patrick.net

curious2 says

thunderlips11 says

Wealthy Argentinians hide their money like crazy....

Why? Are they afraid of confiscation, or kidnapping?

LOL, exactly! That's exactly all what a government does in a country that doesn't have capital punishment: confiscation and kidnapping. Other governments add murder on top of that.

For those who think government regulation would improve beef quality, we already know that government regulation is the reason why we can not buy unpasteurized fresh milk (because the big milk distributors that cover large distances don't want a much tastier and much more nutritious competition); now the TSA goons apparently arrested a guy for having a jar of old style gourmet peanut butter with peanut oil on top separated from the paste below by gravity, because the bureaucrats had never seen real peanut butter that is not industrially hydrogenized to kill your cardiovascular system.

Reality says

As for life circumstances, are we talking about dummies or people who have a clue and making a pro-active investment decision in real estate?

Are you a dummy if your company transfers you to another state?

Reality says

Glad you are finally getting my point that people do not usually buy or sell houses at PV. People do not actually buy or sell houses strictly based on rent equivalent either. PV in accounting usually use a fixed stream of cash unless the rate of increase is contractually guaranteed; something to do with basic accounting standards.

wtf are you talking about? You're glad I got your point? Your point changes with every post you make as you get sidetracked into who knows where. PV does not necessarily use a fixed stream of cash at all. It discounts future cash flows (whatever they are) back to present value based on your discount rate. But that is completely irrevelant to the dicussion at hand. How you have managed to derail the conversation so far from the topic?

Reality says

Tell that to the folks who bought their houses in 2006-7 on adjustable mortgage and have to refinance in 2009-2010 facing much higher prime rates and Libor rates.

Are you on crack? The 1 yr adjustable rate in 2006 was ~5.5%. The 1 yr adjustable rate in 2009 was ~5%. The 1 yr adjustable rate in 2010 was ~4%. The rates were lower, not higher. Those folks were probably pretty damn happy.

Reality says

You are confusing several different markets, each acting in somewhat mutually influenced but not strictly coupled ways. The bond market tends to lead the stock market by a few months, the stock market tends to lead the real economy by anywhere between 6-18 months. The bond market can indeed front-run FED decisions, because the big bond market participants special access to the FED decision making process. The stock market takes time to propagate their information. The general economy is much slower. Information propagation is not instantaneous, or there wouldn't be a market.

Besides being completely incorrect, it doesn't matter. The bond market sees the same data that the Federal Reserve does and adjusts accordingly. But, the point is that the bond market reacts to the overall economy and rates don't rise until the economy is doing well and incomes are rising.

tatupu70 says

Are you a dummy if your company transfers you to another state?

You are entirely mis-interpreting what I wrote. My point is that people buy and sell houses even when they do not have "family circumstances" but out of economic considerations. Just like people don't have to always stay in their company's 401k matching stocks until retirement or job switching. BTW, job transfer doesn't mean having to buy a house; there's the option of renting. If one's job involves frequent transfers, buying would be dummy indeed, but that's a different issue.

tatupu70 says

wtf are you talking about? You're glad I got your point? Your point changes with every post you make as you get sidetracked into who knows where. PV does not necessarily use a fixed stream of cash at all. It discounts future cash flows (whatever they are) back to present value based on your discount rate. But that is completely irrevelant to the dicussion at hand. How you have managed to derail the conversation so far from the topic?

Because at one point you equated house value to PV. Now you don't. I'm glad you made that change.

tatupu70 says

Are you on crack? The 1 yr adjustable rate in 2006 was ~5.5%. The 1 yr adjustable rate in 2009 was ~5%. The 1 yr adjustable rate in 2010 was ~4%. The rates were lower, not higher. Those folks were probably pretty damn happy.

My bad, the rate shock happened to those who bought in 2003-2005 on adjustable rate mortgages, and had to re-finance in 2006-2008. The cause for the inability to roll over in 2009-2010 was valuation change that makes the collateral inadequate and lending standards change. That's another way buyers at an earlier time were misinformed regarding their future likelihood to refinance and roll over loans.

tatupu70 says

Besides being completely incorrect, it doesn't matter. The bond market sees the same data that the Federal Reserve does and adjusts accordingly. But, the point is that the bond market reacts to the overall economy and rates don't rise until the economy is doing well and incomes are rising.

