So What DO You Know About Economics?

[Anniee]

Quote by: donkrabbit Ironic. The socialist who I asked to take the quiz last night complained that the socialist answer options weren't in-depth enough, and left key factors out.

Figures. I think the answers were just about right; the detail lends a surer clarity and assures that key things are NOT left out. If it's tedious to some; that goes to show they aren't interested in economics (which naturally not everyone is!) Which is fine, so long as they don't then spout endless rhetoric (which almost always falls into the socialist/Keynesian camp.)

I have a certain poster on ignore and don't read or respond to him/her; hopefully he/she wasn't addressing me, as I've made this perfectly clear.

BillSP please try not to miss my last post, it was directed towards you.

[Osborn F Enready]

The poster Annie is referring to is me, and I was addressing her since she posted the thread, but her acknowledgement is not necessary since her blocking of my posts only shows she is scared to address the facts I bring to the table. Hence the reason I made the comment about her "attempt to create a label".

I hope her admitting to blocking posts, shows to others her inability to defend her position, since she blocked me after reading ONE of my posts. Some people have thin skin when their beliefs are involved, and she is showing that hers is quite thin indeed.

[Capitalist Pig]

Quote by: Osborn F Enready This leads me to believe it may be an error on their end, since I have had no other e-mail probelms recently. If there was an attachment, I would have used an appropriate or recommended viewer, but there was no attachment or message body to select to "view". I am perplexed.

I received my results in an attachment, and opened it with notepad. It was just a plain text version of what the results page said.

[bishop]

My point is that tax cuts DO indeed spur the economy; bigger cuts tend to spur huge growth. Smaller cuts tend to spur smaller growth. Taxes not having been cut since the early 80s, the GDP, the Dept. of Commerce and Dept of Labor reports show the largest boom in the ensuing 20 years.

what sort of tax cuts are you referring to? there are supply-side cuts and there are demand-side cuts - each type of cut has specific goals.. supply-side cuts are intended to spur investment - the idea is that if you build it, they will come. demand-side cuts are intended to spur consumption - the idea being that the more people demand, the more companies will employ people to meet that demand. then there are market-specific taxes on unearned income - the idea being to increase market activity/participation/returns.

also, in all of my studies, i've never found conclusive evidence showing that reagan's tax cuts produced the 90's boom. i tend to find that those who claim it does completely ignore the recession that happened during bush #1's presidency. plus, the economy boomed during the clinton years, despite tax increases. consumers were spending at all time highs - which has continued to grow under bush #2 but hasn't translated into new jobs.

there are many other factors, aside from tax cuts, that produce growth.

[Osborn F Enready]

Annie said: BillSP please try not to miss my last post, it was directed towards you.
(Last edited by Anniee : Today at 06:28 PM. Reason: yeah )

I say: So Annie, you aren't ignoring my posts, since you edited that in after my post. Very mature.

[RickSp]

Quote by: Anniee Bill, the Laffer curve has NOTHING to do with what I said. snip My point is that tax cuts DO indeed spur the economy; bigger cuts tend to spur huge growth. Smaller cuts tend to spur smaller growth. Taxes not having been cut since the early 80s, the GDP, the Dept. of Commerce and Dept of Labor reports show the largest boom in the ensuing 20 years. This, once again, has absolutely nothing to do with the Laffer curve. I'm not interested in those flawed hypotheses. At any rate; how you can imagine your pockets picked by a tax cut, when it not only propels the economy but also puts a few individual dollars in individual pockets, is beyond me. There is some kind of flawed understanding going on, but I'm not sure where it is.

Bill? Who is Bill?

I think you were responding to my points. Anyhow, it is very simple - spending far more that is being taken in in taxes and funding the shortfall with ever more debt is not prudent economically in the long or even the short run. Shifting the burden of taxes away from the upper income groups and placing it on the middle classes is arguably bad policy as well.

In the long run the total amount of taxes is equal to total spending. Bush is not cutting taxes. He is deferring them.

[Anniee]

Sorry Rick; I did mean Rick. I don't dispute that debt should not go along with tax cuts. A reduction of spending should. Neither party does that, though, and never will. You're going to need an economically educated third party for that. At the same time, the economy IS booming; tax cuts do that even when they are, as you say, only being deferred. Understood.

As far as 'shifting the burden' from the wealthy to the middle class...that is genuinely ridiculous. I'm not trying to pick a fight, but really it is.

