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Free-Market Capitalism never loses?

Discussion in 'U.S. Politics' started by Andy, Nov 11, 2008.

  1. Andy

    Andy Well-Known Member

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    This question was asked by Lagboltz, and I thought it worth having it's own thread since the other fell into flame pit mode.

    The answer is multi-fold.

    First, is our economy in free fall? I contend no, that only the stock market is in free fall. Remember stock prices are largely based on perception, not the real out put of the economy.

    Look at this graph.
    [​IMG]
    What this graph is demonstrating is that prior to WWII, down spikes in our economy of 2.5% to 7.5% negative growth, happened frequently, with some over 10% negative growth. (I count 12 times)

    Today our economy, in the 3rd quarter '08, we are at 0.25% negative growth. This does not seem like a free fall to me.

    Second, the principals of Capitalism, do not exclude individual failure. For example, Chi-Chi's restaurants all closed in 2004 after it's owner filed for bankruptcy several times. People simply didn't want the product sold, and this the business failed.

    Although this is an individual failure, it's a success of Capitalism. Failure is a necessary part of Capitalism. Without it, bad companies producing bad or unwanted products, are kept in business.

    With that said, let's look at the cause of the wide spread failure we see.

    What caused the sub-prime loan melt down?

    In 1995, the Community Reinvestment Act (CRA), was changed in order help the goal of equality in home ownership among minorities and the poor. Further, the government department of HUD, had taken control of Fannie Mae and Freddie Mac prior, and had set a goal for Low Income loans.

    Between these two dynamics, the government legitimized the sup-prime market, and made it grow. With Fannie and Freddie purchasing sub-prime loans, banks could make the loans even to the least qualified, without worry since the risk of default would be passed on to the government sponsored corporations. Further, the CRA provided incentives to banks in the form of credits for low income loans.

    This creation of the market, spawned more sub-prime loans via the appearance the market was sounds. If everyone is offering sub-prime loans, then obviously they are safe. Thus more private mortgage brokers and companies not regulated by CRA, nor working with Fannie and Freddie, were willing to offer these now legitimized loans.

    So with sub-prime loans, the situation was setup by government through regulation and government controlled companies. In other words, socialism.

    So what is causing the stock market melt down?

    The stock market melt down is caused by a change in general accounting practices. Some may, or may not know, that general accounting practices, the way in which companies do their budgets and manage their money, is instituted by the Federal Government through the SEC, which authorized the Financial Accounting Standards Board (FASB) who manage generally accepted accounting principles. This is a necessary evil.

    However, changing these standards on a whim can cause massive effects in the market.

    The problem goes all the way back to Enron. The Enron scandal covered many things, but largely centered around the fabrication of a profit, by using contracts that were over-valued, making it look like there was profit on paper, while losing money in real terms.

    Now, the general conservative view is, the system worked, the fraud was detected, the criminals put on trial, and the issue resolved. The general liberal view is, the system failed because there was a problem. A working system means the absence of all problems. (laughable to me since, socialized systems have the worst problems, and no system with humans will ever be problem free)

    Thus, pressure was placed to change the rules so the issue would never happen again. (still laughable) The result was a change in the general account practices called "Mark-to-Market".

    Mark-to-Market, is a system by which contracts and other assets are "Mark"ed, on the budget, at the "Market" value they have at the time, regardless of their long-term, or total value.

    Example: You have a home worth $250K, and on your budget, you could mark that $250K asset (home), as part of your net worth. But say a hurricane was coming. How much would someone be willing to pay you for that house before the storm hit? Not much. Maybe $100K. If you did a budget, your net value would fall by $150K because the "Market" value of the home is now $100K and you must "Mark" it on your budget as that. Even though after the storm blows over, it will still be worth $250K.

    Similarly, say you are a company and hold Insurance contracts in Florida. Those contracts might be worth $500 Million, but if a hurricane starts toward FL, their market value might be worth very little. This would show on the companies budget as a "loss".

    Or a current day example. Say you owned a bunch of sub-prime loan securities. Let's say all of them are paying on time, and are in good standing. Even if the loans are fine, and they are all paying reliably, because the contracts are not selling on the market (as in no one is interested in buying sub-prime loan securities right now), they would be horribly undervalued.

