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(Washington Post)   Oh, look, another Rethuglican spouting off at the mouth about Medicare being unsustainable and people getting $3 in services for every dollar they put in and fark it, let's just sick the liberal fact checkers on him. See, I told you...oh, he's right?   (washingtonpost.com) divider line 754
    More: Obvious, Medicare, fact checking, John Barrasso, average wage  
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2708 clicks; posted to Politics » on 20 Mar 2013 at 12:24 PM (2 years ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-03-21 08:31:18 AM  

m00: MattStafford: m00: You would go to jail for counterfeiting. Until they caught you, would probably be good for the local economies.

I stumble onto a town that uses their own currency.  I print up a shiat ton of their currency, buy as many goods as possible, and continue on my merry way.  You are suggesting that that local economy is better off, even though I left with a large quantity of real good and it cost me nothing?

The magic of Keynesian economics.

Okay, now we're getting contrived. Because the fact we're at "town that uses their own currency" and "continue on my merry way" doesn't really apply to the situation you are drawing a parallel to.


Yes, it does.

Please explain to me the difference, in terms of economic actions, between these two scenarios:

A: Small town that uses a local currency.  I print a bunch of currency, and use it to buy goods and services.  I never interact with that economy again (except maybe to print and buy more things)

B: US Economy.  I print a bunch of currency, and use it to buy goods and services.  I never interact with that economy again (except maybe to print buy more things).

A: Small town that uses a local currency.  I borrow a bunch of money, and use it to buy goods and services.  I never interact with that economy again (except maybe to borrow and buy more things).

B: US Economy.  I borrow a bunch of money, and use it to buy goods and services.  I never interact with that economy again (except maybe to borrow more and buy more things).

The situations in A are obviously negatively impacting that small town - on this surely you don't disagree.  However, the situations in B are essentially identical, only the setting is different.  Yet that is exactly how Medicare/Social Security work, and people are telling me that they are actually economically beneficial to the economy.

You need to explain to me what the fundamental difference between A and B is, and just saying that they're different isn't enough.
 
2013-03-21 08:34:06 AM  

MattStafford: theknuckler_33: This is why your analogies suck. In the real world, if an individual defaults on a bank loan, the people you used that loaned money to buy things from STILL HAVE THAT MONEY!!!!! The bank is out the amount you defaulted on and they come after you and you'll have liens put on any future earning and/or file for bankruptcy. Is the bank 'worse off'? I suppose, but banks don't lend to one person and can usually absorb a certain amount of defaults on their loans, but you would still be paying for it for years to come. That is what happens in the real world. You can't just 'skip town'... not paying back the loan doesn't make the money you bought stuff with worthless. So, the money you borrowed and bought things with is circulating through that small town economy and benefiting them.

You are suggesting that, if I showed up to a town, took out a large loan, bought a bunch of real goods and services from the citizens of that town, and then defaulted on that loan, that the town is actually better off because I arrived?  Just read that sentence again, and keep on reading it, until you realize how absurd your position is.


You said "but I think it is rather straightforward that the town is worse off " and I explained why it is not. At best, some local merchants got a one-time infusion of cash that maybe they'll take a vacation with. At worst, the local economy goes back to the way it was before you rode into town and the bank has a bad debt on its balance sheet and is coming after you and will probably force you to liquidate whatever assets you might have so they can get every last drop out of you that they can and write off the rest... a thing so common that banks actually plan for a certain amount of defaults.
 
2013-03-21 08:41:45 AM  

Muk_Man: Dude. Your analogies are too simple to work. The economy is a complex diverse entity and you keep trying to bring it down to this totally unrealistic closed system of a single town and you as a single employer with a constrained number of goods and services. And for some reason people who can't produce goods, and for some reason can't learn to produce goods except if you offer them a job at your factory. All of this is unreasonable and thus why your analogies don't work. The reason why people can't explain with it's wrong is because it's just all not even close.


You need to explain why they are too simple to work.  Suppose I explain gravity using two planets, and show how they attract each other, and you agree that they attract each other.  But then we talk about a galaxy, and I say - based on the interactions of two planets - I would expect all of the stars to attract each other.  You, however, would counter by saying the two planet example is just too simple to accurately extrapolate to a universe.  Clearly, in a galaxy, all of the stars repel each other, and you are an idiot for thinking otherwise.  Wouldn't you think I was justified in asking for an explanation as to what changed that caused gravity to act in a completely opposite method when analyzing a galaxy as opposed to two stars?

Because that is exactly what you are doing.

Muk_Man: 1) Government injects money into economy.
2) People spend money (most of it at least) -> increased demand -> increased supply need -> more workers
3) If economy has grown enough the amount of jobs made in step 2 will support the loss of the government "temp" jobs created in step 1.


You are missing steps 4)"The government taxes the money to pay for the original job program out of the economy" and 5)"People stop spending money -> decreased demand -> decreased supply need -> less workers".

You are also missing the fact that the economy has become built around whatever industry the money was injected into.  If you inject the money into the military, you will get a lot of towns built around military bases, a lot of MIC companies, and things of that nature.  If you inject the money into Social Security/Medicare, you will get a lot of retirement homes, and service employees dedicated to serving the elderly.

If that injection did not occur, those resources could have been used to develop and work on something else.  There is a large opportunity cost you are failing to account for, which, along with steps 4 and 5 above, make the government injection of money a negative thing.
 
2013-03-21 08:46:10 AM  

DamnYankees: Basically this. Creating a literally perfect counterfeit would not really be that bad for the economy in the isolate. If this was a known thing and everyone did it, it obviously would be a disaster.


So you are suggesting that it is simply ignorance of the situation that creates the beneficial nature of money printing?

If I had a perfect money printing machine, and did not announce that I was printing money, it would be fine for me to print money and purchase goods.

If I had a perfect money printing machine, and announced to everyone that I was printing money, it would be bad for me to print money and purchase goods?

I'm honestly curious about where you stand on this question, not trying to lead you in any way.
 
2013-03-21 08:47:24 AM  

lordjupiter: Who wakes up in the morning and says "I'm going to be an economics troll."?


