On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
Obama and Romney didn't even get a single cent from concerned citizens.
This statistic seems very legit, despite it obviously removing the crucial statistic that it actually wants to bring forward as evidence.
Honestly, is this the stuff that Ron Paul believers (might as well call them believers considering their zeal) eat up readily?
I don't understand this. Oke, you are a fan of a certain candidate, I get that. But why must you leave your critical thinking at the door? Why can't you use real statistics?
Try to keep thinking critically. You might not be able to submit yourself to a candidate with such ferocity, but atleast you don't look silly posting those kinds of obviously distorted images.
On January 27 2012 07:52 Velr wrote: The problem is... That ideology has lead us into this debt crisise in the first place. There is never a "good" time to pay back debt.. Thats why most countries never did it and suddenly.. Oh shit, debt is out of control! (really sherlock? how come...).
The only country in crisis because of high debt is Greece.
You might want to look at other countries with high debt and the prospects for them borrowing in the future.
Portugal is paying 15% on 10 year money now. That is not sustainable.
Japan has over one QUADRILLION yen in public debt. That's over 200% of their GDP. Even though their interest rates are low on that debt, I think it takes something ridiculous like 40% of their government spending to just cover interest payments. Let that sit in your head for a second.
As you can see, countries in crisis like Spain have very low debt level. In fact, Spain ran surpluses (meaning debt was decreasing) before the crisis hit. The debt was not the cause of the Eurozone crisis for all countries except Greece.
And as you've pointed out, Japan's debt level is 200% of GDP and interest rates have over many years been very very low, about 1%. It's sustainable in the sense, that it's been sustained for like 20 years without signs of catastrophe.
When you have to take on more debt to pay down old debt, I consider that a crisis. It's like maxing out a credit card to cover a different credit card. Just because the Eurozone, Japan, etc. have other problems as well doesn't mean that they are not experiencing a debt crisis in addition. When it costs, for example, Italy an additional $20 billion to service their debt if rates go up 1%, that's a problem.
Japan is not floundering because their debt is incredibly internal. However, with the US it is not this way. And that is the reason why we need to cut the shit out of spending and reduce our ridiculous levels of indebtedness, before something goes wrong and/or we get into the spot where we spend too much just to pay off past excessive spending. Talking about lowering taxes and building space stations right now is just outrageous.
Governments do not have to pay back debt in the sense that persons do. Governments always issue bonds, i.e. they are always borrowing, but they do not borrow explicitly to pay interest on debt.
You can cite large numbers all you like, but none of that really matters in terms of economics, it's just for shock value. All that a government needs to do to keep their debt level sustainable is to ensure that GDP growth outpaces the nominal value they have to repay on the debt.
Your facts are not correct. Japan is not experiencing a debt crisis even though their debt is more than 200% of GDP (compared to 140% for Greece and 95% for the US).
If you look at the table I linked above (http://en.wikipedia.org/wiki/Economy_of_the_European_Union#Economies_of_member_states), you'd see that European countries that are in crisis do not have high debt to GDP ratios. Spain for example is only at 60%. They have debt problems now, but these debt problems were not caused by too much debt. The only exception is Greece.
When S&P downgraded European sovereign debt ratings, they put up a FAQ that perfectly summarized the whole crisis and it's real cause: trade imbalances (i.e. wages were too high in countries like Spain and Italy, making their exports noncompetitive) and high private (and not public) debt. Here's what S&P says: + Show Spoiler +
HOW DO WE INTERPRET THE CONCLUSIONS OF THE DECEMBER EUROPEAN SUMMIT?
We have previously stated our belief that an effective strategy that would buoy confidence and lower the currently elevated borrowing costs for European sovereigns could include, for example, a greater pooling of fiscal resources and obligations as well as enhanced mutual budgetary oversight. We have also stated that we believe that a reform process based on a pillar of fiscal austerity alone would risk becoming self-defeating, as domestic demand falls in line with consumer's rising concerns about job security and disposable incomes, eroding national tax revenues.
The outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers, lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems. In our opinion, the political agreement does not supply sufficient additional resources or operational flexibility to bolster European rescue operations, or extend enough support for those eurozone sovereigns subjected to heightened market pressures. Instead, it focuses on what we consider to be a one-sided approach by emphasizing fiscal austerity without a strong and consistent program to raise the growth potential of the economies in the eurozone. While some member states have implemented measures on the national level to deregulate internal labor markets, and improve the flexibility of domestic services sectors, these reforms do not appear to us to be coordinated at the supra-national level; as evidence, we would note large and widening discrepancies in activity and unemployment levels among the 17 eurozone member states.
