quote:

I read the articles and I read along thinking true, true, that's right, that is what is going on, that is accurate, they are doing that ...

Good. I'm glad you recognize what's going on. And I'm not surprised you don't agree with the conclusions ... in fact, the writer predicts you and the mass of true believers in government's omnipotence over markets won't agree, but the reality will be thrust upon you regardless of whether you see it coming or not.

quote:

Originally posted by AMProf:

quote:

I read the articles and I read along thinking true, true, that's right, that is what is going on, that is accurate, they are doing that ...

Good. I'm glad you recognize what's going on. And I'm not surprised you don't agree with the conclusions ... in fact, the writer predicts you and the mass of true believers in government's omnipotence over markets won't agree, but the reality will be thrust upon you regardless of whether you see it coming or not.

YOU LEFT OFF:

quote:

and then I hit the conclusion and
!!!!

The conservative case is so devoid of a factual response you have to resort to such a disingenuous slimy trick as to cut a quote to change the meaning?

That is crap. Too bad that is all you have.

That shows you know I'm correct but won't admit it. Typical Con.

quote:

Originally posted by BullDoug:

quote:

Originally posted by AMProf:

quote:

I read the articles and I read along thinking true, true, that's right, that is what is going on, that is accurate, they are doing that ...

Good. I'm glad you recognize what's going on. And I'm not surprised you don't agree with the conclusions ... in fact, the writer predicts you and the mass of true believers in government's omnipotence over markets won't agree, but the reality will be thrust upon you regardless of whether you see it coming or not.

YOU LEFT OFF:

quote:

and then I hit the conclusion and
!!!!

You evidently didn't notice that I acknowledged in plain, simple English that "you don't agree with the conclusions," and that anyone who believes in government's power over markets as you evidently do, won't agree.

Do you now deny that as you read along you were thinking true, true, that's right, that is what is going on, that is accurate, they are doing that?

It's pretty much what they always do, and guess what? It doesn't work. Sow the dragon's teeth, reap the dragon harvest.

By the way, it's not really a conservative case, it's a case arguing for government spending that complies with the Constitution, and for ending the practice of the Federal Reserve creating dollars out of thin air and then demanding that only its vaporous, inflationary certificates are legal tender. There are plenty of so-called conservatives who understand the problem even less well than you do.

quote:

You evidently didn't notice that I acknowledged in plain, simple English that "you don't agree with the conclusions

Okay, I will grant you that and say my response was too harsh and maybe wrong. But I am a bit sensitive to the cutting of my words changing the context to make it appear I said something I didn't because of Zorro's proclivity to do that and later use the quotes he edited to call me a liar or a hypocrite over something I didn't say.

quote:

...and that anyone who believes in government's power over markets as you evidently do, won't agree

I wouldn't use the word "power", as in control, as I don't believe that. I would use the word "influence" though and do believe in the ability of the government and policy to influence the economy and markets. That would be particularly true in the short term.

quote:

Do you now deny that as you read along you were thinking true, true, that's right, that is what is going on, that is accurate, they are doing that?

Not at all. No doubt the government is taking action at historically extreme levels to influence the economy. But the situation and current conditions are extreme as well.

quote:

It's pretty much what they always do, and guess what? It doesn't work. Sow the dragon's teeth, reap the dragon harvest.

Here is where I would say we are in total disagreement. I would claim it has worked, it is working, and it always has worked at some level.

You might be able to argue the long term negative effects of debt service or the need to tax to pay it off. But I can't see where you can claim it doesn't work.

It might be useful to discuss what is meant by "work" as I see claims stating the stimulus can't do things it is not intended to do, such as create an entire economy using only government spending.

quote:

By the way, it's not really a conservative case, it's a case arguing for government spending that complies with the Constitution, and for ending the practice of the Federal Reserve creating dollars out of thin air and then demanding that only its vaporous, inflationary certificates are legal tender.

The constitutional argument is not an economic argument. This is where you fall in to the philosophical. Along with the fiat money argument.