Now that, that, is a good question.
 
2013-03-21 08:52:06 AM  

theknuckler_33: Less than what? Than there were before the stimulus efforts? No. Removing the stimulus will have put downward pressure on the economy, but if it is done when the economy is growing on its own and at a responsible pace (no reason it has to be all or nothing... remove the stimulus policies in phases).


Again, you are suggesting that the economy is growing on its own - when you say on its own, do you mean growth that wasn't directly caused by the stimulus spending?  Because if you are referring to the feedback loop caused by the stimulus spending, that is not "on its own", and removing the stimulus spending will cause that growth to stop.

On the other hand, if the growth truly was coming from somewhere organic and not from the stimulus spending, why have the stimulus spending in the first place?

theknuckler_33: And there is no precedent for 'covering the debt'. If the economy grows and the budget is balanced, then we are not increasing our debt anymore while our GDP grows. If our debt to GDP ratio gets back to more historical levels, it is basically irrelevant what the dollar figure of our debt is.


No precedent for about 40 years.  40 years is a pretty small time frame, I'm sorry to inform you.  And we have a long way to go before we get back to historical averages.

www.mybudget360.com
 
2013-03-21 08:52:43 AM  

MattStafford: theknuckler_33: The government of the US is not equivalent to an individual in a small town. You start all your premises the same way as if you can view the friggin US treasury as an individual person. You can't.

I just spent like 500 words explaining that if you are going to say that, you need to explain why I can't.


Because a person is not a government. You do understand that a person and a government are vastly different things, right? Starting an analogy with the assumption that they are essentially interchangable is a logical fallacy known as begging the question. You are the one asserting that you CAN do this... what makes you think that?
 
2013-03-21 08:52:51 AM  

MattStafford: lordjupiter: Who wakes up in the morning and says "I'm going to be an economics troll."?

Now that, that, is a good question.


EHRMAHGERD DAY TWO

I had coconut milk with my breakfast. Does THAT stimulate the economy?!
 
2013-03-21 09:02:46 AM  

MattStafford: theknuckler_33: Less than what? Than there were before the stimulus efforts? No. Removing the stimulus will have put downward pressure on the economy, but if it is done when the economy is growing on its own and at a responsible pace (no reason it has to be all or nothing... remove the stimulus policies in phases).

Again, you are suggesting that the economy is growing on its own - when you say on its own, do you mean growth that wasn't directly caused by the stimulus spending?  Because if you are referring to the feedback loop caused by the stimulus spending, that is not "on its own", and removing the stimulus spending will cause that growth to stop.


It's been explained dozens of times and you pretending such a thing is impossible does not make it so. Increased demand created via government stimulus creates new jobs. Those new jobs in and of themselves also create new demand that will create further new jobs and so on. Eventually, the increase in aggregate demand is greater than the initial demand created by the government stimulus. Cutting off the demand created by the government stimulus in a slow controlled manner can be absorbed by the higher overall aggregate demand of all the other new jobs created.

You need to explain why you think ALL the new jobs will be lost by the slow cessation of government stimulus when the demand for all the OTHER new jobs still exists.
 
2013-03-21 09:03:21 AM  

nmrsnr: If that demand was already present, why wouldn't he already be meeting it?

Because he didn't have the supply in quantities enough to make it viable to bring to the farmer's market in the next town.


So you're suggesting he needs to invest in his farm to increase supply.  I'm entirely fine with you on this, and if we wanted to talk about successful government stimulus programs, investment loans wouldn't be a terrible method.

nmrsnr: If the problem was lack of infrastructure or help that the farmer couldn't afford, couldn't we have just started with "the apple farmer borrows money to invest in his farm" and go from there? What was the point of the ditch digger?

Yes, but now replace "employ ditch digger" with "keep grandma alive" and you realize why we might want to start with spending on a product which (for the sake of argument) produces no economic value.


But the problem here is that we won't be able to employ that ditch digger indefinitely, which doesn't sound too great when you replace it with "keep grandma alive".  In addition, as I said, this is only a good thing provided something very specific occurs (the apple farmer getting the money and subsequently investing it successfully).  If that specific thing doesn't work, we will have to fire the ditch digger eventually (and raise taxes elsewhere) or let grandma die (and raise taxes elsewhere).

I would argue that an economic plan requiring heavily on something to occur that you have absolutely no control over, and that has severe negative effects if that something does not occur, is not a good economic policy.

nmrsnr: Also, you are operating under the assumption that the money will be invested by the apple farmer. Perhaps instead of investing it, the apple farmer just buys something else. And that person buys something else. And when the person who originally hired the ditch digger comes back to town, you'll have to raise taxes and stop the cycle, resetting the economy.

And even more so, you are relying on the assumption that the ditch digger's money successfully makes it to the apple farmer. The ditch digger could have bought an iPod instead, and the money goes to Apple, and that local economy receives no boost.

And you're assuming it won't. I can dream up a thousand ways any economic system could fail. What if everyone stopped believing in fiat money tomorrow and demanded to barter? Just because I can make those assumptions doesn't make my scenario any more dispositive of your argument that Keynsian stimulus can't work. I've demonstrated it can.


Exactly.  If you are going to present an economic policy that relies on something outside of your control to happen, I can absolutely point out the fact that that something won't necessarily happen as a flaw of your economic policy.  And if, when that something doesn't happen, there are severe economic consequences, I can use that as a reason why we shouldn't enact that policy.

