that can be solved by cutting the pizza into more slices.

That's as far as I'm taking that ridiculous analogy.
 
2012-11-06 11:49:56 AM

thurstonxhowell: A pizza crunch that can be solved by cutting the pizza into more slices.


The Republicans are still getting the biggest slices, right? Because Jesus, you know.
 
2012-11-06 12:12:14 PM

CreamFilling: Arkanaut: CreamFilling: Lurking Fear: as usual, conservitard false equivalency. Know why Greece is farked? because, as a member of the european union, cannot simply sell more bonds to cover debt, nor print money, or any other economic fix like the US can.

Printing money is an economic fix?

When the problem is a massive crunch in the money supply, yes.

You can't print wealth. You can print currency, but I don't think a lack of currency is our problem. You might as well cut a pizza into smaller pieces to see if it will feed more people.


Well, it's not lack of "currency" per se, in the sense of number of dollar bills or figures in bank accounts. But the lending conditions are measurably tighter than they need to be. Small businesses are having trouble getting loans to buy needed equipment. Home loan rates are down, but the spread between mortgage rates and banks' borrowing costs has been up since the crisis. And you probably heard about how corporations are holding onto cash instead of hiring or making capital investments because of "uncertainty" -- if the Fed pushes inflation, then that changes the relative value of holding on to the cash (which is declining in value) vs investing in new workers / equipment (which will increase in value).
 
2012-11-06 12:25:01 PM

Arkanaut: CreamFilling: Arkanaut: CreamFilling: Lurking Fear: as usual, conservitard false equivalency. Know why Greece is farked? because, as a member of the european union, cannot simply sell more bonds to cover debt, nor print money, or any other economic fix like the US can.

Printing money is an economic fix?

When the problem is a massive crunch in the money supply, yes.

You can't print wealth. You can print currency, but I don't think a lack of currency is our problem. You might as well cut a pizza into smaller pieces to see if it will feed more people.

Well, it's not lack of "currency" per se, in the sense of number of dollar bills or figures in bank accounts. But the lending conditions are measurably tighter than they need to be. Small businesses are having trouble getting loans to buy needed equipment. Home loan rates are down, but the spread between mortgage rates and banks' borrowing costs has been up since the crisis. And you probably heard about how corporations are holding onto cash instead of hiring or making capital investments because of "uncertainty" -- if the Fed pushes inflation, then that changes the relative value of holding on to the cash (which is declining in value) vs investing in new workers / equipment (which will increase in value).


In theory, yes. In reality, you end up devaluing your currency so much without a corresponding rise in economic growth. If your plan is to just give money away to whoever you think needs it most, every time anyone has ever tried every that the money quickly ends up disproportionately in the hands of the rich anyway.
 
2012-11-06 12:38:58 PM

CreamFilling: In theory, yes. In reality, you end up devaluing your currency so much without a corresponding rise in economic growth.


Why don't we let reality play out for at least a year or so before casting aspersions? Plus, there have been central banks (Israel, Poland) that have applied this same strategy to good effect.


If your plan is to just give money away to whoever you think needs it most, every time anyone has ever tried every that the money quickly ends up disproportionately in the hands of the rich anyway.

This is generally true -- but I think that's a matter for Congress to address, e.g. through the tax code.
 
2012-11-06 01:08:27 PM

Slaves2Darkness: RAISE TAXES! A 60% top marginal rate on income, remove the cap on Social Security taxes, and set capital gains taxes at 33%.

I know it is amazing, but the only problem is the white welfare queens and corporate whores who think they are Taxed Enough Already.


What do you think will be the effects when you raise taxes on the very wealthy? Well, where does the vast majority of the 1% controlled money end up? I would argue primarily in the bond market and the stock market. They aren't hoarding money in some sort of Scrooge McDuck vault, if that is what you were imagining. So when this money leaves those markets, the price of those assets fall. So lower stock prices and higher bond yields. Which means all of those pensions that are invested in stocks will immediately become less valuable, and the government will be forced to pay a far higher rate to borrow money. Which still results in massive amounts of economic pain.

I agree with you that we should tax the wealthy, but to think that taxing the wealthy will somehow fix our problems is ignorant. We're in for some serious economic hardship no matter what steps you think we should take.
 
2012-11-06 01:11:12 PM

MattStafford: They aren't hoarding money in some sort of Scrooge McDuck vault, if that is what you were imagining.


Offshore tax havens. If that money was being put to work, so to speak, the employment rate would be better.
 