Bishop I'm certainly not referring to the inflated 90s boom, which was most definitely not a true boom in any sense of the word. Anyone who knew anything about the economy in the 90s knew that that bubble was going to crash; it was VERY much like the roaring 20s; an inflated stock market and businesses investing in things that the long term would never sustain. We were all waiting for it to come crashing down; which it began to, during the first year or so of Bush's presidency. False, inflated "wealth" does that. The tax cuts, puny as they were, staved off the worst of it, but of course there is also the debt spending.

No, I was referring to the longest sustained economic boom in our history, that lasted through the 80s and into the 90s and began to lose any real steam when Bush #1 increased taxes. Then we had the inflated boom (I guess some people call it the dotcom bubble but I don't care for that) of the 90s which I don't count because it wasn't real.

[RickSp]

At the same time, the economy IS booming;

Booming? Which economy are you referring to? US job growth is beginning to rebound after the slowest growth in jobs of any recent recovery. The leading economic indicators have fallen for the last five months straight, the longest drop since 1995. Nobody is predicting a recession, yet, but no one is calling it a "boom."

The only thing "booming" these days are car bombs in Baghdad.

I also think the shift of the tax burden from upper income to middle class is ridiculous, but I suspect in a completely different context than you mean it.

[bishop]

it wasn't real? how do you define economic boom? or, what specific variables made the 80's "boom" the longest sustained expansion in history? i believe job creation was at its all time high in the 90's..

markets may be inflated, but they are hardly irrelavent.. gains in the market were turned into new investment, job creation and consumption. it may be inflated and the earnings may be unearned, but what happened in the market is not irrelavent. this is a market economy after all. just asking because most economists include market factors (stock returns, job growth, consumption, etc.) into the analysis. i agree that the 90's boom was much like that of the 20's - thankfully the reforms made after the great depression helped prevent the recent recession from becoming a full blown depression.

and speaking about market factors, and regarding the 90's recession..... i've never seen it argued, by any scholar, that it was because bush raised taxes.. most people attribute it to the s&l crisis which was the biggest financial sector crisis since the great depression. and, to a lesser degree, high oil prices and capital flows helped make a bad situation worse.

[Anniee]

All the networks reported on the boom, Rick; the economic gurus of CNN and other networks, and all the economic research outfits; hell even Tom Brokaw and the rest (though they tempered it with anti-Bush statements); I am in the process of moving or I'd have all the names in front of me; perhaps I can find some of them on my hard drive. Still, the May reports by both the Dept of Commerce and Labor will attest. Original projections were much too low; GDP was growing at an excellent rate and job growth was 900K in only four months. The 12 months prior to the reports had the best growth rates in the preceding 20 years. Has it slowed down since then? Possible. I'll wait for more information, a few months. Home ownership is still excellent.

The funny thing is that the leftist press actually used their own failure to focus on the growth as a STORY...they would say things like "It's a little-known secret but the economy is doing very well..." and speculating about "Why this information isn't getting out to the general public." They took their OWN failure to report properly and made THAT into the story LMAO It's not surprising that people who trust tv or liberal papers for their news haven't been exactly aware of the facts. Still one does expect more on the net, from people who have access to more sources.

Bishop; an inflated stock-based boom is not a "boom." I will attempt later to give you a good analogy using counterfeiters and a local CD shop to explain why. Suffice it for now to say the dotcom bubble burst; I'm sure you've heard that. It HAD to and we all knew it had to. Those of us who understood why it wasn't real, that is. (I'm not saying a similar case can't be made using the current debt; but historically that doesn't seem to deflate the same way.)

As far as the longest sustained economic boom in history; the first time I read that was in the World Almanac - starting in the early 90s IIRC. But, then I also lived through it; where jobs were plentiful and need was scarce :) It was a rude awakening in the 90s to end up out of work; not so easy to waltz into a new position anymore. The Reagan tax cuts brought us from double-digit inflation and 1 tank of gas every other week on odd days only (after waiting in line up to 8 hours) under Carter, to jobs, wealth, yuppies, cocaine, black people moving in large numbers into the middle class, and the new baby boom. It's just how it went. Take a look at the Cato institute for some more on the massive 80s boom.