If we do X, Y might happen, and it will be good.  If we do X, Y might not happen, and it will be bad.  You are suggesting that doing X is a solid economic policy, and I am saying that it is complete lunacy, particularly in this economy where there is little corporate investment occurring.

nmrsnr: It is possible for a ditch digging program to successfully lead to investment

This is more than you've been willing to admit earlier in the thread:


Because it requires an assumption that is in no way influenced by the policy makers.  If I throw you a baseball, and you hit a home run, I can't rightfully say that it was my pitch that caused the home run, now can I?  And even if it occurs once or twice, that doesn't mean I should expect every ball I pitch to you to be a home run, particularly if you're not swinging.

nmrsnr: Please explain to me how keeping millions of people, who by definition do not produce things or provide services, alive financed via a massive amount of debt is somehow going to make our country stronger? Who cares if we provide massive amounts of jobs to doctor's providing them services? Those jobs disappear once we can no longer borrow money to fund the scheme!

but that is completely relying on hoping that an eventual recipient of that money will invest in. Based on the fact that the money was initially spent in the ditch digging industry, if it is invested, it will most likely be invested in a field or area related to the ditch digging industry, which would be a wasted investment.

There is absolutely no way to either prove or disprove such a useless assumption about a fake industry in a fake town with fake employees that you made up, why would I try and argue this point?


Then why not apply the argument to a real industry - the Military Industrial Complex.  There are countless towns and cities throughout the country built around military bases or MIC factories.  If we were to pull the plug on funding the MIC to the extent we do, many of those towns would go belly up.

And, as I've recently made clear, if you are going to completely disregard an analogy, you need to specifically explain why you are going to disregard it.  Simply saying it is fake so I don't need to argue against it is not an effective debate strategy.  You need to explain why the analogy is not applicable to explain the point we are trying to discuss.  Which you failed to do here.
 
2013-03-21 09:04:58 AM  

nmrsnr: If a bank loaned me two trillion dollars, and I bought and consumed two trillion dollars worth of goods, would that help the economy?

YES. I've shown you how, and you have agreed in principle. Now you have changed to argue human nature and other assumptions on how the stimulative money will be spent. That is an entirely different question from the ones you have began this thread asking. That is the definition of moving goalposts and a hallmark of someone who has been proven wrong but cannot admit it.


Again, operating under the assumption that somewhere down the line that money is successfully invested by someone.  Of course I have no control over that.  By itself, purchasing goods does not improve the economy, it is simply a transfer of real goods to me and paper to you.
 
2013-03-21 09:05:05 AM  

CPennypacker: EHRMAHGERD DAY TWO

I had coconut milk with my breakfast. Does THAT stimulate the economy?!


Only by potato according to Matt, only by potato
 
2013-03-21 09:05:56 AM  

lordjupiter: How does this guy even fire off all these posts??


I have my offensive line fill in for me when I get tired.
 
2013-03-21 09:08:38 AM  

MattStafford: No precedent for about 40 years.  40 years is a pretty small time frame, I'm sorry to inform you.  And we have a long way to go before we get back to historical averages.

[www.mybudget360.com image 600x360]


Why would you show a chart including private debt when talking about the effects of government stimulus or government borrowing. The US public debt hasn't been close to being 'paid off' since before WWI. And yes, there is a long way to go to get back to historical averages, but getting back there doesn't necessarily mean reducing the dollar amount of the public debt.
 
2013-03-21 09:10:55 AM  

theknuckler_33: MattStafford: theknuckler_33: This is why your analogies suck. In the real world, if an individual defaults on a bank loan, the people you used that loaned money to buy things from STILL HAVE THAT MONEY!!!!! The bank is out the amount you defaulted on and they come after you and you'll have liens put on any future earning and/or file for bankruptcy. Is the bank 'worse off'? I suppose, but banks don't lend to one person and can usually absorb a certain amount of defaults on their loans, but you would still be paying for it for years to come. That is what happens in the real world. You can't just 'skip town'... not paying back the loan doesn't make the money you bought stuff with worthless. So, the money you borrowed and bought things with is circulating through that small town economy and benefiting them.

You are suggesting that, if I showed up to a town, took out a large loan, bought a bunch of real goods and services from the citizens of that town, and then defaulted on that loan, that the town is actually better off because I arrived?  Just read that sentence again, and keep on reading it, until you realize how absurd your position is.

You said "but I think it is rather straightforward that the town is worse off " and I explained why it is not. At best, some local merchants got a one-time infusion of cash that maybe they'll take a vacation with. At worst, the local economy goes back to the way it was before you rode into town and the bank has a bad debt on its balance sheet and is coming after you and will probably force you to liquidate whatever assets you might have so they can get every last drop out of you that they can and write off the rest... a thing so common that banks actually plan for a certain amount of defaults.


I can't believe you're still trying to argue this point.

The town has $X worth of goods and $Y worth of currency.  After I'm done with them, they have $X-1000 worth of goods, and $Y+1000 worth of currency.  You must live in a crazy farking world if you think that town is better off after I was there  than before I was there.

And again - I have no money.  They can't force me to liquidate anything because I have nothing to liquidate.  In fact, I'll probably die soon.  They aren't getting the money back.
 
2013-03-21 09:19:50 AM  

theknuckler_33: Because a person is not a government. You do understand that a person and a government are vastly different things, right? Starting an analogy with the assumption that they are essentially interchangable is a logical fallacy known as begging the question. You are the one asserting that you CAN do this... what makes you think that?


First of all, I think you are misunderstanding my analogies.  The individual in the small town example is not the government, but is representative of a recipient of government money.

A senior citizen in our economy receives borrowed or printed money from the government in order to buy goods or services.

The individual in the analogy borrows or prints money himself in order to buy goods or services.

The interaction that the senior citizen has and the interaction that the individual has are identical, unless you can explain to me why they aren't.  You have already admitted that, if I can print a perfect fake, it doesn't matter whether the government prints the money or I print the money.

And to the larger point - If I assert that an individual has the exact same powers that a government has, certainly that individual is analogous to the government.
 
2013-03-21 09:19:52 AM  
Let's say the economy exists. The economy consists of me by myself, and everyone else. I have all the jam, so i put everyone to work in my toast factory. If I pay them in jam, that creates demand for toast when all of the toast made in my factory is being made for me. Also I have a racecar.

This is what Keynesians actually believe. Put down the book and start using your own mind, sheep.
 
2013-03-21 09:20:57 AM  

MattStafford: I can't believe you're still trying to argue this point.

