IF you want me to go on I can.
But few will read it all.
GTown, you got a defense. Wot you got to say now?
(wait wait, let me guess, it will be something like: "but you still haven't given me any evidence about [random topic here]")
Some more questions for RG:
1) Keynesian theory supports the notion of cutting taxes and increasing deficit spending to soften the blow of a recession. What effect did the tax cuts have on the 2000-2002 recession?
2) Does the return on investment for the government's deficit spending (i.e. economic growth), exceed the interest that will be incurred?
No, that's not his only theory.He hasnt even proved that the Debt is dragging the economy that is his only theory.
In order to justify the scary deficits we have, we need to have strong enough economic growth to pay them off. We have to outgrow the debt, otherwise we're like the dumb consumer who runs up his credit card bill and only makes minimum payments.
The point of supply-side economics is that lower taxes are supposed to spur large enough economic growth that taxing a smaller percentage of a bigger pie yields a larger piece. In this recovery, that has not happened.
And the spiraling debt means that in the future, either we will have to incur much higher taxes to cover the debt, or basically eliminate all social spending and much of our defense spending, or do neither and simply let the dollar become worthless. In democracies, since the first two choices are unpopular, usually the third one happens. Or, we can ins ute a dictatorship to force us to accept one of the first two options.
We are spending ourselves into a crisis where the collapse of our economy and way of life, and the collapse of our democracy are the two best remaining options.
What he's showing is that we're not even close to covering the debt we're incurring, and that means big trouble. And Congress doesn't seem to care --> they're spending at a rate that makes liberal Democrats look like fiscal conservatives. It's like Huey Long writ large.
In other words, you've already made up your mind, so he needs to quit confusing you with the facts.THe only thing he has are data charts on how big the debt is and basic tenents of economy. aNd with all his theory is not that the tax cuts are dragging the economy, but the the debt has, according to him.
In one sense, given that the size of the debt and some basic tenets of economics go a long way toward making his point, that should be pretty scary.
This should be really simple.2. HE only has a peice of paper to back him up, but no facts that the debt is eroding our standard of living, only assumptions.
If you spend more than you make, and charge the difference to your credit card, you can keep a high standard of living. For a while.
But once you reach your credit limit, you go bankrupt and lose everything.
We're approaching our credit limit.
Mortage rates are low because interest rates are low.Mortgage rates have been proven to paralyze inflation and not increase in GOvt debt. My sources the libertarian Cato insitute's senior fellow Alan Reynolds.
Once interest rates go up, mortgage rates go up.
Interest rates depend upon how much our foreign creditors want.
Beijing controls our interest rates, and therefore our mortgage rates, and therefore inflation, and our ability to finance our debt, and the sustainability of our economy.
BEIJING CONTROLS THAT. NOT US. NOT US. WE'RE NOT IN CONTROL OF OUR DESTINY. WE'RE NOT FREE.
Is that getting through?
Kensyian theory also assumes that the governemnt will not be running at a defecit druign times that are not a recession, and that a nation's debt will therefore not be at a level that will harm the nation for running the defecit, however, if a nation runs at a defecit during a depression/ recession after it has been during a boom or a period of even moderatre growth, then the effect will be counterproductive, and the governemnt will have to actually cut spending and wait for deflation to occur.
Deficit spending on social security reform would trigger a dollar collapse and a serious recession.
Robert Kuttner , co-editor of The American Prospect, DECEMBER 2, 2004, URL:
http://www.prospect.org/web/page.ww?...articleId=8912
What ails the dollar? Two things. Our trade deficit grows bigger every year, as does our budget deficit. Both deficits require foreigners to supply capital. The more capital they have to supply, the more nervous they get about the dollar. Lately, private foreign investments in U.S. stocks and bonds have both declined, leaving the United States precariously dependent on two foreign central banks -- China and Japan – to finance its twin deficits. The U.S. trade deficit is now close to 6 percent a year and rising. In theory, a very cheap dollar should improve the trade balance by making exports cheap and imports expensive. But it doesn't work out that way. For one thing, many foreign producers, such as Japanese automakers, "price to market." That means that when the yen rises against the dollar, they just eat the cost in order to maintain their market share. So the dollar price of a Toyota doesn't change and the trade deficit doesn't improve. China, meanwhile, keeps its currency pegged to the dollar, so a cheaper dollar doesn't improve our trade balance with the Chinese either. High oil prices also worsen the trade deficit. Most oil transactions are priced in dollars. As the dollar's value sinks, oil exporting nations just raise the price of oil. By continuing to increase the federal budget deficit, most recently with a plan to privatize Social Security, the Bush administration only worsens the problem. And there is a growing risk of a financial meltdown with the following elements: First, as foreign confidence in the dollar keeps shrinking, so does the dollar. The Federal Reserve then has to raise interest rates defensively to make investments in U.S. securities more attractive to foreigners. But high interest rates slow U.S. economic growth, hurt the stock market, and could contribute to a long-anticipated crash of housing prices. We could face a serious recession with no easy cure, since the usual fix is to run temporary deficits plus low interest rates. But in this case, overly large deficits were part of the problem, and higher interest rates would be necessary to prevent a further dollar collapse. But won't the Japanese and Chinese central banks, whose economies rely so heavily on exports to the United States, keep buying American bonds? Perhaps -- it's a kind of co-dependency in which they willingly buy paper that is losing its value because the exports help develop their real economies.
