The Fed is Taxation without representation.

[Dr. Zaus]

The Judiciary is under the Constitution as is the Executive and it is spelled out how to produce these folks as well as the Congress

I'm not saying anything unconstitutional is happening; just contrary to our basic founding principles.

I am advocating a change in what we do; no doubt you advocate many changes as well. You are saying that it is a good thing to eschew the input of the people or our elected representatives.

An informed decision about laws and good governance can't be made by ignorant politicians either: But why are they ignorant about how economies work, because they are too stupid or because they have no reason to know and no one to learn from?

Why should the people that control taxes and spending not feel required to understand the basic principles on which the disagreements over monetary policy hinge?

I want a representative to be able to disapprove of someone that says "we are targeting 3% inflation" and approve of another that says "we are targeting 0% inflation".

The basics of how this all interplays is explainable in a few hours and comprehensible to a normally intelligent person: Supposing the person doing the teaching isn't an economist, of course.

That said:

You make a good point, that our elected body created a law that says we are to have our property taxed by private entities is a kind of representation, as they could always legally dissolve the entity and use another system for our currency.

 

[LunarRay]

I'm not saying anything unconstitutional is happening; just contrary to our basic founding principles.
I gather you speak to the direct taxation matter... Well, I suppose we have yet another unelected but nominated and consented to by some of our elected folks... Not the people via the Representatives (The Senate was not voted for directly by the people when this bit was written in the Constitution) But yet it is what it is... and we pay taxes. I'm not really sure the logic employed by SCOTUS even after having read their basis for finding as they did.
But, I don't find what the FED does as being remotely a tax. It may have the same effect on our money but that consequence can be had any number of ways and the basis of the 'tax' is not there.

I am advocating a change in what we do; no doubt you advocate many changes as well. You are saying that it is a good thing to eschew the input of the people or our elected representatives.

And, I support your right to seek changes and hold that right for myself as well... I am saying folks who don't have a clue shouldn't have the responsibility to select or appoint or nominate. IF they, however, have that 'job' nonetheless then the result will reflect this condition.

An informed decision about laws and good governance can't be made by ignorant politicians either: But why are they ignorant about how economies work, because they are too stupid or because they have no reason to know and no one to learn from?

I think everyone thinks they understand Economic activity basically. And for the most part it is not beyond the grasp of the normal citizen with some common sense. But, that is the 'What Happened' part. Folks can see the price of something go up or down and the value of stuff change... but why is the issue I'm speaking to. And that that 'why' might not be what needs consideration to effect an alteration to the situation now. iow, gas went up cuz the value of the dollar went down... but is that good or bad in conjunction with other factors and can it be quantified or qualified in some manner... It is why we use the term 'All other things being equal'... All other things are never equal. They are all dynamic in a thinking that holds them static.
I take me to the MD for repair and my car to the auto mechanic for repair and not the other way around... So if it needs fixing, this FED, then first evaluate what is broke bit by bit and not 'through out the baby with the sour milk'.

Why should the people that control taxes and spending not feel required to understand the basic principles on which the disagreements over monetary policy hinge?

That is the easy bit. I'm not too sure that fiscal policy considers monetary policy aims. I don't often see a nexus twixt the two but hear alot of supposed links... The Congress/President seek to set a fiscal policy via taxation or some other stimulus or anti stimulus and presume that the FED can simply wave a wand and cause the economy to digest it all and not toss it back up... or not have it flow like water and soil the very linen the fiscal policy sought to protect.

Politics are just that... agenda that are obscure when viewed from the the pit of economic theory or from the tail end of a moving donkey. But those agenda sure are geared to get reelected... that bit is clear..

I want a representative to be able to disapprove of someone that says "we are targeting 3% inflation" and approve of another that says "we are targeting 0% inflation".

IF someone advocated either of those bench marks I'd wonder how they would go about this and why. I'd seek to understand how they intended to apply which or what monetary policy actions to the fiscal policy actions that are not articulated in law yet and that they have, therefore, only an ideal and not a factual objective to offer. iow, to me it would be a meaningless statement to make... Sure they can say we'll do everything to keep inflation at 'x' percent... but what if this or that happens... what change to that percent will you accept... that kind of analysis presumes, however, so many variables that it becomes a graduate program nightmare.

The basics of how this all interplays is explainable in a few hours and comprehensible to a normally intelligent person: Supposing the person doing the teaching isn't an economist, of course.

That said:

You make a good point, that our elected body created a law that says we are to have our property taxed by private entities is a kind of representation, as they could always legally dissolve the entity and use another system for our currency.