Regarding additional resources, the main enhancement we see has been to bring forward to mid-2012 the start date of the European Stability Mechanism (ESM), the successor vehicle to the European Financial Stability Fund (EFSF). This will marginally increase these official sources' lending capacity from currently €440bn to €500bn. As we noted previously, we expect eurozone policymakers will accord ESM de-facto preferred creditor status in the event of a eurozone sovereign default. We believe that the prospect of subordination to a large creditor, which would have a key role in any future debt rescheduling, would make a lasting contribution to the rise in long-term government bond yields of lower-rated eurozone sovereigns and may reduce their future market access.
We also believe that the agreement is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the EMU's core and the so-called "periphery." In our opinion, the eurozone periphery has only been able to bear its underperformance on competitiveness (manifest in sizeable external deficits) because of funding by the banking systems of the more competitive northern eurozone economies. According to our assessment, the political agreement reached at the summit did not contain significant new initiatives to address the near-term funding challenges that have engulfed the eurozone.
The summit focused primarily on a long-term plan to reverse fiscal imbalances. It proposed to enshrine into national legislation requirements for structurally balanced budgets. Certain institutional enhancements have been introduced to strengthen the enforceability of the fiscal rules compared to the Stability and Growth Pact, such as reverse qualified majority voting required to overturn sanctions proposed by the European Commission in case of violations of the broadly balanced budget rules. Notwithstanding this progress, we believe that the enforcement of these measures is far from certain, even if all member states eventually passed respective legislation by parliaments (and by referendum, where this is required). Our assessment is based on several factors, including:
The difficulty of forecasting reliably and precisely structural deficits, which we expect will likely be at the center of any decision on whether to impose sanctions; The ability of individual member states' elected governments to extricate themselves from the external control of the European Commission by withdrawing from the intergovernmental agreement, which will not be part of an EU-wide Treaty; and The possibility that the appropriateness of these fiscal rules may come under scrutiny when a recession may, in the eyes of policymakers, call for fiscal stimulus in order to stabilize demand, which could be precluded by the need to adhere to the requirement to balance budgets.
Details on the exact content and operational procedures of the rules are still to emerge and -- depending on the stringency of the rules -- the process of passing national legislation may run into opposition in some signatory states, which in turn could lower the confidence of investors and the credibility of the agreed policies.
More fundamentally, we believe that the proposed measures do not directly address the core underlying factors that have contributed to the market stress. It is our view that the currently experienced financial stress does not in the first instance result from fiscal mismanagement. This to us is supported by the examples of Spain and Ireland, which ran an average fiscal deficit of 0.4% of GDP and a surplus of 1.6% of GDP, respectively, during the period 1999-2007 (versus a deficit of 2.3% of GDP in the case of Germany), while reducing significantly their public debt ratio during that period. The policies and rules agreed at the summit would not have indicated that the boom-time developments in those countries contained the seeds of the current market turmoil.
While we see a lack of fiscal prudence as having been a major contributing factor to high public debt levels in some countries, such as Greece, we believe that the key underlying issue for the eurozone as a whole is one of a growing divergence in competitiveness between the core and the so-called "periphery." Exacerbated by the rapid expansion of European banks' balance sheets, this has led to large and growing external imbalances, evident in the size of financial sector claims of net capital-exporting banking systems on net importing countries. When the financial markets deteriorated and risk aversion increased, the financing needs of both the public and financial sectors in the "periphery" had to be covered to varying degrees by official funding, including European Central Bank (ECB) liquidity as well as intergovernmental, EFSF, and IMF loans.
Now is the perfect time for the US government to spend more, as interest rates are at a historic low. This opportunity will likely not present itself again. It has never been cheaper for the government to spend.
Fiscal policy (i.e. government spending) should be countercyclical, i.e. increase spending in a recession, and decrease spending in a boom. We are barely recovering from a recession, and with record low interest rates, government should increase spending right now.
Debt is a long term issue. There is no short term deleterious effect caused by increasing debt. In a boom is when government spending should be decreased.
If you want to know what happens when governments cut spending during recessions, look at Europe, that's exactly what they're doing. And it's not ending well.
Please read my prev. post, where i Try to explain why the Japan has a debt problem
The reason why government can have substantical higher debt, is because people see their debt as safe (for the most part) as they have the possiblity of increasing taxes, and hence paying the debt down. However if people throught government could not pay the debt pack (if it didn't have the production capacity), interest rates would rise, and government would default (or have to be bailed out).