    What this means is, all these companies are reporting losses of value on their budgets, that actually are not "real". They are not actually losing money, they are losing the projected value of these assets. But that doesn't help in the stock market, because like I said before, perception rules the stock market.

    Bottom line, knee-jerk reactions to Enron led directly to the stock market fall we're seeing right now.

    If anyone still doesn't understand, just ask, I'll explain in more detail.
     
  2. Libsmasher

    Libsmasher New Member

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    Pretty good job gathering in one place most of the things that have already been said. The history of people blaming things on capitalism which are actually the fault of government meddling in the economy is very old.

    You might have added that the last "failure of capitalism", the S&L collapse of the 1980s, was due to the FSLIC essentially underwriting speculative real estate loans.

    The Great Depression caused by cheap credit engineered by the Federal Reserve.

    Railroad monopolies caused by deals with corrupt state legislatures - on and on it goes.
     
  3. Lagboltz

    Lagboltz Well-Known Member

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    Thank you for taking the time for such a detailed reply. We have a different perspective on free fall. Also I think I am confusing free-market capitalism with poor government. When I say our economy is in free fall I was thinking more of the US economy and not just the stock market.

    I agree that corporate failures are an expected part of the survival of the fittest in capitalist "ecology".

    Again, I agree that the CRA is the of type of social regulation that the government often screws up. The government is too eager to introduce a new regulations to solve one problem, but it ends up in disaster in some other area.

    Mark-to-market
    I wasn't aware of the mark-to-market accounting practice, and you convinced me that it is a bad solution to a bad problem.

    Yes, you can say that Enron was resolved nicely in the a conservative's context. But Enron brought down many retirement funds. There has to be a better way. My idea is that regulation should attempt to protect the citizens (who are often a bit ignorant (diversify, damn it!)) from corporate fraud.

    I think the examples of CRA and S&L (Libsmasher) are more in the area of government meddling rather than an attempt to reduce corporate deceit by regulation.

    Getting back to free fall. When I say our economy is in free fall I was thinking:
    We borrow over $1.5 billion a day to prop up the government
    The balance of trade is negative $2 billion a day.
    Our national debt is $14 trillion. (David Walker says over $40 trillion - a bit of an exaggeration)
    Social Security was raided of over $6 trillion since 1965.
    Some have predicted that at our current pace, in a few decades total tax revenue will only be enough to pay the interest on our debt and maybe a few other things.
    All the above are happening at an accelerating pace.

    We have outsourced manufacturing so that now jobs are now 80% in service industries and of that, about 60% are in retailing. The US depends on consumerism to support the service industries, and Americans are now running out of money. Consumerism is dropping and so service jobs are being lost -- a self-reinforcing cycle, and I think this should be called free-fall.
     
  4. primerib

    primerib New Member

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    Capitalism could work if we upheld an honor system. There are too many greedy mother f-ers that want it all and want it now and don't give a hoot about you. Conservatives or republicans believe in less government and free markets. More or too much government is not the answer. That's called socialism. That's what most people voted for in this election.

    The story is always the same. It's greedy people that know how or can manipulate markets and game the system. Every decade we have some major financial market meltdown or scandal that requires a bailout, change in regulation and/or new legislation. After the fire is out our polical saviors are all stroking each other and proud of there accomplishments for solving the crisis of a generation. They hold press conferences, write books and then run for office. While the powers that be are scoring political points most of the guilty bad guys are laughing all the way to the bank.

    So you can break out the graphs, use accounting terms and legal ease to explain it but the story is always the same. It's called WASTE, FRAUD and ABUSE. Been around for years. 5 or 10 years from now there will be another scandal to write about.
     
  5. Dr.Who

    Dr.Who Well-Known Member

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    Can you say: Whack-a-mole?


    Yes. government should be responsible to do the thing that we created it to do - stop people from hurting each other.

    Think about all the laws on all the books... Now think if all the time that was spent on things that were a waste of time or were just wack-a-mole was instead spent on stopping fraud...


    I think you are right.
    government

    government

    government
    government
    government


    A lack of competitiveness among us businesses that is caused in part by - government.
     
  6. Lagboltz

    Lagboltz Well-Known Member

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    LOL
    I'm not sure what you are thinking that I'm thinking, but I am not specifically blaming capitalism on the problems, I was just arguing that when I said "Our economy is now in free fall", you replied
    My argument was that the several fiscal factors in the US economy that I mentioned above are the reasons behind the free fall.

