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There is a kingdom with a king and 1000 people living within it. The king has to pay for upkeep of the castle including wages for guards, cooks, servants, etc. The king also makes promises to it's citizens but also taxes their earnings. Now, in a normal kingdom they use gold and everything is handled in gold. Since it's impossible to make fake gold, if the king wants any money for himself he needs to keep his expenses lower than his earnings.
Now, however, there is a smart king. The king has hired a minter. The minter takes copper, and imprints a picture of the king on it. Copper is so cheap that he basically has an unlimited supply. So what does the king do? He no longer accepts tax payments in gold. Instead, taxes must be paid in copper coins. This forces the citizens to turn in their gold and they begin to use it instead. Now, if the king wants more money, all he has to do is print more money and devalue it. However, he has smart peons, so they insist that they are able to get the same amount of gold as before. The king agrees and sets up a bank. Whenever the king needs more money, he has to borrow it from the bank. The king is the king, so the banker always gives it without any question usually with no interest or very little attached.
Then there is a war, the king borrows a lot of money to pay for soldiers, but he wins the war. By now however, the king is in huge amounts of debt and is reaching the limit he had earlier. Also, because of the amount of money the king introduced into his kingdom, the price of everything has doubled also causing his expenses to increase. The king says, don't worry, I will just raise the amount of money i can borrow. Eventually this wears off and the king says "Ok, I will sell you the gold back, but only to the highest bidders." This temporarily solves the debt problem, however, you can no longer trade copper for gold.
Now this seems all nice and dandy, but little does he know that he caused the savings of all of his peons to be cut in half. Over time, the king borrows more and more money to pay for new obligations to keep his citizens happy. He throws lavish partys and provides services like doctors, elderly care, and schooling. Without his knowing though, citizens begin to become poorer. Since it's almost impossible to keep up with the amount of money being added into the system, The average savings drops. Because of increasing prices, the citizens have also had to borrow money. In fact, it seems like the entire kingdom is in debt. To solve the problem there are 2 solutions. The king can either say "No, I'm going to stop spending money and pay back what I owe" or "No, i'm just going to borrow more money regardless of the effects".
What is the solution for this poor king and kingdom?
 
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What was your inspiration for this blog heh?
Also, are you asking us to choose between the two solutions, or to postulate our own? o_o
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On July 19 2011 07:44 Z3kk wrote:
What was your inspiration for this blog heh?
Also, are you asking us to choose between the two solutions, or to postulate our own? o_o
If you have another solution that is amazing, please say it.
It's obviously an analogy of the current financial situation of the United States beginning in the early 1900's.
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Smoke weed. Worry later 
+ Show Spoiler +Is this a metaphor for America, by the way?
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On July 19 2011 07:44 darmousseh wrote:Show nested quote +On July 19 2011 07:44 Z3kk wrote:
What was your inspiration for this blog heh?
Also, are you asking us to choose between the two solutions, or to postulate our own? o_o If you have another solution that is amazing, please say it. It's obviously an analogy of the current financial situation of the United States beginning in the early 1900's.
I was just wondering as to what prompted you to post this allegory, sorry.
I don't have a solution, but here's hoping for some interesting responses.
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On July 19 2011 07:45 masami.sc wrote:Smoke weed. Worry later + Show Spoiler +Is this a metaphor for America, by the way?
Following the advice of Sir masami the high, the king smokes weed and a riot ensues. The king is found buried in a river 5 miles south.
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On July 19 2011 07:48 Z3kk wrote:Show nested quote +On July 19 2011 07:44 darmousseh wrote:On July 19 2011 07:44 Z3kk wrote:
What was your inspiration for this blog heh?
Also, are you asking us to choose between the two solutions, or to postulate our own? o_o If you have another solution that is amazing, please say it. It's obviously an analogy of the current financial situation of the United States beginning in the early 1900's. I was just wondering as to what prompted you to post this allegory, sorry. I don't have a solution, but here's hoping for some interesting responses.
To gauge people's thoughts on the current debt ceiling problem, but to present it in a way which removes the complexity of the situation by using a simple analogy.
edit; A lot of policitians get hung up on the small problems like "How are we going to pay social security" instead of identifying the core issue. I don't care what you think about the debt ceiling limit coming up soon, but of the debt ceiling limit as a whole. Even if we pass this it will happen again in 6 months.
