Lets make fun of Obama while he is still relevant.

[Eric the Green]

Does Galen and Warren and Classic Xer et all REALLY want to resume skyrocketing national deficits that our great grandchildren will never be able to pay back, saddled with enormous taxes? Or an economy crippled beyond repair by government default? This is really what you voted for and argue for? Are you going to let Trump have his enormous budget busting infrastructure and military rebuilding programs, and this is going to be paid for, how? Another supply side delusion?

http://www.politicususa.com/2016/11/14/e...onomy.html

Keep history in mind, unless you believe in magical thinking, like I allegedly do!
https://mic.com/articles/159352/donald-t....y3waUnDoQ

[Eric the Green]

Well said here:

The Trump "Plans:" Death, Debt & Depression.
Organizer
News • 3 months ago
https://www.yabberz.com/post/the-trump-p...t=86830555

Donald Trump said he had a "secret plan to defeat ISIS," and that he knew "more about ISIS than the generals," who have been dealing with them.

Hillary Clinton said that Trump's "secret plan," was that he had no plan at all.

And unwittingly, Trump confirmed Hillary's observation, when he said yesterday that upon entering the WH, he would charge "his generals" to come up with a plan for defeating ISIS.

Trump also had previously proposed an "economic plan," which included not just more tax cuts for the rich, but the end of the estate tax, which doesn't effect estates of less than $10 million for married couples.

The estimated cost of Trump's "economic plan?" $10 trillion dollars over the next decade, according to the Brookings Institution.

And then there's the increases in the Defense spending that Trump proposed last night. It seems having a military that is bigger and more powerful than the next 10 largest military nations on earth isn't enough for Trump. He wants more Marine divisions, more warships, more missiles, more of everything. The costs will be in the hundreds of billions of $$$ that will have to be added to the deficits Trump will cause to skyrocket with his "economic plan."

And then there's that "Wall" Trump says he will build on the Mexican border. Estimated costs for that are $40 billion, but Trump promises Mexico will pay for it, even though the President of Mexico said they won't. Who do you believe?

But aside from all the numbers and the plans, the reality is that if Trump is serious about "defeating ISIS," in the short term, assuming that's possible, he would have to do it with American boots on the ground. Which means a lot of American soldiers will be returning from Syria, Libya, and Iraq in body bags (again).

And of course, there is no guarantee that another ground war in the Middle East by America will end any better than the one we have been conducting there for the last 13 years - if it ever ends at all!

So if you've been paying attention to what Donald Trump has been saying, and you can do the math, the bottom line is that Trump's "plans" will spill the blood of thousands more American troops, as well as tens of thousands more innocent civilians in those war zones. The cost of his new war and his tax cuts for the rich (the old GW Bush/GOP scam repeated), will skyrocket our deficits back above the trillion $$$/year levels, and the result of all the debt and his deregulation proposals will (as history repeats itself) lead to another economic depression.

Yes folks, it's that good old GOP witch's brew for America all over again. More death (mostly middle class and poor American kids), more debt (while the rich get richer from tax cuts), and another economic depression!

And if you vote for Donald Trump, in addition to the "benefits" above, you also get Trump's small fingers on the nuclear buttons, just in case he wants to launch a nuclear war to "teach somebody a lesson!"

Is that a great "plan" for your future or what???

[Warren Dew]

I suspect I'm the only one who actively wants more debt, because I think it's necessary to the ideal handling of the demographic slowdown. Japan has shown that a debt level of 3x GDP is sustainable and even good, given that the demographic slowdown causes exceptionally low or even negative natural interest rates. We're far below that.

I suspect Galen wants to reduce spending to the point that taxes can also be reduced while reducing the deficit, though I'd be interested in hearing from him.

I'd also be interested in hearing from Classic Xer.

[Eric the Green]

So you really want more debt as an answer to demographic slowdown (translation, fewer people saddled with higher debt)? More deficits and debt in a period of recovery? $19 trillion is not enough fer ya?

I suspect the real objective you favor is to render government and it's "top down" activities impotent. You can correct me if I'm wrong, tho

I suspect though that there are deficit hawks in both parties that may put a stop to Trump's deficit spending, and thus end his hope for his plan to "bring jobs back" (which it would never accomplish anyway, except for some temporary infrastructure projects). No, the time for this was 2009, and the DINOs first watered it down, and then that same Republican Party that boosts him now, brought the OBama stimulus to a screeching halt in 2011 so they could blame him for the tepid recovery in the next election, which they did.

[Galen]

(11-17-2016, 04:04 PM)Warren Dew Wrote: I suspect I'm the only one who actively wants more debt, because I think it's necessary to the ideal handling of the demographic slowdown.  Japan has shown that a debt level of 3x GDP is sustainable and even good, given that the demographic slowdown causes exceptionally low or even negative natural interest rates.  We're far below that.