So assume this: If country A borrows a shitton of money to invest in production, that produces stuff which people demanded, it would be able to pay down their debt.
However if country B borrows a lot of money and destroys it by consuming (like buying 1 more television to each home), or builds another useless bridge, it will obv. be harder for country B to pay down their debt, and if investors are aware of how country B used their borroed money, interest rase would rise.
But yeh if wages in Spain are too high, they wont be able to pay back their debt as well. So while I agree that debt in it self isn't a problem. its a problem if the government can't pay it back.
From reading your posts there are some questions I need to ask you:
1) First of all Europe and USA aren't compareable. Europe are definitely spending a shitton of money as well. Obv. the balance sheets aren't pretty. But there are so many differencies that you can't just look, that you can't make a superficial conclusion like this. 2) Prices during the "boom" was artifically high as spendings and investments were based on too much borrowing (agree?) 2) Prices will genereally go towards equilibrium (demand of goods vs suply of goods). 3) During the bust prices are supposed to go down (agree?)
4) If prices are supposed to go down, but they are not allowed to go down, becasue the demand is made artifically high due to government fiscal policy, then prices will go toward the new equlibrium (where demand this time = "Natural demand" + "Fiscal policiy" Demand). 5) What happens when government can't afford the fiscal policy program any longer? Is the demand still going to be equal to the "natural demand + fiscal demand" (like if we assume natural demand = 5.000$ usd, and fiscal demand = 2.000$US, will the natural demand when the government stops the fiscal program be 7.000$ USD?).
Below this another hyphot. situation, which I made if you barely agreed with any of my above claims (but you can answer both if you both as well even if you agreed).
Assume this hyp. situation: 1) For some very weird reason investors throught that people would need more haircuts in the future, and hence they decided that would invest in hairdressing saloon (from where investors could buy shares). 2) In this proces a lot of new hairdressing saloons opened. 3) The price of a haircut during this "boom" rose from 20$ to 30$. (assume 20$ was preboom equlibrium) 4) After a while investors realized they were retarded, and people weren't going to need more haircuts in the future, so this meant that a lot of the hairdressing saloons that had just opened were going bankrupt. 5) As prices decreased and unemployment rose, some government dude decided that he wasn't going to allow this, hence he wanted to make a hairdressing stimulis package.
Do you approve of the government dude's decision? If no, whats the difference between that crises and the financial crises?
On January 28 2012 20:45 zalz wrote: Obama and Romney didn't even get a single cent from concerned citizens.
This statistic seems very legit, despite it obviously removing the crucial statistic that it actually wants to bring forward as evidence.
Honestly, is this the stuff that Ron Paul believers (might as well call them believers considering their zeal) eat up readily?
I don't understand this. Oke, you are a fan of a certain candidate, I get that. But why must you leave your critical thinking at the door? Why can't you use real statistics?
Try to keep thinking critically. You might not be able to submit yourself to a candidate with such ferocity, but atleast you don't look silly posting those kinds of obviously distorted images.
I gotta +1 you here. No reason to manipulate statistics, this just makes the debate worse.
But yeh Ron Paul isn't a racist. But hyphotec. even if he were, it wouldn't have any impact on his policies.
On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
Please stop spamming this topic with propaganda that has long been discredited.
As for him being "racist", this would be the closest I can find.
Granted, it's his ignorance on the subject that makes it worth noting, not necessarily him being racist by any means. He seems to believe that collective groups of people outside of government will not and cannot be racist.
On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
This is the third time this picture has been posted, and you posted it at least once before. Each time, people pointed out how it was a propaganda picture that did not show the proportion of small donations (the "citizens" box) for Obama and Romney. JUST LIKE RON PAUL, Obama is at 48% of donations by small donors. That picture is intellectual dishonesty at its best. Why do you keep posting it?
Here is the link to a post debunking that table: link.
On January 27 2012 07:52 Velr wrote: The problem is... That ideology has lead us into this debt crisise in the first place. There is never a "good" time to pay back debt.. Thats why most countries never did it and suddenly.. Oh shit, debt is out of control! (really sherlock? how come...).
The only country in crisis because of high debt is Greece.
You might want to look at other countries with high debt and the prospects for them borrowing in the future.
Portugal is paying 15% on 10 year money now. That is not sustainable.
Japan has over one QUADRILLION yen in public debt. That's over 200% of their GDP. Even though their interest rates are low on that debt, I think it takes something ridiculous like 40% of their government spending to just cover interest payments. Let that sit in your head for a second.