You talk as if "incomes are rising" were some kind of magic show that makes everyone's income rise by the same percentage. People bought in 2004 on a 3.5% adjustable rate mortgage would have to see a 30-50% income increase by 2007 in order to quality for a 5.5% amortizing adjustable mortgage at that time. Most people not having enjoyed that kind of income rise may well have been what's behind the popularity of interest-only and negative-amortizing adjustable mortgage at that later time, which obviously in hind sight would be a bomb waiting to go off. . . yet even the Money Czar told them taking the nation as a whole real estate prices always go up, just like you insist on income always rising before interest rate does. The folly of averages.

Reality says

Because at one point you equated house value to PV. Now you don't. I'm glad you made that change.

Not that it matters, but I did not. You kept insisting on using PV--I just used whatever term you wanted to call it to try to illustrate my point that using rental equivilent is the best way to approximate a value for a house. Hopefully you get it now.

Reality says

You talk as if "incomes are rising" were some kind of magic show that makes everyone's income rise by the same percentage.

How did I do that? I don't recall every implying that.

Reality says

yet even the Money Czar told them taking the nation as a whole real estate prices always go up, just like you insist on income always rising before interest rate does.

And again--I don't recall saying incomes always rises before interest rates do--just that historically that has generally been the case. If you are betting on rates rising during a period when incomes are stagnant, you are betting against the odds.

tatupu70 says

You kept insisting on using PV--I just used whatever term you wanted to call it to try to illustrate my point that using rental equivilent is the best way to approximate a value for a house. Hopefully you get it now.

PV is not my term. It's a well established accounting term. I have repeated over and over again that PV does not equate to home value. The latter is subjective . . . different to different people, otherwise there wouldn't be a transaction as the seller receives less money than the buyer pays.

tatupu70 says

Reality says

You talk as if "incomes are rising" were some kind of magic show that makes everyone's income rise by the same percentage.

How did I do that? I don't recall every implying that.

Then why did you even bring up "incomes rising" at all? Loans default one at a time when rates adjust . . . there isn't some magical national average income that borrowers / homeowners can resort to in order to keep their homes.

tatupu70 says

Reality says

yet even the Money Czar told them taking the nation as a whole real estate prices always go up, just like you insist on income always rising before interest rate does.

And again--I don't recall saying incomes always rises before interest rates do--just that historically that has generally been the case. If you are betting on rates rising during a period when incomes are stagnant, you are betting against the odds.

So you are pulling a Bernanke: "I" only said historically there had never been real estate price drop across the country. LOL.

Rates rising during a period when a specific family under a specific loan has not seen income rising happens all the time! Loans default and homes get foreclosed one at a time. There is no magical average for the family to resort to.

Reality says

PV is not my term. It's a well established accounting term. I have repeated
over and over again that PV does not equate to home value. The latter is
subjective . . . different to different people, otherwise there wouldn't be a
transaction as the seller receives less money than the buyer pays.

OK--let's forget PV. I know what PV is, and obivously you didn't invent it. You brought it up so I figured I'd try to explain my point in PV terms so you'd understand. I'm not sure if you don't want to understand or if you can't understand at this point.

Reality says

Then why did you even bring up "incomes rising" at all? Loans default one at
a time when rates adjust . . . there isn't some magical national average income
that borrowers / homeowners can resort to in order to keep their homes.

Because loans don't necessarily default when rates adjust if one can afford the new rate. I thought that was pretty obvious.

Reality says

Rates rising during a period when a specific family under a specific loan has
not seen income rising happens all the time! Loans default and homes get
foreclosed one at a time. There is no magical average for the family to resort
to.

Of course. Do you think I was implying that nobody has ever defaulted on a loan before? What is your point?

So, back to the original topic--do you understand how to use rent to get a good approximate of the value of a home?

Reality says

If you believe those nonsense GDP numbers, you are even more deluded by academic econometrics than I thought.

Reality, some numbers come from the UN, others from the World Bank. If you have evidence that they're substantially false, I'd love to hear it.

curious2 says

Why? Are they afraid of confiscation, or kidnapping?

I think it's just culture. S. Americans IMHO are huge on being quietly wealthy; they're the opposite of Americans. For example, Americans will tell strangers how many cars and homes they have, what make/model/neighborhood they are, what stocks they own, etc. South Americans don't do generally do so. Also, there is a lot of property crime, paying by check is rare, and most people use cash exclusively, even for large purchases like cars.

On the other hand, plenty of wealthy Americans and wealthy companies hide billions outside the US, so probably for the same reasons they do.

Reality says

That's preposterous. . There were tons of ads by the manufacturers touting their goods and what went into making them

No it isn't. Sinclair wrote "the Jungle", Teddy appointed a commission to examine Chicago Slaughterhouses because of public outrage. TR didn't like socialists and was suspicious of Sinclair, but the men he sent published a report which confirmed just about everything Sinclair wrote about: filthy meat being swept up and tossed into the grinder, ground up hooves, rotting organs, etc. Needless to say this was not advertised on the packaging.