The town has $X worth of goods and $Y worth of currency. After I'm done with them, they have $X-1000 worth of goods, and $Y+1000 worth of currency. You must live in a crazy farking world if you think that town is better off after I was there than before I was there.


You can't read, can you? You said it was clear they were worse off. I argued they were not. Can you read? How is what you wrote "clearly worse off"? The net is 0.

This of course ignores the fact that the cost of the goods to the merchant was less than what you paid for them because, well, that's how businesses are run. You spent $1000 and bought goods that cost the merchant, say, $600. The merchant can replace the goods on his shelf for another $600 and got a profit of $400 that he can use for himself. $400 he would not have had if you hadn't unexpectedly dropped $1000 on him in a single day.


And again - I have no money. They can't force me to liquidate anything because I have nothing to liquidate. In fact, I'll probably die soon. They aren't getting the money back.

You would not have gotten a loan then.  You know... real world stuff. Another reason your analogy sucks!
 
2013-03-21 09:24:36 AM  

MattStafford: A senior citizen in our economy receives borrowed or printed money from the government in order to buy goods or services.


If the budget of the US was balanced, then the money that senior citizen received would not be 'borrowed or printed' since it will be paid for with tax receipts (hence balanced budget). Apparently, this WOULD be good for the economy, correct?

If so, you need to assume why the money a senior citizen receives and spends is good with a balanced budget, but somehow is bad when the budget is not balanced.
 
2013-03-21 09:26:17 AM  

theknuckler_33: MattStafford: A senior citizen in our economy receives borrowed or printed money from the government in order to buy goods or services.

If the budget of the US was balanced, then the money that senior citizen received would not be 'borrowed or printed' since it will be paid for with tax receipts (hence balanced budget). Apparently, this WOULD be good for the economy, correct?

If so, you need to assume explain why the money a senior citizen receives and spends is good with a balanced budget, but somehow is bad when the budget is not balanced.


FTFM
 
2013-03-21 09:37:13 AM  

theknuckler_33: It's been explained dozens of times and you pretending such a thing is impossible does not make it so. Increased decreased demand created via government stimulus raising taxes creates newfewer jobs. Those new lost jobs in and of themselves also create new destroy demand that will create further new jobs job losses and so on. Eventually, the increase decrease in aggregate demand is greater than the initial demand created by the government stimulus. Cutting off the demand created by the government stimulus in a slow controlled manner can be absorbed by the higher overall aggregate demand of all the other new jobs created.


I've explained that as well, numerous times, yet you continue to ignore it.

theknuckler_33: You need to explain why you think ALL the new jobs will be lost by the slow cessation of government stimulus when the demand for all the OTHER new jobs still exists.


Because the demand for those other new jobs exist only because of the demand created by the government injection of money.

Imagine it as a long chain of economic interactions.  Government pays A.  A buys something from B, B buys something from C, and so on.  What you are suggesting is that, when the government lays off A, Z will hire A and the cycle will continue.  In other words, the demand created by the economic activity generated will be enough to absorb A back into the economy.  And sure, this is possible - I doubt it will happen however for a variety of reason.

There are several problems with that, the first and most obvious being the assumption that Z will hire A.  If Z does not hire A, then the cycle falls apart.  A has no money, and therefore cannot hire B, who can't hire C, and so forth.  Perhaps once the money gets to Z, he only trades with X and Y, and the money just bounces around between them.  A through W don't receive any sort of benefit.  Also, since A presumably received government money for something he was unable to receive money for in the private sector (or it was just a straight cash handout) he likely has no services that those other private actors would demand.

The next problem is that you are discounting taxes being taken out of the economy.  If Z is taxed during this cycle, then he won't have the money to hire A and continue the cycle.  Again, the cycle falls apart.

In addition, since I've already established how likely it is that the cycle will fall apart, you are left with the negative effects of creating the cycle in the first place.  A will be trained to produce whatever the government wanted, and B will be trained to produce what A wanted, and so on and so forth.  They are trained for jobs that won't necessarily exist.  To make this real life - imagine A is Boeing, and B is a parts manufacturer, and C is the caterer to that parts manufacture.  You can see how those companies are all tailored to a specific industry, and if the cycle falls apart, they won't easily be able to find new jobs.

And finally, piggybacking on that last comment, you suffer a huge opportunity cost.  You have all of these goods and resources devoted to this cycle, and those goods and resources could be devoted towards other enterprises.  Instead of having all of those engineers and factories producing the F-35 for Lockheed, perhaps they would be working for Tesla developing electric vehicles.  The cycle that you are creating makes it very difficult for upstart companies to exist, as labor and resources are bid far higher by the government than they otherwise would be.

Was that enough of an explanation?
 
2013-03-21 09:46:46 AM  

theknuckler_33: You can't read, can you? You said it was clear they were worse off. I argued they were not. Can you read? How is what you wrote "clearly worse off"? The net is 0.

This of course ignores the fact that the cost of the goods to the merchant was less than what you paid for them because, well, that's how businesses are run. You spent $1000 and bought goods that cost the merchant, say, $600. The merchant can replace the goods on his shelf for another $600 and got a profit of $400 that he can use for himself. $400 he would not have had if you hadn't unexpectedly dropped $1000 on him in a single day.


You are assuming that their currency has an intrinsic value not related to what they can purchase with that money.  In terms of the town, they are absolutely worse off after that exchange, and I don't see how you can possibly argue otherwise.  Money is only as good as what it can buy, and after I went through the town, each bit of money that they have buys less goods than it used to.  Suppose I change the values:

The town starts off with $X goods and $Y currency.  After I leave, they have $X-X goods and $Y+X currency.  Would you still suggest that their net is zero?

theknuckler_33: You would not have gotten a loan then. You know... real world stuff. Another reason your analogy sucks!


Then why do you suggest that borrowing money for seniors, who aren't going to pay back that loan either, is a good thing for the economy?
 
2013-03-21 09:53:23 AM  

theknuckler_33: If the budget of the US was balanced, then the money that senior citizen received would not be 'borrowed or printed' since it will be paid for with tax receipts (hence balanced budget). Apparently, this WOULD be good for the economy, correct?