As you can see, countries in crisis like Spain have very low debt level. In fact, Spain ran surpluses (meaning debt was decreasing) before the crisis hit. The debt was not the cause of the Eurozone crisis for all countries except Greece.
And as you've pointed out, Japan's debt level is 200% of GDP and interest rates have over many years been very very low, about 1%. It's sustainable in the sense, that it's been sustained for like 20 years without signs of catastrophe.
When you have to take on more debt to pay down old debt, I consider that a crisis. It's like maxing out a credit card to cover a different credit card. Just because the Eurozone, Japan, etc. have other problems as well doesn't mean that they are not experiencing a debt crisis in addition. When it costs, for example, Italy an additional $20 billion to service their debt if rates go up 1%, that's a problem.
Japan is not floundering because their debt is incredibly internal. However, with the US it is not this way. And that is the reason why we need to cut the shit out of spending and reduce our ridiculous levels of indebtedness, before something goes wrong and/or we get into the spot where we spend too much just to pay off past excessive spending. Talking about lowering taxes and building space stations right now is just outrageous.
Governments do not have to pay back debt in the sense that persons do. Governments always issue bonds, i.e. they are always borrowing, but they do not borrow explicitly to pay interest on debt.
You can cite large numbers all you like, but none of that really matters in terms of economics, it's just for shock value. All that a government needs to do to keep their debt level sustainable is to ensure that GDP growth outpaces the nominal value they have to repay on the debt.
Your facts are not correct. Japan is not experiencing a debt crisis even though their debt is more than 200% of GDP (compared to 140% for Greece and 95% for the US).
If you look at the table I linked above (http://en.wikipedia.org/wiki/Economy_of_the_European_Union#Economies_of_member_states), you'd see that European countries that are in crisis do not have high debt to GDP ratios. Spain for example is only at 60%. They have debt problems now, but these debt problems were not caused by too much debt. The only exception is Greece.
When S&P downgraded European sovereign debt ratings, they put up a FAQ that perfectly summarized the whole crisis and it's real cause: trade imbalances (i.e. wages were too high in countries like Spain and Italy, making their exports noncompetitive) and high private (and not public) debt. Here's what S&P says: + Show Spoiler +
HOW DO WE INTERPRET THE CONCLUSIONS OF THE DECEMBER EUROPEAN SUMMIT?
We have previously stated our belief that an effective strategy that would buoy confidence and lower the currently elevated borrowing costs for European sovereigns could include, for example, a greater pooling of fiscal resources and obligations as well as enhanced mutual budgetary oversight. We have also stated that we believe that a reform process based on a pillar of fiscal austerity alone would risk becoming self-defeating, as domestic demand falls in line with consumer's rising concerns about job security and disposable incomes, eroding national tax revenues.
The outcomes from the EU summit on Dec. 9, 2011, and subsequent statements from policymakers, lead us to believe that the agreement reached has not produced a breakthrough of sufficient size and scope to fully address the eurozone's financial problems. In our opinion, the political agreement does not supply sufficient additional resources or operational flexibility to bolster European rescue operations, or extend enough support for those eurozone sovereigns subjected to heightened market pressures. Instead, it focuses on what we consider to be a one-sided approach by emphasizing fiscal austerity without a strong and consistent program to raise the growth potential of the economies in the eurozone. While some member states have implemented measures on the national level to deregulate internal labor markets, and improve the flexibility of domestic services sectors, these reforms do not appear to us to be coordinated at the supra-national level; as evidence, we would note large and widening discrepancies in activity and unemployment levels among the 17 eurozone member states.
Regarding additional resources, the main enhancement we see has been to bring forward to mid-2012 the start date of the European Stability Mechanism (ESM), the successor vehicle to the European Financial Stability Fund (EFSF). This will marginally increase these official sources' lending capacity from currently €440bn to €500bn. As we noted previously, we expect eurozone policymakers will accord ESM de-facto preferred creditor status in the event of a eurozone sovereign default. We believe that the prospect of subordination to a large creditor, which would have a key role in any future debt rescheduling, would make a lasting contribution to the rise in long-term government bond yields of lower-rated eurozone sovereigns and may reduce their future market access.
We also believe that the agreement is predicated on only a partial recognition of the source of the crisis: that the current financial turmoil stems primarily from fiscal profligacy at the periphery of the eurozone. In our view, however, the financial problems facing the eurozone are as much a consequence of rising external imbalances and divergences in competitiveness between the EMU's core and the so-called "periphery." In our opinion, the eurozone periphery has only been able to bear its underperformance on competitiveness (manifest in sizeable external deficits) because of funding by the banking systems of the more competitive northern eurozone economies. According to our assessment, the political agreement reached at the summit did not contain significant new initiatives to address the near-term funding challenges that have engulfed the eurozone.