Knowing how to produce models and develop theoretical outcome and proving it by being able to determine the area under the curve and all the rest of the nifty edification one damages their brain with are academics. Applying it to reality is like hitting a moving target while on a moving platform... and never once acknowledging that the hardest target to hit is the one that is not there!

 

[LegendKiller]

I'm not saying anything unconstitutional is happening; just contrary to our basic founding principles.

I am advocating a change in what we do; no doubt you advocate many changes as well. You are saying that it is a good thing to eschew the input of the people or our elected representatives.

An informed decision about laws and good governance can't be made by ignorant politicians either: But why are they ignorant about how economies work, because they are too stupid or because they have no reason to know and no one to learn from?

Why should the people that control taxes and spending not feel required to understand the basic principles on which the disagreements over monetary policy hinge?

I want a representative to be able to disapprove of someone that says "we are targeting 3% inflation" and approve of another that says "we are targeting 0% inflation".

The basics of how this all interplays is explainable in a few hours and comprehensible to a normally intelligent person: Supposing the person doing the teaching isn't an economist, of course.

That said:

You make a good point, that our elected body created a law that says we are to have our property taxed by private entities is a kind of representation, as they could always legally dissolve the entity and use another system for our currency.

How is it against the "basic principles". What principles are you talking about?

The Fed isn't taxation, inflation isn't taxation. Inflation is a byproduct of monetary predictability that can be affected by a myriad of issues, not just monetary expansion, but also speculation in certain sectors of the economy. For example, the massive price increase in oil had ripple effects throughout the economy, was this inflation due to monetary expansion? No.

Furthermore, out of all of the assets in this country, only a relatively small fraction of them are held in "savings accounts" by the strictest measurement. The remaining are held in assets that, mostly, build in the inflation assumption into the asset's yield. Thus, most "savers" are buying assets that actually will account for long-term inflation expectations and even current inflation occurrences. For example, housing appreciated over inflation by about .20% annually and did so pretty consistently until the last 10 years. It did so for more than 100 years.

Finally, the last "taxation" that people talk about comes from wages. I find this pretty humorous as all indications point out that long-term wages have largely kept up with long-term inflation. Some disparities existed but, overall, wages did react favorably.

People point out secondary effects of more people having to have second jobs or wives that work. However, they do not consider the fact that monetary allocation inside US households is an absolute mess. Modern "luxuries" have now become musts. Cell phones, HD cable...etc, things we didn't have to pay for 2 decades ago, now HAVE to be had. Where did the money come from to pay for these? The 2nd job, naturally.

 

[jman19]

I'm not saying anything unconstitutional is happening; just contrary to our basic founding principles.

:hmm:

 

[Hyraxxx]

Devaluation of your money might suck, but it's not a "tax". Taxes are money that you pay to the government. You are not paying anyone anything when the dollar ends up being devalued, so it can't be a tax using a normal definition. Otherwise ANYTHING that causes inflation could be considered a tax, right?

Also, if the majority of the FOMC are appointed and approved by elected officials, it sounds like we have plenty of representation.

They print more money to fund pet projects like banks and war, the purchasing power of my money goes down. Sounds like a tax to me.

 

[LegendKiller]

They print more money to fund pet projects like banks and war, the purchasing power of my money goes down. Sounds like a tax to me.

They don't just "print" money and inflation has not gone up that much. Stop talking in sound bites and prove it.

 

[Dr. Zaus]

long-term wages have largely kept up with long-term inflation.

it is the lack of real growth on the low end of the spectrum, despite overall economic growth, that inflation has taxed.

The remaining are held in assets that, mostly, build in the inflation assumption into the asset's yield.

Even given a stable monetary environment that would allow for accurate integration of this assumption the artificial interest rates that the fed crates in order to benefit banks is bad for the people.

They don't just "print" money

no they put us in compounding debt, much worse.

Applying it to reality is like hitting a moving target while on a moving platform... and never once acknowledging that the hardest target to hit is the one that is not there!

No doubt the business is hard and detailed, but I don't find economists to be the only social scientists that should have such input;

Just read Greenspan's book, he is clearly a scholar of may interdisciplinary fields. I would never want a simple economist, even a good one, to be running the fed. People with a Pointy-head Degree tend to see the world only through their own paradigm and miss the bigger pictures.

 

[LunarRay]

They print more money to fund pet projects like banks and war, the purchasing power of my money goes down. Sounds like a tax to me.