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What if the king could acquire more money in a manner similar to previous kings by repealing previous tax cuts for the richest citizens of the kingdom?
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On July 19 2011 07:52 n.DieJokes wrote:
What if the king could acquire more money in a manner similar to previous kings by repealing previous tax cuts for the richest citizens of the kingdom?
The king follows the advice of diejokes and is able to temporarily solve the issue, the king however comes back 6 months later and presents the same problem.
Cutting back a small portion of the budget doesn't work. We need massive reform.
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shouldn't the answer be a bit of both? maybe this is naive but it can't be that clear cut...
if he stops borrowing completely.. it's reasonable to say that the government will be in a horrible situation and perhaps not be about to function, but if he says he's just going to keep borrowing then it's just going to get worse...
wouldn't the reasonable thing to do be to be able to borrow more in order to function but use that money to reform broken systems and look for any resonable place to cut
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On July 19 2011 07:52 n.DieJokes wrote:
What if the king could acquire more money in a manner similar to previous kings by repealing previous tax cuts for the richest citizens of the kingdom?
Then the richest will move to another kingdom? (or move their businesses there at the very least?)_
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Here is a cool little simulator which helps you create a financial solution by cutting certain programs. This is a solution, but remember, you gotta convince the peons of your plan.
http://crfb.org/stabilizethedebt/
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He presses the reset button.
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Looks like town goes bankrupt, Mafia wins, we start signups for next game.
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On July 19 2011 08:16 Lemonwalrus wrote:
Looks like town goes bankrupt, Mafia wins, we start signups for next game.
Hahaha, i can always count on you guys to give the most appropriate responses.
Maybe I should come back to the mafia forums. I've been playing too much on epicmafia.com.
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Kill peons, let them starve or start a new war.
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I used that simulator you posted and cut defense spending and raised taxes on the rich and I balanced that mother fucker easily.
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5003 Posts
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet
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On July 19 2011 09:16 Milkis wrote:
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet
Dun dun dun.
To be fair, it's an analogy, so by "king" he may be referring not to the president but to the collective body that's assumed to be capable of making the decision/change.
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This metaphor is pretty weak, since the "King" isn't swapping personalities, ministers and advisors roughly every 4 years.
You've also ignored the merchants.
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On July 19 2011 09:16 Milkis wrote:
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet
He said he was trying ot simply the problem by providing an easier analogy, ala, removing all the additional backdoors you could postulate that could be going on.
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5003 Posts
On July 19 2011 09:37 Z3kk wrote:Show nested quote +On July 19 2011 09:16 Milkis wrote:
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet Dun dun dun. To be fair, it's an analogy, so by "king" he may be referring not to the president but to the collective body that's assumed to be capable of making the decision/change.
except power is never that collective in a republic which is what he tried to make an analogy too
us government makes bad economic decisions cause they always have to compromise or risk being paralyzed not because they dont know what they're doing 
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5003 Posts
On July 19 2011 09:38 ch33psh33p wrote:Show nested quote +On July 19 2011 09:16 Milkis wrote:
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet He said he was trying ot simply the problem by providing an easier analogy, ala, removing all the additional backdoors you could postulate that could be going on.
But when you simplify it it isn't the same problem
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On July 19 2011 09:38 Milkis wrote:Show nested quote +On July 19 2011 09:37 Z3kk wrote:On July 19 2011 09:16 Milkis wrote:
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet Dun dun dun. To be fair, it's an analogy, so by "king" he may be referring not to the president but to the collective body that's assumed to be capable of making the decision/change. except power is never that collective in a republic which is what he tried to make an analogy too us government makes bad economic decisions cause they always have to compromise or risk being paralyzed not because they dont know what they're doing
Yeah, I guess the entire situation is somewhat misrepresented. I suppose you're suggesting by corollary that if we were to discuss this, we might as well not use an analogy at all? Otherwise it would essentially be refined into the actual situation, so an analogy in this case isn't pariticularly useful in the first place...aha.
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Press Start -> New Game.
I figure this post should be allowed because nobody said anything about smoking weed and pressing the reset button.
