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View Diary: Insolvency, tax cuts, military spending and social security (188 comments)

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  •  Excuse me (1+ / 0-)
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    Matt Z

    "Economics (0+ / 0-)

    Never the strong suite here on DK."

    You don;t deserve respect when you start like that.

    Want to start over? Don't start your comments with insults.

    And then don;t continue them with more insults:

    "You really don't know much about this stuff, do you? No shame in that, but what gives you the illusion that you ought to write about it?"

    Back atcha.

    FTR, you;ve written nothing that gives me any indication that you actually understand economics.

    Here's a a tell that you do not - "Instead, we're more like Britain, which has its own currency and is already (if inadequately) cutting back on public spending in order to avoid genuine crisis."

    Anyone who would write that is not well versed in macroeconomics in my opinion.

    Your mileage obviously varies. Hell, you must think Spain is the great example for us all.

    •  And yes (0+ / 0-)

      I've played this responding to stupid and insulting comments game for a long time.

      I don't do it much on my front page posts, but this was a diary so I'm indulging myself.

      •  Self indulgence (0+ / 0-)

        Thanks for something substantive.
        a) Does Britain have its own currency? Yes.
        b) Has it severely cut back on public spending? Why, yes, it has:
        c) Now, please explain what part of macroeconomics I don't understand.

        Spain is a terrible example, in all ways, shapes and forms.

        But here—try a simpler question.

        Let's pretend that this is 2032 but use 2012 numbers for a thought experiment. If GDP is $14 trillion (current), and (2032) SocSec costs are projected by the trustees at 12% of GDP (up from present 7%) with the trust fund at that point exhausted, please explain exactly where, in addition to the other things we will have to pay for, we will find $1.6 trillion dollars? This year's federal budget is about $2.6 trillion

        I know!. We'll rescind the Bush tax cuts!. Great—we've got an extra $120 billion. That'll help. All we need now is another 10+ sources of funds like that.

        Then remember that this is just Social Security.

        •  I know you believe in (0+ / 0-)

          "expansionary austerity" despite the conclusive evidence of its fallacy.

          Therefore, discussions between us would be pointless.

          Facts and evidence are not relevant to your beliefs on macroeconomics.

          I don't see the point to our discussing the issue.

          FTR, my post actually had not a thing to do with any of this.

          Merely the simpler point that Social Security is not "insolvent" or "bankrupt" and will not be in 2033.

          Frankly, I'm not even sure you actually disagree with my point.

          You took a tangent of insult and I responded accordingly.

          On the separate issue you now want to discuss, I think our understanding of what the evidence has demonstrated
          regarding "expansionary austerity" is so divergent, that there really is no point to our discussion.

          Just one final thought, do you really believe that THE MOST IMPORTANT ISSUE IN THE WORLD today is the "impending bankruptcy" of Social Security?

          I bet you don't.

        •  Couple of answers (0+ / 0-)

          (b) - why has Britain cut back?
          Ans: Because it is insane. Because the 1% want to attack the 99%. The 1% control the government & their academic errand-boys have convinced enough of the 99% that up is down, that black is white, and the vote to cut their own throats. No other reason.

          where, in addition to the other things we will have to pay for, we will find $1.6 trillion dollars?

          We, the USA, will find the money the only way any country has ever "found" money. By printing money, which is how we do it nowadays. By issuing debt. Government debt is money. The highest type of money is government debt.

          To quote FDR - government credit (=debt) & government currency are one & the same thing. Governments have an infinite amount of money. Nobody has ever found it difficult to go into debt = make promises = issue money!

          All the crap that the Fed & the Treasury & the banking system do is devoted to hiding this obvious fact that children know until academic morons diseducate them.

          •  Why bother? This kind of poster will refuse (0+ / 0-)

            to believe that there is any other solution other than deflationary cuts. Even though we are already in a deflationary spiral, commenters like this will still insist that inflation is A Very Bad Thing.

            "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

            by bryduck on Tue Apr 24, 2012 at 05:15:21 PM PDT

            [ Parent ]

            •  You're right (0+ / 0-)

              you'd have to go a long way to convince me (or any economist) that inflation is a good thing. Here's today's pop quiz: which do you prefer: 1% deflation or 2% inflation?

              •  Long answer to your tricky question :-) (0+ / 0-)

                Plenty of economists think inflation is a good thing. Krugman, Baker. People whose econ is pretty decent, but not quite right. They want to inflate in order to counter debt-deflation, balance sheet recessions, excessive & unpayable private debt. A laudable, necessary goal. Inflation may have some place in the ultimate ideal scheme of things to cure giant crises like this one.

                But some of the policies they assume are inflationary - "loose money" - "financing deficits" by "printing money" are actually disinflationary in the long run, as shown by centuries of evidence. The standard econ of the last few decades gets everything backwards. A lot of MMT is just returning to the superior, logical, empirically correct econ of the leading thinkers of say the late 20s to the 50s.