The summit focused primarily on a long-term plan to reverse fiscal imbalances. It proposed to enshrine into national legislation requirements for structurally balanced budgets. Certain institutional enhancements have been introduced to strengthen the enforceability of the fiscal rules compared to the Stability and Growth Pact, such as reverse qualified majority voting required to overturn sanctions proposed by the European Commission in case of violations of the broadly balanced budget rules. Notwithstanding this progress, we believe that the enforcement of these measures is far from certain, even if all member states eventually passed respective legislation by parliaments (and by referendum, where this is required). Our assessment is based on several factors, including:
The difficulty of forecasting reliably and precisely structural deficits, which we expect will likely be at the center of any decision on whether to impose sanctions; The ability of individual member states' elected governments to extricate themselves from the external control of the European Commission by withdrawing from the intergovernmental agreement, which will not be part of an EU-wide Treaty; and The possibility that the appropriateness of these fiscal rules may come under scrutiny when a recession may, in the eyes of policymakers, call for fiscal stimulus in order to stabilize demand, which could be precluded by the need to adhere to the requirement to balance budgets.
Details on the exact content and operational procedures of the rules are still to emerge and -- depending on the stringency of the rules -- the process of passing national legislation may run into opposition in some signatory states, which in turn could lower the confidence of investors and the credibility of the agreed policies.
More fundamentally, we believe that the proposed measures do not directly address the core underlying factors that have contributed to the market stress. It is our view that the currently experienced financial stress does not in the first instance result from fiscal mismanagement. This to us is supported by the examples of Spain and Ireland, which ran an average fiscal deficit of 0.4% of GDP and a surplus of 1.6% of GDP, respectively, during the period 1999-2007 (versus a deficit of 2.3% of GDP in the case of Germany), while reducing significantly their public debt ratio during that period. The policies and rules agreed at the summit would not have indicated that the boom-time developments in those countries contained the seeds of the current market turmoil.
While we see a lack of fiscal prudence as having been a major contributing factor to high public debt levels in some countries, such as Greece, we believe that the key underlying issue for the eurozone as a whole is one of a growing divergence in competitiveness between the core and the so-called "periphery." Exacerbated by the rapid expansion of European banks' balance sheets, this has led to large and growing external imbalances, evident in the size of financial sector claims of net capital-exporting banking systems on net importing countries. When the financial markets deteriorated and risk aversion increased, the financing needs of both the public and financial sectors in the "periphery" had to be covered to varying degrees by official funding, including European Central Bank (ECB) liquidity as well as intergovernmental, EFSF, and IMF loans.
Now is the perfect time for the US government to spend more, as interest rates are at a historic low. This opportunity will likely not present itself again. It has never been cheaper for the government to spend.
Fiscal policy (i.e. government spending) should be countercyclical, i.e. increase spending in a recession, and decrease spending in a boom. We are barely recovering from a recession, and with record low interest rates, government should increase spending right now.
Debt is a long term issue. There is no short term deleterious effect caused by increasing debt. In a boom is when government spending should be decreased.
If you want to know what happens when governments cut spending during recessions, look at Europe, that's exactly what they're doing. And it's not ending well.
Please read my prev. post, where i Try to explain why the Japan has a debt problem
The reason why government can have substantical higher debt, is because people see their debt as safe (for the most part) as they have the possiblity of increasing taxes, and hence paying the debt down. However if people throught government could not pay the debt pack (if it didn't have the production capacity), interest rates would rise, and government would default (or have to be bailed out).
So assume this: If country A borrows a shitton of money to invest in production, that produces stuff which people demanded, it would be able to pay down their debt.
However if country B borrows a lot of money and destroys it by consuming (like buying 1 more television to each home), or builds another useless bridge, it will obv. be harder for country B to pay down their debt, and if investors are aware of how country B used their borroed money, interest rase would rise.
But yeh if wages in Spain are too high, they wont be able to pay back their debt as well. So while I agree that debt in it self isn't a problem. its a problem if the government can't pay it back.
The point of spending is to boost aggregate demand. Certain investments will boost demand more than others, and obviously spending money wisely is better than spending money poorly, but in a recession spending money poorly is better than not spending money at all.