That's how we got the Pure Food and Drug Act, the Meat Inspection Act, and ton of other laws about that time.

tatupu70 says

Because loans don't necessarily default when rates adjust if one can afford the new rate. I thought that was pretty obvious.

Therefore you assumed that average wage rising would mean almost every household would see wage rising. Also assuming rising is rising, right? a 3% raise somehow would be sufficient to pay a 30-50% increase in interest payment adjustment.

tatupu70 says

Of course. Do you think I was implying that nobody has ever defaulted on a loan before? What is your point?

You failed to realize that "the average income would have risen" doesn't matter in the context of interest payment rising 30-50% due to interest rate change, and statistically significant (in fact may well be the majority of) specific families under existing mortgage may not have seen much wage rise at all despite the average wage going up by a few percentages, especially if the gasoline and food prices rise even faster.

So, back to the original topic--do you understand how to use rent to get a good approximate of the market value of a home?

The relationship between rent and home value is highly dependent on interest rate and interest rate projections by individuals, the latter of which is heavily dependent on FED interest-rate suppression policies in the recent past. That's why individual home buyers were/are often misled by the artificially low interest rates that the FED produces in certain time periods when it is trying to bail out the banks mal-invested in past bubbles, resulting in new bubbles that would/will inevitably burst.

Reality says

Your home country has various different plugs because the various different governments in the developed world imposed different standards in order to protect their home market domestic manufacturers and keep out foreign competitors. Paraguy doesn't impose a standard because it has no domestic electric appliance manufacturer of significance, and has no political incentive to rig the market place. You can reuse an adapter.

Hmm, Brazil and Argentina are growing like crazy. Big Fat Tariffs, Heavy infrastructure spending, and other pro-industrialization programs by the government. nterestingly, the Asian Tigers also have big fat tariffs on imports.

Mexico didn't invest in industry in the 19th Century. The US did invest in industrialization in the 19th Century. Gee, I wonder why the US Industrialized and Mexico didn't? According to the free market, Mexican businessmen and entrepreneurs could have just did it without any government help, yet it didn't happen.

Paraguay has no industry to speak of, and also doesn't have big fat tariffs to protect nascent industry, minimal infrastructure spending, and no pro-industrialization programs (but lots of subsidies for large agricultural enterprises).

But don't let uncomfortable facts get in the way of laissez-faire theory.

Reality says

What about Japan? Japanese bought tons of their own government debt, and that's their biggest problem: the government mal-invested that money, and now their savings (already wasted) are about to hyperinflate away in the accounting books.

Well, Reality, they can just forgive their own debt to themselves, then.

We have a bigger problem - much of our debt is owned abroad. I don't think we'll default safely. But then again, we also have one-sided "Free Trade", where China tariffs our exports double-digit percentages, whereas most of theirs is tariffed at a rate below what is required to pay for import infrastructure like ports. And that's some great leverage we can use.

The reason we have one-sided free trade is that retailers and manufactures import or build things abroad, and use "Money Speech" to "convince and lobby" the politicians.

Reality says

In any case, I made a mistake earlier: I was thinking of Uruguy when I said Argetine of any networth tend to park their money there.

No problem. Uruguay got a bailout from Uncle Sam.
http://news.bbc.co.uk/2/hi/business/2171565.stm

thunderlips11 says

Reality, some numbers come from the UN, others from the World Bank. If you have evidence that they're substantially false, I'd love to hear it.

Being from the UN and the World Bank should be the first clue. More seriously, the hyperinflation underway now should the strongest evidence that the previous "growth" was little more than monetarily driven bubble blowing. The alleged GDP growth was simply the result of the price inflation index lagging monetary growth, hence not sufficiently discounting the nominal numbers.

thunderlips11 says

No it isn't. Sinclair wrote "the Jungle", Teddy appointed a commission to examine Chicago Slaughterhouses because of public outrage. TR didn't like socialists and was suspicious of Sinclair, but the men he sent published a report which confirmed just about everything Sinclair wrote about: filthy meat being swept up and tossed into the grinder, ground up hooves, rotting organs, etc. Needless to say this was not advertised on the packaging.

That's how we got the Pure Food and Drug Act, the Meat Inspection Act, and ton of other laws about that time.

And you know about all this because? For most Americans that's because what they are taught in schools, just before or after they are shoved off to the school cafeteria to have the pink slime lunch. Obviously nearly a century of FDA hasn't stopped hooves, skins, organs and other filth from being scraped off the floor and ground up and mixed into hamburgers, only change being having the official government seal of approval.