                MMTers, real Keynesians, real Institutionalists - are not so much inflationists - and they've said so - they get the Austrian weltanschauung. But the Austrian theory of money is the heart of bad economics.

                To answer your question:

                As long as you have a  job &-or money deflation is dandy. That's why the rich love depressions.

                But the problem is that deflation causes/ correlates with depressions and unemployment, which wreck the real economy.

                So accomodated deflation, deflation with a Job Guarantee, deflation with full employment, is Basically Good. Everybody is working & has the dough, which buys more & more stuff!

                2% Inflation has no such automatic destructive effects, and can help debtors, e.g. some of its effect during the 70s were good for many, so it is Not So Good, but Not Really So Bad either.

                Continued untreated serious deflation, probably 1% is bad enough, with the accompanying unemployment is horrendous, massively destructive. Very, Very Bad.  

                And it where the world, especially Europe, is at or near. Becomes a negative sum game, where the rich get relatively richer, but the misery they inflict on the poor is far greater.

          •  Ah, the conspiracy theory (0+ / 0-)

            explanation of cutbacks. Sorry, don't buy it. You, I take it, accept it as an article of faith.

            In re: your monetary theory—
            You confuse a bunch of things with similar names but different meanings, and not all debt is identical.
            If all the gov't need do is print money, then we're in great shape. Unfortunately, if there are a million dollars in circulation and the government injects another million into the system, in short order the amount of widgets purchasable with that million will be cut more or less in half.

            Governments have unlimited supplies of paper and ink, but they never, ever, have "an infinite amount of money." Frankly, I'm shocked that any adult could believe such a thing.

            As for FDR, you ought to go back a reread his speech, and think about the part where he notes that, "Nevertheless, gold, and to a partial extent silver, are perfectly good bases for currency and that is why I decided not to let any of the gold now in the country go out of it."
            A canny guy.

            •  You are assuming (1+ / 0-)
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              that the economy is already producing as many widgets as possible. That is not the case. We have about 8% unemployment in this country, and those 8% could be put to work making (alot) more widgets.

              The government never "has" or "doesn't have" any money. To borrow an analogy from a book by Warren Mosler, the government is like a football stadium. No one ever asks whether the stadium has enough points available to it to put up on the scoreboard. When there's a touchdown, someone in the press box just pushes a button and voila! there are more points.

              What is your point regarding gold and silver?

              •  FDR's point (1+ / 0-)
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                not mine. And his point was that even a fiat currency eventually rests on some estimate of tangible worth—in his time, gold and silver.

                You imagine that governments simply wish money into existence and that's that. To stick with your analogy, you imagine that the stadium owner can just keep putting up points at will and ad infinitum. goals scored or not. But in fact, the owner is limited to adding in only the points the team is able to score. The team scoring is the source of value for the points, which must represent some source of value.

                If your version were real, what reason is there that the government doesn't simply print up $15 trillion tomorrow and wipe out the national debt? If you think there are no constraints, you are living in a fantasy world. If you understand what the constraints actually are, you are one the path to beginning to understand why even a fiat currency must represent some sort of limited-supply value. This is econ, 101.

                •  Here's some econ 101 :-) (0+ / 0-)

                  what reason is there that the government doesn't simply print up $15 trillion tomorrow and wipe out the national debt?

                  Doing this would not wipe out the national debt. It would merely transform it from bonds to dollars. It would be like replacing all the hundreds with two fifties. Big deal.

                  You don't understand FDR's basic MMT/Keynesian/Institutionalist/Chartalist point.  Government debt is government currency & vice versa.

                  Of course there are constraints. But not abstract financial constraints. "Governments simply wish money into existence and that's that" is absolutely correct.

                  The problem is that Econ 101 basically has taught pure shit to undergraduates for the last 30 odd years. I studied a bit of econ in the late 70s, stopped because there was too much nonsense in it. Looked at recent textbooks, and saw that the shit had completely taken over. A lot of the work of the MMTers is simply cleaning away this shit.

                  Gold & silver never really backed currencies. Intrinsically valuable fiat currencies backed these rather worthless commodities, driving them up to ludicrous prices. FDR knew this, which is why he went off the gold standard, to all intents and purposes converting money back to what it always was, fiat money, credit. Gold is valuable because you can get dollars for it, not vice versa -something gold mine owners know very well.

                  The true backing was the tax system & government spending, creating a monetary economy, where commodities were traded for credit = money. The responsibility of the government is that its credit=money does not inflate with respect to consumer goods.

                  It is tragic that adults have been brainwashed into the preposterous, psychotic belief that governments do not have an infinite nominal spending capacity - what I meant by an infinite amount of money, what Mosler & pivy mean by neither have nor not have.

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