I suspect Galen wants to reduce spending to the point that taxes can also be reduced while reducing the deficit, though I'd be interested in hearing from him.

I'd also be interested in hearing from Classic Xer.

Are you insane?  Japan is working on their third lost decade.  No doubt someone will tell me that Fukishima is responsible for their current problems but this has been going on since about 1990.  It will no doubt be someone who, when a Hurricane next levels a city, says that it is good for the economy because of the rebuilding.

Japan has been following the Keynesian prescription since the early nineties and it has gotten them nowhere.  Abenomics is Keynesianism on steroids.  The only reason their debt appears sustainable is because of the artificially low interest rates caused by the bank of Japan.

The Harding's response to the Depression of 1920 violated all of the rules of modern macroeconomics and it only lasted eighteen months, typical of recessions prior to the Great Depression.  Hoover and Roosevelt borrowed, taxed and spent like most modern economists say should be done and the Depression dragged on for fourteen years.  The only reason the Depression didn't resume is because FDR was dead and Truman vastly reduced spending after World War II.  Keynesian economists were predicting that the Depression would resume and were absolutely shocked when it didn't.  1946 was one of the best years ever in terms of GDP.  Look up Robert Higgs to understand why the GDP measurements during the war years are completely bogus.  Hint:  It involves the US being turned into a command economy.

[Eric the Green]

The beloved Fed and its chair pour some cold water on Trump's plans. At least we'll have some sanity from the Fed, Mr. Rags! for another year. After that, Katy bar the door!

the two-way
BREAKING NEWS FROM NPR
ECONOMY

Federal Reserve Chair Throws Cold Water On Trump's Economic Plan

November 17, 20165:25 PM ET
CHRIS ARNOLD

Federal Reserve Board Chair Janet Yellen told Congress on Thursday she didn't agree with President-elect Donald Trump's plans for more infrastructure spending and less banking regulation.

President-elect Donald Trump has pledged a $1 trillion infrastructure spending program to help jump-start an economy that he said during the campaign was in terrible shape.

Speaking on Capitol Hill Thursday, Federal Reserve Board Chair Janet Yellen warned lawmakers that as they consider such spending, they should keep an eye on the national debt. Yellen also said that while the economy needed a big boost with fiscal stimulus after the financial crisis, that's not the case now.

"The economy is operating relatively close to full employment at this point," she said, "so in contrast to where the economy was after the financial crisis when a large demand boost was needed to lower unemployment, we're no longer in that state."

Yellen cautioned lawmakers that if they spend a lot on infrastructure and run up the debt, and then down the road the economy gets into trouble, "there is not a lot of fiscal space should a shock to the economy occur, an adverse shock, that should require fiscal stimulus."

In other words, lawmakers should consider keeping their powder dry so they have more options whenever the next economic downturn comes along.

Trump was harshly critical of Yellen during his campaign. But testifying before the Joint Economic Committee, Yellen said she is not going to quit just because Trump won the election. Rep. Carolyn Maloney, D-N.Y., asked Yellen, "Can you envision any circumstances where you would not serve out your term as chair of the Federal Reserve?" "No, I cannot," answered Yellen, "It is fully my intention to serve out that term." Yellen's appointment goes through January 2018.

Another target of Trump's during the campaign came up at the hearing: the Dodd-Frank Wall Street Reform and Consumer Protection Act. Rep. Pat Tiberi, R-Ohio, cited Trump's criticism that the Dodd-Frank banking rules were stifling lending and stunting the economy. But Yellen gave her support to Dodd-Frank, saying:

"We lived through a devastating financial crisis, and a high priority for all Americans should be that we want to see put in place safeguards through supervision and regulation that result in a safer and sounder financial system, and I think we have been doing that and our financial system as a consequence is safer and sounder and many of the appropriate reforms are embodied in Dodd-Frank."

Yellen added, "We wouldn't want to go back to the mortgage lending standards that led to the financial crisis."

She also said she thought banks were actually willing to lend to small businesses, but that sales haven't been growing sufficiently fast to justify borrowing, suggesting the demand for loans was the real problem.

As far as the ever-present question about when the Fed will raise interest rates, Yellen signaled that she didn't see any reason to alter the Fed's prior guidance now that Trump has been elected as the next president.

[Warren Dew]

(11-17-2016, 04:21 PM)Eric the Green Wrote: So you really want more debt as an answer to demographic slowdown (translation, fewer people saddled with higher debt)? More deficits and debt in a period of recovery? $19 trillion is not enough fer ya?