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On July 19 2011 09:40 Milkis wrote:Show nested quote +On July 19 2011 09:38 ch33psh33p wrote:On July 19 2011 09:16 Milkis wrote:
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet He said he was trying ot simply the problem by providing an easier analogy, ala, removing all the additional backdoors you could postulate that could be going on. But when you simplify it it isn't the same problem
Just because the king has multiple personality disorder doesn't affect the underlying problem. It could be a new king every year. If the problem is that the rules are constantly changing then that is a problem by itself and needs to be resolved, but even if that problem is resolved, the system itself appears unsustainable. No matter how good the king is, the underlying monetary problem still exists. Its a little oversimplified, but often when trying to solve a problem, its best to cut out the unimportant details that people get so hung up on.
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5003 Posts
On July 19 2011 09:59 darmousseh wrote:Show nested quote +On July 19 2011 09:40 Milkis wrote:On July 19 2011 09:38 ch33psh33p wrote:On July 19 2011 09:16 Milkis wrote:
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet He said he was trying ot simply the problem by providing an easier analogy, ala, removing all the additional backdoors you could postulate that could be going on. But when you simplify it it isn't the same problem Just because the king has multiple personality disorder doesn't affect the underlying problem. It could be a new king every year. If the problem is that the rules are constantly changing then that is a problem by itself and needs to be resolved, but even if that problem is resolved, the system itself appears unsustainable. No matter how good the king is, the underlying monetary problem still exists. Its a little oversimplified, but often when trying to solve a problem, its best to cut out the unimportant details that people get so hung up on.
Except in reality, the problem comes directly from the fact that the "king has multiple personality disorder" ~_~
methinks you need to understand how economics are applied in a democratic system some more before trying to nail down where the problem came from.
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Economics nerd battle!
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Milkis: are you an econ major @ U Chicago?
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5003 Posts
On July 19 2011 10:07 Lemonwalrus wrote:Economics nerd battle!
this is more ideology and less economics :D
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On July 19 2011 10:16 Froadac wrote:
Milkis: are you an econ major @ U Chicago?
Also IMO attendee or something along those lines, I think. I know flamewheel had something to do with IMO.
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On July 19 2011 10:17 Z3kk wrote:Show nested quote +On July 19 2011 10:16 Froadac wrote:
Milkis: are you an econ major @ U Chicago? Also IMO attendee or something along those lines, I think. I know flamewheel had something to do with IMO.
Really? I thought it was flamewheel and ]343[ that were big into IMO. Or is it Milkis as well?
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Er, never mind, I believe I'm mistaken; flamewheel and ]343[ come to mind but I randomly thought of Milkis...
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raise the taxes on the highest earning peons, as they need the money the least, and also cut spending on unnecessary things.
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On July 19 2011 10:36 Tatum26 wrote:
raise the taxes on the highest earning peons, as they need the money the least, and also cut spending on unnecessary things.
This mentality perturbs me.
Sure bill gates may need less money than you to live, but it doesn't mean that he should gift money to the government.
He won't if he has a say in it.
In another way I could say the middle class doesn't really need money because they have adequate food and shelter.
So tax the middle class damnit.
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If you can afford a 25 million dollar yacht that you use maybe twice a year, you can afford a 5% tax hike. The fact that anyone but the uber rich themselves protects them from higher taxes when there are starving poor all over the place makes me sad.
Edit: I don't have an economics degree or anything, so if that is a dumb policy that is one thing, I just find it morally reprehensible.
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On July 19 2011 10:50 Lemonwalrus wrote:
If you can afford a 25 million dollar yacht that you use maybe twice a year, you can afford a 5% tax hike. The fact that anyone but the uber rich themselves protects them from higher taxes when there are starving poor all over the place makes me sad.
Edit: I don't have an economics degree or anything, so if that is a dumb policy that is one thing, I just find it morally reprehensible.
I think he meant that both the high-earners and the middle class should be taxed.
I also think he got semi-trolled by his quoted comment :x
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http://factcheck.org/2008/05/top-1-what-they-make-and-pay/
The word peons pissed me off >.>
The issue is the top 1% is ALREADY paying almost thirty percent of taxes. Sure, they make a lot of money, but they don't make as much money on net as the middle class.
I'm just saying that it may be popular to say "ohhh, just cut stupid tax breaks and tax the wealthy more" and that can be part of the problem, I suppose. But the heart of them atter is that you could make income tax 100% for the top 1% and it wouldn't fix it.
It also perturbs me that the middle class is like NO MOAR MIDDLE CLASS TAX HIKES, when it is only a point or two, but they don't care if they raise taxes on the rich by 5-10 percent because "they can afford it"
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On July 19 2011 12:44 Froadac wrote:
I'm just saying that it may be popular to say "ohhh, just cut stupid tax breaks and tax the wealthy more" and that can be part of the problem, I suppose. But the heart of them atter is that you could make income tax 100% for the top 1% and it wouldn't fix it.