If so, you need to assume why the money a senior citizen receives and spends is good with a balanced budget, but somehow is bad when the budget is not balanced.


Morally, sure, but economically?  A bit more nuanced.  If I have one hundred dollars, and spend it, I create two jobs.  If I have one hundred dollars, and give 50 to my friend, and we each spend our 50, we each create one job.  At the end of the day, 100 dollars spent, two jobs created.  The economy is just as strong as it would be otherwise.  Now, you could make the argument that me giving my friend that 50 prevented him from robbing a bank or staging a revolution or whatever, and I would agree with that argument.  Wealth redistribution is good for the economy as it provides stability.  But in the terms we are discussing, no, it is not particularly beneficial.

And the obvious reason that it isn't good when the budget isn't balanced is because of the loan that you have to take out to give them that extra money!  You seem to just entirely discount that every time you open your mouth.  The money that the senior citizen spends stimulates the economy in the short run, sure, but in the long run, as I've explained numerous times, it hurts the economy.
 
2013-03-21 09:53:45 AM  

MattStafford: theknuckler_33: It's been explained dozens of times and you pretending such a thing is impossible does not make it so. Increased decreased demand created via government stimulus raising taxes creates newfewer jobs. Those new lost jobs in and of themselves also create new destroy demand that will create further new jobs job losses and so on. Eventually, the increase decrease in aggregate demand is greater than the initial demand created by the government stimulus. Cutting off the demand created by the government stimulus in a slow controlled manner can be absorbed by the higher overall aggregate demand of all the other new jobs created.

I've explained that as well, numerous times, yet you continue to ignore it.


I do?

theknuckler_33:

You apparently think that more people working does not result in more tax receipts. This is basic arithmetic. You never even tried to explain why you think more people with jobs does not increase the tax receipts of the government even without raising taxes... because you can't.
 
2013-03-21 09:58:32 AM  

MattStafford: Exactly.  If you are going to present an economic policy that relies on something outside of your control to happen, I can absolutely point out the fact that that something won't necessarily happen as a flaw of your economic policy.  And if, when that something doesn't happen, there are severe economic consequences, I can use that as a reason why we shouldn't enact that policy.If we do X, Y might happen, and it will be good.  If we do X, Y might not happen, and it will be bad.  You are suggesting that doing X is a solid economic policy, and I am saying that it is complete lunacy, particularly in this economy where there is little corporate investment occurring.nmrsnr: It is possible for a ditch digging program to successfully lead to investmentThis is more than you've been willing to admit earlier in the thread: Because it requires an assumption that is in no way influenced by the policy makers.


Ah, so now we get somewhere, you're now arguing that economic policy based on consumer actions outside your control is bad policy. This is demonstrably false. Example 1: The government has no control over whether its citizens will honor its fiat currency in private transactions. If every store owner refuses to take my money, the economy collapses over night, and the government has absolutely no say in the matter. Example 2: Banks. Banks leverage their capital on the assumption that the people who give their money for safe keeping don't all want it back at once. Banks have no control over when people will want access to their money, but they run on this assumption all the time. In fact it is a foundational principal of modern economics.

If you are arguing that banks are an economically unsound idea because it relies on assumptions beyond governments control, then I have nothing more to say, you have no business in any economy past the 14th century.

If you agree that an economic policy isn't bad because it is base on certain assumptions of human behavior, then I can explain why your assumption that the stimulative money will never make into the hands of investors is far more ludicrous than my assumption that it will:

It has been shown experimentally that people do not horde. If they have money they spend it (investment counts as spending, psychologically, you are using the money). So if you give money to the ditch digger he will not just sit on a pile of money. When he spends it the person who receives it will either spend it or invest it, since nobody hordes money a-la Scrooge McDuck. If he spends it, someone else will get the money, until eventually it will reach the hands of an investor, who will invest in their own business, a friend's business, or the stock market, where the investment money will compund interest and boost the economy.

The only way this assumption fails (like you claim it will) is if one of the initial people to receive the money horde it or invest it before it circulates through the community. The first almost never happens in the real world, we humans just aren't wired to sit with a lot of cash under the mattress. The second only happens if you give the money to people who have no pressing demand for market goods, and can immediately invest the money (this would be the vaunted "trickle down" theory, and you are correct, that assumption is terrible) whereas if we give the money to a ditch digger or dying grandma, they have no choice but to start circulating that money until it will very likely land in the hands of our apple farmer or some other budding business entrepeneur and be invested, the exact situation you have admitted will make the economy better.

Assumptions don't make a theory bad, bad assumptions make a theory bad.

Once again, note how incredibly far this nuanced position is from where you started: "Buying shiat does not help the economy! Christ, how difficult is that to understand?"

You now admit that it can, in fact, help the economy, but you have some problems with the assumptions required, which means that you no longer disagree in principal. Also note how you've toned down your rhetoric, people respond better when you don't yell at them like they are idiots.

Start here instead of there next thread and most people won't yell at you like you're an idiot troll.
 
2013-03-21 10:06:25 AM  

theknuckler_33: You apparently think that more people working does not result in more tax receipts. This is basic arithmetic. You never even tried to explain why you think more people with jobs does not increase the tax receipts of the government even without raising taxes... because you can't.


So if we go back to that cycle explanation I proposed (government pays A, A pays B, B pays C, ...Y pays Z) - you are suggesting that the government impose a 1/26th tax on each of those transactions, and as such, they make the money back?

This might blow your mind, but that is called a balanced budget, and I'm in favor of it.  It works simply as wealth redistribution, which I have repeatedly stated I am in favor of.
 
2013-03-21 10:11:39 AM  

MattStafford: theknuckler_33: You can't read, can you? You said it was clear they were worse off. I argued they were not. Can you read? How is what you wrote "clearly worse off"? The net is 0.

This of course ignores the fact that the cost of the goods to the merchant was less than what you paid for them because, well, that's how businesses are run. You spent $1000 and bought goods that cost the merchant, say, $600. The merchant can replace the goods on his shelf for another $600 and got a profit of $400 that he can use for himself. $400 he would not have had if you hadn't unexpectedly dropped $1000 on him in a single day.