As to inflation, thinking of some of Pawn's statements I would respond that the tax cuts of the Republicans are not cuts at all if they continue to spend. If you consider that inflation driven by deficit spending is really taxation on the majority. (But less so on the richest 10% that own 50% of the country's hard assets).

Doug, that's a reasonable answer, reasonably expressed.

I do argue that the long-term negative effects of debt service and the need to tax to pay it off are sufficient to make a claim that the process doesn't work. Even you recognize that the effect (influence) would be "particularly true in the short term." IMO it's the long term we all need to worry about.

If I might, I suggest you take a look at Peter Schiff's very recent book, "Crash-Proof 2.0" in the matter of both government spending and fiat money. It's a reprint of the same title from a couple of years ago, with each chapter updated with a long footnote bringing events up to mid-2009.

Best wishes,

David

I'm concerned about the National Debt. How can we pay it off?
Seán

Sean,

Re:

quote:

I'm concerned about the National Debt.

I don’t mean this in any derogatory way what so ever, but why are you concerned about the national debt, when those who run up the debt are not concerned?

Re:

quote:

How can we pay it off?

Again, I don’t mean this in any derogatory way what so ever.
A. The very same way you retire any other debt. You payoff the debt in full. (principle and interest )
You accomplish this by increasing your income and/or reducing your spending on other items to free up cash to pay off the debt.
In short you simply reverse the procedure that ran up the debt.
Pawn

quote:

"...why are you concerned about the national debt, when those who can do something about it are not concerned?"—Pawn

     Those who can "do something about it" can't create value. They can obtain it only through extracting it from the citizenry by taxes or by confiscation. Naturally I'm concerned because my share of the debt keeps growing. When concern returns to fiscaldom I fear I shall be ravished.

quote:

"...to pay off the debt...you simply reverse the procedure that ran up the debt.—Pawn

     The Public Debt has been expanding rapidly since circa 1980. Is it even possible to go into reverse and run thirty years of surpluses?
Seán

Sean,
Re:

quote:

Those who can "do something about it" can't create value.

I disagree. All they need to do is unbridle our national resources and change our nation’s “value” into wealth.

Re:

quote:

They can obtain it only through extracting it from the citizenry by taxes or by confiscation.

True, but it is a historically proven fact that lowering taxes creates more wealth for both the citizenry AND the government’s coffer.

Re:

quote:

Naturally I'm concerned because my share of the debt keeps growing.

As you should be. But I am not for that reason, as I am retired and no longer pay taxes.
My concern is now only based on patriotism and my lose of pride in America.
I don’t think you can even begin to imagine how a 3 or 4 generation American, who have worked their azz to the bone to build the very best nation ever known to man kind, while they watch it all being destroyed by a generation that is supposed to be the most educated.
Not to mention changing our society from a loving and caring society to one of the most inhumane to man society to walk the earth.
I think Vince Foster put it best, just before he blew his own brains out.
“ In Washington, destroying people, IS A SPORT”.
It’s no wonder we have such big azz holes in Washington with the daily anal exams certain politicians have to endue.

Re:

quote:

The Public Debt has been expanding rapidly since circa 1980. Is it even possible to go into reverse and run thirty years of surpluses?

It is not only possible but it is also probable with the right people in Washington.

You do realize that the only reason any foreign nation is financing the US debt is because they know our collateral is our national resources.
Did you really think China was financing our debt out of the kindness of their heart?
I suspect China would wipe out our debt for, say ----- oh--------- Alaska!
Lets hope it doesn’t come to that!

Pawn

quote:

...it is a historically proven fact that lowering taxes creates more wealth for both the citizenry AND the government’s coffer.—Pawn

     I know I'd be pleased to have my taxes lowered because it would let me keep more money, but I don't understand how that would make more wealth for the government. Perhaps you can explain it?
Seán

Sean,
Re:

quote:

I know I'd be pleased to have my taxes lowered because it would let me keep more money, but I don't understand how that would make more wealth for the government. Perhaps you can explain it?