And yet, the value of what Bejing holds is dependent upon a somewhat strong US economy. In addition, Bejing needs access to the US consumer market just as badly. So both parties "control" each other.
If the US wants the benefits of freer trade, then it's going to have to put up with the reality of a volatile labor market and trade deficits. Employment in the US is moving up the food chain. Of course, when you have a decrepit, outmoded government-dominated education system then you have a problem.
For now, yes. But China's internal markets are growing rapidly. There will come a time in the near future when they aren't as dependent on their export market to the U.S. When that time comes, they'll be able to raise the price of lending us money. We will have no other options.
A volatile labor market and trade deficits aren't the crux of the problem. The crux of the problem is that we don't have much in the way of actual wealth anymore and are sustaining our economy on credit. We're using imported money to buy the imported goods.If the US wants the benefits of freer trade, then it's going to have to put up with the reality of a volatile labor market and trade deficits. Employment in the US is moving up the food chain. Of course, when you have a decrepit, outmoded government-dominated education system then you have a problem.
In a vacuum, sure. But its not like China's internal markets are that stable. Their banking system is a house of cards. It's going to be quite a while before they can build up the level of internal economic activity to replace what they currently enjoy with the US. Also, there will be continued pressure on the Chinese to free up their currency.
, in 5 years the US could be running a trade surplus.
That credit only becomes a problem when the economic growth is not there to be able to service it with ease. The economic growth ultimately gets back to success at what the economy specializes in, which is moving up the value chain, the IP. That is where a piss poor educational system becomes the issue, as well as immigration.A volatile labor market and trade deficits aren't the crux of the problem. The crux of the problem is that we don't have much in the way of actual wealth anymore and are sustaining our economy on credit. We're using imported money to buy the imported goods.
I don't have a problem with the trade deficit or volatile labor markets in principle.
Well then your previous post saying that CHina controls our mortgage rate is deeply flawed since they havent reached that rate. ES, we are talking about the now. Now you can only assume that the debt is dragging the economy down. You cannot by any method of data or scientific method conclude that the debt is the sole cause or main. You and Rg have only vague assumptions on what is dragging the economy now. You try to prove for the present for "what could happen in the future".
I can be the proverbial knife in the gunfight, even not the sharpest one at that. But I will bet the house on the guy with the knife against the guy with a gun that doesnt shoot straight.
Rg has data and knowledge. But that data just sits there and doesnt conclude his main arguments. Basically his gun is all smoke and a "bang!" flag.
Next time you come across somebody that is more knowledgeable than you on a certain area. I dare you to blindly take his word. In that case, i should never catch you or random disputing a preist on subjects of religion, or questioning a cop on law procedures. Nice try.
See what i'm talking about. His post was on the efficacy of tax cuts. basically he's judging the economy by his own standard. He has not taken into consideration that this economic period is way different than others than just superficial reasons, and by doing so he is trying to parrallel those time periods with this one.
Here is some concrete reasons why you cannot parrallel the tax cuts and this economy to others like the post war economy of ww2, the reagan years, and the clinton years.
1.We have extremely high energy prices in this economy. Right now inflation should be running extremely amok on all levels like the late 70's ala carter. Energy prices were never high when we had boom economies in the past.
2. This is a war economy and not a post war economy like eisenhowers and clinton's.
3.These tax cuts came to relieve the recession that took place when bush took office in 01. As a resut, all economist have stated that the 01 recession was the shortest in history.