If you're waiting for interest rates to rise because of the US governments allegedly massive and reckless spending, good luck with that. Interest rates on bonds are at a record lows, and the Fed will keep the cash rate at 0-0.25% until at least 2014, meanwhile investors are still giving their money to the US government to hold.
But yes, debt does have to be eventually (i.e. not now) covered by increases to the tax rate or cuts in spending if it cannot already be covered by GDP growth, inflation, and an increase in taxpayers due to population growth. However, failing to spend in a recession will cause a fall in the tax base (government gets less money), a fall in GDP, and a deterioration in long-term prospects, all of which makes it harder to pay back debt.
From reading your posts there are some questions I need to ask you:
1) First of all Europe and USA aren't compareable. Europe are definitely spending a shitton of money as well. Obv. the balance sheets aren't pretty. But there are so many differencies that you can't just look, that you can't make a superficial conclusion like this. 2) Prices during the "boom" was artifically high as spendings and investments were based on too much borrowing (agree?) 2) Prices will genereally go towards equilibrium (demand of goods vs suply of goods). 3) During the bust prices are supposed to go down (agree?)
4) If prices are supposed to go down, but they are not allowed to go down, becasue the demand is made artifically high due to government fiscal policy, then prices will go toward the new equlibrium (where demand this time = "Natural demand" + "Fiscal policiy" Demand). 5) What happens when government can't afford the fiscal policy program any longer? Is the demand still going to be equal to the "natural demand + fiscal demand" (like if we assume natural demand = 5.000$ usd, and fiscal demand = 2.000$US, will the natural demand when the government stops the fiscal program be 7.000$ USD?).
I think you're misunderstanding the point of fiscal policy. It's not a case of governments artificially boosting demand to a new equilibrium that is unsustainable when fiscal policy halts, as you seem to believe. Government spending boosts demand, which puts people to work, which gives people money to spend on products, which boosts demand, etc. So stimulus gets this self-sustaining virtuous cycle going. Self-sustaining so that the economy won't crash when stimulus is scaled back. There is a gap between current GDP and potential GDP (i.e. the GDP if it had continued to grow according to trend), and fiscal policy aims to close or reduce this gap in a self-sustaining way.
Below this another hyphot. situation, which I made if you barely agreed with any of my above claims (but you can answer both if you both as well even if you agreed).
Assume this hyp. situation: 1) For some very weird reason investors throught that people would need more haircuts in the future, and hence they decided that would invest in hairdressing saloon (from where investors could buy shares). 2) In this proces a lot of new hairdressing saloons opened. 3) The price of a haircut during this "boom" rose from 20$ to 30$. (assume 20$ was preboom equlibrium) 4) After a while investors realized they were retarded, and people weren't going to need more haircuts in the future, so this meant that a lot of the hairdressing saloons that had just opened were going bankrupt. 5) As prices decreased and unemployment rose, some government dude decided that he wasn't going to allow this, hence he wanted to make a hairdressing stimulis package.
Do you approve of the government dude's decision? If no, whats the difference between that crises and the financial crises?
Your example is not of a macroeconomy. If people didn't want that many haircuts, then it would be futile for government to boost demand, unless they could endlessly inject stimulus to keep demand at the level that corresponded to a $30 price.
But how this differs from the real macroeconomy is a lack of feedback loops. In a real macroeconomy a sudden collapse in value makes people less willing or less able to spend which reduces demand, which puts people out of work which reduces demand further. Then people are unemployed, standing around doing nothing, contributing nothing, and that is a waste of human capital.
This argument doesn't hold in your example, a sudden collapse in the haircutting market doesn't make people less willing to spend on other things, like buying TVs or food. Of course, if this were some alien species where all they do is haircuts, i.e. the haircut market is the entire macroeconomy, then for the reason above, government stimulus is a good idea.
I think you're mixing up microeconomics and macroeconomics.
Your hypothetical example seems to fall into the realm of micro. There is a reason why micro and macro are usually taught in separate courses at universities. There are key differences: in macro feedback loops are very important.
The failure to recognize the difference between macroeconomics and microeconomics is also the root of the completely wrong analogy whereby an indebted government is compared to a person who borrowed so much money he can't pay it back anymore.
On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
Granted, it's his ignorance on the subject that makes it worth noting, not necessarily him being racist by any means. He seems to believe that collective groups of people outside of government will not and cannot be racist.
He believes that greed will trump racism and where it doesn't, people have the right to be racist, that is people have the right to associate freely and think whatever they like.