True! Lower taxes does let you keep more of your own money.
But it also lets you spend more of your own money, which helps create more jobs to produce what you buy, and more jobs equates to more taxpayers paying taxes to the government.

Think about it this way.
If you were in need of a new vehicle, but you couldn’t afford a new one at your present tax rate because your income was $50 per month to low to make the monthly payment.
If you got a tax cut equal to $50 per month you could buy a new vehicle.
And when you buy the vehicle you created a new job for those who produce the raw materials to build the vehicle, those who design and build the vehicle and those who sell
the vehicle.

Regardless of what you spend your new found tax money on ,it will at least help keep some other people working and paying taxes. Remember, those who don’t work, don’t pay taxes ( a loss to government income )and they become a burden on those who do pay taxes ( a liability to the government’s taxpayers coffers ).

Then there is the positive psychological effect a tax cut has on taxpayer, which tends to make them more productive which generates even more tax revenue .

Pawn

quote:

Originally posted by Sean:

quote:

...it is a historically proven fact that lowering taxes creates more wealth for both the citizenry AND the government’s coffer.—Pawn

     I know I'd be pleased to have my taxes lowered because it would let me keep more money, but I don't understand how that would make more wealth for the government. Perhaps you can explain it?
Seán

That is another major righty myth!

It is more of that dogma they WANT to be true and it is not.

We have some of the lowest taxes RIGHT NOW in over half a century.

So how are doing? How are those government revenues?

Other being a mythical righty talking point it comes from misuse of the Laffer curve. The statement is only true if we are on the right side of the curve with taxes being restrictive. Cons want to ignore the total left half of the curve.

October sales gains lift hopes for housing market

By ALAN ZIBEL, AP Real Estate Writer Alan Zibel, Ap Real Estate Writer – 17 mins ago
WASHINGTON – First-time buyers seized on an expiring tax credit, low mortgage rates and falling prices to boost home sales in October to their highest level in 2 1/2 years.

Home sales are now nearly 37 percent above their bottom in January, though still 16 percent below their peak in 2005. At the current sales pace, there's a modest seven-month supply for sale. Bidding wars are occurring in some areas.

The report Monday from the National Association of Realtors pleased investors on Wall Street. And analysts said the homebuyer tax credit, which has been extended, will help sustain the housing market next year.

Darn that good news, eh?

Since the bottom in January? Who was President that brought us to that point? Who do we thank now? LOL.

PS, That October gain was the largest increase in existing home sales in a decade.

Pawn,
Here is my impression of the effect of lowering taxes without a compensating adjustment of the budget:
     Lowering taxes increases an individual's discretionary income enabling him to buy more goods. The seller of the goods enjoys a profit, which he will, in part, use to hire workers and to restore his inventory. What is left will go to increase his wealth. That increment will be enhanced because he, too, is paying taxes at a lower rate. So, also will his workers prosper; when he and they become consumers, they will be spending what they've earned... Thus far, there has been no net increase in money except that gained by individuals at the government's expense.
     As consumers deplete inventory, replacements will be manufactured and supplied to sellers. This process involves many steps, from extracting raw materials to shipping. When fresh goods are created they are subject to taxation when they're sold. Possibly the government regains the tax revenue it sacrificed by lowering the rates and perhaps even more.
     However, that successful outcome depends entirely on the consumers spending more than what they gained from lowered taxes: They can do that easily by using credit cards. Unfortunately they are forced to pay high interest on the balances they carry and that quickly exceeds the benefit they gained from lower taxes. Purchases lag, businesses fail, unemployment climbs, government revenue diminishes and deficit government spending soars in response to the economic emergency.
     Mine is a choppy summary, but I think it's reasonable. I believe the whole debacle could be avoided if people had to pay cash for purchases, using money they had really earned.
Seán

     An aspect of deficit spending by the government that I failed to mention is the expense of paying interest on the public debt. That expenditure uses money that otherwise would be available for useful purposes. If the governmental budget could be reduced to match its revenue it might help our economy more than tax reduction.
Seán.