4.We are producing a 3.8 Gdp when we just went through the most tragic natural disaster in american history, all while keeping interest low and unemployment at a low level. iF you want to complain about lower standard of living, then illegal immigration is your devil. The reason why pay wages are low in the katrina reconstruction is because companies can hire illegaly. Even Mayor Ray Nagin has acknowledge the fact. Maybe Rg can now say that illegal immigrants are the buffaloe soldiers of the war on poverty.
5. We dont have the oxymoronic security of MAD like in the cold war economies. We are at a disadvantage in that we are more likely to encounter a huge bio threat or nuke now more than in the past because Al queda is willing to die for their cause and they're not a country. you cannot retaliate back at alqueda like you could UNcle Joe. and the USSR.
All this and our economy is doing fine and wall street is going strong and not even flinching.
Its also ludicrous to say that tax cuts alone cost the govt. FOr your info. those taxes are private individual's money and not the govt. What is costing us is not the tax cuts but the inaction of cutting spending immediately because tax cuts take time to expand the tax base. One does not look at the fed fiscal budget and see tax cuts listed as a fed program like MEdicare with its annual expenses. THat 929 billion was the cost of inaction on behalf of Bush to slash pork and overspending that should accompany tax cuts.
Where are the enlightened economic progressives.
.
Once agin, gtwerp cannot expand his feeble mind beyond a narrow partisan argument about whether the tax cuts gave us a great return or nut.
I asked RG to quantify that a little bit back, and got no response.
What gtwerp can't get his mind around is that I was talking about something bigger than just the Bush tax cuts. Since gtwerp views the entire world in terms of us vs. them partisan arguments, this does not compute.
My point was that the U.S. economy is sustained on credit. gculo responds by saying, "Prove to me the debt is slowing down the economy." My point is the opposite: THE DEBT IS THE ONLY THING KEEPING THE ECONOMY GOING.
gtwerp probably would respond, "Ha ha, Bush is right." What he doesn't get, is that our credit line is not infinite. Soon, our remaining creditors will demand higher interest rates, or stop buying T-bills altogether. Once that happens, there is nothing else to keep the economy going, and it will crash.
Since I can see it coming, I can move my assets out of dollar-based investments and weather it reasonably OK. If you choose to do nothing, you will suffer greatly.
Just thought I'd mention...
Though the Republicans certainly aren't helping things, our debt problems go far past anything the government is doing. Our businesses are carrying too much debt. Individual households are carrying too much debt. Our 290 million citizens don't have enough savings to cover much if any economic downturn, or any kind of jump in interest rates.
Ordinarily, in a downturn, our central banks can cut interest rates, like they did in 2000, and flood the economy with cheap liquidity to soften the blow. But we've backed ourselves in a corner now. We're facing a double whammy of economic contraction and rising interest rates at the same time. That's going to hurt really, really bad. That's the sort of thing that triggers hyperinflation.
Our Latin American neighbors provide multiple object lessons in what happens when a country keeps spending money it doesn't have. If we weren't the United States of America, things would have gone south long ago. But with sufficiently irresponsible behavior, even we can wreck our own economy.
And we're doing it.
^^You were not debating me the fiscal debt deficit at first. You just came in and attacked me for not being an economist on the idea. I already agreed with RG that fiscal debt was really bad to not deal with many post ago. you should actually read the other post not b4 opining but criticizing.
THe fact is the premise of the thread is bogus and you (since you at first took sides with RG) or Rg have not proven it with factual data.
RG's point is is that the tax cuts cost the the nation money. How can that be so when it's our own money.
My point is that it is the act of not preparing for a tax cut's delayed promises by cutting spending in the begining of its practice that cost the govt money. I have blamed BUSh already for not cutting spending
I have blamed bush for not cutting spending.
i have ....you get the idea.
So dont respond with your ad hominem "cheerleader" defense.
Um, not likely. This trend is a decade in the making.
Very valid and cogent questions.
1) Not a lot, if the data from EPI is any indicator. Either the tax cuts weren't targeted well and went to unproductive parts of the economy, or the interest payments we are having to throw out the window on our debt is dragging the economy down. I think it is a combination of both.
2) I don't think so. I think the interst incurred will end up being much higher than the economic growth that those cuts fostered. It is a question that I wish I had time to dig up the answer to.
Very good points as well.
I actually see the results of the chinese education system first-hand in the form of my classmates who are studying for their CPA and/or MBAs.