I suspect the real objective you favor is to render government and it's "top down" activities impotent. You can correct me if I'm wrong, tho

While I wouldn't mind that, that's not my reasoning.  I will point out one thing:  the important issue is debt service, not debt.  With interest rates at 1%, ten times as much debt is sustainable as is sustainable with interest rates at 10%.  And I can remember when the latter was the case.

Quote:I suspect though that there are deficit hawks in both parties that may put a stop to Trump's deficit spending, and thus end his hope for his plan to "bring jobs back" (which it would never accomplish anyway, except for some temporary infrastructure projects). No, the time for this was 2009, and the DINOs first watered it down, and then that same Republican Party that boosts him now, brought the OBama stimulus to a screeching halt in 2011 so they could blame him for the tepid recovery in the next election, which they did.

Truth.  But I don't advocate any spending increase at all.  Rather, I advocate increasing the deficit through massive income tax reductions.

[Eric the Green]

(11-17-2016, 10:18 PM)Warren Dew Wrote:

(11-17-2016, 04:21 PM)Eric the Green Wrote: So you really want more debt as an answer to demographic slowdown (translation, fewer people saddled with higher debt)? More deficits and debt in a period of recovery? $19 trillion is not enough fer ya?

I suspect the real objective you favor is to render government and it's "top down" activities impotent. You can correct me if I'm wrong, tho

While I wouldn't mind that, that's not my reasoning.  I will point out one thing:  the important issue is debt service, not debt.  With interest rates at 1%, ten times as much debt is sustainable as is sustainable with interest rates at 10%.  And I can remember when the latter was the case.

The problem being that they could go to 10% again at any time. I can remember when the rates were close to 20%. Then most of our taxes will be going to pay interest. I suppose that's one way to stimulate the economy, when we're not doing QE. Or it might stimulate China's economy, FWIW. But it doesn't give the US taxpayers much benefit, I don't think.

Quote:

Quote:I suspect though that there are deficit hawks in both parties that may put a stop to Trump's deficit spending, and thus end his hope for his plan to "bring jobs back" (which it would never accomplish anyway, except for some temporary infrastructure projects). No, the time for this was 2009, and the DINOs first watered it down, and then that same Republican Party that boosts him now, brought the OBama stimulus to a screeching halt in 2011 so they could blame him for the tepid recovery in the next election, which they did.

Truth.  But I don't advocate any spending increase at all.  Rather, I advocate increasing the deficit through massive income tax reductions.

I suppose we might avoid some boondoggles that way, such as Trump's stupid military toys and walls. I hope the deficit hawks and spending opponents have some say in the matter. But beyond that, all that reduced taxes accomplishes is a reduced tax bill. It is very bad for the country, both in terms of debt, and the removal of services that the government provides that we need. It has no benefit for most people's income. Supposed benefits of reduced taxes on the wealthy do not trickle down at all, and there is little stimulus to the economy. Poverty increases, public resources are removed, infrastructure and research decline, and the bosses abuse the people and the environment, who then have no recourse. It's a failed theory. Free market capitalism alone cannot supply what a healthy society needs. Not even close. It never has, and never will.

But, right now, not quite enough Americans realize this.

http://philosopherswheel.com/freemarket.html

[Warren Dew]

(11-17-2016, 04:43 PM)Galen Wrote:

(11-17-2016, 04:04 PM)Warren Dew Wrote: I suspect I'm the only one who actively wants more debt, because I think it's necessary to the ideal handling of the demographic slowdown.  Japan has shown that a debt level of 3x GDP is sustainable and even good, given that the demographic slowdown causes exceptionally low or even negative natural interest rates.  We're far below that.

I suspect Galen wants to reduce spending to the point that taxes can also be reduced while reducing the deficit, though I'd be interested in hearing from him.

I'd also be interested in hearing from Classic Xer.

Are you insane?  Japan is working on their third lost decade.  No doubt someone will tell me that Fukishima is responsible for their current problems but this has been going on since about 1990.  It will no doubt be someone who, when a Hurricane next levels a city, says  that it is good for the economy because of the rebuilding.

Japan has been following the Keynesian prescription since the early nineties and it has gotten them nowhere.  Abenomics is Keynesianism on steroids.  The only reason their debt appears sustainable is because of the artificially low interest rates caused by the bank of Japan.

The Harding's response to the Depression of 1920 violated all of the rules of modern macroeconomics and it only lasted eighteen months, typical of recessions prior to the Great Depression.  Hoover and Roosevelt borrowed, taxed and spent like most modern economists say should be done and the Depression dragged on for fourteen years.  The only reason the Depression didn't resume is because FDR was dead and Truman vastly reduced spending after World War II.  Keynesian economists were predicting that the Depression would resume and were absolutely shocked when it didn't.  1946 was one of the best years ever in terms of GDP.  Look up Robert Higgs to understand why the GDP measurements during the war years are completely bogus.  Hint:  It involves the US being turned into a command economy.