The real reason for the FDA's establishment was quite different from the ludicrous narrative supplied to brain wash the public school inmates. The (mostly European) patent drug makers lobbied the TR administration to ban street variety of pain relievers, so that their patent drugs made from the same opium plant could become more profitable. That's the area that FDA had the most impact. It created a cash cow to the insiders from limiting competitive choices available to Americans.

thunderlips11 says

Hmm, Brazil and Argentina are growing like crazy.

Both are facing hyperinflation.

Big Fat Tariffs, Heavy infrastructure spending, and other pro-industrialization programs by the government. nterestingly, the Asian Tigers also have big fat tariffs on imports.

What year is on your calendar? 1996? What "Asian Tigers" had from the 1960's to 1996 was a transition from a state slavery system to a crony socialist economy. The primary beneficiaries were the local dictators and the hangers-on.

Mexico didn't invest in industry in the 19th Century. The US did invest in industrialization in the 19th Century. Gee, I wonder why the US Industrialized and Mexico didn't? According to the free market, Mexican businessmen and entrepreneurs could have just did it without any government help, yet it didn't happen.

What help did men like Andrew Carnegie, JD Rockerfeller, and Henry Ford get from the US government? besides having the government staying the heck out of business?

The development trajectory bifurcated drastically between the US and Mexico at the Mexican-American War, which took place when neither country was industrialized. It may well be argued that Mexico lost the war largely because it was trying to centralize too much, and people in then northern Mexico (now southwestern US) didn't care for being managed by the central government.

Paraguay has no industry to speak of, and also doesn't have big fat tariffs to protect nascent industry, minimal infrastructure spending, and no pro-industrialization programs (but lots of subsidies for large agricultural enterprises).

But don't let uncomfortable facts get in the way of laissez-faire theory.

If you like infrastructure spending by the government so much, how do you Moboto Soseseko's Zaire (Now named Congo)? Why would you want your government officials to take more of your money and put in their Swiss bank accounts via so-called "infrastructure programs" by the government handing contracts to their relatives and friends?

thunderlips11 says

Well, Reality, they can just forgive their own debt to themselves, then.

That's preposterous. If I owe you $1M, and suggest we just forgive all debts between "us," how would you feel about that? Start think in terms of individuals instead of collectives . . . or tell your wife/girlfriend to share herself with me because I'm part of "we/us." I'm not sharing mine. LOL.

We have a bigger problem - much of our debt is owned abroad. I don't think we'll default safely.

Defaulting on foreign debt is a lot easier than defaulting on domestic debt, unless you are some kind of Stalinistic murderous dictatorship. In any case, because the US debt is denominated in the debtor's fiat money, it will just be inflated away.

But then again, we also have one-sided "Free Trade", where China tariffs our exports double-digit percentages, whereas most of theirs is tariffed at a rate below what is required to pay for import infrastructure like ports. And that's some great leverage we can use.

More commonly repeated nonsense. The ports are owned private entities. They are not in the business for losing money. The US government gets to tax the ports as businesses. In any case, tariff barriers primarily hurt the people who are deprived of the goods. You go to work in order to buy goods that you like, not in order to work. Otherwise, you are welcome to work for me without pay.

The reason we have one-sided free trade is that retailers and manufactures import or build things abroad, and use "Money Speech" to "convince and lobby" the politicians

More nonsense. The retailers import because the American worker, due to locational and linguistic reasons, is more productive and generate more profit at selling widgets than making widgets, in the current worldwide fiat money system with the US dollar as reserve currency.

Reality says

In any case, tariff barriers primarily hurt the people who are deprived of the
goods. You go to work in order to buy goods that you like, not in order to work.
Otherwise, you are welcome to work for me without pay.

lol--I beg to differ there. If tariffs keep jobs in the USA, then they most definitely help the guy who still has a job more than they hurt the guy who has to pay 25 cents more.

Reality says

The retailers import because the American worker, due to locational and
linguistic reasons, is more productive and generate more profit at selling
widgets than making widgets, in the current worldwide fiat money system with the
US dollar as reserve currency.

Talk about nonsense....

tatupu70 says

lol--I beg to differ there. If tariffs keep jobs in the USA, then they most definitely help the guy who still has a job more than they hurt the guy who has to pay 25 cents more.

It's a common fallacy. Frederick Bastiat addressed this issue more than a century ago: do you think the population would be better off if the candle makers managed to lobby through a law that requires the erection of a giant city cover to block out sun light, so there can be more candle making jobs?