From what I have seen, the analysis that the chinese educational system doesn't produce people capable of critical thinking is pretty much correct. Not that my classmates are dumb, it is just that they have not been taught to think or act for themselves much. This is something that will limit long-term chinese growth considerably for a number of reasons.
Every country's compe iveness boils down to ONE factor:
How well they invest in their human capital. People are the most important asset of any nation. Short change education, health care, or individual achievement at your own peril.
China does control our mortgage rates through its saving rate. Interest rates are rather complicated things with lots of interrelated factors working on them. (shrugs) You simply don't understand the interrelation, and I doubt could explain to you why he is correct in a way that you would understand.
As for the rest of this paragraph, it isn't really clear what you are trying to say, so I won't comment too much other than to say I have more than "vague assumptions".
The data just sits there for you because you lack the knowledge or framework of understanding to interpret it. I say this with no anger or intended mean-ness. It just is the way things are. If you want to dis-believe me, that's ok. I don't expect anybody to jump up and say, "halelujah!"Rg has data and knowledge. But that data just sits there and doesnt conclude his main arguments. Basically his gun is all smoke and a "bang!" flag.
I don't ask anybody to blindly take my word for it.Next time you come across somebody that is more knowledgeable than you on a certain area. I dare you to blindly take his word. In that case, i should never catch you or random disputing a preist on subjects of religion, or questioning a cop on law procedures. Nice try.
I do ask that you take what I have to say seriously though. I read and think things through, and have some reasonable basis for what I say.
If you want to pooh-pooh something simply because you don't understand it, that is your business.
No, not the efficacy of tax cuts. THESE tax cuts in particular aren't doing near the good the administration said they would. You can blindly keep believing Bush knows what he is doing if you want to though.
I am sure the laws of supply and demand have been repealed when I wasn't looking...Here is some concrete reasons why you cannot parrallel the tax cuts and this economy to others like the post war economy of ww2, the reagan years, and the clinton years.
Wrong, check your figures. Energy is actually pretty cheap historically. That will change in about 10 years, but that is another thread.1.We have extremely high energy prices in this economy. Right now inflation should be running extremely amok on all levels like the late 70's ala carter. Energy prices were never high when we had boom economies in the past.
Wrong again. Check your figures on percentage of the economy spent on the military.2. This is a war economy and not a post war economy like eisenhowers and clinton's.
Um, sure.3.These tax cuts came to relieve the recession that took place when bush took office in 01. As a resut, all economist have stated that the 01 recession was the shortest in history.
If you really understood how GDP is measured, you would realize why this is not exactly spectacular. But if it makes you feel good, go for it.4.We are producing a 3.8 Gdp when we just went through the most tragic natural disaster in american history, all while keeping interest low and unemployment at a low level. iF you want to complain about lower standard of living, then illegal immigration is your devil. The reason why pay wages are low in the katrina reconstruction is because companies can hire illegaly. Even Mayor Ray Nagin has acknowledge the fact. Maybe Rg can now say that illegal immigrants are the buffaloe soldiers of the war on poverty.
Immigration legal and otherwise is the only thing keeping our economy afloat.
Actually our economy isn't doing fine. Unless you blindly believe the Bush administration's word on it. I happen to know how they are lying, so I will keep my opinion, thank you.All this and our economy is doing fine and wall street is going strong and not even flinching.
The tax cuts do take time to expand our economic base. Time we don't have because of the deficit spending and looming collapse of oil production.Its also ludicrous to say that tax cuts alone cost the govt. FOr your info. those taxes are private individual's money and not the govt. What is costing us is not the tax cuts but the inaction of cutting spending immediately because tax cuts take time to expand the tax base. One does not look at the fed fiscal budget and see tax cuts listed as a fed program like MEdicare with its annual expenses. THat 929 billion was the cost of inaction on behalf of Bush to slash pork and overspending that should accompany tax cuts.
My apologies. I have work and school and family and job search and extracurricular stuff and mentoring and... sigh. I get to this when I can.
I agree.What gtwerp can't get his mind around is that I was talking about something bigger than just the Bush tax cuts. Since gtwerp views the entire world in terms of us vs. them partisan arguments, this does not compute.
My point was that the U.S. economy is sustained on credit. gculo responds by saying, "Prove to me the debt is slowing down the economy." My point is the opposite: THE DEBT IS THE ONLY THING KEEPING THE ECONOMY GOING.
gtwerp probably would respond, "Ha ha, Bush is right." What he doesn't get, is that our credit line is not infinite. Soon, our remaining creditors will demand higher interest rates, or stop buying T-bills altogether. Once that happens, there is nothing else to keep the economy going, and it will crash.