Completely agreed regarding Harding, Hoover, and Roosevelt.

Japan's situation is not the same.  It's not a business cycle recession.  In fact, it's not fundamentally an economic issue at all, although it manifests that way; it's a political issue.

Japan's baby boom came two decades before ours.  While we were having a depression in the 1930s and corresponding low birth rates, they were conquering resources in southeastern Asia  and had high birth rates.   It was followed by a bust at the same time as our boom after the war since they lost when we won.  As a result, their big generation started retiring in 1990 instead of 2010.

Since Japan allows virtually no immigration, the retirements and low birth rates resulted in a severe shortage of labor, and, of course, a recession.

If market forces had been at work, the price of labor - wages - would have increased and unemployment would have dropped.  The pain of the depression would have fallen primarily on the nonworking retired as the value of labor went up relative to the value of savings.

However, because of the political power of the swollen retired age groups, the opposite happened.  The living standards of the retirees was maintained with less of the economic output going to the workers.  This resulted in less incentive to work and thus higher unemployment.

Japan did not use serious keynesian stimulus until Abenomics in 2012, not that that would have made a difference.

More detail on my thoughts here:

http://psychohist.livejournal.com/73820....iew=261980
http://psychohist.livejournal.com/74190.html

We're entering a period similar to Japan in the 1990s.  What that says for us is that we need to take all possible measures to increase labor participation.  One of the best tools to do that is heavy cuts to income tax rates.  We need that even if it results in bigger deficits.

[Galen]

(11-18-2016, 10:53 AM)Warren Dew Wrote:

(11-17-2016, 04:43 PM)Galen Wrote:

(11-17-2016, 04:04 PM)Warren Dew Wrote: I suspect I'm the only one who actively wants more debt, because I think it's necessary to the ideal handling of the demographic slowdown.  Japan has shown that a debt level of 3x GDP is sustainable and even good, given that the demographic slowdown causes exceptionally low or even negative natural interest rates.  We're far below that.

I suspect Galen wants to reduce spending to the point that taxes can also be reduced while reducing the deficit, though I'd be interested in hearing from him.

I'd also be interested in hearing from Classic Xer.

Are you insane?  Japan is working on their third lost decade.  No doubt someone will tell me that Fukishima is responsible for their current problems but this has been going on since about 1990.  It will no doubt be someone who, when a Hurricane next levels a city, says  that it is good for the economy because of the rebuilding.

Japan has been following the Keynesian prescription since the early nineties and it has gotten them nowhere.  Abenomics is Keynesianism on steroids.  The only reason their debt appears sustainable is because of the artificially low interest rates caused by the bank of Japan.

The Harding's response to the Depression of 1920 violated all of the rules of modern macroeconomics and it only lasted eighteen months, typical of recessions prior to the Great Depression.  Hoover and Roosevelt borrowed, taxed and spent like most modern economists say should be done and the Depression dragged on for fourteen years.  The only reason the Depression didn't resume is because FDR was dead and Truman vastly reduced spending after World War II.  Keynesian economists were predicting that the Depression would resume and were absolutely shocked when it didn't.  1946 was one of the best years ever in terms of GDP.  Look up Robert Higgs to understand why the GDP measurements during the war years are completely bogus.  Hint:  It involves the US being turned into a command economy.

Completely agreed regarding Harding, Hoover, and Roosevelt.

Japan's situation is not the same.  It's not a business cycle recession.  In fact, it's not fundamentally an economic issue at all, although it manifests that way; it's a political issue.

Japan's baby boom came two decades before ours.  While we were having a depression in the 1930s and corresponding low birth rates, they were conquering resources in southeastern Asia  and had high birth rates.   It was followed by a bust at the same time as our boom after the war since they lost when we won.  As a result, their big generation started retiring in 1990 instead of 2010.

Since Japan allows virtually no immigration, the retirements and low birth rates resulted in a severe shortage of labor, and, of course, a recession.

If market forces had been at work, the price of labor - wages - would have increased and unemployment would have dropped.  The pain of the depression would have fallen primarily on the nonworking retired as the value of labor went up relative to the value of savings.

However, because of the political power of the swollen retired age groups, the opposite happened.  The living standards of the retirees was maintained with less of the economic output going to the workers.  This resulted in less incentive to work and thus higher unemployment.

Japan did not use serious keynesian stimulus until Abenomics in 2012, not that that would have made a difference.