You are assuming that their currency has an intrinsic value not related to what they can purchase with that money.  In terms of the town, they are absolutely worse off after that exchange, and I don't see how you can possibly argue otherwise.  Money is only as good as what it can buy, and after I went through the town, each bit of money that they have buys less goods than it used to.  Suppose I change the values:

The town starts off with $X goods and $Y currency.  After I leave, they have $X-X goods and $Y+X currency.  Would you still suggest that their net is zero?

theknuckler_33: You would not have gotten a loan then. You know... real world stuff. Another reason your analogy sucks!

Then why do you suggest that borrowing money for seniors, who aren't going to pay back that loan either, is a good thing for the economy?


All your nonsense seems to boil down to the concept that if there is one dollar in the economy and suddenly another dollar is 'printed' that the thing you could have previously bought for a dollar will now cost two dollars. In other words the dollar will have lost half its value. Observable reality proves that this is not how the economy works, so making analogies where such a degradation in the value of money exists is a fallacy.

Will inflation increase if the fed continues to pump money into the economy indefinitely, of course. No one is suggestion that it happen indefinitely. Not a single person. And the depressed nature of our economy the past 5 years has been a counter force on the inflationary policies of fed proving beyond a shadow of a doubt that there is no such simple direct relationship between the money supply and the value of the currency. Yet another reason your analogies suck.
 
2013-03-21 10:26:14 AM  

Sergeant Grumbles: DrPainMD: In 15 years, when there is one person on SS/medicare for every 1.5 workers, no tax rate will be high enough to pay for it.

Citation needed.

SS can be fixed for the forseeable future merely by adjusting the income cap.
Medicare can be fixed by looking at any other first-world country and copying their system. We already pay on average twice per capita what every other nation pays for their healthcare systems.
And just to further degrade your nonsense, I think you underestimate just how much money the wealthy are stealing away from the rest of the country as they enjoy low capital gains taxes and offshore tax havens.


The figures come from the Congressional Budget Office. It doesn't matter what system we go to, 1.5 workers will not be able to support each retiree. It's not possible no matter how you do it.
 
2013-03-21 10:27:31 AM  

nmrsnr: The government has no control over whether its citizens will honor its fiat currency in private transactions. If every store owner refuses to take my money, the economy collapses over night, and the government has absolutely no say in the matter.


The government does have a say in the matter, as they require taxes to be paid in that fiat currency.  Let's ignore that fact, however, and say that every store owner switches to a gold based currency - the economy doesn't collapse, the currency has simply been replaced.  Stores are still open for business, and people are still trading, so I don't see what the big deal is.  People have simply rejected the fiat currency.  Yes, that would have wreak havoc today, but in a vacuum, switching one currency for another isn't too big of a deal.

If, however, you are arguing that all stores would simply shut down overnight, sure, that could always happen and the government would have no control over it.  Somehow I'm not concerned.

nmrsnr: Banks. Banks leverage their capital on the assumption that the people who give their money for safe keeping don't all want it back at once. Banks have no control over when people will want access to their money, but they run on this assumption all the time. In fact it is a foundational principal of modern economics.

If you are arguing that banks are an economically unsound idea because it relies on assumptions beyond governments control, then I have nothing more to say, you have no business in any economy past the 14th century.


Ya know, it is almost amazing that you posted this today.  You do realize that it is a significant chance of a severe bank run in southern Europe in the coming days?  Those banks are about to be extremely economically unsound.

nmrsnr: It has been shown experimentally that people do not horde. If they have money they spend it (investment counts as spending, psychologically, you are using the money). So if you give money to the ditch digger he will not just sit on a pile of money. When he spends it the person who receives it will either spend it or invest it, since nobody hordes money a-la Scrooge McDuck. If he spends it, someone else will get the money, until eventually it will reach the hands of an investor, who will invest in their own business, a friend's business, or the stock market, where the investment money will compund interest and boost the economy.


This suggestion is absurd.  You are saying a solid economic policy would be to simply distribute money with the hopes that someone along the way will invest it in something beneficial for society?  First, in the globalized economy you are far more likely to be investing in some manufacturing plant overseas than you are to be investing at home.

Second, you are directly influencing where the investment will be taking place.  Say you give the money to the elderly - guess what people will invest in?  Retirement homes and medical care for the elderly!  You'll have people going to school to be nurses in large quantities, and bingo halls being built all over the place!  When the money train to the elderly stops, that will be a ton of investments wasted.

nmrsnr: The second only happens if you give the money to people who have no pressing demand for market goods, and can immediately invest the money (this would be the vaunted "trickle down" theory, and you are correct, that assumption is terrible) whereas if we give the money to a ditch digger or dying grandma, they have no choice but to start circulating that money until it will very likely land in the hands of our apple farmer or some other budding business entrepeneur and be invested, the exact situation you have admitted will make the economy better.


This doesn't make a lot of sense.  You are saying that the only way the money could end up in the hands of the apple farmer would be if the money started with a ditch digger or grandma.  ....ummm, what about just giving it directly to the apple farmer so he can increase his production?  Giving it to the dying ditch digging grandma actually makes it far less likely the money ever gets to the apple farmer.

nmrsnr: You now admit that it can, in fact, help the economy, but you have some problems with the assumptions required, which means that you no longer disagree in principal. Also note how you've toned down your rhetoric, people respond better when you don't yell at them like they are idiots.


Except for the fact the people have stated, numerous times in this thread, that buying things will always help the economy.  That is false.  Buying things can help the economy, but only in very specific circumstances.
 
2013-03-21 10:29:27 AM  

Sergeant Grumbles: It's not just about the value you yourself produce. You're going to spend that $X/hr you made stacking cans, consuming goods or services and thereby producing economic activity.


If the only economic benefit of my "labor" (i.e. stacking cans) comes from me spending the money that I'm paid, why not skip a step and just cut me a check to sit on my ass all day?  My point still stands: there is such a thing as non-productive labor, and it's foolish and short-sighted to borrow money in order to pay for such things.

cameroncrazy1984: You're right, let's just stop buying consumables. We don't need food, or oil, or electricity. It provides no future economic return, right?


