A simple economics analogy

[Craig234]

There's a basic point not agreed to by the 'right' with the 'left' on economics.

A mantra of the right is, 'we have a spending problem, not a revenue problem'.

Now, I'd suggest that perhaps we should agree that the politics of spending - powerful interests and so on - mean that as a practical matter, if there is 'waste', it's not likely to be cut with our political situation; instead, 'good' spending will be cut (keeping the airlines flying, CDC research, and so on). Two types of 'waste' - the type that has the political clout not to get cut, and the fact that there's always some 'waste' in any program, government or private sector or anywhere not practical to weed out.

If all we talk about is cutting that waste, and it's not going to get cut, we have a problem.

So let's put 'waste' to the side here. It doesn't really help the debate much and usually means 'the spending the other people want you don't'.

Here's the simple point.

Imagine there's a company, with $110 million revenue and $100 million expenses, and 1000 employees in 2010. I know I say there are problems comparing the government to a company, but there are some similarities and they work for this simple point. Now, let's say in 2011, the company relocates, refusing to pay for relocation, and only ends up with only 80% of its workers. As a result, with closures and lost productivity, while that reduces their labor expenses - not that huge a part of the budget - revenues fall to 75%.

In fact, let's say the company has contracts to pay many of the employees no matter what - so while they sit not doing anything at the old location, they're still an expense.

Now the company has expenses of $900 million with revenue of $750 million - a deficit of $150 million.

This is where the left has a mantra: 'our urgent problem is the jobs deficit, not the fiscal deficit'.

What does that mean?

Solution 1: The right says, 'we need to cut spending to fit our income. The company needs to shut down more things, lay off people, until expenses are down from $900 million to $750 million - then we'll be solvent and can try to grow the company again'. Unfortnately, as they shut more division and functions and lay people off, their expenses are now $750 million - but the cuts slashed revenue to $500 million, increasing the deficit to $200 million.

Rinse and repeat if they they cut expenses to $500 million - revenue down to $250 million.

Now, depending on the situation, sometimes there are more cuts to be made without hurting revenue so much. But remember our stipulation about what our leaders will cut.

Just at we've seen with the European nations who tried austerity, another left mantra is 'you can't cut your way to prosperity', their results fit this revenue losing scenario.

Solution 2: The left says, 'we need to fix our staffing problem before our fiscal problem'.

They say we need to borrow even more money to bring the workforce back up to 1000, to restore the lost revenue. In my scenario, that means borrowing to pay for relocating the employees from the old location. It might also mean money to train new people, to retain people with bonuses for moving, to advertise in the new location. In fact, for the first year they want to increase expenses to $125 million to pay for all this with temporary spending.

Under their scenario, the company for the first year spends $125 million to make $110 million in revenues - a deficit of $15 million.

But after that first year, spending can return to $100 million, with 1000 employees and $110 revenue, profitable.

Which scenario is better for the company? Cuts that do more harm than good to the bottom line but 'sound' responsible by trying to get rid of the deficit? Or the second?

Now, not all government spending is 'productive'. Govenment isn't a profit maker - it has obligations to what's good for the people also. But much is. Some programs generate 40 times their costs in revenue, some two times, and some are just expenses. But we have that same problem, of high unemployment, where those people don't stop needing things - in fact, their use of the safety net goes up, so we not only lose their productivity in the economy and their tax revenue, we spend more on the safety net from lower revenue.

If we could get employment up, it has a lot of positives - it grows the economy, with all of that growth providing new taxes that lower the deficit.

This is 'growing out of the debt' instead of 'cutting out of the debt'.

Economists will tell you that growing has all kinds of advantages over cutting.

The left's point here in this simple analogy is that what will help is spending more for a temporary period to increase employment, which will increase our economy and taxes, not cutting and cutting and cutting that will hurt the economy - and even if those cuts are focused as much as possible on the ones not hurting the economy, they'll be focused on those who need the safety net, with horrible effect, not good for the country. Let's cancel NASA, let's slash Medicare and transfer those costs to the families. Not a good plan.

(Economically, if we don't provide care for the elderly and it kills them, perhaps that's 'good'. Now think about how good of an idea that is morally for the good of people).

History supports this. When the economy had its business and consumer portions plummeting in the great recession, the government increased spending to compensate, and the economy slowly recovered - until around 1936 when politics said 'balance the budget' and they cut the spending, and caused the recession of 1937. Shortly before the massive increase in spending on a totally economically wasteful equivalent to sort of literally burning the money, WWII, and then the economy took off.

Now, in my scenario above, let's say the two sides compromise - the left can have a small increase in spending from $900 to $950 million, and that raises employment from 800 to 900, and revenues from $750 million to $900 million - still a deficit of $50 million. This is an analogy for the 'compromise' stimulus' we did in 2010.

The left would say 'that stimulus was a big success, we need more; it reduced our deficit from $150 million to $50 million, it helped but wasn't enough'.