2012-11-06 01:15:00 PM

Arkanaut: Well, it's not lack of "currency" per se, in the sense of number of dollar bills or figures in bank accounts. But the lending conditions are measurably tighter than they need to be. Small businesses are having trouble getting loans to buy needed equipment. Home loan rates are down, but the spread between mortgage rates and banks' borrowing costs has been up since the crisis. And you probably heard about how corporations are holding onto cash instead of hiring or making capital investments because of "uncertainty" -- if the Fed pushes inflation, then that changes the relative value of holding on to the cash (which is declining in value) vs investing in new workers / equipment (which will increase in value).


Lending conditions are tight because they need to be tighter. When you try to encourage lending, you create artificial booms in the economy. Easy loans created the housing bubble. Easy loans have created the student loan bubble. The answer isn't easy loans somewhere else.

Loans don't fix the economy, actual production does.
 
2012-11-06 01:19:59 PM

Alphax: Offshore tax havens. If that money was being put to work, so to speak, the employment rate would be better.


You think offshore tax havens are giant vaults of money? That money still gets put to work, so to speak, it doesn't just sit in a vault.
 
2012-11-06 01:21:48 PM

MattStafford: Alphax: Offshore tax havens. If that money was being put to work, so to speak, the employment rate would be better.

You think offshore tax havens are giant vaults of money? That money still gets put to work, so to speak, it doesn't just sit in a vault.


You have evidence of that?
 
2012-11-06 01:28:31 PM

Alphax: You have evidence of that?


1. It makes absolutely no sense to have money sitting around doing nothing.
2. Read this: Offshore Investment

It isn't just sitting in a vault.
 
2012-11-06 01:37:03 PM

MattStafford: Alphax: You have evidence of that?

1. It makes absolutely no sense to have money sitting around doing nothing.
2. Read this: Offshore Investment

It isn't just sitting in a vault.


Right, it makes no sense.. but the wealthy are doing it, and the other 99.9% of us have to use the money they didn't hoard.
 
2012-11-06 01:41:38 PM

MattStafford: Slaves2Darkness: RAISE TAXES! A 60% top marginal rate on income, remove the cap on Social Security taxes, and set capital gains taxes at 33%.

I know it is amazing, but the only problem is the white welfare queens and corporate whores who think they are Taxed Enough Already.

What do you think will be the effects when you raise taxes on the very wealthy? Well, where does the vast majority of the 1% controlled money end up? I would argue primarily in the bond market and the stock market. They aren't hoarding money in some sort of Scrooge McDuck vault, if that is what you were imagining. So when this money leaves those markets, the price of those assets fall. So lower stock prices and higher bond yields. Which means all of those pensions that are invested in stocks will immediately become less valuable, and the government will be forced to pay a far higher rate to borrow money. Which still results in massive amounts of economic pain.

I agree with you that we should tax the wealthy, but to think that taxing the wealthy will somehow fix our problems is ignorant. We're in for some serious economic hardship no matter what steps you think we should take.


There is no one simple step to fix all the problems. And you may disagree with any marginal rate, but the effective rate absolutely has to rise.

And the idea that increasing taxes on the wealthy will suddenly tank the stock market is not likely to play out. And that is ignoring the fact that pulling money out of many speculative investments would be beneficial for society. After all far higher marginal and effective tax rates didn't prevent tremendous growth before the push for massive cuts occurred.

The fact is there is no evidence that decreases to tax rates had any positive effect and no reason to think that increases would have a significant negative effect.
 
2012-11-06 01:43:54 PM

Alphax: Right, it makes no sense.. but the wealthy are doing it, and the other 99.9% of us have to use the money they didn't hoard.


Um, did you read the Wikipedia article? There are a vast number of ways they can invest their money when it is in an offshore tax haven. To either be ignorant of that fact, or believe that these millionaires and billionaires (who are clearly good with money and have great lawyers and accountants) are simply refusing to invest for no discernible reason, shows that you are simply being blinded by partisanship with regards to this.

The money isn't in a vault, it is out the economy doing something. Unless you give me a good reason why these moneyed people wouldn't avail themselves to these investment opportunities the Wiki article detailed, I see no reason to believe your version of the events.
 
2012-11-06 01:47:51 PM

MattStafford: Alphax: Right, it makes no sense.. but the wealthy are doing it, and the other 99.9% of us have to use the money they didn't hoard.

Um, did you read the Wikipedia article? There are a vast number of ways they can invest their money when it is in an offshore tax haven. To either be ignorant of that fact, or believe that these millionaires and billionaires (who are clearly good with money and have great lawyers and accountants) are simply refusing to invest for no discernible reason, shows that you are simply being blinded by partisanship with regards to this.