I never said we should stop buying consumables, only that we shouldn't be borrowing money to pay for them. Cute strawman though.
 
2013-03-21 10:29:38 AM  

Sergeant Grumbles: DrPainMD: In 15 years, when there is one person on SS/medicare for every 1.5 workers, no tax rate will be high enough to pay for it.

Citation needed.

SS can be fixed for the forseeable future merely by adjusting the income cap.
Medicare can be fixed by looking at any other first-world country and copying their system. We already pay on average twice per capita what every other nation pays for their healthcare systems.
And just to further degrade your nonsense, I think you underestimate just how much money the wealthy are stealing away from the rest of the country as they enjoy low capital gains taxes and offshore tax havens.


PS. It has nothing to do with money, and it's not my nonsense, it's the CBO's nonsense. Money is just a way of keeping score. It's about the production of goods and services; every 1.5 workers will not only have to produce enough to provide their own needs, but also have to provide for the needs of a retired person. Taking all the money from all the rich people on the planet won't be able to make that happen.
 
2013-03-21 10:32:39 AM  

theknuckler_33: All your nonsense seems to boil down to the concept that if there is one dollar in the economy and suddenly another dollar is 'printed' that the thing you could have previously bought for a dollar will now cost two dollars. In other words the dollar will have lost half its value. Observable reality proves that this is not how the economy works, so making analogies where such a degradation in the value of money exists is a fallacy.

Will inflation increase if the fed continues to pump money into the economy indefinitely, of course. No one is suggestion that it happen indefinitely. Not a single person. And the depressed nature of our economy the past 5 years has been a counter force on the inflationary policies of fed proving beyond a shadow of a doubt that there is no such simple direct relationship between the money supply and the value of the currency. Yet another reason your analogies suck.


You still aren't getting it.  The town is worse off.  Suppose the town produces 10,000 dollars worth of real goods in a day, and they are all consumed that day.  200 people, each produce 50 dollars worth of goods per day, and they all trade them back and forth.  Now I show up, print 10,000 dollars, and buy every good that they have produced that day.  That town is unequivocally worse off.  If you can't understand that, you can't understand anything.
 
2013-03-21 10:37:43 AM  

DrPainMD: It's not possible no matter how you do it.


Citation needed.
This is nothing but libertarian bollocks used to justify gutting social services.
 
2013-03-21 10:41:55 AM  

Sergeant Grumbles: DrPainMD: In 15 years, when there is one person on SS/medicare for every 1.5 workers, no tax rate will be high enough to pay for it.

Citation needed.

SS can be fixed for the forseeable future merely by adjusting the income cap.
Medicare can be fixed by looking at any other first-world country and copying their system. We already pay on average twice per capita what every other nation pays for their healthcare systems.
And just to further degrade your nonsense, I think you underestimate just how much money the wealthy are stealing away from the rest of the country as they enjoy low capital gains taxes and offshore tax havens.


PPS. I found a source. Comes from the Labor Department. Sez that private sector workers per SS recipient is down to 1.75, as of 2010. Is it still nonsense? Do you see that juggling money around isn't going to allow 1.5 workers to produce not only everything they need, but also produce everything needed for a retiree? It's not going to happen; it can't happen; it's not in the set of things that are possible.
 
2013-03-21 10:42:27 AM  

Koalacaust: I never said we should stop buying consumables, only that we shouldn't be borrowing money to pay for them. Cute strawman though.


Are you saying that consumables like oil, electricity, and food aren't important enough drivers to the economy to continue to purchase through borrowing if we need to? Why or why not?
 
2013-03-21 10:42:32 AM  

Koalacaust: My point still stands: there is such a thing as non-productive labor, and it's foolish and short-sighted to borrow money in order to pay for such things.


No, your point does not stand. Food stamps and welfare (aka paying you to sit on your ass) produce greater economic activity than cutting taxes. Borrowing to pay for such thing in the short term, like during a financial crisis, makes perfect sense in order to maintain and spur the economy.

Long-term, yes, it's a bad idea, but it's not ALWAYS foolish and short-sighted to borrow money to pay for these things.
 
2013-03-21 10:43:08 AM  

DrPainMD: The figures come from the Congressional Budget Office. It doesn't matter what system we go to, 1.5 workers will not be able to support each retiree. It's not possible no matter how you do it.


It appears we agree on a great deal, but do you honestly not believe that we, as a country, aren't wealthy enough to support our retirees?  I understand that with our current debt situation and economy, we are beyond farked, but in alternate universe where we actually paid for things instead of borrowed for them, don't you think the eventual end game is large scale wealth redistribution?

We're going to get to the point where large portions of our society don't offer any goods or services that a computer or robot can't do better for cheaper, so what will be our plan then?  It seems to me we should tax the owners of the machines and redistribute some of that wealth to those who are unable to offer goods and services people want.
 
2013-03-21 10:43:51 AM  

DrPainMD: Do you see that juggling money around isn't going to allow 1.5 workers to produce not only everything they need, but also produce everything needed for a retiree? It's not going to happen; it can't happen; it's not in the set of things that are possible.


Nowhere in that study does it say that raising the FICA tax cap will not work.
 
2013-03-21 10:44:32 AM  

cameroncrazy1984: Are you saying that consumables like oil, electricity, and food aren't important enough drivers to the economy to continue to purchase through borrowing if we need to? Why or why not?


If you are relying on borrowing to pay for your food, you're in some serious shiat.  Extrapolating that to the US?  We're relying on borrowing to keep an absolute ton of people eating.  I would think we're in some serious shiat.
 
2013-03-21 10:44:34 AM  

DrPainMD: Sez that private sector workers per SS recipient is down to 1.75, as of 2010.


I'm not disputing this. It's just that it has absolutely zero relevance for your next bit:

DrPainMD: It's not going to happen; it can't happen; it's not in the set of things that are possible.