The right would say, if they're like ours, 'the stimulus failed. At a time we had a big deficit, they spent MORE, and what we should have done instead is cut spending further.

What do you people not get about the fact we have a deficit, and so we need to cut spending?'

Now, we could take the analogy further to where the 'right' makes the company stop paying its bills and blocks spending for any employees in order to try to get its way, but I don't think we need to get into that - this is a simple analogy just to try to explain to people who only think cuts are helpful to an economic downturn with a lot of people unemployed, that the left's position isn't just crazy feel-good fiscal irresponsibility.

To suggest that maybe they aren't especially prepared to evaluate the economic options, and instead fall for simplistic analogies about 'balancing the checkbook'.

Not to mention that they are being misled and used by a few wealthy people to support policies that are bad for them for the worst reasons - pure greed of people who WANT the American people to be a lot poorer, because that helps 'cut the costs' like slashing wages by a company, leaving them a bigger share of the pie - even though the pie is smaller.

And oh by the way, that's what weve seen for 30 years, as the few at the top have skyrocketed their wealth and share of the pie while 80-0-% are flat, for the first time in American history - so that while the stock market has doubled in the economic recovery, 93% of the recovery since the crash - and 121% of the recovery the first two years - went to the top 1%. As companies, as the banks who caused the crash, set new records for profits and wealth being hoarded but the middle class lost much of its wealth.

Those are the people pushing this 'debt' issue, as a stealth agenda to cut your wealth for their benefit. It's effective propaganda. Can you not fall for it?

Note the left's position isn't 'we never need to do anything about the debt'.

Rather, the left's position is, do things that will help us grow out of the debt and keep a stronger middle class - the debt needs to be reduced after more recovery.

Get employment improved, and that will allow cutting the debt instead of the austerity programs only creating poverty and not helping much on debt, likely making it worse.

Economists - people like Paul Krugman - will explain, the stimulus worked, but was too small.

The right would benefit by learning why.

Unfortunately, the top people in the right know this - but it's their little secret that shifting wealth from the American people is their agenda, not a bad thing. All they have to do is keep tricking the voters into voting for doing that, by pretending the best way to fix the debt (which they made for just this reason, to force goverment cuts as interest is an ever bigger expense, called 'starving the beast') is austerity.

Before the liberal policies - take the year 1900 - the average wage was $10,000 while a few had incredible fortunes, sucking up society's wealth to their own pockets.

After the liberal policies were put in place - more worker rights, higher wages, more public spending and so on - the economy thrived and we had a strong middle class.

A big public debt was not created by these liberal policies - but by Reagan. And Bushes. When 'starve the beast' was invented to defeat the darn voters.

 

[Mursilis]

A big public debt was not created by these liberal policies - but by Reagan. And Bushes. When 'starve the beast' was invented to defeat the darn voters.

What role, if any, did Congress play in the growth of public debt?

 

[dank69]

Sounds like you are illustrating the effects of the fiscal multiplier with regard to government spending. I believe this is a Keynesian concept and therefore the equivalent of voodoo to the mainstream Republican.

 

[werepossum]

I'll give you a simpler analogy. Your house has consistently been producing more waste than the pipes can handle, so that now your house is up to its ceilings in raw sewage. Should you:
(A) Reduce your output to a level the pipes can handle and pump out the sewage;
(B) Raise your ceilings.

Your analogy presupposes that government can be analogized to a corporation. I'll go along with that to a degree, but not when you begin attributing to government producing revenue with its expenditures. Government revenue comes from taxing the private sector. Obviously government cannot tax at 100%, so anything government spends by definition must bring back less money. There are obviously exceptions to this - a renovated port or an expanded highway may increase taxable revenue - but obviously the bulk by far of government activity is not infrastructure. Our two biggest expenses are defense and transfer payments; neither of these produce infrastructure, so the revenue they produce is limited to that fraction returned as taxes. Even where government is merely moving money from one person's pocket to another's, consuming no wealth in making products for government, the act of confiscating and redistributing costs money; those government workers don't work for free.

To put it more simply, more government workers mean less wealth left over for the private sector, not more wealth overall.

 

[dank69]

I'll give you a simpler analogy. Your house has consistently been producing more waste than the pipes can handle, so that now your house is up to its ceilings in raw sewage. Should you:
(A) Reduce your output to a level the pipes can handle and pump out the sewage;
(B) Raise your ceilings.

This analogy is not even close to being applicable. For starters, a budget is an entirely different system than sewage output.

Your analogy presupposes that government can be analogized to a corporation. I'll go along with that to a degree, but not when you begin attributing to government producing revenue with its expenditures. Government revenue comes from taxing the private sector. Obviously government cannot tax at 100%, so anything government spends by definition must bring back less money. There are obviously exceptions to this - a renovated port or an expanded highway may increase taxable revenue - but obviously the bulk by far of government activity is not infrastructure. Our two biggest expenses are defense and transfer payments; neither of these produce infrastructure, so the revenue they produce is limited to that fraction returned as taxes. Even where government is merely moving money from one person's pocket to another's, consuming no wealth in making products for government, the act of confiscating and redistributing costs money; those government workers don't work for free.