More detail on my thoughts here:

http://psychohist.livejournal.com/73820....iew=261980
http://psychohist.livejournal.com/74190.html

We're entering a period similar to Japan in the 1990s.  What that says for us is that we need to take all possible measures to increase labor participation.  One of the best tools to do that is heavy cuts to income tax rates.  We need that even if it results in bigger deficits.

There is some truth to this but Japan has always used inflation as a way to devalue their currency in order to make their exports more attractive.  After the stock market crash in 1989 they then explicitly used Keynesian monetary and government fiscal stimulus to try to revive their economy.  Abenomics is simply taking this to extremes.

Japan has never explicitly had a free market economic in the Classical Liberal sense the Europe and the US did.

You have noted the negative effects of this policy on the young who also tend to be poorer and not hold equities.  This has made wealth inequality greater than it otherwise would be just as it has in the US.  I would also maintain that in addition to the taxes that fall more heavily on the poor, the decrease in purchasing power caused by inflation has fallen on the poor and the young.  It seems likely that this is part of the reason why family formation and the lower birthrate has affected Japan more than it has in the US and Europe.

[Warren Dew]

(11-19-2016, 03:23 AM)Galen Wrote: You have noted the negative effects of this policy on the young who also tend to be poorer and not hold equities.  This has made wealth inequality greater than it otherwise would be just as it has in the US.  I would also maintain that in addition to the taxes that fall more heavily on the poor, the decrease in purchasing power caused by inflation has fallen on the poor and the young.  It seems likely that this is part of the reason why family formation and the lower birthrate has affected Japan more than it has in the US and Europe.

I really don't think you can say Japan continued with inflationary Keynesian policies after the crash.  In the 1960s to 1980s, when they were trying to build exports to the U.S., yes,  but since the beginning of the 1990s, inflation in Japan has been essentially zero, with the price index the same in 1992 as it is today:

http://www.tradingeconomics.com/japan/co...-index-cpi

(set the graph to "max" time period)

[Galen]

(11-19-2016, 08:10 PM)Warren Dew Wrote:

(11-19-2016, 03:23 AM)Galen Wrote: You have noted the negative effects of this policy on the young who also tend to be poorer and not hold equities.  This has made wealth inequality greater than it otherwise would be just as it has in the US.  I would also maintain that in addition to the taxes that fall more heavily on the poor, the decrease in purchasing power caused by inflation has fallen on the poor and the young.  It seems likely that this is part of the reason why family formation and the lower birthrate has affected Japan more than it has in the US and Europe.

I really don't think you can say Japan continued with inflationary Keynesian policies after the crash.  In the 1960s to 1980s, when they were trying to build exports to the U.S., yes,  but since the beginning of the 1990s, inflation in Japan has been essentially zero, with the price index the same in 1992 as it is today:

http://www.tradingeconomics.com/japan/co...-index-cpi

(set the graph to "max" time period)

Fair enough but they have been trying to use Keynesian policies to create consumer price inflation which has not occurred.  Inflation in the classical and Austrian sense is an increase in the money supply.  They have been printing money and the government has been spending like a madman for nearly thirty years and it hasn't gotten them what they want.  In this case nominal economic growth and price inflation which have yet to be seen.

The policies have been Keynesian with rather unexpected results.

[Warren Dew]

(11-20-2016, 03:14 AM)Galen Wrote:

(11-19-2016, 08:10 PM)Warren Dew Wrote:

(11-19-2016, 03:23 AM)Galen Wrote: You have noted the negative effects of this policy on the young who also tend to be poorer and not hold equities.  This has made wealth inequality greater than it otherwise would be just as it has in the US.  I would also maintain that in addition to the taxes that fall more heavily on the poor, the decrease in purchasing power caused by inflation has fallen on the poor and the young.  It seems likely that this is part of the reason why family formation and the lower birthrate has affected Japan more than it has in the US and Europe.

I really don't think you can say Japan continued with inflationary Keynesian policies after the crash.  In the 1960s to 1980s, when they were trying to build exports to the U.S., yes,  but since the beginning of the 1990s, inflation in Japan has been essentially zero, with the price index the same in 1992 as it is today:

http://www.tradingeconomics.com/japan/co...-index-cpi

(set the graph to "max" time period)

Fair enough but they have been trying to use Keynesian policies to create consumer price inflation which has not occurred.  Inflation in the classical and Austrian sense is an increase in the money supply.  They have been printing money and the government has been spending like a madman for nearly thirty years and it hasn't gotten them what they want.  In this case nominal economic growth and price inflation which have yet to be seen.

The policies have been Keynesian with rather unexpected results.

While there has been some continued growth in the money supply, it was substantially lower in the 1990-2012 period than before or since.

http://www.tradingeconomics.com/japan/money-supply-m2
(again set graph to "max" time period)

The fact that price inflation was lower during that same period is exactly what would be predicted by monetary theory.