The money isn't in a vault, it is out the economy doing something. Unless you give me a good reason why these moneyed people wouldn't avail themselves to these investment opportunities the Wiki article detailed, I see no reason to believe your version of the events.


Yeah, I did read it; it wasn't that long.

They move money out there to avoid taxes, regulations, and other 'restrictions' that limit what to do with their unearned money.
 
2012-11-06 01:52:18 PM

dywed88: There is no one simple step to fix all the problems. And you may disagree with any marginal rate, but the effective rate absolutely has to rise.

And the idea that increasing taxes on the wealthy will suddenly tank the stock market is not likely to play out. And that is ignoring the fact that pulling money out of many speculative investments would be beneficial for society. After all far higher marginal and effective tax rates didn't prevent tremendous growth before the push for massive cuts occurred.

The fact is there is no evidence that decreases to tax rates had any positive effect and no reason to think that increases would have a significant negative effect.



First, I'm entirely in favor of higher taxes, and wealth redistribution in general. I do believe that lower tax rates result in an overall more productive economy, but that the trade off between a more productive economy and ensuring that no one in our society goes hungry or has to forgo necessary medical treatment is a necessary trade off. We're rich enough that we can afford a small slowdown in exchange for taking care of our own.

Second, I'm not sure why you think increasing taxes on the wealthy won't hurt the stock market. The comment I was initially replying to suggested that raising taxes would solve all of our debt problems. The amount of money we would have to tax to fix our debt problems would be absolutely massive, and the vast majority of that taxable 1% income is invested in stocks or bonds. Removing hundreds of billions if not trillions from those markets will certainly have negative consequences for the prices of those assets.
 
2012-11-06 01:53:45 PM

Alphax: Yeah, I did read it; it wasn't that long.

They move money out there to avoid taxes, regulations, and other 'restrictions' that limit what to do with their unearned money.


Did you not read the part about investments? They still invest the money. The money still "does work". You're being willfully ignorant here. You can admit that you were wrong, and offshore tax havens aren't Scrooge McDuck vaults. No one will judge you.
 
2012-11-06 01:56:10 PM

MattStafford: Alphax: Yeah, I did read it; it wasn't that long.

They move money out there to avoid taxes, regulations, and other 'restrictions' that limit what to do with their unearned money.

Did you not read the part about investments? They still invest the money. The money still "does work". You're being willfully ignorant here. You can admit that you were wrong, and offshore tax havens aren't Scrooge McDuck vaults. No one will judge you.


I still have the article open. I see nothing of the sort.
 
2012-11-06 02:00:34 PM

MattStafford: Slaves2Darkness: RAISE TAXES! A 60% top marginal rate on income, remove the cap on Social Security taxes, and set capital gains taxes at 33%.

I know it is amazing, but the only problem is the white welfare queens and corporate whores who think they are Taxed Enough Already.

What do you think will be the effects when you raise taxes on the very wealthy? Well, where does the vast majority of the 1% controlled money end up? I would argue primarily in the bond market and the stock market. They aren't hoarding money in some sort of Scrooge McDuck vault, if that is what you were imagining. So when this money leaves those markets, the price of those assets fall. So lower stock prices and higher bond yields. Which means all of those pensions that are invested in stocks will immediately become less valuable, and the government will be forced to pay a far higher rate to borrow money. Which still results in massive amounts of economic pain.

I agree with you that we should tax the wealthy, but to think that taxing the wealthy will somehow fix our problems is ignorant. We're in for some serious economic hardship no matter what steps you think we should take.


Bwhahahahahahahahahahahahahaha!

After years of hearing the vast hoards of cash the rich are sitting on you still trot out this old lie.
 
2012-11-06 02:20:05 PM

MattStafford: Arkanaut: Well, it's not lack of "currency" per se, in the sense of number of dollar bills or figures in bank accounts. But the lending conditions are measurably tighter than they need to be. Small businesses are having trouble getting loans to buy needed equipment. Home loan rates are down, but the spread between mortgage rates and banks' borrowing costs has been up since the crisis. And you probably heard about how corporations are holding onto cash instead of hiring or making capital investments because of "uncertainty" -- if the Fed pushes inflation, then that changes the relative value of holding on to the cash (which is declining in value) vs investing in new workers / equipment (which will increase in value).

Lending conditions are tight because they need to be tighter.


I think you're drawing too clear of a dichotomy between "loose lending" and "tight lending", and also disregarding the state of the economy. No doubt lending conditions were too easy in the mid-2000's; similarly there's no doubt in my mind right now that lending conditions are too tight right now.


When you try to encourage lending, you create artificial booms in the economy.

Yes! That's the point! That's what we're trying to do!