To put it more simply, more government workers mean less wealth left over for the private sector, not more wealth overall.

I like how you debunked your own conclusion. Also not sure how you can say defense spending does not produce infrastructure.

 

[Dr. Zaus]

I'll give you a simpler analogy. Your house has consistently been producing more waste than the pipes can handle, so that now your house is up to its ceilings in raw sewage. Should you:

This is not how economics works; not in the least.

Your analogy presupposes that government can be analogized to a corporation.

also not how economics works.

Money in any year = (D)dollars in the economy * (V)number of times the average dollar changes hands each year

If V is falling because of technology D needs to go up lest we suffer major deflation: this usually happens thorough reduced taxes and increased spending. If V is in perpetual a fall because of permanent technological advancement, then a reversal of deficits makes no sense.

If we error on the too much M side and start to hit inflation the federal reserve can interject and reduce D at whatever rate is needed.

 

[ElFenix]

This is not how economics works; not in the least.

also not how economics works.

Money in any year = (D)dollars in the economy * (V)number of times the average dollar changes hands each year

If V is falling because of technology D needs to go up lest we suffer major deflation: this usually happens thorough reduced taxes and increased spending. If V is in perpetual a fall because of permanent technological advancement, then a reversal of deficits makes no sense.

If we error on the too much M side and start to hit inflation the federal reserve can interject and reduce D at whatever rate is needed.

why would technology cause the velocity of money to decrease?

 

[Dr. Zaus]

why would technology cause the velocity of money to decrease?

As productivity per work-hour increases the affluence of society per-employee increases; this means that since the same (or maximal) wealth is reached with fewer and fewer employees, (and cost) the amount of money spent (v) on both employees and products will go down. The end of money under the weight of technology is all right here:

http://en.wikipedia.org/wiki/Quantity_theory_of_money

 

[werepossum]

This analogy is not even close to being applicable. For starters, a budget is an entirely different system than sewage output.



I like how you debunked your own conclusion. Also not sure how you can say defense spending does not produce infrastructure.

It is if it's a government budget. As far as debunking my own conclusion, let me put it this way: That one can travel small distances on a Pogo stick does not make a Pogo stick a means of transportation. It remains a toy which incidentally can mimic, in a very small way, a means of transportation.

This is not how economics works; not in the least.

also not how economics works.

Money in any year = (D)dollars in the economy * (V)number of times the average dollar changes hands each year

If V is falling because of technology D needs to go up lest we suffer major deflation: this usually happens thorough reduced taxes and increased spending. If V is in perpetual a fall because of permanent technological advancement, then a reversal of deficits makes no sense.

If we error on the too much M side and start to hit inflation the federal reserve can interject and reduce D at whatever rate is needed.

Do you seriously want to posit the OP's analogy as how economics works? If we ever accept the notion of government as a corporation that needs to spend more to make more, then we're all screwed, blued and tattooed.

Beyond that, your equation is oversimplified far beyond uselessness because it presupposes that more money going to resource owners somehow disappears and thus, reduces overall velocity. That was true as late as the Renaissance but outside of one specific instance it's demonstrably false in modern times. During the Great Depression when people lost all confidence in banks and hoarded cash you'd have a point, but outside of that one short period people with money don't hoard it, they invest it. Thanks to the magic of fractional banking, a thousand dollars in the bank becomes three thousand dollars loaned, thereby increasing overall velocity. It's largely the same for other investments; money invested in the stock market is used for capital expansion projects, thereby creating the same general infrastructure you want the government to create (as well as going right back into circulation.) Obviously there are separations - the private sector largely doesn't invest in roads (although it usually builds them) and the government usually doesn't invest in individual corporations (<cough>Solyndra<cough>) - but broadly speaking, the private sector builds up the infrastructure that allows progress just as does government.

Whether one prefers government over the private sector in general depends on whether one believes that all of us, making decisions for our own benefit, will tend to make smarter or dumber decisions than those elected supposedly to serve us. Used to be that most folks fell somewhere in the middle, believing there are a few things government does better but generally the private sector is more efficient and more innovative. These days there are an astounding number of people who believe that even the smallest decisions such as what size soda to order is rightly the province of government.

 

[Lithium381]

If we could get more people back to work in the private sector then yes. Adding more people to public jobs doesn't sound ideal...

Until we get a major 3rd party in the mix, the R and D's are just going to bicker, kick the can down the road, and continue to line their pockets from "political donors" and the problem will not get solved.

 

[chucky2]

Some people have failed so bad at past analogies they really should not keep making them.