Now, Japan did run large deficits during that period.  However, one thing neokeynesians seem to have forgotten about Keynesian theory is that Keynesian stimulus requires both large deficits and also that those deficits be monetized by the central bank through increases in the money supply.  Without that monetization, the deficits induced by extra spending are counteracted by high interest rates and their accompanying drag on the economy.  And of course, compensating for spending with tax increases instead of deficits is even worse.

In this case, Japan accepted the high interest rates because they catered to the large and growing class of retirees whose standard of living depended on high returns on investment.  The result was that those still working got squeezed and many gave up.

What Japan should have done is run the deficits, but through massive tax cuts rather than increased spending, and with full monetization of the deficits.  The retirees would have taken a hit since interest rates would have been lower and inflation higher, but people still working would have taken home more money, increasing the incentive to work and reducing the unemployment rate.  The overall economy would have held up better.

The indicated solution for the U.S.  is a bit different since our retirees get inflation adjusted social security; inflation doesn't help us with our boomer retirements.  What we need is massive tax cuts to motivate and reward work, but with less monetization and perhaps a partial removal of inflation adjustments for social security and welfare benefits.

[Eric the Green]

The delusion that conservatives and libertarians are under is that massive tax cuts "motivate and reward work." They don't. Tax cuts motivate financial speculation, pencil pushing, buyouts, exporting jobs, automation and all the other wonderful (and horrible) things that the wealthy do. They don't earn their money, they extort it from the people who do real work. Trickle down doesn't trickle. What it certainly does is increase the unequal power of the wealthy over the rest of us.

The inflation adjustment for social security has already been removed by you guys.

Higher interest rates help those who spend money, thus stimulating the economy. Higher interest rates (within reason) put a check on the wealthy, who borrow money for luxury purchases that don't help the economy, and for supposed expansion of their businesses. In the old days, businessmen borrowed money to boost their business, which helped create jobs. Nowadays, especially in America rather than Japan, they borrow in order to buyout other companies, build plants in other countries, and speculate and gamble with other peoples' money.

The purpose of "work" for an individual is not to take home more money now. It is to build up savings so they can invest it and thus not have to "work." Without savings, investment, and returns on investment, there is no incentive to "work." And savings builds up capital in the economy so business can expand.

And then people can afford to pay more taxes too, which builds infrastructure. Without taxes (within reason) and government spending (within reason), the economy has no basis on which to operate. Only toll roads and privatized services available only to the wealthy exist. That's called a banana republic.

Extremism in defense of liberty is indeed a vice. Balanced policies are a virtue.

[Galen]

(11-21-2016, 07:36 AM)Warren Dew Wrote:

(11-20-2016, 03:14 AM)Galen Wrote:

(11-19-2016, 08:10 PM)Warren Dew Wrote:

(11-19-2016, 03:23 AM)Galen Wrote: You have noted the negative effects of this policy on the young who also tend to be poorer and not hold equities.  This has made wealth inequality greater than it otherwise would be just as it has in the US.  I would also maintain that in addition to the taxes that fall more heavily on the poor, the decrease in purchasing power caused by inflation has fallen on the poor and the young.  It seems likely that this is part of the reason why family formation and the lower birthrate has affected Japan more than it has in the US and Europe.

I really don't think you can say Japan continued with inflationary Keynesian policies after the crash.  In the 1960s to 1980s, when they were trying to build exports to the U.S., yes,  but since the beginning of the 1990s, inflation in Japan has been essentially zero, with the price index the same in 1992 as it is today:

http://www.tradingeconomics.com/japan/co...-index-cpi

(set the graph to "max" time period)

Fair enough but they have been trying to use Keynesian policies to create consumer price inflation which has not occurred.  Inflation in the classical and Austrian sense is an increase in the money supply.  They have been printing money and the government has been spending like a madman for nearly thirty years and it hasn't gotten them what they want.  In this case nominal economic growth and price inflation which have yet to be seen.

The policies have been Keynesian with rather unexpected results.

Now, Japan did run large deficits during that period.  However, one thing neokeynesians seem to have forgotten about Keynesian theory is that Keynesian stimulus requires both large deficits and also that those deficits be monetized by the central bank through increases in the money supply.  Without that monetization, the deficits induced by extra spending are counteracted by high interest rates and their accompanying drag on the economy.  And of course, compensating for spending with tax increases instead of deficits is even worse.

The indicated solution for the U.S.  is a bit different since our retirees get inflation adjusted social security; inflation doesn't help us with our boomer retirements.  What we need is massive tax cuts to motivate and reward work, but with less monetization and perhaps a partial removal of inflation adjustments for social security and welfare benefits.