    Now let me get to the bottom line. IMHO, Both Democrats and Republicans in the house, senate and executive branch over the past few decades were equally unconscionable and short sighted imbeciles in the fiscal management of our country. We citizens can control the destiny of our government by voting. Right? Voting for who??!! They are all too self-serving and listen too much to the whispers of lobbyists.

    There are a few reasons I'm not a Republican.
    The prevailing feeling of Democrats is that they are the party for the poorer majority of wage earners, and the GOP represents largely the few wealthy.

    I don't like the conservative Christian ties to the Republicans. That is the second reason I am a Democrat.
    They are too focused on theological abstractions such as gay marriage, teaching creationism in high schools and whether life starts at one cell or whatever. I don't want them putting Christian abstractions in high school science. Meanwhile the souls of the lowest income people are breaking-down. They are filling the jails at a rate higher than any other country. At the government level, they are deserted by the GOP more than by the Democrats.

    One can argue that real Christians should be more attracted to Democrats:
    "Blessed are you poor, for yours is the kingdom of God. ... But woe to you that are rich, for you have received your consolation."

    Politically, a lot of the people here are more concerned with the abstractions of capitalism rather than what is happening to the people of this country. The disparity between the bottom 50% and the upper 1% of income earners is continually widening due to government mismanagement. Capitalism, in principle should be good for all classes but that may be breaking down by govmt mismanagement. The government has put us on a very unstable path that is now leading to fiscal failure on a large scale in the not-to-distant future.
     
  7. Andy

    Andy Well-Known Member

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    Which is why the graph is of GDP. For our discussion, the best possible, or widely used formula is the GDP. 0.25% negative growth is simply not a free-fall.

    I'd be hard pressed to located two good examples of "social regulation" that the government has not screwed up. I'm still looking for the first.

    There is no protection from stupidity as you have adequately pointed out.

    This is the classic liberal vs. conservative argument. On one side you have freedom and responsibility of choice, while on the other you have oppression and control for the promise of security.

    What do you think we could do? Prevent companies from offering stock options and investments, thereby forcing people to invest in other things? What if employees want to invest in company stocks?

    Actually I think this is more a failure of basic education in personal finances, rather than any regulatory failure.

    There will always be deceit, corporate or otherwise, for as long as humans are involved. The question is wether it's detected and dealt with, or not. I would even submit to you, part of the cause of Enron type 'deceit', is actually of our own making.

    Why do CEOs screw with financial statements, because they have a good portion of their income in stock options, because the tax for the highest marginal rate is so high it is not worth it to take it in salary.

    So when the company does poorly, and they have all this income they rightfully earned, tied up in stock options... there's a massive temptation to mess with the books to protect the income they feel they deserve.

    What does federal government borrowing, trade deficits, national debt, and social security have to do with the economy? All of these are real and important issues, but none are tied to the economy.

    Remember your original question referred to Capitalism, and thus the contrast to Socialism.

    Can a socialized economy have a government that has a deficit, a national debt, a trade deficit, or a mock 'trust fund' that is empty? Answer: yes to every single one.

    It is important to remember that all things government are socialized. There is no "privately operated" government. That's a misnomer. All government, and thus all things government related, are socialist by nature.

    Social Security, is a socialist system, and it's failing. Well duh... I said before all socialism fails. Social Security being raided by Socialists in government, is about as surprising as the line being slow at the BMV. It's expected. Did you really think leaving your retirement in the hands of Politicians was a wise move? That somehow all Lawyers and Politicians, with most in congress being both, are the most honest and trust worthy of people to leave your money with?

    Government deficits are not directly connected to the state of the national economy. If fact, in some cases the relation seems to be inversely effected. In the mid 90s when government deficits were high, the economy grew by a fairly stable 2% rate. Yet when deficits started declining in the late 90s, the economy declined as well, and ultimately during the smallest deficit numbers of '99 and 2000, the economy went into recession.

    National debt, is not directly connected either. In fact national debt only has an effect on the economy when the government chooses to raise taxes to pay off, or reduce the debt. Taxes always have a consistently negative relation to the economy.