While analogies are useful in trying to get a concept across, when it comes down to it, we really don't need one in respect to the Fed Gov. This sole fact and sole fact alone indicates the Fed has a spending problem that it will never fix by itself until something forces it to: Never, not once, has Fed spending decreased in nominal dollars (not %/GDP so they can keep faking that it's been addressed before - it hasn't and never was).

Not a once.

That includes the boom/"boom" years where the current crop of Spend Spend Spenders disingenuously say: Oh, we have to spend in bad years and then cut in the good years. Meaning: They are completely and totally FOS. Which they know, but they keep saying to get people to go along with ever increased spending.

That is really the only thing to keep in mind when talking to anyone about the Fed spending money. When one realizes this, one realizes that never will the Fed have enough. Never. It is a bottomless pit that takes almost* any amount of money thrown at it, belches (if you're lucky you get a belch), and then asks two questions, the same ones each time: 1.) Is that it?, and 2.) When will you give me more?

*: There can be freak occurrences where during a true boom, tax receipts are coming in past what even the greedy Fed thought they'd get. Sometimes a freak condition happens where this excess amount actually temporarily outpaces Fed spending. The Fed answer to this of course is: Spend more.

When this temporary boom goes away, the Fed answer is, unsurprisingly, spend more.

Anyone see a pattern here?

Chuck

 

[dank69]

If we could get more people back to work in the private sector then yes. Adding more people to public jobs doesn't sound ideal...

Until we get a major 3rd party in the mix, the R and D's are just going to bicker, kick the can down the road, and continue to line their pockets from "political donors" and the problem will not get solved.

Why do you believe that a 3rd party will fix the "problem"?

 

[dank69]

It is if it's a government budget. As far as debunking my own conclusion, let me put it this way: That one can travel small distances on a Pogo stick does not make a Pogo stick a means of transportation. It remains a toy which incidentally can mimic, in a very small way, a means of transportation.


...

That's it? The government budget is "shit" so now we can validly compare it to a sewer system? And pogo sticks? And transportation?

 

[dank69]

Some people have failed so bad at past analogies they really should not keep making them.

While analogies are useful in trying to get a concept across, when it comes down to it, we really don't need one in respect to the Fed Gov. This sole fact and sole fact alone indicates the Fed has a spending problem that it will never fix by itself until something forces it to: Never, not once, has Fed spending decreased in nominal dollars (not %/GDP so they can keep faking that it's been addressed before - it hasn't and never was).

Not a once.

That includes the boom/"boom" years where the current crop of Spend Spend Spenders disingenuously say: Oh, we have to spend in bad years and then cut in the good years. Meaning: They are completely and totally FOS. Which they know, but they keep saying to get people to go along with ever increased spending.

That is really the only thing to keep in mind when talking to anyone about the Fed spending money. When one realizes this, one realizes that never will the Fed have enough. Never. It is a bottomless pit that takes almost* any amount of money thrown at it, belches (if you're lucky you get a belch), and then asks two questions, the same ones each time: 1.) Is that it?, and 2.) When will you give me more?

*: There can be freak occurrences where during a true boom, tax receipts are coming in past what even the greedy Fed thought they'd get. Sometimes a freak condition happens where this excess amount actually temporarily outpaces Fed spending. The Fed answer to this of course is: Spend more.

When this temporary boom goes away, the Fed answer is, unsurprisingly, spend more.

Anyone see a pattern here?

Chuck

You still want to cut spending? What is your response to experts saying that austerity was the wrong thing to do? Sepcifically this part:

They estimate that for European austerity measures started in 2010, the multiplier was significantly greater than one, meaning economic output shrank by more than one euro for each euro in deficit reduction. That's much higher than the multiplier of 0.5 that the IMF and other forecasters typically used in 2010 and that had proven more or less accurate in the years before the 2008 financial crisis.

By the way, spending is supposed to go up every year. We have more people every year. Not sure why you think spending should go down. If everyone that wanted a job had one, we wouldn't have a spending problem.

 

[chucky2]

You still want to cut spending? What is your response to experts saying that austerity was the wrong thing to do? Sepcifically this part:

The problem is, the Fed has been allowed to become so large, so entrenched, there is no easy or even medium answer to what to do. There is a 'shoot the hostage in the guts' answer and then there is a 'inject the hostage with HIV' answer. People keeping thinking there are lessor of two evils (some insane people actually think one of those isn't even preferable, but rather, a good thing) but no matter the choice, under what the present situation has been allowed to become (under both Dem and Rep), we are long term F'd. I do not care what these same super smart economic guys have to say as they are the exact same super smart economoic (and political, and business, and legal) guys that have led us (in many cases willingly) into and quagmired into this mess. You want to make me trust them? Find one or more that have been consistently right for the past 20 years not just in generalizations but in accurately calling the numbers we have put up for the past 20 years 20 years and less ago. Find someone who truly has that crystal ball. Then maybe I'll actually be able to trust what they have to say about the future. For example: They are saying austerity is wrong. For me to believe that 1.) they need to have a track record of being right in specifics years in advance and 2.) need to demonstrate that their 'where EU will be in 20 years with enacted austerity' prediction is correct - and actually even have that prediction.