Plus, "artificial" has a bad connotation (I blame the hippies) but does it have to be? Does anyone blame a surgeon for "artificially" healing a patient?


Easy loans created the housing bubble. Easy loans have created the student loan bubble. The answer isn't easy loans somewhere else.

They're bubbles only if the debtors can't cover their debts. I have some ideas on attacking this problem that don't have anything to do with monetary policy. Both parties have in the past 20 years or so tried to solve the poverty issue by pushing loans to destitute communities, and lenders have pursued those loans excessively, to the detriment of everybody. I think the answer is, instead of distorting the loan market to make it easier for poor people to get loans, we should make it easier for those debtors to earn enough to cover those loans. I personally favor a negative taxation scheme like the Earned Income Tax Credit, although I have some problems with that specific program that would be too lengthy to go into right now.

In the meanwhile, it's important to note that those easy loans that you decry did, for a short time, create economic growth. The challenge is how to get that growth to spread to the rest of the economy, instead of being accrued entirely to the financial sector. As I said to CreamFilling, that is a problem for Congress, not the Fed.


Loans don't fix the economy, actual production does.

Certainly financial intermediaries don't "create jobs" directly by themselves, but their debtors do. Lots of entrepreneurs need loans to get started, and in rough times like these, after many people have been laid off from bigger companies and have trouble finding jobs, a lot of people are trying to head out on their own. But oftentimes, depending on the business they're trying to establish, they'll need cash to get started; maybe they need an office to meet with clients; or kitchen equipment for a restaurant; or a truck to haul supplies in. Most people can't just borrow that money from a rich uncle -- that's where banks come in. But now that they've been burned by small loans, they're tightening restrictions on everybody.

It's kind of a prisoner's dilemma; if nobody else is giving out loans, then the economy is shiatty, then you don't want to give out loans either, even though the economy would be better if everyone were giving out loans at the same time. The Fed can cut through the coordination problem by changing everybody's calculus so that it would be more favorable to lend than earn the 0.25% they get for parking their money at the Fed.
 
2012-11-06 02:24:19 PM
We have a strong federal government and run our economic and monetary policy much differently from Greece.

If poor state like Alabama had to ask New York every time it needed more funds, then we might be comparable to Greece. Even then. Many more differences.
 
2012-11-06 02:43:28 PM

HellRaisingHoosier: We have a strong federal government and run our economic and monetary policy much differently from Greece.


The problem is that if the debt problem is not acted upon, the federal government will not be as strong going into the future and will be less able to impact the direction of the economy via its fiscal policy. Not saying that we will have the same exact issues as Greece, but this is nothing to sneeze at. In fact, it is one of the biggest hurldes we have to face in this country moving forward.
 
2012-11-06 02:55:19 PM

Alphax: I still have the article open. I see nothing of the sort.


I find it rather humorous you were unable to find anything about investment in an article entitle "Offshore Investment". I did a quick search and found 38 instances of the word investment, including such sentences as "Offshore investing includes investment strategies outside of an investor's home country. Investment opportunities in money-market, bond and equity assets are available through offshore companies." and "Investment diversification - risk can be managed by diversifying investments among a wider range of options than are available for onshore investment."

Either your reading comprehension is so poor it is a wonder you're even able to function in society, or you are simply refusing to admit that you are wrong, which I find far more likely.
 
2012-11-06 02:57:23 PM

Slaves2Darkness: Bwhahahahahahahahahahahahahaha!

After years of hearing the vast hoards of cash the rich are sitting on you still trot out this old lie.


You think that the rich have Scrooge McDuck vaults of billions of dollars, and yet you laugh at me. It'd be funny, if it wasn't so sad.
 
2012-11-06 03:01:43 PM

MattStafford: Alphax: I still have the article open. I see nothing of the sort.

I find it rather humorous you were unable to find anything about investment in an article entitle "Offshore Investment". I did a quick search and found 38 instances of the word investment, including such sentences as "Offshore investing includes investment strategies outside of an investor's home country. Investment opportunities in money-market, bond and equity assets are available through offshore companies." and "Investment diversification - risk can be managed by diversifying investments among a wider range of options than are available for onshore investment."

Either your reading comprehension is so poor it is a wonder you're even able to function in society, or you are simply refusing to admit that you are wrong, which I find far more likely.


Yes, yes, I'm sure there's LOTS of creative ways to rip people off, and undercut the nations they live in.

It's using money manipulation to make more money. As opposed to something tangible and useful to someone besides the wealthy.
 
2012-11-06 03:06:50 PM

Alphax: Yes, yes, I'm sure there's LOTS of creative ways to rip people off, and undercut the nations they live in.