Since I can see it coming, I can move my assets out of dollar-based investments and weather it reasonably OK. If you choose to do nothing, you will suffer greatly.[/QUOTE]
It is always best to diversify your holdings anyways.
Erg, gotta get back to work. (working late at a bookkeeping client)
I'm gonna stop speaking for myself and let the facts speak for themselves.
But before i go into this. I will remind you that the tax cuts were sold as a stimulus package for recovery in 2001 to the congress.
1. The economy is doing fine if not better.
http://news.xinhuanet.com/english/20...nt_3697904.htm
2. The tax cuts have been doing their job in keeping consumer spending high and un perturbed despite 911 and the war in iraq.
http://www.fdic.gov/bank/analytical/...012605fyi.html
If you think i or bush is lying to you about the effects of the tax cuts, then take it up with the FDIC who believes that the tax cuts have helped keep our economy strong.
3.Despite what you say about the tax cuts. Leading Fed Chairman Greenspan stated that he'd still support the Bush tax cuts, and that the economy is strong and sturdy growing and advancing.
http://sfgate.com/cgi-bin/article.cg...&type=business
Despite your efforts on the contrary. The dollar is doing fine, and wages are on the rise.
http://www.smartmoney.com/bn/ON/inde...04-000869-1330
4.Wrong again. Recession was short lived.
http://www.americanprogress.org/site...20&printmode=1
You didn't even read half the stuff you posted.
Here are some of the excepts from your links:
http://www.fdic.gov/bank/analytical/...012605fyi.html
One of the statistics … quoted a lot [in 2004] … was about the loss of jobs. Typically, you would see that you would recover all of those jobs within two years after the start of a recovery. Now we're three years into it and we still haven't recovered all of those jobs, which is yet another way of looking at this point about how slow employment growth has been in this recovery. And that, obviously, affects consumers a lot.”
Real wages are going down now for a couple of reasons. One reason is we've had a bit of an acceleration in inflation. That, obviously, undercuts purchasing power.
http://sfgate.com/cgi-bin/article.cg...&type=business
Greenspan used strong language to warn Congress to get the nation's fiscal house in order. Bloated budget deficits, if not curbed, could pose a danger to the economy's long-term health, he warned.
"Unless the situation is reversed, at some point these budget trends will cause serious economic disruptions," Greenspan said.
Greenspan said given the facts known at the time, he would still support the tax cuts because of projections, which later proved wrong,that the federal government was facing huge surpluses.
And, Greenspan called on Congress to pay for any future tax cuts with either increases in other taxes or reductions in spending.
http://www.smartmoney.com/bn/ON/inde...04-000869-1330
Average wages are still rising slower than inflation, however.
With its offsetting factors, most analysts said the routinely market-moving jobs report did little to argue against bets for higher U.S. interest rates in coming months.
http://www.americanprogress.org/site...20&printmode=1
The Bush administration failed to enact the kinds of policies that would have spurred demand most. Too few of the tax cuts were targeted to households with either slow income growth or high proportions of their budgets devoted to necessities, as is the case with most low income families. Had fiscal policies been more effective, demand would have been higher, overcapacities would have shrunk, and investment would have increased.
Thanks for the articles that supported my position.
The sfgate article which qouted Greenspan was used by me solely to show greenspan's oppinion on the efficacy of the tax cuts. I could careless what the journalist oppinion's on the tax cuts are. The big red meat was Greenspan's own words and not the journalist. The article did stated on it's own volition, not greenspans that the projections were wrong. Greenspan though said he would still support the tax cuts. NO point made on your behalf.
the american for proggress article was a liberal source which was critical of the Bush tax cuts. Yet at that, they, contrary to your oppinion, believed the recession was short. I figured it would take your own damn liberals to convince you of the fact that the recession was short. Although i didnt expect them to blow bush's nut, i used their words to slash your argument that anybody that believed that the recession was short lived was a republican or bush lover.
And according to the FDIC statement, It made my argument more than yours. The jobs that were loss wont be totally recovered till we build back the WTC. On that day we lost 50,000 jobs. Another reason why we will not get back the amount of jobs we had is becuase jobs have been sent oversees.
Despite your argument of lagging wages, and debt(which for the upteenth time, I AGREE WITH YOU!!)
YOur still wrong that this economy is weak and that the tax cuts are useless.
ANd the points that i did make you still cannot prove them wrong.
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