If they don't have that, whatever they have to say is short term speculative at best.

By the way, spending is supposed to go up every year. We have more people every year. Not sure why you think spending should go down. If everyone that wanted a job had one, we wouldn't have a spending problem.

Spending does not have to go up every year. Spending could be made to stay constant, if there was even a wisp of political will for that to happen. Even if I grant you that spending has to go up every year, we are hundreds of Billions if not Trillions past whatever population growth should add to an ideal Fed budget.

We have a perception problem that has led to a policy problem that has led to a spending problem. All three of those must be addressed to have any hope of reigning in the out of control beast that is the Fed.

Of course, there are those that jizz down their leg at the thought of pumping more dollars to the Fed, having more and more Fed involvement, more and more Fed power, more and more Fed anything and everything. That's fine I say, just let them donate their own money above what they are legally required to pay the IRS each year in support of their own beliefs. Surprise surprise though...I suggested that to a few of our forum members here and, boy, you'd have thought I'd suggested that they bang their mom or something. It was like an unthinkable thing that they'd pony up their own bucks to help fund the largess of the system they want. Funny huh?

Chuck

 

[dank69]

The problem is, the Fed has been allowed to become so large, so entrenched, there is no easy or even medium answer to what to do. There is a 'shoot the hostage in the guts' answer and then there is a 'inject the hostage with HIV' answer. People keeping thinking there are lessor of two evils (some insane people actually think one of those isn't even preferable, but rather, a good thing) but no matter the choice, under what the present situation has been allowed to become (under both Dem and Rep), we are long term F'd. I do not care what these same super smart economic guys have to say as they are the exact same super smart economoic (and political, and business, and legal) guys that have led us (in many cases willingly) into and quagmired into this mess. You want to make me trust them? Find one or more that have been consistently right for the past 20 years not just in generalizations but in accurately calling the numbers we have put up for the past 20 years 20 years and less ago. Find someone who truly has that crystal ball. Then maybe I'll actually be able to trust what they have to say about the future. For example: They are saying austerity is wrong. For me to believe that 1.) they need to have a track record of being right in specifics years in advance and 2.) need to demonstrate that their 'where EU will be in 20 years with enacted austerity' prediction is correct - and actually even have that prediction.

If they don't have that, whatever they have to say is short term speculative at best.

Nobody has the "crystal ball." That doesn't mean you get to just dismiss the advice of experts. We are talking about the future here, so first of all, you have to examine all contributing factors. What I mean is, take the following example:

Expert A says that if we do X now then we will see Y in 20 years.
20 years later we aren't even close to acheiving Y.
Does this automatically mean Expert A can be dismissed? No. What are the other factors? Did we do X? Did we start to do X for awhile and then stop? Did we do any number of N things that changed the ability to acheive Y? Dismissing the advice of experts without examining every contributing factor is very irresponsible.

Spending does not have to go up every year. Spending could be made to stay constant, if there was even a wisp of political will for that to happen. Even if I grant you that spending has to go up every year, we are hundreds of Billions if not Trillions past whatever population growth should add to an ideal Fed budget.

We have a perception problem that has led to a policy problem that has led to a spending problem. All three of those must be addressed to have any hope of reigning in the out of control beast that is the Fed.

Of course, there are those that jizz down their leg at the thought of pumping more dollars to the Fed, having more and more Fed involvement, more and more Fed power, more and more Fed anything and everything. That's fine I say, just let them donate their own money above what they are legally required to pay the IRS each year in support of their own beliefs. Surprise surprise though...I suggested that to a few of our forum members here and, boy, you'd have thought I'd suggested that they bang their mom or something. It was like an unthinkable thing that they'd pony up their own bucks to help fund the largess of the system they want. Funny huh?

Chuck

What support do you have for the bolded statements?

 

[chucky2]

Nobody has the "crystal ball." That doesn't mean you get to just dismiss the advice of experts. We are talking about the future here, so first of all, you have to examine all contributing factors. What I mean is, take the following example:

Expert A says that if we do X now then we will see Y in 20 years.
20 years later we aren't even close to acheiving Y.
Does this automatically mean Expert A can be dismissed? No. What are the other factors? Did we do X? Did we start to do X for awhile and then stop? Did we do any number of N things that changed the ability to acheive Y? Dismissing the advice of experts without examining every contributing factor is very irresponsible.

Exactly, they can't show they've been right long term. These same class of experts over say the past 50 years (from super smart economic guys to super smart business guys to super smart political guys to super smart legal guys) are the exact same class of experts we have now, from the exact same class of institutions, who are saying precisely the same things: Trust us, we know what we're talking about.