It's using money manipulation to make more money.


So now investing overseas is ripping people off and undercutting the nation they live in? Hmm, do you say the same thing about all those Chinese that 'invest' in US Debt Instruments?
 
2012-11-06 03:53:19 PM

Arkanaut: I think you're drawing too clear of a dichotomy between "loose lending" and "tight lending", and also disregarding the state of the economy. No doubt lending conditions were too easy in the mid-2000's; similarly there's no doubt in my mind right now that lending conditions are too tight right now.


What makes you think lending conditions are too tight now? Total credit market debt is still climbing, so lending has still been increasing throughout the economy. Total outstanding debt for businesses and corporations has been growing, slowly but steadily. The only places where deleveraging is occurring is the home mortgage market (entirely understandable), the financial sector (I'm sure you have no arguments with them delevaraging), and state and local governments (perhaps you have an issue here). Overall, however, lending and debt is increasing.

Arkanaut: Yes! That's the point! That's what we're trying to do!

Plus, "artificial" has a bad connotation (I blame the hippies) but does it have to be? Does anyone blame a surgeon for "artificially" healing a patient?


The problem is, the boom is only temporary. Imagine if a bank loaned out a million dollars to a bunch of homeless guys. What happens initially? Economic boom, as the homeless guys are buying everything. Companies hire more people to keep up with the increased demand, they buy stuff, and everything is great. But obviously, lending out money to homeless people does not fix the economy. Once the homeless guys default on their loans, as they most surely will, the economy will go into a tailspin. All of the demand created by their increased consumption disappears. Those jobs that were created to meet their demand also disappear, and so on and so forth.

Arkanaut: They're bubbles only if the debtors can't cover their debts.


And right now, the market is saying that people can't cover their debts. Are you suggesting that a centrally planned economy would operate better than a market oriented economy? Because all of history goes against that idea.

Arkanaut: Certainly financial intermediaries don't "create jobs" directly by themselves, but their debtors do. Lots of entrepreneurs need loans to get started, and in rough times like these, after many people have been laid off from bigger companies and have trouble finding jobs, a lot of people are trying to head out on their own.


This is terrible, but just assuming that loans will fix these problems is extremely naive. As the homeless person example showed above, loans aren't strictly good, and must be evaluated on a case by case basis. Perhaps you think you are better than the market at determining how many loans should be created, but I assure you, you are not.

Arkanaut: It's kind of a prisoner's dilemma; if nobody else is giving out loans, then the economy is shiatty, then you don't want to give out loans either, even though the economy would be better if everyone were giving out loans at the same time.


You know what is the single best force at determining what is the optimal amount of loans to give out? The market. You know what we refuse to let work in this case? The market. The solution isn't to force more loans on people, the solution is to let the market determine interest rates and the proper amount of loans in the economy.
 
2012-11-06 03:55:01 PM

Alphax: Yes, yes, I'm sure there's LOTS of creative ways to rip people off, and undercut the nations they live in.

It's using money manipulation to make more money. As opposed to something tangible and useful to someone besides the wealthy.


You're a joke.
 
2012-11-07 10:22:11 AM

MattStafford: Overall, however, lending and debt is increasing.


What periods are we talking about? Has it increased from, let's say, 2006? Not sure what's the best source of data for this. What I was talking about was the spread between the borrowing costs for banks and the rates they're lending at, which I remember reading has increased by about 75 basis points since the financial crisis. Also, historically, the inflation in the US has been about 3.3% since the founding of the Fed, and it's been about 4% post-WWII, so inasmuch as inflation is correlated with money supply you could say monetary policy has been tighter than it should be.


MattStafford: Imagine if a bank loaned out a million dollars to a bunch of homeless guys.


Extreme cases are always easy to argue. The Fed is talking about maybe a quarter percentage point increase in the inflation target, not free money for everybody now.


MattStafford: Are you suggesting that a centrally planned economy would operate better than a market oriented economy?


Having the Fed manage a limited set of market conditions is no more a "centrally planned economy" than a redistributive tax scheme, which I saw you favoring in another post (just to be clear -- I'm with you on that). Nobody's setting production targets or rationing supplies; the market still does its thing, it just has slightly different expectations.

Also, I'm sure you've noticed, but the market kinda sucks sometimes. "Animal spirits" and all that -- sometimes it's overenthusiastic, sometimes it's too scared. Psychologically, people weigh losses, especially unexpected losses, a lot more than equivalent gains, and the trauma lingers more. I think that's what we're seeing here, and why we're recovering more slowly than, let's say, after the Volcker recessions. Plus, the market has spoken, and it's not planning on "solving" anything.
 
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