    The only way the debt itself, could have a direct impact on our economy, is if the US government were to lose it's credit rating, or if the people we have borrowed from lost faith in the dollar, or if the government starts printing money to pay the debt. In any of those cases, the result will be the selling off of US backed loans, which will in turn devalue our currency. This devaluing will cause massive inflation.

    However since none of the above situations have happened yet, this can not be the cause of a current economic free-fall.

    Trade deficits are more a reflection on the purchasing power of the population. The population of India, that is still coming out of it's socialized past, doesn't have the money to purchase American goods, but has the ability to make goods Americans can buy. European countries that face tax rates above 50% of their income, don't have the money to buy imported goods, but do have domestic subsidized products.

    Typically when our economy is in recession, and our population has less money to purchase goods, our trade balance swings more positive. When the economy is good, and our population has more money to purchase goods, our trade balance goes more negative. Yes, there are some exceptions, but the point made is that Trade Deficits are not a good indicator of our economy.

    Every country depends on consumerism. Show one country in which there are not consumers, and I'll show you a land filled with poverty.

    Further, there will always be more retail than manufacturing, and by a large ratio. I worked at Worthington Industries, in their propane and air tank manufacturing plant. It supplied propane tanks for nearly the entire eastern US, and Canada. Point being, it's very normal that a few hundred manufacturing jobs, will supply for millions more retail outlets.

    That said, it's also true that we are losing manufacturing jobs, and that a system lacking in manufacturing, may not be able to survive.

    So without doing an over simplistic, blame capitalism for the lack of manufacturing jobs, let's consider what exactly is causing them to leave.

    For auto manufacturing, Unions have driven the jobs out of the US. While Honda has thrived and grown it's domestic auto manufacturing very successfully while being completely anti-union, GM being pro Union has closed it's US plants, and opened a few in South Korea which are now imported here, and Ford has closed it's US plants, and now builds the majority of it's autos in Canada.

    It's similar to what happened in the 20s with coal strikes that ended up causing consumers to switch to the more reliable heating oil instead of the strike prone coal heat. The strikes which were intended to improve working conditions, end up sending most people to the unemployment lines as the coal market dried up.

    For the yacht industry, a high luxury tax meant to harm the rich, ended up making it more cost effective to purchase a yacht out of the country and sail it back, resulting in companies moving over seas.

    For some like the Broom plant, the cost of over bearing environmental regulations, made US Brooms more expensive than 100% identical Brooms made in Mexico, and thus caused our plants to shut down.

    For still others, the minimum wage has simply pushed the pay scales up so much, that the cost of US labor is simply too high to compete with international labor markets.

    To put it simply, in every situation I have investigated thus far, all problems related to the loss of manufacturing jobs can be tied back to taxes, regulations, unions, and government control. In other words, socialism.

    The problem is, the average American is either uninformed of this, or is simple unwilling to do what is required to reverse the trend. Are you willing to reduce taxes, by eliminate government programs, to make product creation economical again? Are you willing to eliminate the minimum wage to reduce the cost of labor? Or you willing to stop union supporting policy, to make business profitable again? Are you willing to reduce environmental controls to make manufacturing tenable?

    The answer from most Americans is no. Somehow, everything we want, should magically be given for us. If it's not, then somehow it's the fault of "greed" and the 'evil CEOs', or corruption on Wall St.
     
  8. Andy

    Andy Well-Known Member

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    I actually don't have a problem with lobbyist. Who are lobbyist? We are the lobbyists. The public is the lobbyist. For example, when people join that screw ball Sierra Club, as much as I think they are stupid, those stupid lobbyist are speaking for the stupid Sierra club members. When people join the NRA, the gun lobbyist speak for the NRA members. When you work for GM, as I have done, those Auto Lobbyist spoke for me.

    Lobbyist, is the non-vote way of speaking to government. I support Citizens Against Government Waste. CAGW lobbies government, for me. They speak for me, to government. Lobbying is the word of the people, spoken without a ballot.

    That's true. This is because people don't realize that democrat policy, regardless of their talk, negatively effects the poor, while republican policy, is more of a help. Just like the yacht tax was meant to help the poor, and harm the rich. Instead the rich simply bought elsewhere, and the poor we're unemployed.