Well, we trusted them. We trusted them so much we've got ourselves $16T in immediate debt (at just the Fed level), and massively growing. Coincidentally, the States have the same class of folks and surprise surprise, many States are largely in Billions of debt as well. Forgive me, but, you can choose to trust them so you can get ideology validation, but I'll just trust none of them thanks. I live by a simple live within ones means philosophy, along with a don't ask me for sh1t and I'll do the same to you likewise. I don't wish to support systems/others who want to live outside of their means and have to consistently keep coming to me asking me for more more more more more while they keep partying like money is meaningless. If that's the case, don't ask me for anything, borrow/print whatever you need, and leave me the F alone. Doh! Then money means something, what a surprise...

What support do you have for the bolded statements?

What support would I need for the bolded statements? Does one need to support that water is wet? Fire is hot? What support needs to be given that the Fed could not live within say a $1.5 Trillion yearly budget? That already is an astronomical amount of money, and if someone at the Fed Gov proposed that, stunned silence would be heard from both sides of the aisle at even the mention of that absurdity. That is how F'd we are: That either side of the aisle would view that insanely high Fed budget as non-starter absurd.

Look, don't get me wrong: I bitch in these threads, but, I freely admit...your side has "won"! (I put won in "" because long term, we are so F'd by the spender ideology on multiple levels that its sickening, anyways...) Rejoice! For decades, the Fed has been allowed to grow in spend each year under the auspice of "look it's all relative to GDP" logic, and with each growing spender logic year, more and more people are woo'd and reinforced that more and more Fed is needed. It's a self-fullfilling cycle. We're past the greed point at what it would have taken to break the US of this mentality, so now, we get to go down this spender rabbit hole, whether we want to or not! I for one am enjoying these good days on behalf of the future generations who won't be able to. I have little doubt though, the same class of super smart <x> guys will still be around then, warping Reality to get the masses to subvert to whatever path they need to take the country down so the populace can enjoy whatever will be the American Idol equiv.

Laissez les bons temps rouler!

Chuck

 

[Lithium381]

Why do you believe that a 3rd party will fix the "problem"?

It would help people realize there ARE options out there to find people who really want to help the country and that serving in the senate is a SERVICE to the country, not a career. There are people who are convinced we have only two choices, D or R and they always vote one or the other and most of the time vote for "the lesser of two evils".

Some people vote the same person in year after year without knowing their accomplishments(or not!) A lot of people vote party line R/D without looking at the candidates. It's primarily a problem of laziness on the part of our voters, and partly because they're low-information voters(as Rush would say).

I get much more meaningful debate here on these forums because it's dedicated to politics and most of the people here have purposfully exposed themselves to it and have knowledge of the issues and the people involved. Talk to a lot of people on the street and they might not know who ran for president last fall, nor who our VP is. . etc.. maybe it's laziness or maybe they just don't want to deal with it and would rather isolate themselves and hide from it all.

To bring it back to Craigs original point. . . if we're supposed to grow our way out of this, we need to put people back to work. Legislation and regulations prevent jobs. . .This can be a topic for another thread, but just look at how all the gun companies are being treated in MD, CT, and IL...... very hostile environment to have a business. They're talking about moving out. What about the employees of those companies who can't make the move to another business friendly state? They're SOL and now on the government teat until they can find another job.... sounds counterproductive to me..

 

[Craig234]

Chucky's posts seem to me nothing but uninformed paranoia - a red flag is the bogeyman of 'the fed', which doesn't actually make any of these spending choices (unless he's misusing the term 'the fed' not to mean the Federal Reserve, a popular bogeyman among some, to mean 'the federal government', in which case it's still a concerning bit of jargon to use suggesting some indoctrination), and the bogeymen of 'experts' who are these monsters out to get you.

Start to make a point about debt versus GDP and he cuts you off with how that's nothing but a lie to hide the problem.

How is there going to be any discussion informing him of the real issues with debt?

I think the debt is a long-term problem - but larger problems are the employment 'deficit' and the high levels of inequality. Just 'cutting spending' makes those worse.

Perversely, that creates a cycle cutting productivity that INCREASES the debt - so you don't even get that benefit, you just screw the economy and the people.

 

[Lithium381]

Chucky's posts seem to me nothing but uninformed paranoia - a red flag is the bogeyman of 'the fed', which doesn't actually make any of these spending choices (unless he's misusing the term 'the fed' not to mean the Federal Reserve, a popular bogeyman among some, to mean 'the federal government', in which case it's still a concerning bit of jargon to use suggesting some indoctrination), and the bogeymen of 'experts' who are these monsters out to get you.

Start to make a point about debt versus GDP and he cuts you off with how that's nothing but a lie to hide the problem.

How is there going to be any discussion informing him of the real issues with debt?

I think the debt is a long-term problem - but larger problems are the employment 'deficit' and the high levels of inequality. Just 'cutting spending' makes those worse.