[bishop]

i appreciate the anecdotes, but i'm more interested in hearing you explain your case using some hard numbers.

about home ownership... parts of the world have full-blown bubbles in the real estate sector.. imo, we do too. i don't think these inflated values will last indefinitely. that's just my opinion though.

heh, and since you mentioned projections and took a jab at the media.. this one's a doozy:

http://cogent.typepad.com/cogent_life/bush-jobs.JPG

something that isn't mentioned all that often about the 2000-2001 recession was the massive flight of hedge funds out of dollar-denominated assets - the japanese were the key players there. right when that happened, then the market began to tank. simply saying that the market was inflated is... simplistic. heh, i could go what goes up, comes down - and if it's in reference to a past event, hindsight is always 20/20.


and you made another assertion that you ought to back up with facts. that is, that the reagan tax cuts somehow brought inflation down. inflation has historically been a monetary problem - that is, a problem solved/created by/with monetary policy. (and no mention of the s&l scandals????)

[Anniee]

Inflation is always a government problem. From Ancient Romans clipping the edges of coins to the US printing more money without producing/earning it, that's what it is. I pointed to the high inflation as one aspect of the disastrous Carter-era economics, yes.

I didn't have to rely on hindsight for the 90s because I knew in the nineties what was coming. You don't have a roaring 90s where businesses are overspending due to inflated projections without a coming crash. It just doesn't work that way.

Say you have a town, just for an analogy. (Please recall no analogy is perfect.) And Cory the Counterfeiter is making money in the basement. He spends some about town, and being a nice guy he also shares with his friends and family. He, his friends and family spend the extra money on fun things, such as CDs. The man who owns the CD shop sees his numbers going up, sees his stock being bought; sees his profits increasing. Great! He projects the coming year and decides he will need to buy X more stock and hire X new people. He even takes out a loan to build an addition onto the store and redecorate a bit. Great!

Until Cory is caught. The extra money supply is gone. The fake bills Mr. CD man has are worthless. The new people he hired have to be let go, and THEY can't patronize local businesses anymore. No one is buying CDs anymore. Instead of gains, he now has losses and NOW the whole town is plunged into a recession because they were all making projections based on the inflated currency. All their extra people have to go too, and they can't buy anything either. (Please note that there are many different things that amount to an inflated currency or an inflated market.) Now all the businesses have to make adjustments, which takes time, and they're already starting off in a hole.

This is a simple analogy that helps with understanding what happened in the 90s after the new Bush taxes (another "inflation" since it isn't earned and TANSTAAFL, you know) stifled the economy. Rather than freeing up the money people were earning so they could invest and, you know, create jobs and business opportunities with it, and hire people, the government did its own inflationary number on the economy. They became Cory. The results were highly predictable; and the thing about Monetarist and Austrian economics is that they, more than your Chicagoan or Keynesian, have provided the highest level of predictability (and thus the most scientific accuracy) over the course of time.

You would probably learn a lot from www.fee.org as well. Excellent site; the Foundation for Economic Education. Of course they will condemn the deficit spending of the Reagan Era (rightly so, though few try to remember that it was the Democratic congress writing the bills) but I sincerely doubt they will try to pretend it wasn't the boom that it was. Though I daresay it could be considered inflated as well; since there WAS so much deficit spending.

(Isn't it funny though, that the debt that our great great grandchildren were never to be able to pay off ended up becoming, at least as far as the left tells me, a surplus under Clinton in only a few short years? Seems to me our great great grandchildren aren't even going to KNOW about the deficit spending of the 80s, much less have to pay it off...)

[RickSp]

All the networks reported on the boom, Rick; the economic gurus of CNN and other networks, and all the economic research outfits; hell even Tom Brokaw and the rest (though they tempered it with anti-Bush statements); I am in the process of moving or I'd have all the names in front of me; perhaps I can find some of them on my hard drive. Still, the May reports by both the Dept of Commerce and Labor will attest. Original projections were much too low; GDP was growing at an excellent rate and job growth was 900K in only four months. The 12 months prior to the reports had the best growth rates in the preceding 20 years. Has it slowed down since then? Possible. I'll wait for more information, a few months. Home ownership is still excellent.

Well, perhaps you should consider your sources. Interesting that you inject strictly partisan comments to figures that should be relatively objective. The numbers, in either the Leading Economic Indicators, job growth, stock market performance, or the value of the dollar, suggest a modest recovery at best.

The Leading Economic Indicators have been down for five months straight. If they continue to decline for one more month, they could be taken as the traditional sign of a recession. No one expects this but then five down months does not suggest a "boom." Job growth was up in November but dipped in October. I know the Bush talking parrots are claiming a "boom", but I would prefer to discuss economic rather than polemical spin.