    Can't argue with that since we have different world views. There's no way you'd understand my views since you don't have the same world view I do. We don't have a common reference point to debate from.

    For example, I would say that it's our lack of a belief in G-d, the leads to our jails filling up. We need more of a foundation in faith, not less.

    He didn't say that. The correct quote is "Blessed are the poor in spirit, for theirs in the Kingdom of Heaven". Poor in spirit, has nothing to do with wealth. It has to do with humility, and not pride. It's an understanding that we need G-d.

    Capitalism is good for all classes. Our lowest class, lives in better conditions than most in the world today. Trying to prevent disparity is the worst economic policy that we could possibly have.

    Capitalism is based on freedom, and thus people have the right to do nothing but flip burgers for their life and be poor, or risk opening a new fast food shop and become a Dave Thomas with millions. Just like people have the right to invest all their retirement into one stock that's doing well, but risk losing it all if the company folds.

    The purpose of the CRA policy was to less disparity. That policy led to worse conditions than before, and arguably made the situation worse for everyone in the country, including the poor who were the targets of the policy to begin with.

    In order to prevent disparity, you have to have Ho Chi Mhin, or China's Mao, working for $1 a day in rice patties. Or work for a similarly bad amount in Cuban sugar cane fields. Yeah the difference between rich and poor will be minor, but 2 out of 3 people will live below the poverty line. Everyone will be equal... equally poor. That's the only alternative to the disparity of capitalist freedom.
     
  9. Lagboltz

    Lagboltz Well-Known Member

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    Again, thank you for taking time to answer my post.

    One of the reasons of our disagreement is that we have a different take on what free fall is. The GDP is a measure of the economy only for the period in which it was calculated. It indicates the present value of the present economy. You can say -.25% is not free fall and I agree.

    What macroeconomists often measure is the present value of the future economy to predict how stable the economy will be.

    That is what David Walker, the previous Comptroller General of the United States and head of the GAO is worried about. He says, "we are currently in a $53 trillion fiscal hole. This hole gets deeper by $2-$3 trillion a year on autopilot. We need to start figuring how we are going to start climbing out of that hole."
    http://www.pgpf.org/newsroom/oped/dmwhouse/[/QUOTE]

    That is what I meant by "free-fall". As you are falling off a 1000 foot cliff, the free fall is part of it could be even a pleasant experience if you weren't aware what the future has is in store for you.

    I agree with you enough about some of what you say, that I don't need to get into quibbling.

    I agree with the above for your definition of free fall, but not with mine.

    One trick for a surplus is to govern during a period without war, (yes, start the flames about Clinton being lily-livered to terrorists, and I will agree with you.) and, as you say, allow inflation.

    As I say below, one of those above situations must happen in the future, starting 20 to 40 years from now.
    Right. What I'm saying is that over the past 40 years the US lost 2 out of 3 workers in manufacturing, and now we are much more vulnerable to job loss and the subsequent spending loss, and this will exacerbate free fall as I defined it above.
    I am familiar with all this (except brooms) and agree these sort of things are significant problems.
    I would go with 60% uninformed and 40% unwilling.
    You are asking "Are you willing..." I am saying some of that is inevitable whether we are willing or not.

    Reducing taxes and reducing expenditures even more, if not done right will lead to class inequities. The rich and poor want lower taxes for each other and not themselves. Do we trust the government to do it right?
    Reducing lower class real wages may be an inevitable trend.
    Unions have outlived their original purpose and will self-destruct.
    Environmental control is similar to the budget deficit. Start doing it now, or have a more difficult future.
    It's our choice to make a decision for future generations (who may get a bit pissed off at our folly.)
    One item I would add is, are you willing to have inflation?
    And the final question is are you willing to let it ride and leave bigger problems to your kids.

    The war on terror will be supplanted by the war on economics sometime in the future, when foreign countries stop investing in treasury bonds, and start buying our country. The Sovereign Wealth Funds held by Asian and Mideast countries are a tremendous economic force and threat to the future of the American way of life.

    Here is the inflation scenario: The median income is $40,000. Suppose inflation was rampant and inflation adjusted income were reduced by half: $20,000. That is at and below subsistence level for half of Americans. If your income is $150,000, you would drop to $75,000 real income. Good bye some discretionary spending, but you at least won't have trouble making ends meet. I think with the $50 trillion debt, an eventual lower standard of living is inevitable, and half of Americans will really suffer. Including me. Our kids are going to inherit a mess.