Perversely, that creates a cycle cutting productivity that INCREASES the debt - so you don't even get that benefit, you just screw the economy and the people.

It's going to be painful short term if we cut no doubt. . .
Why is the government doing things to discourage hiring in the private sector? Rules, regulations, ACA, new minimum wage proposals, higher taxes....etc
shouldn't we be incentivizing hiring people?

 

[Craig234]

It would help people realize there ARE options out there to find people who really want to help the country and that serving in the senate is a SERVICE to the country, not a career. There are people who are convinced we have only two choices, D or R and they always vote one or the other and most of the time vote for "the lesser of two evils".

Some people vote the same person in year after year without knowing their accomplishments(or not!) A lot of people vote party line R/D without looking at the candidates. It's primarily a problem of laziness on the part of our voters, and partly because they're low-information voters(as Rush would say).

I get much more meaningful debate here on these forums because it's dedicated to politics and most of the people here have purposfully exposed themselves to it and have knowledge of the issues and the people involved. Talk to a lot of people on the street and they might not know who ran for president last fall, nor who our VP is. . etc.. maybe it's laziness or maybe they just don't want to deal with it and would rather isolate themselves and hide from it all.

To bring it back to Craigs original point. . . if we're supposed to grow our way out of this, we need to put people back to work. Legislation and regulations prevent jobs. . .This can be a topic for another thread, but just look at how all the gun companies are being treated in MD, CT, and IL...... very hostile environment to have a business. They're talking about moving out. What about the employees of those companies who can't make the move to another business friendly state? They're SOL and now on the government teat until they can find another job.... sounds counterproductive to me..

Lithium, the thing is, good regulations have benefits that justify 'job losses' or other costs.

There are always tradeoffs between 'jobs' and other issues.

For example, when people who make a living from hunting Buffalo or fishing want to drive those industries to extinction, regulations say 'no, that's a bad idea'.

Our national parks got started when miners wanted to destroy the beauty of Yosemite by blowing it up.

The little known origins of the FBI come from when industrialists were going around the country causing horrible damage to our beautiful natural areas and it pissed off Teddy Roosevelt, and he ordered the Attorney General to create a force to collect evidence against them to use in prosecuting them.

Polluters are a common theme - there's always an extra buck to be made by polluting more and paying less for cleanup - but there are also bucks to be made by oppressing workers, serving unsafe food and products, finding ways to extract wealth that only adds to costs to others such as insider trading and other financial scams, monopoly, on and on.

Now, we can agree that some regulations are better than others, and that regulation CAN be excessive, wasteful, even harmful.

But it needs to be recognized that good regulation is important and helpful, and it's only 'bad regulation' that's a problem, a distinction rihgt-wingers often don't make.

'Regulation' just becomes one of these bogeymen like 'waste' that they love to rant about but which they can't fix other than with destructive policies that do more harm than good.

It feeds an unformed ideology driving bad policied that benefit the few most powerful - 'get rid of the EPA!' so the Kochs can make billions more polluting more.

 

[Craig234]

It's going to be painful short term if we cut no doubt. . .
Why is the government doing things to discourage hiring in the private sector? Rules, regulations, ACA, new minimum wage proposals, higher taxes....etc
shouldn't we be incentivizing hiring people?

We should be incenting hiring people the right way - at decent wages, for productive things. We shouldn't just say 'hiring someone for a dollar a day they can't live on is good! Hiring more people to grow tobacco that kills many people and adds greatly to healthcare costs is good!'

The ACA cuts costs and expands healthcare coverage. The minimum wage increase helps the economy, slightly helps reduce the terrible inequality and doesn't hurt employment.

Higher taxes *on the people who have skyrocketed in wealth* at the expense of the rest of the country and are hoarding wealth has a lot of benefits for the country.

The government can help the economy with more 'stimulus' hiring in the short term.

 

[Lithium381]

Lithium, the thing is, good regulations have benefits that justify 'job losses' or other costs.

There are always tradeoffs between 'jobs' and other issues.

For example, when people who make a living from hunting Buffalo or fishing want to drive those industries to extinction, regulations say 'no, that's a bad idea'.

Our national parks got started when miners wanted to destroy the beauty of Yosemite by blowing it up.

The little known origins of the FBI come from when industrialists were going around the country causing horrible damage to our beautiful natural areas and it pissed off Teddy Roosevelt, and he ordered the Attorney General to create a force to collect evidence against them to use in prosecuting them.

Polluters are a common theme - there's always an extra buck to be made by polluting more and paying less for cleanup - but there are also bucks to be made by oppressing workers, serving unsafe food and products, finding ways to extract wealth that only adds to costs to others such as insider trading and other financial scams, monopoly, on and on.

Now, we can agree that some regulations are better than others, and that regulation CAN be excessive, wasteful, even harmful.

But it needs to be recognized that good regulation is important and helpful, and it's only 'bad regulation' that's a problem, a distinction rihgt-wingers often don't make.