Sean,
Your making this more complicated then need be.
Lets try breaking it down and do one thing at a time

How a tax cut stimulates the economy. We will do government spending next.
Look at this part as “increased income to the government.”

It’s a historical fact and a mathematical fact that if you let people keep more of their own money (lower taxes ) they will consume more, simply because they can. When they consume more, more work is created and more workers will be needed to supply the produces they consume.

Example:
Lets say at your present rate of taxation you can only afford to buy 10 hamburgers a week.
Now lets say it takes 1 cook ( 1 taxpayer ), who can only produce 100 burgers per week, to serve you.
If you and 100 other taxpayers get a tax cut equal to 1 burger the cook will now have to hire another cook We now we have 2 taxpayer ( cooks ) paying taxes.
If 1 cook pays $50 per year in taxes, 2 cooks pay $100 per year in taxes, as long as the tax cut stays in place. Hence the income to the government has doubled.

That is an example of “PRIVATE sector” economic stimulation through tax cuts, which created one job that was created for eternity.

Are you with me so far?
Questions? But only on what I have explained so far.
Pawn

quote:

...if you let people keep more of their own money (lower taxes ) they will consume more, simply because they can. When they consume more, more work is created and more workers will be needed to supply the produces they consume.—Pawn

     That seems correct to me, but your illustration uses optimistic numbers. It looks to me as if spending the money saved on taxes just passes it on to other people, but the money's total stays the same. What is the source of extra money to pay for the expansion you describe?
Seán

Sean,
Re:

quote:

It looks to me as if spending the money saved on taxes just passes it on to other people, but the money's total stays the same.

True, if you are counting the governments money. But in this example the government is giving up some money in the form of a tax cut. So as the government coffer goes down equal to the tax cut, the available private sector money goes up, equal to the government tax cut.

quote:

What is the source of extra money to pay for the expansion you describe?

From the government in the form of a tax cut.
OK? Or ?? Before I go on to the government side of the equation?
Pawn

quote:

Thus far, there has been no net increase in money except that gained by individuals at the government's expense.

I have to disagree with that rather strongly, and you put it in bold!

You have, imo, ignore two important aspects. One is that a recession can be destructive. While I can agree a correction is healthy I firmly believe a recession can be destructive. And this is a very severe recession. I think the attempts to frame it as healthy are very wrong and self serving.

It ignores that a economy is a system. The same is true down to the micro levels of an individual business or even a family unit. The system can break down. If not entirely the parts loss are damaging. Most bankrupt companies never recover and return in any form. While some are deserving, a severe recession takes out good companies with a future and thus you also then have severely hampered the potential upside, recovery.

An example of this would be empty warehouse that warehoused a going business can become more than worthless, it is a liability. So it is not just the loss of the business as the value of the warehouse itself falls. That is wealth destruction.

The other thing you somewhat ignore is the wealth creation that comes from the exchange. You do mention profits in that sense, but that comes from the increased value gained by the exchange. This is wealth creation separate from raw production. Keeping the exchanges occuring with government stimulus thus is creating wealth or in the least preventing wealth destruction.

Stimulus from tax cutting or government spending are both stimulative, Keynesian. The main difference is where the money goes. The Republicans like tax cuts for the rich. This is KNOWN to be poorly stimulative as the rich don't spend, they don't invest unless they see demand, and therefore the money does not trickle down. It never has, it never will.

The majority of the Bush tax cuts for the rich were invested....overseas, according to money flows. Because that is where they saw demand and profits.

Government spending tends to be bottom up. The Republicans only want to maintain their myths of supply side to line their own pockets not help the economy or the country.

quote:

Possibly the government regains the tax revenue it sacrificed by lowering the rates and perhaps even more.

Again, we are near record low taxes thanks to Bush, so how are doing?

Shouldn't reality trump demogogery or rhetoric?