It may have the same affect... like you can't buy as many cheetos today as yesterday with the same amount of allowance.
A tax has to have a base upon which it is applied to... you must have that base... like income or gallons of petro or pack of cigarettes or value of property... but when inflation or some other factor occurs you can't call it a tax... you can, however, call it a devaluation and the two, therefore, are mutually exclusive.

 

[LunarRay]

no they put us in compounding debt, much worse.

The best anology for this condition is the patient with a bleeding Artery. The remedy for stagnation is stimulation of the economy and like the Artery if you don't remedy you loose the patient.
Spending, spending and more spending is the way to remedy a stagnent economy. How do you get the money to spend but from the government. Who do you give it to? The entities who will spend the money in the areas that the 'experts' indicate will best serve the needs of the economoy.
Now, then... Folks say... 'Well, the increase in the debt IS like a bleeding Artery!' 'And, that patient (The Economy) is gonna die from that cause before the Economy catches up and stops that bleeding...' This is true! And a consequence of trying to stimulate the Economy via debt spending IS a balancing act that both the fiscal and monetary policies have to deal with. Down side of the debt escalation is loss of foreign confidence in our health and the down side of stagnation is more or deeper stagnation... but usually deflation is the worry. ...
So... Are you prepared to gamble which is best today and what changes and when are in order... ?
I say... dam the debt... let those chips fall where they may because the dynamics of the worst case scenario are that we will emerge stronger if the world denominates in the yen or giant rocks... a bit more isolated but stronger...
All I've to do now is convince Obama and company they should increase spending to buy lots more bandages for that bleeding artery cuz the other patient is not relevant... that other patient is like that air bag you hit and it comes back up smiling at you...

 

[First]

The Federal Reserve board members are elected to their posts by officials elected by American citizens. Now please, stop posting.

 

[dfuze]

The Federal Reserve board members are elected to their posts by officials elected by American citizens. Now please, stop posting.

Not to mention they are on the board for a 14 year term, not indefinite.

 

[Dr. Zaus]

All I've to do now is convince Obama and company they should increase spending to buy lots more bandages for that bleeding artery cuz the other patient is not relevant... that other patient is like that air bag you hit and it comes back up smiling at you...

We tried this, it ends up with massive interest rates and very high oil prices, people with the equal or the same purchasing power being pushed into a higher tax-bracket, the long term effects of devaluing our currency through unwarranted spending well known. What is different about it this time? Sure higher oil prices are deflationary, but once the employment bounces back we'll have higher oil prices and higher spending which will lead to a great deal of inflation as we re-ramp-up production.

Now please, stop posting.

5 of the 12 who are on the federal open market committee, the guys that actually do the open-market operations to control the money supply, (that is the issue I'm talking about); They are just the presidents of big private banks. Now, please stop posting without reading the OP.

A tax has to have a base upon which it is applied

The basis of the taxation is money itself, every dollar is being taxed so that it is now worth less purchasing power; and purchasing power, not money, is the real thing that the government taxes for anyway.

If you want to argue semantics you can; but the effects are the same:

We all have less purchasing power in exchange for the government having more purchasing power; call it anything you like: I call it a tax.

As we devalue the currency but don't adjust the tax-rate to inflation, even if incomes do adjust, we will see higher taxes on people with the same purchasing power simply because the numbers (not the purchasing power) of their pay check has gone up.

 

[LunarRay]

The basis of the taxation is money itself, every dollar is being taxed so that it is now worth less purchasing power; and purchasing power, not money, is the real thing that the government taxes for anyway.

If you want to argue semantics you can; but the effects are the same:

We all have less purchasing power in exchange for the government having more purchasing power; call it anything you like: I call it a tax.

As we devalue the currency but don't adjust the tax-rate to inflation, even if incomes do adjust, we will see higher taxes on people with the same purchasing power simply because the numbers (not the purchasing power) of their pay check has gone up.

Ok... you can call anything that reduces your purchasing power a tax. But us dummies who seek to communicate try to pigeon hole words with their generally accepted meanings within the framework of the greater subject. In this case Economics and Finance and to some extent Accounting.

Taxation is the providence of the Fiscal Policy folks... not the FED! (That will be on the test!)
What I mean by 'basis' is you need something to apply tax to... That you MAY get a raise and creep into another bracket the affect is only on those marginal income dollars that are taxed at a greater rate... But using your premise, all your income is subject to the devaluation of the inflationary factors (and so is the tax Revenue) and to say the FED taxed you or everyone might be correct if you are speaking in the lunchroom of the chemistry building but not so if you're in the Economics building... Perhaps I'm taxing your patience...

 

[piasabird]

Lets all carry gold and silver coins.