[bishop]

Inflation is always a government problem. From Ancient Romans clipping the edges of coins to the US printing more money without producing/earning it, that's what it is. I pointed to the high inflation as one aspect of the disastrous Carter-era economics, yes.

no... it's a monetary problem.. government printing more money is a monetary policy - as are the fed's raising/lowering of interest rates.

but alas, i'd still like to see you prove your previous allegations. especially that reagan's tax cuts lowered inflation.. here is an article sponsored by our government attributing lower inflation to fed policy:

http://www.bls.gov/opub/mlr/1990/08/art3full.pdf


and as far as the 90's bubble is concerned, i also felt the end was near towards the end. all you had to do was build a fed valuation model and you could plainly see that the market was extremely overvalued.

[bishop]

also, i'm 100% against deficit spending - which is why i stopped supporting bush during the middle of his first term... all i saw was spending going up, and up, and up - while at the same time he's pushing to make government revenues lower, and lower, and lower.. that's how you turn a record surplus into a record deficit real fast. what he's done to our country's finances is the epitomy of fiscal irresponsibility. the twit hasn't used his veto ONCE. and the only times he's threatened to use it was when legislation was proposed that the corporations didn't like (ex. the one passed regarding media conglomerates). another time was to push through new rules to eliinate overtime pay - so very pro-middle class. never once did he threaten to use it because they were full of pork spending and/or inefficient spending programs.

[Osborn F Enready]

Bishop said: also, i'm 100% against deficit spending - which is why i stopped supporting bush during the middle of his first term... all i saw was spending going up, and up, and up - while at the same time he's pushing to make government revenues lower, and lower, and lower.. that's how you turn a record surplus into a record deficit real fast. what he's done to our country's finances is the epitomy of fiscal irresponsibility. the twit hasn't used his veto ONCE. and the only times he's threatened to use it was when legislation was proposed that the corporations didn't like (ex. the one passed regarding media conglomerates). another time was to push through new rules to eliinate overtime pay - so very pro-middle class. never once did he threaten to use it because they were full of pork spending and/or inefficient spending programs.

I say: I couldn't agree more. His obligation is to more than the hear and now, it is also to conserve, plan, and help provide a plan for the future fixes to the problems being created NOW. I think you are bringing up the latest Omnibus Act when you refer to "media conglomerates"? That is still a sore spot with me on many levels. As far as Pork Barrel politics, it is simply out of hand. How people see pork-barrel politics as getting what their "constituents" want, is beyond me.

His help to the small businesses I also find more than questionable. Knowing several people who have started out small businesses in the last 3 years, I can attest they will all tell you that is just plain B.S. Here in Ohio, it has amounted to nothing but more licensing, more taxes, more hassles in starting up and getting the doors open to MAKE MONEY.

The way Bush has handled un-employment is criminal. While I am not a supporter of welfare systems, I was forced to partake in un-employment this year. (I mean why shouldn't I, it is my money that is being stolen for this too.) My local paper in a town of over 600,000 people, had 51 help wanted ads, this month. About 30 of those are "OTR Driver positions", the remaining 20 are mainly minimum wage Holiday help. Our job situation this month has not improved over the last 16 months of job availability. At the same time we are experiencing one of our biggest waves of job loss, the Bush administration is cutting benefits to those who need them, AND ALSO, changing over from people to computerized systems to take care of claims, filings, review, processing and all other aspects of the systems interaction with claimants. This helps to skew the numbers, at the same time the cuts were issued, since the system was very non-user friendly, and many people didn't get qualified in time just because the system was complex and there were no access number to talk to a PERSON to answer questions not ADDRESSED in the new computerized system.

Combine those two reasons, (switch to computerized system, cutting benefits) and it makes it appear that less people are on unemployment (since they are being cut, or can't file due to system error) even though Ohio, especially northwest Ohio is experiencing one of its worst bouts of unemployment EVER. This is one of the many ways used to project that rosy "rise in the economy" they are boasting which is built like a house of cards.

This is the beginning of the SECOND, created depression. Read Alan Greenspans 1967 essay on this topic of our economy, and our reliance on the central bank, and his own words live to haunt him.

[bishop]

I think you are bringing up the latest Omnibus Act when you refer to "media conglomerates"?

yeah.. i think it was passed last february or something like that.

what's interesting about your rant about unemployment benefits is that benefits have been cut in other programs as well - but the deficit keeps on growing.. i always thought that lost benefits would coincide with decreased spending, but apparently the bushies want to test how far they can stretch our economy.

at the heart of our problems is the national debt.. it's the reason why the central bank was separated from direct federal control, it's the reason why we abandoned the gold standard, etc... it saddens me that there is this overwhelming lack of interest and knowledge about what our massive debt actually means to the future of this country.

for the record, i'm not particularly ideological - i simply want balanced budgets. if they are to be balanced with higher taxes, then so be it. it may not be the best thing to do, but it's still better than more and more deficit spending.