You have to keep in mind that the US ran into some serious problems in the seventies by monetizing the debt.  Consumer price inflation was approaching twenty percent by the end of the Carter years.  One of the the surprising things about Reagan was that he permitted Volker to raise interest rates enough to kill inflation.  The cost was a short and very severe recession early in his administration.  Unfortunately, he did not do anything about the spending which is why we find ourselves staring trillion dollar deficits and twenty trillion in total debt.  The Japanese are in an even worse position as a consequence of Abenomics.

No doubt Eric the Obtuse is whining about how tax reductions don't reward work.  There are plenty of cases where reducing taxes, government debt and government spending did improve economic growth.  Eric the Obtuse also can't seem to figure out that with the Saudis and Chinese selling large amounts of their T-Bills means that the petrodollar is done and it is no longer possible to export inflation the way the US has been doing for the past fifty years.  The government will have no choice but to get its spending under control and it will probably be a currency crisis that forces the issue.

[Warren Dew]

(11-21-2016, 03:39 PM)Galen Wrote:

(11-21-2016, 07:36 AM)Warren Dew Wrote:

(11-20-2016, 03:14 AM)Galen Wrote:

(11-19-2016, 08:10 PM)Warren Dew Wrote:

(11-19-2016, 03:23 AM)Galen Wrote: You have noted the negative effects of this policy on the young who also tend to be poorer and not hold equities.  This has made wealth inequality greater than it otherwise would be just as it has in the US.  I would also maintain that in addition to the taxes that fall more heavily on the poor, the decrease in purchasing power caused by inflation has fallen on the poor and the young.  It seems likely that this is part of the reason why family formation and the lower birthrate has affected Japan more than it has in the US and Europe.

I really don't think you can say Japan continued with inflationary Keynesian policies after the crash.  In the 1960s to 1980s, when they were trying to build exports to the U.S., yes,  but since the beginning of the 1990s, inflation in Japan has been essentially zero, with the price index the same in 1992 as it is today:

http://www.tradingeconomics.com/japan/co...-index-cpi

(set the graph to "max" time period)

Fair enough but they have been trying to use Keynesian policies to create consumer price inflation which has not occurred.  Inflation in the classical and Austrian sense is an increase in the money supply.  They have been printing money and the government has been spending like a madman for nearly thirty years and it hasn't gotten them what they want.  In this case nominal economic growth and price inflation which have yet to be seen.

The policies have been Keynesian with rather unexpected results.

Now, Japan did run large deficits during that period.  However, one thing neokeynesians seem to have forgotten about Keynesian theory is that Keynesian stimulus requires both large deficits and also that those deficits be monetized by the central bank through increases in the money supply.  Without that monetization, the deficits induced by extra spending are counteracted by high interest rates and their accompanying drag on the economy.  And of course, compensating for spending with tax increases instead of deficits is even worse.

The indicated solution for the U.S.  is a bit different since our retirees get inflation adjusted social security; inflation doesn't help us with our boomer retirements.  What we need is massive tax cuts to motivate and reward work, but with less monetization and perhaps a partial removal of inflation adjustments for social security and welfare benefits.

You have to keep in mind that the US ran into some serious problems in the seventies by monetizing the debt.  Consumer price inflation was approaching twenty percent by the end of the Carter years.  One of the the surprising things about Reagan was that he permitted Volker to raise interest rates enough to kill inflation.  The cost was a short and very severe recession early in his administration.  Unfortunately, he did not do anything about the spending which is why we find ourselves staring trillion dollar deficits and twenty trillion in total debt.  The Japanese are in an even worse position as a consequence of Abenomics.

I remember that extremely well.  I graduated from college just as interest rates were peaking, and I knew from having read Friedman's column for many years that they would soon be coming down, and for the long term.  I put $500 into a 5 or 10 year certificate of deposit yielding 15% - try getting that today - while cursing the fact that I didn't have more to invest.  If I could have put $15k into stripped 30 year bonds, I'd be comfortably retired now.

The situation then is different from the situation now, though.  Because of lower demographic and economic growth, the natural interest rate is lower.  Thus, the federal government can support a proportionately larger debt burden with the same expenditure on interest payments.

Also, the 20 trillion in nominal debt is dwarfed by the unfunded liabilities of Social Security and other entitlement programs.  It would be interesting to see a comparison of the nominal debt run up during the Reagan years with the savings in unfunded Social Security liabilities from the Social Security reform of 1983.

Quote:No doubt Eric the Obtuse is whining about how tax reductions don't reward work.  There are plenty of cases where reducing taxes, government debt and government spending did improve economic growth.  Eric the Obtuse also can't seem to figure out that with the Saudis and Chinese selling large amounts of their T-Bills means that the petrodollar is done and it is no longer possible to export inflation the way the US has been doing for the past fifty years.  The government will have no choice but to get its spending under control and it will probably be a currency crisis that forces the issue.

