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Comments on:   A Distinction with a Difference . . .


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Helk  2012-12-04 08:54:00

I said "tax receipts" not "tax rates."

Cash flow must be generated by commodities at the base; capital management is not capital creation.

If you allow capital management to create capital (outside the ordinary loan-generation spectrum of banking) any capital that is created must by definition be inflationary.

However, if wealth is destroyed at a pace and on a scale that is roughly equivalent to the pace and scale of the creation of the inflationary "currency," those who receive the inflationary currency can purchase the destroyed wealth and offset any (national) deflationary trend that would have otherwise been set off by the wealth destruction.

That is how you transfer a lot of wealth to a few hands.

Ours.

The Book of Dave, Chapter 30



RL  2012-12-04 08:51:00

Helk:

I addressed most of your points in the post.

The example I gave was exaggerated to make the point simply.

Your list still assumes a zero sum game, particularly by drawing no distinction between tax rates and tax revenues. Lower rates CAN generate higher tax revenues.

Of course it's about cash flow. And, no there is no Doomsday associated only with national debt. Doomsday is a function of huge uncontrolled deficits that cannot be fixed.

I understand what you're trying to say but you're flailing around.



Helk  2012-12-03 09:10:00

"If your income is rising faster than your debt, foreclosure day never comes."

This can be true for a person but it is utter folly to apply the same logic to the government. Government cannot increase income except by increase tax receipts. This can happen one of four ways.

1) wages are stable while taxes increase

2) wages increase while taxes remain stable

3) wages increase and taxes increase

4) wages decrease and taxes increase

Now, you want cite the example of a person who is doubling their earnings ever year. Under what scenario does a 2 trillion dollar government increase it tax revenues by 100% a year?

Unrealistic hyperbole.

Realistic: #1 or # 4. Why?

Mainliners, Chapters 11-14



Helk  2012-12-03 08:53:00

I apologize for not being more specific. Of course the annual deficit matters. It is implied in the comment about the national debt. The debt is a problem because once you reach a certain tipping point the debt drives itself. Borrowing becomes necessary, not optional. There is no ability to restrain the deficit much like the brakes on a car cease to work once the car has driven over the edge of a mountain.

Now cash flow of course matters. But the country cannot suddenly have 5 to 10% cash flow growth (let's call it wage growth) without triggering inflation. Flat fact. And guess what inflation will do? Increase the borrowing costs for our government. How? Because the only tool the government has to combat inflation (excluding commodities subsidization) is the interest rate setting function at the FED. And if you increase the borrowing costs at the exact time that the government faces an unprecedented "retiree problem" then the economy will break.

Now what you want to see is a return on investment (ROI). And we have less than zero for all the money we spent in Iraq and Afghanistan. In fact, getting attacked by terrorists again would arguably have been less expensive (in blood and treasure) than these wars have been / continue to be.

I was not seeking an argument merely pointing out that you rarely mention the ever-expanding national debt as a looming doomsday event.

Now if all Americans see an increase in their cash flow without a corresponding increase in (product space) output the scarcity function will apply and the cost of goods will go up at a rate that is proportional to the rate of wage growth. This is natural to the extent that inflation is proportional to the average rate of wage growth (and the product space adjusts prices accordingly). But when cash flow outstrips the product creation we have a recipe for hyperinflation.

Cash flow is not a way out of the debt/deficit problem. Unless you want to see a "Wiemar Republic Party" in your future.



RL  2012-12-03 03:39:00

Joe:

I wasn't even talking to you. No wonder they seemed like haymakers. Sorry they landed.

Corzine should go to prison. That's not government business as usual. It's crime.

I haven't accused you of anything. Why do you react so guiltily?

I was talking about the obsession with national debt as opposed to correcting our fiscal woes. How on earth is that overreacting?

Truthfully, I thought "Joseph" was someone different from "Joe." That's the real disadvantage I work with.

Try to factor that in.

All right. You're so literate. Look at theboomerbible.com. book of adam. Twenty years ago I identified an offshoot of capitalism that had nothing to do with creating wealth but being a parasite on capitalist creativity. Go read it. I anticipated all of this. I lived with the assholes who made it happen. I've been battling them all my life. I've lost every college friend I ever had over it. And you get kind of mildly snarky about the chickenhawk argument, like it's a blow you could land but won't.

Rethink that. Think about being 60 with no friends your own age because they've all sold out -- journalism, law, business, science, everything -- and email vile things about your character and accomplishments.

Chickenhawk. Chickens don't live this long. I'm still who I was when I graduated from, yes, fucking prep school. I even weight the same. Everybody else I know has become somebody I can't even recognize. Don't know how old you are. Tell me when you get to be my age that you still have any friends. I think you'll be surprised in one of two ways. One, you won't recognize them. Two, you won't recognize yourself. Three, doesn't matter, none of you recognize any of the others and just get drunk together, pretending it's all okay.



Joe  2012-12-03 03:06:00

Well, R is angry, threw a bunch of hay-makers that landed, and stung, but he's gassed now, so let me slip left of the turnbuckle and counter.

"Cars aren't reliable transportation because Dale Earnhardt slammed into a wall and died."