[donkrabbit]

Quote by: Anniee Say you have a town, just for an analogy. (Please recall no analogy is perfect.) And Cory the Counterfeiter is making money in the basement. He spends some about town, and being a nice guy he also shares with his friends and family. He, his friends and family spend the extra money on fun things, such as CDs. The man who owns the CD shop sees his numbers going up, sees his stock being bought; sees his profits increasing. Great! He projects the coming year and decides he will need to buy X more stock and hire X new people. He even takes out a loan to build an addition onto the store and redecorate a bit. Great! Until Cory is caught. The extra money supply is gone. The fake bills Mr. CD man has are worthless. The new people he hired have to be let go, and THEY can't patronize local businesses anymore. No one is buying CDs anymore. Instead of gains, he now has losses and NOW the whole town is plunged into a recession because they were all making projections based on the inflated currency. All their extra people have to go too, and they can't buy anything either. (Please note that there are many different things that amount to an inflated currency or an inflated market.) Now all the businesses have to make adjustments, which takes time, and they're already starting off in a hole.

How about this scenario;

The government decides to turn up the presses and print more money. The increased supply of dollars causes the devaluation of every dollar, and therefore inflation. This means that all of the money that people had been saving is now instantly worth less (it can add up to quite a chunk). In one way, this is bad because it makes government richer and everybody else poorer. In other way, it's bad because it discourages investing- which is an important factor of our economy. Inflation is a deceitful form of taxation.

Not that I've seen anybody here argue that inflation isn't a bad thing. I just wanted to throw that example out there.

[Osborn F Enready]

Bishop, I thought it was the Omni-bus act you were speaking of. Criminal in my opinion.

I understand what you mean about a balanced budget, and it entails fiscal responsibility which is something Bush has not employed, or may not have in the aresenal.

My main contention is that the needs of our people come first, before the deficit. The deficit problem can be addressed as long as the dollar is strong. The dollar will not stay strong if we allow nations like China, to manipulate our dollar to suit them. Along with this, we know that China is about as close to a formidable conventional enemy we have. They are leading in the world of counterfeit of our bills, they steal our copyrighted goods and sell them cheaper. This is as Milton said, I believe it is trading with the enemy. Trade is not a bad thing, and I believe in FREE TRADE, but this manipulation of currency cannot go on and still be expecting to rectify the overall problem. Corporate trade is what is killing us, and if we still had the ability to cancel corporate charters as we used to, this is what would be done in this case. If the corporate charters violate the public trust, or stop serving the public good, the public should have the right to remove that corporate charter.

The only reason they are deficit spending now, is because there are no more funds to rob out of Social Security, Medicare, or No Child Left Behind. It must be stopped, and this government put back in to ACCOUNTABILITY.

[bishop]

i think it was the omnibus bill.. but, it doesn't matter, you know the actual policy i was talking about.

the dollar isn't under attack from china. as an exporting country, it's in their interest to have a strong dollar - especially given their current exchange rate policies. bush has, rightly so imo, been pushing for them to allow their currency to be valued according to global markets - which would cause their currency to appreciate. i've haven't encountered any scholarly works alleging that china is this big bogeyman destroying our currency and economy.. the dollar would be much weaker if it wasn't for japanese and chinese intervention - and recently EU intervention. if you have something reputable, share it.

the dollar is getting hammered because of our macroeconomic imbalances (namely our trade deficits and federal deficits). in all of my studies, whenever a country has had large current account deficits and federal deficits, their currency faced strong pressures for devaluation. we have been fortunate in this regard because the USD is the reserve currency of choice throughout the world - meaning that we have been able to finance our debt with ease. that is the primary factor separating us from virtually every other economy in the world.

if foreign banks should lose their appetite to buy dollars, we'll have some big problems on our hands.

as an aside, china has been cracking down on piracy bigtime lately.. also, i don't have a problem with corporate trade.. i do have problems with loopholes that only benefit large corporations - meanwhile we have too many useless regulations/taxes here at home which limits incentives to develop here. if only our policies regarding fixed investment were as flexible as those regarding capital investment. of course the capital investment rules will be flexible - we need all the capital inflows we can get to support the current account deficit.