    Summary: We are in surprising agreement in a number of details, but not the overall picture. I think the reason is because of our differing view of the future, and perhaps our own personal economic condition.

    The second half of you post will be answered later.
     
  10. Mr. Shaman

    Mr. Shaman New Member

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    ....And, doing the best they can to cope.

    What a heart-breaking scenerio. We should (all) pray for their improved-future. :rolleyes:
     
  11. Andy

    Andy Well-Known Member

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    Ah ok. When you say "economy", you don't mean the national economy, a system involving the productions and sale of goods and services in our country, but rather, the fiscal budget of the government. In that case I agree. The government is in free fall, as it has been for years I'd suggest.

    I disagree. First, war is a constant in this world. We can no more control whether there is war, than control whether the sun comes up or not. Second, Clinton used the military tons during his administration. The idea there was not war during that time is silly. Further, backing down in the face of enemies makes them more emboldened, as you pointed out with Clinton's terrorist policies, and as we found out again in Iraq.

    Third, the budget for the war is so small in comparison to the other expenditures, we could easily have funded the entire war, and had hundreds of billions in surplus, if our government had simply stopped over spending on other unconstitutional programs.

    Somehow, we are just not connecting on this :) I simply can not find the connection between the government overspending, and the loss of manufacturing jobs.

    If we eliminate the minimum wage, eliminate union laws, eliminate irresponsible EPA rules, and relax controls on auto manufactures, manufacturing jobs will sky rocket in the US.

    However, if congress still over spends, we will still have high deficits, and massive national debt, no matter how many or few manufacturing jobs exist.

    I do not trust government to do anything right. They have failed at nearly everything they have ever set out to do. That's why I'm conservative. Why give government more control to do more things wrong, and screw more things up? Not bright.

    Taxes should be flat. 15% of income for everyone at every income level. No one should have to pay more or less than anyone else. This is equality under the law. One of the basic principals that our nation was built on.

    Class inequality is good. The only way to not have inequality in the population, is to force everyone to be equally poor. In China, prior to 1978, everyone was equal. And everyone was broke. Now, under capitalism, where rich people can open business and employ workers, there is much inequality, and the poverty rate fell from 66% to 3%.

    Remember this: If there is class equality, that means my CEO is earning no more, or not that much more, than I am. If that is true, what incentives do I have to open my own business and hire people, or work my way up to be CEO and grow a company? None. Why take so much responsibility, when there is so little reward? Result is, no one opens new business and we all suffer from a stagnate economy. Inequality is good.

    I would argue there is far too much EPA controls that are unneeded or helpful. I read once where a contamination site was found, and the EPA study showed that if I child went to the site, which was nearly impossible to get to, and ate the dirt there for 78 days, the contamination may have caused some health problems. After millions spent on cleanup, new examination found that now a child could go there, which he still couldn't get to, and eat the dirt for 250 days before getting sick.

    Then, it was found that nearly 50% of the contamination would have evaporated or deteriorated into nothing after one year. So millions were spent, and companies where charged for this massive clean up that, in one year would have naturally done the same that the millions spent did. This is stupidity of the EPA. I can list hundreds of other examples.

    Inflation is not caused by the federal debt. Whether the debt is $50 Billion or $50 Trillion, the inflation rate can be high or low regardless. In fact, just a brief examination of the history of inflation shows that generally, as deficits were higher, inflation was lower, indicating an inverse relationship between the two. I'd submit that this is because, thus far our government has not chosen to start printing money to pay debts... yet.

    Inflation is unavoidable, and unconnected to the federal budget. It's caused by the fact our currency is no longer tied to anything. Inflation was nearly non-existent under the Gold standard. But those day are long gone, and so is any control on inflation. It will happen no matter what policy is enforced.
     
  12. Lagboltz

    Lagboltz Well-Known Member

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    Well, we didn't have the depletion of military resources during Clinton as we had during WWII, Vietnam war, and the current wars. So I'm speaking relatively.