Which is pure nonsense.
 
2013-03-21 10:45:19 AM  

MattStafford: DrPainMD: The figures come from the Congressional Budget Office. It doesn't matter what system we go to, 1.5 workers will not be able to support each retiree. It's not possible no matter how you do it.

It appears we agree on a great deal, but do you honestly not believe that we, as a country, aren't wealthy enough to support our retirees?  I understand that with our current debt situation and economy, we are beyond farked, but in alternate universe where we actually paid for things instead of borrowed for them, don't you think the eventual end game is large scale wealth redistribution?

We're going to get to the point where large portions of our society don't offer any goods or services that a computer or robot can't do better for cheaper, so what will be our plan then?  It seems to me we should tax the owners of the machines and redistribute some of that wealth to those who are unable to offer goods and services people want.


Or we can provide retraining programs, something that was (gasp!) part of the stimulus and is part of every Obama jobs proposal.
 
2013-03-21 10:46:01 AM  

DrPainMD: Sez that private sector workers per SS recipient is down to 1.75, as of 2010.


Not disputing this. It just has zero relevance for your next bit:

DrPainMD: It's not going to happen; it can't happen; it's not in the set of things that are possible.


This is pure nonsense.
 
2013-03-21 10:46:27 AM  

cameroncrazy1984: Or we can provide retraining programs, something that was (gasp!) part of the stimulus and is part of every Obama jobs proposal.


Education.  Something I have said, many times at this point, I'm in favor of.
 
2013-03-21 10:46:53 AM  
What the hell? I thought it ate that post.
 
2013-03-21 10:47:16 AM  

MattStafford: You still aren't getting it. The town is worse off. Suppose the town produces 10,000 dollars worth of real goods in a day, and they are all consumed that day. 200 people, each produce 50 dollars worth of goods per day, and they all trade them back and forth. Now I show up, print 10,000 dollars, and buy every good that they have produced that day. That town is unequivocally worse off. If you can't understand that, you can't understand anything.


No, I get it. You think your little fantasies are analogous to the real world.
 
2013-03-21 10:52:15 AM  

theknuckler_33: No, I get it. You think your little fantasies are analogous to the real world.


Again, you need to explain why they aren't analogous to the real world.

It is easy to see what would happen if I waltzed into town, printed up the currency, and bought all of the goods.  The town would be worse off.  What if I bought 95% of the goods?  50% of the goods?  10% of the goods?  I see no reason why the percentage of goods that I have bought would affect whether or not the action was beneficial or detrimental to that town.  In every case, counterfeiting money and then buying their goods hurts that town.

So why isn't that the case with regards to the US Economy?
 
2013-03-21 10:52:28 AM  

DrPainMD: Sergeant Grumbles: DrPainMD: In 15 years, when there is one person on SS/medicare for every 1.5 workers, no tax rate will be high enough to pay for it.

Citation needed.

SS can be fixed for the forseeable future merely by adjusting the income cap.
Medicare can be fixed by looking at any other first-world country and copying their system. We already pay on average twice per capita what every other nation pays for their healthcare systems.
And just to further degrade your nonsense, I think you underestimate just how much money the wealthy are stealing away from the rest of the country as they enjoy low capital gains taxes and offshore tax havens.

PPS. I found a source. Comes from the Labor Department. Sez that private sector workers per SS recipient is down to 1.75, as of 2010. Is it still nonsense? Do you see that juggling money around isn't going to allow 1.5 workers to produce not only everything they need, but also produce everything needed for a retiree? It's not going to happen; it can't happen; it's not in the set of things that are possible.


143MM workers, 62MM Social security recipients. That works out to 2.3. Those numbers are from BLS and SSA. What the actual fark are you talking about?
 
2013-03-21 10:53:06 AM  

Sergeant Grumbles: DrPainMD: It's not possible no matter how you do it.

Citation needed.
This is nothing but libertarian bollocks used to justify gutting social services.


In addition to the Labor Dept. citation, above, here's one straight from Social Security. It shows, currently, 2.8 workers per SS recipient (not sure why the difference... perhaps the Labor Dept. is only including people who have jobs that actually create the goods and services that people consume), and their worst-case scenario (if you know anything about SS projections, their worst-case scenario always turns out to be very optimistic) has the ratio dropping to 2 in 2027 and dropping down to 1.5 by 2086. Is it still nonsense? Are the Social Security statisticians and accountants nothing more than libertarians trying to justify gutting social services? Again, how are 1.5 workers going to produce not only everything they need to consume, but also everything that one retired person will need to consume? It won't happen, because it can't, and taxing the rich at 100%, or even 1000%, won't make it happen.
 
2013-03-21 10:55:41 AM  

DrPainMD: Sergeant Grumbles: DrPainMD: It's not possible no matter how you do it.

Citation needed.
This is nothing but libertarian bollocks used to justify gutting social services.

In addition to the Labor Dept. citation, above, here's one straight from Social Security. It shows, currently, 2.8 workers per SS recipient (not sure why the difference... perhaps the Labor Dept. is only including people who have jobs that actually create the goods and services that people consume), and their worst-case scenario (if you know anything about SS projections, their worst-case scenario always turns out to be very optimistic) has the ratio dropping to 2 in 2027 and dropping down to 1.5 by 2086. Is it still nonsense? Are the Social Security statisticians and accountants nothing more than libertarians trying to justify gutting social services? Again, how are 1.5 workers going to produce not only everything they need to consume, but also everything that one retired person will need to consume? It won't happen, because it can't, and taxing the rich at 100%, or even 1000%, won't make it happen.


The employer pays half the tax, professor.
 
2013-03-21 10:57:12 AM  

Sergeant Grumbles: DrPainMD: Sez that private sector workers per SS recipient is down to 1.75, as of 2010.

I'm not disputing this. It's just that it has absolutely zero relevance for your next bit:

DrPainMD: It's not going to happen; it can't happen; it's not in the set of things that are possible.

Which is pure nonsense.


So, you think that 1.5 workers can produce not only everything that they need, but also produce enough to support one retired person?
 
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