Greed will trump racism, in that if people hire white workers over black workers due to racism, the price of black labour will go down and white labour will go up. The net effect will be to make black labour more productive on a cost basis compared to a white worker, and hence the businesses that hire black labour will be able to undercut all-white businesses and drive them out of business. This, of course, neglects to account for the fact that diversity undercuts productivity (people are more productive when all workers that work together are of the same race/gender, due to comfort and sexual reasons, respectively), as well as that people are willing to pay a racism premium - they will pay extra money to live in all white neighbourhoods, for example. e.g. white flight from neighbourhoods once they exceed 15% black or so.
The right to freedom of association (one of the universal human rights as per the United Nations Declaration of Human Rights) means that you do not have to work with anyone you do not wish to work with, do business with anyone you do not wish to do business with, be friends with anyone you do not wish to be friends with, live with anyone you do not wish to live with.
Freedom of thought is a given. You have the right to think whatever you wish.
On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
Why is Goldman Sachs giving money to both Romney and Obama?
Surely they should pick who they want to win, and give him all the money.
Honestly, is this the stuff that Ron Paul believers (might as well call them believers considering their zeal) eat up readily?
Ron Paul supporters have a semi cultish belief in him. And they hate "The Fed" but they dont really know why, they just hate it. And they hate 'mass media' that 'ignores' Ron Paul.
On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
Why is Goldman Sachs giving money to both Romney and Obama?
Surely they should pick who they want to win, and give him all the money.
Its called 'covering your bases' -- all big corporations give money to all politicians.
On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
Why is Goldman Sachs giving money to both Romney and Obama?
Surely they should pick who they want to win, and give him all the money.
I think they are of the opinion that their causes are too important to play on one horse. If the candidate they poured all the money on lost for some inexplicable reason they would be too vulnerable to retaliation of the " If you had supported me..."-kind. By playing on both horses in the race they are ensuring at least some leverage no matter who wins. I am pretty sure it is a calculated risk of keeping enough pressure on the candidates to avoid a specific kind of law passing.
Those lists are of employees of businesses who donate money to the candidate's campaign, not the business itself. That is why various branches of the military are listed as well.
On January 28 2012 22:34 Saryph wrote: Those lists are of employees of businesses who donate money to the candidate's campaign, not the business itself. That is why various branches of the military are listed as well.
Then why list the companies? It doesn't make much sense unless you are purposfully trying to decieve people. If you are going to do it that way, at least list the number or percentage of people, not the money.
On January 28 2012 22:34 Saryph wrote: Those lists are of employees of businesses who donate money to the candidate's campaign, not the business itself. That is why various branches of the military are listed as well.
Then why list the companies? It doesn't make much sense unless you are purposfully trying to decieve people. If you are going to do it that way, at least list the number or percentage of people, not the money.
It isn't that deceiving if you go to the website and read the data from there. However, if someone wants to cut and paste things, and leave information out in a purposely biased way, then sure it can be confusing.
From the website:
Top Contributors
This table lists the top donors to this candidate in the 2012 election cycle. The organizations themselves did not donate , rather the money came from the organizations' PACs, their individual members or employees or owners, and those individuals' immediate families. Organization totals include subsidiaries and affiliates.
Because of contribution limits, organizations that bundle together many individual contributions are often among the top donors to presidential candidates. These contributions can come from the organization's members or employees (and their families). The organization may support one candidate, or hedge its bets by supporting multiple candidates. Groups with national networks of donors - like EMILY's List and Club for Growth - make for particularly big bundlers.
Paralel: I must not have made my self clear. I actually assumed that was your logic from reading your prev. post. Its actually a huge problem that jap. buys their own debt, because of the demographical problem of the jap. citizens.
On January 28 2012 17:28 liberal wrote: So your stance is that Ron Paul isn't racist, but he wants to act like a racist to make a profit from a.... newsletter? Someone who made their occupation as a doctor and was elected to congress really needs that obscure newsletters profit so much that he's willing to espouse something that is against what he believes in, someone as principled as Ron Paul is?
Oh, and racists (of course we mean white racists here) choose to not support hard core conservative right wing candidates, and instead flock to.... libertarians? Because... libertarians believe that people should not be hired or discriminated against on the basis of race?
You've really got some odd ideas there, I must say.
Show me a audio clip of him saying anything remotely racist at all. You won't find any because that doesn't reflect on what and who Ron Paul stands for. I see why liberals like you attack the good doctor because you fear him as someone that could potentially beat down Obama in a 1:1 race. You know why? Because he's not a lying scumbag that takes money from special interest groups like Goldman Sachs and ends up hiring them as part of their cabinet. People like you are blinded by the left-right paradigm and don't see the person for what they stand for. Here let me show you an example of what I mean:
Granted, it's his ignorance on the subject that makes it worth noting, not necessarily him being racist by any means. He seems to believe that collective groups of people outside of government will not and cannot be racist.