Actually this would increase revenue by ~2 trillion a year and would basically fix everything in 5 years time. I think the reason so many people want to continue to tax the rich is because that was what was working for the 8 years before bush came into office but obviously we should tax across the board. It's just that increases scale up the higher you are on the income bracket and its the most powerful among us that lobby the hardest to stop tax increases.
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Having a debt limit is stupid to begin with. Raise it and do what you will to bring the deficit under 3% of GDP.
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There is a prevailing belief that most of the top 1% made their money by crushing the lives and dreams of the "little guy," which is why you'll find very little sympathy from the poor/middle class for the ultra rich who, they believe, got their wealth off of their backs. Unfortunately a lot of times this prevailing belief is actually true.
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I did read it, they are paying more now proportionally because they are making more now that ever before. Is that not what your article says? Also the last line of your article confuses me, they say the major reason for the increase is because more people creep into the higher income bracket but all their charts say what the top 1% contribute unless the highest income bracket includes less than 1%?
But regardless, your stats are not what I'm talking about. I want to increase the percent income taxed on the rich. Your article says the rich are now more rich and thus make up a greater percentage of tax (or phrased another way the top one percent have become so much richer that their reduced rates are pumping out more income proportionality)
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Pretty much. I understand your point.
I understand the argument, that it's immoral for people to be super rich and make those who can't afford it pay, but in another sense I think it's immoral to say "hey, you're the minority, you deal with it"
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On July 19 2011 13:56 Froadac wrote:
Pretty much. I understand your point.
I understand the argument, that it's immoral for people to be super rich and make those who can't afford it pay, but in another sense I think it's immoral to say "hey, you're the minority, you deal with it"
Well if it such a problem they could give up the wealth and join the majority. I am fairly certain they don't mind being that particular minority.
As an aside, I am all for spending cuts with tax increases as long as they are proportional. Screwing the little guy over is not going to help.
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I think the problem is that the king is stealing from the peasants, not that he makes copper coins.
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The king is friends with certain powerful merchants, who begged him and his council for money to sustain their reckless behavior, money which came from the peasants.
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the answer is obviously to invade another country and steal their money
as for troops, you tell the starving peasants that people in xyz country are to blame and you should go kill them
hey it worked for germany in 1930s
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I like what you did there.
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On July 19 2011 10:05 Milkis wrote:Show nested quote +On July 19 2011 09:59 darmousseh wrote:On July 19 2011 09:40 Milkis wrote:On July 19 2011 09:38 ch33psh33p wrote:On July 19 2011 09:16 Milkis wrote:
your scenario fails when you assume that the king has any power
it's really the various ministers who are fighting with each other to make decisions that will satisfy their party and refusing to compromise
the king is a puppet He said he was trying ot simply the problem by providing an easier analogy, ala, removing all the additional backdoors you could postulate that could be going on. But when you simplify it it isn't the same problem Just because the king has multiple personality disorder doesn't affect the underlying problem. It could be a new king every year. If the problem is that the rules are constantly changing then that is a problem by itself and needs to be resolved, but even if that problem is resolved, the system itself appears unsustainable. No matter how good the king is, the underlying monetary problem still exists. Its a little oversimplified, but often when trying to solve a problem, its best to cut out the unimportant details that people get so hung up on. Except in reality, the problem comes directly from the fact that the "king has multiple personality disorder" ~_~ methinks you need to understand how economics are applied in a democratic system some more before trying to nail down where the problem came from.
Lol, i think the democratic system is the problem. The other reason I used an analogy instead of directly talking about the topic is because the topic itself is cluttered with a political mess.
I really don't care what the political atmosphere is like, the outcome is always the same. I guess it depends on your view of economics, but economics can and does exist in hypothetical scenarios (such as in online video games and in computers at the federal reserve) and that we can learn and make decisions using these models. If there is something that affects possible solutions, then we should identify and solve those as separate issues. For example, I'm asking about how to solve the budget/debt problem. How big our military is is a completely different issue. It may be the case that cutting military is the solution, but it may also not be. This is not what I'm asking, I am questioning the very financial system itself. Sure a great king will never go over his debt limit, but why does this even exist in the first place? Too many economists and politicians focus on the way things are rather than the way they ought to be. I might be called an idealist, but idealism is the foundation of all modern social thought. Of course real solutions must take into consideration the current environment, but that shouldn't disrupt the process of deciding a solution. In chess, the fastest way to determine the best move is to picture the ideal location for all of your pieces and work backwards and find viable means to get to that position. Only new, inexperienced players play 1 move at a time. Let's find an ideal solution and talk about the means to get there.