That idea that the government will benefit in revenues from tax cuts is a miscontruing of the Laffer curve. It is only true if we are on the right side of the optimal point. With all the cuts we had, such as the 1995 capital gains cuts that was the largest tax cut for the rich in history we are most likely well to the left on the curve and cuts will only decrease revenue. ("for the rich" because the richest 10% claim the majority of all capital gains as they own 50% of all assets)

How do we pay for the debt? Taxes.

The Republicans are still doing their Born Yesterday bit.

I guess they forgot that in 2000 they claimed, and Greenspan even said:

"The greatest risk to the country and the economy is that the government will pay off all it's debt and will have to buy private assets with the excess revenue."

REALLY? Yes. That was their claim. Their big myth at the time. How quickly they forget.

My position at the time was, okay, just pay off the debt first then cut taxes.

But one economist I read noted that, although they didn't pay down debt, the situation at that time proved we could tax our way out of deficits and pay down the debt.

(Pawnie, did your heart miss a beat after reading that? lol)

Sean,
Read this http://www.humanevents.com/article.php?id=34153 then get the book “The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen (Paperback)”
Pawn

Pawn,
     Let's focus on the people first, the government can wait. We have agreed a tax cut leaves more money for the people and that they can benefit by spending more. However, spending does not increase the net amount of money. After it is spent some will be poorer and some will be richer, but average wealth will not be changed by trading cash for merchandise. Wealth increases only when new goods are added to the pool by exploiting natural resources or by productive labor. Government "gifts" do not create wealth, they only increase public debt.
Seán

Pawn,
     I have scanned the article Experts Warn: Tax Hikes Would Undercut Economy
by Paul Dykewicz and will read it carefully tomorrow. Its premise that excessive taxing is detrimental seems sound enough, but I maintain governmental spending beyond what it takes in as tax revenue is far more damaging.
Seán

quote:

Originally posted by Pawn09:
Sean,
Read this http://www.humanevents.com/article.php?id=34153 then get the book “The End of Prosperity: How Higher Taxes Will Doom the Economy--If We Let It Happen (Paperback)”
Pawn

quote:

The supply-side strategies included cutting tax rates on: dividends from 49.5% to 15%; capital gains from 20% to 15%; personal income for the highest earners from 39.6% to 35%; and business investment in plant, machinery and equipment. Stocks climbed about 20% within two years of the Bush tax cuts. Overall asset values rose by $6 trillion between 2003 and 2007. Business spending advanced from declines of 4.8% in 2001 and 6.1% in 2002 to increases of 7.4% in 2004 and 9.5% in 2005 -- reflecting a “classic” supply recovery, the authors wrote. Indeed, the economy grew by 8 million jobs between 2003 and the end of 2007, according to the U.S. Bureau of Labor Statistics.

Republicans SOOO like to be duped and fooled.

Let's see declines of 4.8% and 6.1% is minus 10.9 then 7.4 and +9.5% equals 16.9%. That is average growth of 1.5% over FOUR YEARS? That is REAL BAD!
hahahahahahaha C'mon man think!

What about after 2005? 2006? 2007? 2008?

He ignores job the losses in 2001, 2002, and 2008??? Then touts gains? hahaha

Taking credit for gains after ignoring huge losses he presided over under THEIR policies is total crap. Getting back to little better than even without a change in policy is BAD. Remember it starts by touting Republican policy since the 1995 tax cuts.


I ask again, all those tax cuts are in place still. How are we doing?

How did incomes and wages fair during that time you tout gains? How did the majority fare? How was their debt levels? Savings? Their incomes went down and they spent the equity in their homes? Now they are losing their homes as a result? That can't be good.

I have hardly seen a worse case of liars lying with statistics. The statistics are cherry picked bad enough so many cherries should give you diarrhea.

And duped Republicans eat it up. Zorro posted the same article a couple of times as well.

You should be dizzy from being spun so badly.

When are going to wake up and realize your Republican policies have almost destroyed our country, made the majority poorer and the rich very much richer, caused damage that will take a decade to repair, and is causing immeasureable suffering?

And YOU want more it? Why? To make things worse?