Cars may still be reliably, but when one proves faulty, that model is subject to recall, isn't it? What penalties did the investment bankers who sold (according to their leaked e-mails) "shit paper" to investors face, after it was revealed that they didn't have the money to pay on the securities they guaranteed to insure, and that billions of dollars were unaccounted for? What happened to the ratings agencies when they rubber-stamped Triple A on incredibly risky sub-prime loans? Is Corzine not responsible for the 1.2 billion of agricultural subsidy money he can't 'account for,' despite the fact that by his own admission he wanted to turn the firm into a "mini-Goldman Sachs?" (Mission accomplished, by the way).

Your reductio ad absurdum logic makes it seem as if I was Robespierre waving a black flag and calling for the beheading of the 1%. No, investment banking is not the entire economy, but if the "experts" like Greenspan, their guardians (Paulson, Geithner, the Security & Exchange Commission) and the talented captains of industry are all terribly wrong, and all on the public's dime, some skepticism is warranted. And that was all I called for: skepticism. I didn't call for a dismantling. I threw out no baby, merely drained some brackish bathwater through a colander large enough to accommodate Michael Moore's Ziti.

"Because there have never been any crooked politicians, common working class union activists, social justice communities, or women who can't get over the passive power of their inside-out phallic vaginas... Right?"

Again, you're going to get tired doing this. If you want to use tu quoque, you might as well go for ad hominem. Since you don't know me, I'll help you out. My literary career isn't going too well (sold a few short stories here and there, one novel), and my car is in the shop. That should give you a start.

"That would be too demanding by a chicken hawk like me to ask of a great patriot like you? Have I finally got it right?"

Well, this is why you're at something of a disadvantage. I know a lot about you from your blog, and thus can draw on a reserve when I want to go below the belt (i.e. Chickenhawk) with ad hominems.

You've been right many times, and I've been wrong (especially on the Middle East/Israel). This time you're not really right or wrong, just overreacting.



RL  2012-12-03 02:02:00

Justifiably skeptical? Bullshit. Cars aren't reliable transportation because Dale Earnhardt slammed into a wall and died.

Sometimes the biggest snobs are people who insist they're the very last shining examples of people in the universe who aren't.

Capitalist crooks? Really? Must be enough to end everybody's belief in capitalism, right, Joe?

Because there have never been any crooked politicians, common working class union activists, social justice communities, or women who can't get over the passive power of their inside-out phallic vaginas... Right?

Why am I sorrowful. Your immediate flop to utter cynicism, for one thing. Did you even vote?

No, don't tell me. That would be too demanding by a chicken hawk like me to ask of a great patriot like you? Have I finally got it right?



Joe  2012-12-03 01:49:00

"While our progressive leaders take constantly to the airwaves encouraging us to support abortion and quit defending our own cultural traditions in favor of immigrants who don't even ask permission before demanding their share of our lives and livelihoods."

Forgive the double-post, but FINALLY. Krugman, et. al., were basically born in the upper rarefied stratosphere of the Ivory Tower. It has never occured to them that applying a New Deal metric to people who in no way resemble the original New Deal coalition might not work. FDR had the "Grapes of Wrath," salt-of-the-Earth hyper-assimilationists as his clients. And while the Brokaw hageography gets a little old, they pretty much were the Greatest Generation.

We have plenty of data available for 5th generation Hispanics in the US and the stats on standard deviations in IQ, illegitimacy, rates of incarceration make the "Moynihan Report on the Negro Family" read like "Peyton's Place." A European social democracy can work, as evidenced by the ultra-liberal ultra-conformist ice floe known as Scandinavia. But America is not headed for Norway; we are headed for some hideous portmanteau of Haiti-and-Mexico.



Joe  2012-12-03 01:33:00

"They refuse to understand the basic principle that capitalism creates wealth for everyone in the workforce."

People have become justifiably skeptical in the wake of things like Enron and the '08 investment banking moral hazard racket, though. It's hard to convince people that anything can trickle down when a). Your boss bought his wife a Czarist Faberge egg from Sotheby's with your pension, and b). The CEO of a company is being loaned several hundred billion dollars of your money by your nation's treasurer, who also happened to formerly be a CEO of the aforementioned company.

At least Reagan put people in prison for S & L. All Obama did was try to reposition the foxes closer to the hen-house.

Speaking of Obamanomics, I saw a poster outside the office of a tenured professor that informed students in a smarmy fashion: "If you vote Republican, congratulations on reducing your financial aid."

I'm not exactly sure when loaning people money became an act of benevolence, but if that's the case, then my neighborhood bookie Vinnie the Gindaloon is the most generous, decent man in the world. He will not only give you all the money you ask for, but will even give you three points on the Bengals-Dallas spread this weekend. Maybe he should be president.

As for more general economic philosophy, I rely solely on Paul Krugman's weekly column in the PAPER OF RECORD. From what I've been able to gather, Keynesian economics is based on the following principals:

1.) It's not deregulation if a democrat does it. (It is, in fact, bold leadership).

2). A republican with a net worth of $200,000,000 is a heartless plutocrat, while a democrat worth $16,000,000,000 is a philanthropist.

3). All economic instability stems from the fact that certain people in flyover country still believe in Jesus.



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