 

[Dr. Zaus]

Perhaps I'm taxing your patience

only if you keep side-stepping the hard questions

The condescension is both respected and admired.

LB: Spending, spending and more spending
DC: It ends up with massive interest rates and very high oil prices etc: What is different about it this time?

Also, international political science is a dough doughnut to chew as well; should we have unelected, unapproved, captains of international industry run foreign policy?

 

[First]

5 of the 12 who are on the federal open market committee, the guys that actually do the open-market operations to control the money supply, (that is the issue I'm talking about); They are just the presidents of big private banks. Now, please stop posting without reading the OP.

Since you seem to be inordinately slow I'll bold it for you; The officials elected to the Fed are elected to their posts by people who were elected by Americans citizens. So those 5 people are only able to exist in the Federal Reserve because officials elected by the American people elected them themselves. You getting it yet or should I write it out in crayon?

We all have less purchasing power in exchange for the government having more purchasing power; call it anything you like: I call it a tax.

You can call it a tax if you like, it just tells us you don't know what tax means.

 

[Dr. Zaus]

The officials elected to the Fed are elected to their posts by people who were elected by Americans citizens. So those 5 people are only able to exist in the Federal Reserve because officials elected by the American people elected them themselves.

you are simply ignorant; I'm sorry, I had a hard time believing that the presidents of private banks were part of the FOMC as well.

Check it out:
http://en.wikipedia.org/wiki/Federal_Open_Market_Committee#FOMC_membership

5 of the 12 are simply the president of federal-reserve banks; these are private banks that these guys just happen to be president of.

You can call it a tax if you like

Semantics.

Now that you know that 5 of the 12 people on the FOMC are private citizens who have not either been elected or put in place by elected representatives: stop arguing semantic and start addressing the issue.

Unelected people are deciding how to move purchasing power from the people to the government.

This same issue is part of what we were founded on getting rid of.

 

[First]

you are simply ignorant; I'm sorry, I had a hard time believing that the presidents of private banks were part of the FOMC as well.

Check it out:
http://en.wikipedia.org/wiki/Federal_Open_Market_Committee#FOMC_membership

5 of the 12 are simply the president of federal-reserve banks; these are private banks that these guys just happen to be president of.

Semantics.

Now that you know that 5 of the 12 people on the FOMC are private citizens who have not either been elected or put in place by elected representatives: stop arguing semantic and start addressing the issue.

Unelected people are deciding how to move purchasing power from the people to the government.

This same issue is part of what we were founded on getting rid of.

Good lord you are slow.

 

[LunarRay]

only if you keep side-stepping the hard questions

The condescension is both respected and admired.

LB: Spending, spending and more spending
DC: It ends up with massive interest rates and very high oil prices etc: What is different about it this time?

Also, international political science is a dough doughnut to chew as well; should we have unelected, unapproved, captains of international industry run foreign policy?

I think (at least once in awhile) that what I'm trying to indicate is that although income increases follow inflation and perhaps never catch up on a line by line basis that is internal... How it affects the warm and fuzzies of foreign 'investors' is external and is another matter but also of importance. The point, however, to my spending spree is to stimulate the economy regardless of any other factor that may be impacted by such spending (assuming via LT Debt). While it is true that printing money is thought to be inflationary how much of that is mitigated by the reality that that increase in the money supply is actually needed to provide the growth that I expect from my spending?... In any event, to do nothing is not what we need in a slowed or backward economic condition.

Additionally, I don't mind if the rich get exponentially richer... I welcome that. Historically we see that the greater the wealth created for the rich by the rich the further down the chain it trickles... The rich get richer off the labor of the less rich but at least they too get richer (wealthy) and the rich get richer off risk taking in various forms... one being investment in PPE or start up ventures... but they do this when they are given incentives or their inherent saavy enables them to so so... seeing their bench marks being met or by government stimulus, IOW.. either way the middle and even the lower class get a bit of the pie.

I want who ever is the best for the job to do the job especially in Foreign Policy... how they get there is not relevant to my want... I don't care! Again... best for the job is the ONLY criteria I look for... I'd want the most successful and 'former' Bank Robber to be my Bank Security Analysis Person, for instance.

That you don't agree with me is fine with me... I simply hope some of what I've said may augment what you know or simply be another perspective... I'm quite comfortable in my philosophy and expect everyone else is too. But one thing for sure... Both the Right and Left know that if they listen to the right thinking they'll solve the problems an economy has... They know my thinking...