He believes that greed will trump racism and where it doesn't, people have the right to be racist, that is people have the right to associate freely and think whatever they like.
Greed will trump racism, in that if people hire white workers over black workers due to racism, the price of black labour will go down and white labour will go up. The net effect will be to make black labour more productive on a cost basis compared to a white worker, and hence the businesses that hire black labour will be able to undercut all-white businesses and drive them out of business. This, of course, neglects to account for the fact that diversity undercuts productivity (people are more productive when all workers that work together are of the same race/gender, due to comfort and sexual reasons, respectively), as well as that people are willing to pay a racism premium - they will pay extra money to live in all white neighbourhoods, for example. e.g. white flight from neighbourhoods once they exceed 15% black or so.
The right to freedom of association (one of the universal human rights as per the United Nations Declaration of Human Rights) means that you do not have to work with anyone you do not wish to work with, do business with anyone you do not wish to do business with, be friends with anyone you do not wish to be friends with, live with anyone you do not wish to live with.
Freedom of thought is a given. You have the right to think whatever you wish.
Greed did not eradicate racism.
The only time that has happened is on paper. It's all theorycrafting.
The civil rights act is one of the biggest examples of how government intervention can improve a situation. This notion that free-market capitalism would eradicate racism flies against everything that history tells us.
Greed will trump racism, in that if people hire white workers over black workers due to racism, the price of black labour will go down and white labour will go up. The net effect will be to make black labour more productive on a cost basis compared to a white worker, and hence the businesses that hire black labour will be able to undercut all-white businesses and drive them out of business. This, of course, neglects to account for the fact that diversity undercuts productivity (people are more productive when all workers that work together are of the same race/gender, due to comfort and sexual reasons, respectively), as well as that people are willing to pay a racism premium - they will pay extra money to live in all white neighbourhoods, for example. e.g. white flight from neighbourhoods once they exceed 15% black or so.
Just a small example.
The bank manager is racist. Your supplier is racist. You are the forward thinking Randian hero of the story who owns his own restaurant.
You want to open your business to everyone. Afteral, if black people and white people can eat at your restaurant, you will make a killing.
You start letting black people eat at your restaurant.
Next week you get your delivery, all the food you need to run your restaurant. The delivery guy sees black people sitting in your restaurant. He points out that your contract with the supplier states that you cannot service black people. He goes back to the supplier, you get a call. You need to hang up a "no nigger" sign or you will be sued for a breach of contract.
But you are our Randian champion, you press ever forward.
Turns out that the first non-racist supplier is so far off that they don't deliver. The manager feels sympathy for your cause and offers to supply your restaurant, but you have to cover the extra charge. The resut of this extra cost will be that you will offer the same product as the white-only and black-only restaurant across the street but your product will be 30% more expensive.
So already, you are offering a product that depends on the sympathy of non-racists. People willing to pay 30% more for not being racist. But you live in a racist society where the majority of the customer base has been taught from birth that white or black people are disgusting.
So your product is overpriced, your customer base is small.
You decide to fight the big guys, you are going to start your own supply business. You supply to everyone.
You make a business plan and offer it to the bank manager. The bank manager says that he likes your idea, but he won't sign out a loan unless you promise to only supply to white restaurants. You refuse to do so, you don't get the loan.
You get back to your overpriced restaurant. The customer base gets fed up with overpaying for your product.
Your free market ideas were crushed. The white and black only restaurants outperform you. Being racist is the only way to succeed in business.
But a racist supplier and a racist bank manager don't exist in theory land. But economics still involves humans. And humans are more then just numbers.
Free market capitalism does not eradicate racism. It has never done so. History, in fact, shows that it has never succeeded in diminishing racism. All notions that it does are purely theoretical and disregard the human aspect of economics.
The only time that has happened is on paper. It's all theorycrafting.
The civil rights act is one of the biggest examples of how government intervention can improve a situation. This notion that free-market capitalism would eradicate racism flies against everything that history tells us.
History consistently teaches us that things can go horribly wrong with an overly-free market economy, yet that doesn't stop people from believing in the theorycrafting.
EPT![[image loading]](http://www.washingtonpost.com/rw/2010-2019/WashingtonPost/2011/12/06/National-Politics/Graphics/w-billionaires.jpg)
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