    When you say "The budget for the war", I don't know if you are referring to Clinton's era specifically, or what, but generally war has a very different economic impact. Cruise Missiles, smart bombs, Humvees, etc. are expensive, and they are capital equipment that can be expended in milliseconds. I.e. they blow up. Furthermore, they blow up something else that is very expensive: power stations, bridges, etc. these have to be replaced by one government or another. The "return on investment" (how much is it worth to stop Hitler, Commies, Terrorists) varies. It is a difficult matter that I won't pursue here.

    Compare war with spending on US infrastructures such as the electrical grid, fiber optics, highways, etc. Some infrastructures are privately financed but they all last for decades.

    We aren't connecting. I was talking about the loss of manufacturing jobs increasing economic vulnerability, and not a connection with government overspending. I'm too lazy to go back and see where we missed the connection, we should probably drop it.

    This is an area of strong disagreement. The pros and cons have been discussed in many places, and it is a major topic.

    I wouldn't put it quite that way. I would say capitalism is good, and class inequality is an inevitable consequence.
    You are speaking to far left liberals and not to me. I'm halfway between middle and left.

    In 1980, an average CEO earned 42 times the average hourly worker's pay. In 2001, the ratio increased to 411 times. We are talking astronomic inequity. Many corporations have no internal punishment if the CEO drags his company to the ground. This is bad for the company and bad for the economy. I'm not trying to start another argument, but I'm just stating the well known perception of the hoi polloi.
    The example you gave is an unconscionable waste. There are other serious problems, but many people deny that we can do anything. This is another area that should be in a separate topic.
    I think that here is another area of disconnect. I was arguing that inflation may be one outcome of controlling the free-fall splat at the end of the tunnel (I know - mixed metaphors). I.e. it would occur not because of debt, but because of an effort to get out of a potential exponential rise in debt.

    Here is the purpose of my example. If inflation becomes as high as 50% the impact on people is non-linear. Half the population would be dragged at or below the threshold of subsistence. If the lowest 25% were simply poor, but could eke by, and manage adequate food, shelter and occasional illness, I could handle that. But if there is widespread squalor to the extent of homelessness, lack of food, etc., then it begins to affect me and my security. There may be large increases in robberies, cardboard box houses in downtown and eating from refuse bins. So, rampant inflation should be avoided as a means to try to stem the difficult economic future.
     
  13. Lagboltz

    Lagboltz Well-Known Member

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    I'm talking about the Jack Abramoff type of lobbyist. I have a deep mistrust of the financial power of some of these lobbyists and how they can influence representatives. They and our government largely operate outside the public view.

    OK. Luke said "Blessed are the poor, for they..." Matthew said "Blessed are the poor in spirit, for they...." What was Matthew's intent? Matthew goes on later to disclose something about a rich ruler being advised to sell his possessions and give the money to the poor in order to be perfect. That seems to be advise for self-inflicted socialism. It is hardly a philosophy to increase his GDP.

    I didn't want to be sidetracked. My intent is to tell you my perception and why I and others are Democrats, rather than a discussion of an interpretation of the bible.

    I think one reason that this series of posts is going on so long is that you often compare black and white. For example your comments about the disparity of Ho Chi Mhi and Mao addresses an extreme. Brian Moore with the Socialist party captured an infinitesimal vote. So I and Democrats in general don't need such strong arguments. In the US, you are addressing people like Sean Penn and Harry Belafonte (Try googling Chavez and Penn or Belafonte.) 99% Democrats already agree with you as far as the extremes. I kept telling Sarah Palin (I hoped she couldn't hear me) that it is the centrists you should be trying to sway if you want success.
     
  14. Andy

    Andy Well-Known Member

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    The current total cost of the war in Iraq, for example, as of the beginning of this year, was $600 Billion total for the last 5 years. From 2000 to 2007, the debt went from $5.7 Trillion, to $9 Trillion. So let's think this through... $3.3 Trillion increase in national debt, and $600 Billion total spent on Iraq... Where did the other $2.7 Trillion in debt come from if the problem was "war"?

    In fact the entire War on Terror budget for 2009 is only $189 Billion, and that includes all operations in Iraq and Afghanistan, plus reconstruction, and our clandestine operations outside of those countries. The entire Department of Defense budget is only $515 Billion. Meanwhile our expenditures for 2009 are $3.226 Trillion. So we're spending over $3 Trillion more than what's going into Iraq and Afghanistan, and $2.7 Trillion more than the entire defense budget, yet the problem is with military spending?