So, to discuss the issue of economics in a democratic system, you believe that it is the fault of the congress for spending too much as a result of compromise politics? If so, what is your solution? Should we adopt legislation like the ones the republicans are proposing (all budgets must be balanced) or one like the democrats (remove the debt ceiling) or something else? If you want to discuss actual current US economics, that is fine, but that is boring because the result is always the same. Nothing happens. Governments grow bigger and bigger and we are getting deeper and deeper into debt. We have bandaid solutions such as lowering the interest rates or bailing out large corporations, but those are temporary and rarely work exactly as planned. I know all of the theory behind the madness, but the theory doesn't match the results. Economists love to blame investors, financial institutions, consumers, and governments for recessions and inflations [Inflations are time periods where prices are going up, but that real wealth is not increasing at the same rate], but are they really to blame? Is our current system really sustainable?
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Blazinghand
United States25550 Posts
Here's what the king does:
He says, "I refuse to borrow any more money from the bank. To ensure that I can give more money to the people in the future, everyone has to know that I am not irresponsible. Therefore, I will balance the budget."
He continues, "As usual, this vote will have to pass in the Senate and the House of Oliphaunts. I will submit the bill forthwith, that it might pass in a timely fashion."
The Senators are divided into 2 camps, the Freedom Party and the Liberty Party. "Wait," says the Liberty Party leader, "We can't just go doing this, the nominal shock to the economy will be large, especially given the current setup of royal outlays. I demand that we increase the amount that the king is allowed to borrow, and that he borrow that money and light it on fire immediately."
"That's preposterous!" Cries the Freedom Party leader, who generally agrees with the king. "you'll never have a vote from ANY of Freedomers for such a preposterous act. Instead, I recommend the king do a mighty jig, have sexual relations with many concubines, and cut funding to schools, weapons, and healthcare immediately while taxing the shit out of our merchants and poor."
Either group needs a 2/3rds majority to pass their vote, and each group controls half the vote.
After months and months of debating, the deadline comes, and each side, the Freedomers and the Libertites, claim that they will NOT bow to the other side's demands. Instead, they raise the debt ceiling JUST A LITTLE so they can continue the discussion shortly.
As a result, all the Libertite and Freedomer politicians look like they're drunk crazy buffoons who have no idea what's going on. That's not to worry, though, since that's representative of the country's voting populace.
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On July 20 2011 06:03 Blazinghand wrote:
Here's what the king does:
He says, "I refuse to borrow any more money from the bank. To ensure that I can give more money to the people in the future, everyone has to know that I am not irresponsible. Therefore, I will balance the budget."
He continues, "As usual, this vote will have to pass in the Senate and the House of Oliphaunts. I will submit the bill forthwith, that it might pass in a timely fashion."
The Senators are divided into 2 camps, the Freedom Party and the Liberty Party. "Wait," says the Liberty Party leader, "We can't just go doing this, the nominal shock to the economy will be large, especially given the current setup of royal outlays. I demand that we increase the amount that the king is allowed to borrow, and that he borrow that money and light it on fire immediately."
"That's preposterous!" Cries the Freedom Party leader, who generally agrees with the king. "you'll never have a vote from ANY of Freedomers for such a preposterous act. Instead, I recommend the king do a mighty jig, have sexual relations with many concubines, and cut funding to schools, weapons, and healthcare immediately while taxing the shit out of our merchants and poor."
Either group needs a 2/3rds majority to pass their vote, and each group controls half the vote.
After months and months of debating, the deadline comes, and each side, the Freedomers and the Libertites, claim that they will NOT bow to the other side's demands. Instead, they raise the debt ceiling JUST A LITTLE so they can continue the discussion shortly.
As a result, all the Libertite and Freedomer politicians look like they're drunk crazy buffoons who have no idea what's going on. That's not to worry, though, since that's representative of the country's voting populace.
hahahahahahahahahahha. So true.
I have no doubt that this is what will ensue. They will delay it until december is my guess.
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EPT