'Regulation' just becomes one of these bogeymen like 'waste' that they love to rant about but which they can't fix other than with destructive policies that do more harm than good.

It feeds an unformed ideology driving bad policied that benefit the few most powerful - 'get rid of the EPA!' so the Kochs can make billions more polluting more.

Agreed, I agree some regulation is necessary. . I see you used the term "right-wingers" correctly here!
Pollution is a problem, sure. But when the EPA claims small puddles as 'navigable waters' and wants control over them, or when Texas lowers its emissions below what the EPA wants, but didn't do it the WAY the EPA wanted and tries to shut the plants down. . . . that's a problem.

 

[Craig234]

Agreed, I agree some regulation is necessary. . I see you used the term "right-wingers" correctly here!
Pollution is a problem, sure. But when the EPA claims small puddles as 'navigable waters' and wants control over them, or when Texas lowers its emissions below what the EPA wants, but didn't do it the WAY the EPA wanted and tries to shut the plants down. . . . that's a problem.

We're finding some agreement and I'm open to specific cases of bad regulation.

But if you are getting your info on that 'bad regulation' from paid propagandists whose interest is to simply turn you against regulation so their funders can profit by polluting, and they're misrepresenting information to you, you should be skeptical about the info they put out. We'd need to use specific examples, if you want to get into those more.

I'll provide an exampe of bad regulation, though. The excellent 'Dan Rather' reports show on hd.tv/axs.tv did a story recently on a nightmare of regulation coming from the Oceanic agency over an area's fishermnen. They abused their power, were arrogant in how they treated people, fined excessively. Eventually an investigation confirmed the problems. It happens.

 

[chucky2]

Chucky's posts seem to me nothing but uninformed paranoia - a red flag is the bogeyman of 'the fed', which doesn't actually make any of these spending choices (unless he's misusing the term 'the fed' not to mean the Federal Reserve, a popular bogeyman among some, to mean 'the federal government', in which case it's still a concerning bit of jargon to use suggesting some indoctrination), and the bogeymen of 'experts' who are these monsters out to get you.

I mean 'the Fed' as the Federal government. I just shorten it to 'the Fed' so I don't have to type Federal government each and every time. While I have very little doubt that the Federal Reserve was setup to aid large business and government play the games it wanted to play, I recognize that whatever peoples beef with the Federal Reserve is, it's here to stay no matter what. So I really don't get on the bash The Fed(eral Reserve) bandwagons because it's largely a pointless cause to get on.

It's not that these super smart <s> guys are out to get us personally, it's their out to fullfil their own desires, at whatever expense it's incurred at. Their track record is clear: We have massive debt, we have massive out(and in) sourcing, we have rediculous laws, we have rediculous policies. All of these, every single one, brought to you buy these same super smart <x> guys. I know there are those that like apples that are just super enthralled with listening to them, agreeing with them, being led around the nose by them, etc etc. I am not. When they prove they are trustable and have the long term interests of the US in mind, then I'll perhaps lend them some trust. Until then why would I trust them? Not that it matters, they're the ones with the power, and they've got the numbers of the masses behind them to keep themselves in power to make the polices they want enacted happen. Like I said, I'm just enjoying these good times while they last!

Start to make a point about debt versus GDP and he cuts you off with how that's nothing but a lie to hide the problem.

How is there going to be any discussion informing him of the real issues with debt?

I cut you off because I don't want to hear the usual dodge to the problem. We can save time by not going down that strawman road. We don't need to discuss why a family that is living completely within it's means at $100k a year, who then gets a raise and makes $115k a year, now needs to immediately spend $120k a year. It's a non-starter discussion that doesn't need to happen. And, what I just described, is Fed spending each year in respect to GDP.

I think the debt is a long-term problem - but larger problems are the employment 'deficit' and the high levels of inequality. Just 'cutting spending' makes those worse.

Perversely, that creates a cycle cutting productivity that INCREASES the debt - so you don't even get that benefit, you just screw the economy and the people.

Right, they're all problems. And that is the problem: Which is the greater long term problem? The Fed spending as % GDP'rs will always be able to get the GDP up'd (unless a true crash like '08 happens), so they'll always make the case that the Fed can spend more. That is, the family living within its means completely at $100k now suddenly can't and needs to spend at least $115k.

And when their income decreases to $98k the next year after that, instead of having to make a $2k cut, they now should be making a $22k cut - not palpatable. Of course, the Fed had a budget of $2.somethingT almost those receipts, and blew that out to $3T. So now that family is making $100k and spending $150k, and they're used to living at $150k. It's inconceivable to them that they need to again live at the $100k - or less, so they can pay off their debts - level.

Gleefully the spenders will reference % of GDP and that we can print money. But, remember...take them seriously when they say that there will be cuts in the good times we just need to spend in the bad times. Righto....

Chuck