    I guess I'm a bit tired off the rush to blame Iraq and military for our budget shortfalls when they are a tiny fractions of the budget. It's like someone earning $50K a year, claiming that his 50ยข can of pop is the reason for his budget shortfall.

    We have to figure this out because as long as we blame the wrong things for our deficits, the politicians in government have no reason to cut their fiscal irresponsibility.

    Ok, well the solution is the same as stated before. Reduce minimum wage, cut out the union laws, reduce taxes, abolish EPA, let the free-market reign, and those jobs will return.

    Are all men equal? Should all men be treated the same under the law? Ok, then all taxes should be equal to all men. I should not pay a higher, or lower % of my income than any other man. Everyone should pay. The only exception I would consider would be the poverty line.

    Inequality is good. If I had demanded equality in high school, we'd all be earning $4.25/hour. IF I demanded it in college, we'd all be earning $8/hour. I want inequality, because those earning more than me show I can earn more. Equality is bad because it inevitably leads to socialism and poverty.

    I just don't see this as a bad thing. I would like to have my own business someday. When that happens, I should be able to set my wage as I see fit. The stock holders of major corporations determine whether the CEOs wage is worth the price. If not, they replace him. I have no more right to comment on the wage of a CEO, than I have to comment on what car you drive. It's YOUR car, and YOUR business. Not mine.

    I'll defer to your suggestion of a separate topic. But I would point out that it's this very line of thinking that has led us to the situation we're in. Every government program, every expenditure on the federal budget, can be legitimized in this same way. At some point you must say enough, and stop spending money you don't have. Environmental clean up and control, is not a duty of the federal government under our constitution. All rights reserved for the state.

    oooo... so your theory is that if our government tries to pay off the debt, that inflation will rise? That's a new one. Or do you mean that they start printing money to pay the debt, and that causes inflation? In which case I agree. Which is why it's so important we cut these unconstitutional programs. (like PBS).

    I agree totally. Again, cut the spending in Washington. At least $2.4 Trillion is spent on unconstitutional projects. Let's go back to the constitution, and cut out at least $2 Trillion from our national budget, and then we can pay down the debt easy.
     
  15. Andy

    Andy Well-Known Member

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    At the start of the above post, I edited the wrong quote I was responding to...
    It was supposed to be:
    Not about manufacturing jobs. Sorry for the confusion.
    ===========================================
    Generally I'd agree with this. But then that's why I'm against campaign finance reform. I would rather have all this stuff out in the open for everyone to see, rather than hidden behind closed doors where only if someone stumbles on it, does it come to light.

    That also why I didn't like Hillary. The majority of her income comes from blind trusts. In other words, we have no idea who's paying her wage.

    Of course there is a huge difference between bribing someone, and lobbying someone. Abramoff was engaged in bribing, which is why he's in prison.

    True. The sermon Jesus gave in Matthew is the same as the one in Luke. Luke just abbreviated it. Blessed are the poor, still referred to spirit, because if you study Jesus ministry, it was always about rectifying your self to G-d.

    The rich young ruler was the same. The reason he was advised to sell all he had and give to the poor, then come follow Jesus, was because Jesus understood the problem the young ruler had was his faith in his possessions instead of G-d. It had nothing to do with socialism, or that being rich meant he couldn't follow Jesus.

    Try and remember that dozens of Jesus followers in his day were rich. The OT had dozen or more very rich followers of G-d.

    There is a reason for this. After you show the full results of either Capitalism, or Socialism, you can then determine which policies would be beneficial and which are harmful.

    Our national policy is in a constant state of flux. It's either moving toward socialism, and reaping the results of that, or moving more Capitalist and reaping the results of that.

    For example, I see Social Security as a natural socialist policy. By looking at how socialism operates, I can make the assumption that Social Security will inevitably result in ever higher costs, while providing ever lower benefits, and eventually becoming bankrupt.

    We then look at the history of Social Security, and clearly see the costs have gone up consistently, while benefits dropping consistently, and it's been going bankrupt since it started. Social Security has had a major overhaul 3 times, and each time, it still ends up broke while taking more and providing less.

    At this point, we can evaluate every government policy, and see whether it is socialist, or capitalist, and instantly determine whether it will work.
     
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