 

[Darwin333]

I would rather keep it as it is with people who understand the industry brought in to do the job, not whoever can run the flashiest ad campaign. And they don't "tax" you, but rather set rates at which money is borrowed.

http://www.washingtonpost.com/wp-dyn/content/article/2005/10/26/AR2005102602255.html

Glad we got our "A team" in there....

 

[Darwin333]

I think (at least once in awhile) that what I'm trying to indicate is that although income increases follow inflation and perhaps never catch up on a line by line basis that is internal... How it affects the warm and fuzzies of foreign 'investors' is external and is another matter but also of importance. The point, however, to my spending spree is to stimulate the economy regardless of any other factor that may be impacted by such spending (assuming via LT Debt). While it is true that printing money is thought to be inflationary how much of that is mitigated by the reality that that increase in the money supply is actually needed to provide the growth that I expect from my spending?... In any event, to do nothing is not what we need in a slowed or backward economic condition.

Additionally, I don't mind if the rich get exponentially richer... I welcome that. Historically we see that the greater the wealth created for the rich by the rich the further down the chain it trickles... The rich get richer off the labor of the less rich but at least they too get richer (wealthy) and the rich get richer off risk taking in various forms... one being investment in PPE or start up ventures... but they do this when they are given incentives or their inherent saavy enables them to so so... seeing their bench marks being met or by government stimulus, IOW.. either way the middle and even the lower class get a bit of the pie.

I want who ever is the best for the job to do the job especially in Foreign Policy... how they get there is not relevant to my want... I don't care! Again... best for the job is the ONLY criteria I look for... I'd want the most successful and 'former' Bank Robber to be my Bank Security Analysis Person, for instance.

That you don't agree with me is fine with me... I simply hope some of what I've said may augment what you know or simply be another perspective... I'm quite comfortable in my philosophy and expect everyone else is too. But one thing for sure... Both the Right and Left know that if they listen to the right thinking they'll solve the problems an economy has... They know my thinking...

The one thing I don't think you consider is that the key to gaining wealth is "saving wealth". What you suggest is a system that gives incentive to NOT saving wealth (and therefor gaining wealth). Giving incentive to go into debt rarely creates wealth at the middle/bottom. It does however help those that already have wealth gain more of it.

Inflation=bad (unless you have a ton of debt)
Deflation=bad (unless you have a ton of cash)
Neither=good

 

[LunarRay]

The one thing I don't think you consider is that the key to gaining wealth is "saving wealth". What you suggest is a system that gives incentive to NOT saving wealth (and therefor gaining wealth). Giving incentive to go into debt rarely creates wealth at the middle/bottom. It does however help those that already have wealth gain more of it.

Inflation=bad (unless you have a ton of debt)
Deflation=bad (unless you have a ton of cash)
Neither=good

I do consider what you state. I said these wealthy folks CAN be induced to invest in job creating endeavors and etc... especially .... especially... if they can see that the yield on their 'investments' erodes if held in some vehicle or another like bonds or piggy banks.. I do want them to be creative and make a fortune! It is in the production of these inducements that one side or the other politically jump up and scream...

Sure, the benefit of the economy falls to the fortune of one's position when it occurs... I'd rather have inflation, however...

 

[Darwin333]

You can call it a tax if you like, it just tells us you don't know what tax means.

Would you prefer "an intentional decrease of value/purchasing power on past labor/profits"?

 

[Darwin333]

I do consider what you state. I said these wealthy folks CAN be induced to invest in job creating endeavors and etc... especially .... especially... if they can see that the yield on their 'investments' erodes if held in some vehicle or another like bonds or piggy banks.. I do want them to be creative and make a fortune! It is in the production of these inducements that one side or the other politically jump up and scream...

but how does that create anything but debt for the poor/middle class? Like I said, if they can't or won't save they will generally not gain wealth. They might be employed but if there is negative incentive to save they will probably be employed and in a ton of debt, which is one way the wealthy get more wealth at the expense of the lower rungs...

 

[LunarRay]

Would you prefer "an intentional decrease of value/purchasing power on past labor/profits"?

Ask yourself what 'items' in your own bucket of assets are devalued by inflation. Cash... sure!... Your home... not really and the mortgage is fixed, hopefull... but in either case you'll use future dollars (inflated ones) to pay for it! Your car?... hmmmm, you bought it and it has built in obsolesence... it probably has debt so inflated future dollars pay for that too...
The only real issue is to hope your income increases to match what you spend on that was 'inflated'.

Past labor/profits paid for past items... or movie tickets.. if the items are fixed assets like a house or pony... what changed? Other than you might get the same 'real' dollars for your house in more of the inflated kind.

There are exceptions....