Eric's position on taxes is ridiculous.  Perhaps he believes that only billionaires pay taxes, which is close to the opposite of the truth.

The petrodollar could be restored and inflation exported again if we started living up to our obligations to protect commerce by sailing the Navy in harm's way rather than leaving it rusting in home port.  I'm not sure if Trump has figured that out, though.

[Eric the Green]

(11-21-2016, 07:36 PM)Warren Dew Wrote: Eric's position on taxes is ridiculous.  Perhaps he believes that only billionaires pay taxes, which is close to the opposite of the truth.

The petrodollar could be restored and inflation exported again if we started living up to our obligations to protect commerce by sailing the Navy in harm's way rather than leaving it rusting in home port.  I'm not sure if Trump has figured that out, though.

They won't pay much under Trump, that's for sure. They don't pay as much as they should.

Who cares about restoring the petrodollar (assuming it needs restoring)?

We could reward work by raising wages and salaries, not by cutting the already low taxes people pay. There's just a not a whole lot there to cut, so it wouldn't make much difference to "motivation." I mean, among most people who actually "work." And of course, not including what you call ponzi schemes, which are just prudent retirement programs.

The extremist libertarian views that you, Galen and most Republicans and Libertarians hold, has nothing to do with a sensible, balanced policy. Taxes that are too high on anyone can be a problem. But that's just not where we are, in most cases.

[Eric the Green]

It's a motley mixture, but it's largely libertarian at its worst; huge tax cuts for the wealthy; and allowing business to pollute and screw over the people as much as it wants. Very authoritarian, in reality, as libertarian economics IS. Very deceptive slogans. Very popular programs on all versions of the right wing. The alt-right is wrong; the libertarian right is wrong; the neo-con right is wrong. If it's right wing, it's wrong! And very dangerous to all of us.

[Warren Dew]

(11-22-2016, 12:12 AM)X_4AD_84 Wrote:

(11-21-2016, 11:07 PM)Eric the Green Wrote:

(11-21-2016, 07:36 PM)Warren Dew Wrote: Eric's position on taxes is ridiculous.  Perhaps he believes that only billionaires pay taxes, which is close to the opposite of the truth.

The petrodollar could be restored and inflation exported again if we started living up to our obligations to protect commerce by sailing the Navy in harm's way rather than leaving it rusting in home port.  I'm not sure if Trump has figured that out, though.

They won't pay much under Trump, that's for sure. They don't pay as much as they should.

Who cares about restoring the petrodollar (assuming it needs restoring)?

We could reward work by raising wages and salaries, not by cutting the already low taxes people pay. There's just a not a whole lot there to cut, so it wouldn't make much difference to "motivation." I mean, among most people who actually "work." And of course, not including what you call ponzi schemes, which are just prudent retirement programs.

The extremist libertarian views that you, Galen and most Republicans and Libertarians hold, has nothing to do with a sensible, balanced policy. Taxes that are too high on anyone can be a problem. But that's just not where we are, in most cases.

What's crazy is Trump is not even moving in a Libertarian direction. The two most Libertarian presidents in recent history were Bill Clinton and George W. Bush. Most of the crowd who adore Trump hate those two. A true Libertarian president would further loosen immigration, would not raise tariffs and while perhaps renegotiating TPP, would not want to shred it. In many other areas the Trumpistas embrace Authoritarianism. It's not even strictly Right Authoritarianism. There are also some Stalinist aspects.

While I agree with you that George HW Bush and Obama were less libertarian, it's sad when "libertarian" is applied to Clinton and Bush.

Agreed regarding tariffs, not necessarily regarding immigration and TPP - TPP is as much a multinational protectionist agreement as a free trade agreement - but the biggest nonlibertarian aspect of Trump's agenda is increased government spending, such as on infrastructure.

[Galen]

(11-22-2016, 12:25 AM)Eric the Green Wrote: It's a motley mixture, but it's largely libertarian at its worst; huge tax cuts for the wealthy; and allowing business to pollute and screw over the people as much as it wants. Very authoritarian, in reality, as libertarian economics IS. Very deceptive slogans. Very popular programs on all versions of the right wing. The alt-right is wrong; the libertarian right is wrong; the neo-con right is wrong. If it's right wing, it's wrong! And very dangerous to all of us.

As someone who actually read the President-Elect's tax plan, I know that the top brackets get about a 3% reduction and the middle class gets about 8% reduction.  Anyone below that gets an even bigger reduction.  The corporate income tax rate goes to 15%, same as Ireland, which should help the US to retain and attract businesses.  Its the economy stupid!