From an economic perspective, there's no difference between foreign cheaper labor vs. machinery that can do the work of multiple workers. In fact, the exported manufacturing jobs may well be replaced by robots in this country. Do you suppose we'd be better off smashing the robots so people can have the jobs? People don't go to work in order to make widgets, but in order to be able get this and other widgets that they can buy with their wages. Any law getting in the way of maximizing widgets available to the population directly cuts into their living standards. Not to mention the tariff enforcement has to be carried out by very expensive bureaucrats who not only don't make any widgets but also consume twice as many widgets as the average worker in the private sector due to the monopolistic nature of bureaucratic jobs.

tatupu70 says

Reality says

The retailers import because the American worker, due to locational and

linguistic reasons, is more productive and generate more profit at selling

widgets than making widgets, in the current worldwide fiat money system with the

US dollar as reserve currency.

Talk about nonsense....

Care to elaborate?

Reality says

It's a common fallacy. Frederick Bastiat addressed this issue more than a
century ago: do you think the population would be better off if the candle
makers managed to lobby through a law that requires the erection of a giant city
cover to block out sun light, so there can be more candle making jobs?

That's a very poor analogy. The purpose of a tariff is not to create more jobs, but to move them from a foreign economy to a local economy.

Reality says

From an economic perspective, there's no difference between foreign cheaper
labor vs. machinery that can do the work of multiple workers

There's a huge difference. In one case the money goes out of the local economy, whereas in the other case it stays in the local economy.

Reality says

Any law getting in the way of maximizing widgets available to the population
directly cuts into their living standards

You have to look at local economies, not the world economy.

Reality says

Not to mention the tariff enforcement has to be carried out by very expensive
bureaucrats who not only don't make any widgets but also consume twice as many
widgets as the average worker in the private sector due to the monopolistic
nature of bureaucratic jobs.

Painting with a bit of a broad brush there.

Reality says

Care to elaborate?

I don't think elaboration is necessary.

tatupu70 says

That's a very poor analogy. The purpose of a tariff is not to create more jobs, but to move them from a foreign economy to a local economy.

Increasing the price of a product leads to the reduction of jobs utilizing that product and less money people using that product would have to create other jobs. The enforcement bureaucrats that are ignored in MagicThinking(R) but exist and cost a lot in real life would further reduce real productive domestic jobs via taxation.

tatupu70 says

There's a huge difference. In one case the money goes out of the local economy, whereas in the other case it stays in the local economy.

We are in a fiat money system. The fact that the excess money from printing is shipped overseas causing inflation elsewhere is better than letting the money stay in this country and cause inflation here.

tatupu70 says

You have to look at local economies, not the world economy.

I am looking the local economy. Do you think the Japanese live a better life than we do? We work in order to have products and services that we enjoy. Making the desired products and services less available and more expensive means driving down standards of living. Jobs are not the goal, enjoying goods and services is the real goal for each individual.

tatupu70 says

Painting with a bit of a broad brush there.

Not at all. The average government employee is making twice as much as an average employee in the private sector; that's before counting their fat pension packages and early retirement. The more schemes you think up getting their greasy fingers into the market exchanges and division of labor, the more clogged up the economy would become.

tatupu70 says

I don't think elaboration is necessary.

I will take that as a retraction of your earlier statement.

Reality says

Increasing the price of a product leads to the reduction of jobs utilizing
that product and less money people using that product would have to create other
jobs. The enforcement bureaucrats that are ignored in MagicThinking(R) but exist
and cost a lot in real life would further reduce real productive domestic jobs
via taxation.

Maybe, if you're looking at a global economy. But not if you're looking only at the US.

Reality says

We are in a fiat money system. The fact that the excess money from printing
is shipped overseas causing inflation elsewhere is better than letting the money
stay in this country and cause inflation here.

You've got the chicken and the egg reversed. We have to print money because of the trade deficit. A little inflation is far superior to a lot of unemployment anyway.

Reality says

I am looking the local economy. Do you think the Japanese live a better life
than we do?

Good question. By many objective standards, they do. But it's hard to strip away all the other factors and see what is only caused by tariffs.

Reality says

Making the desired products and services less available and more expensive means
driving down standards of living. Jobs are not the goal, enjoying goods and
services is the real goal for each individual.

But you can't enjoy goods and services without having a job. Unless you want to completely change the way things are run... I think society is much better off with jobs as opposed to slightly cheaper goods and services.

tatupu70 says

Reality says

Increasing the price of a product leads to the reduction of jobs utilizing

that product and less money people using that product would have to create other

jobs. The enforcement bureaucrats that are ignored in MagicThinking(R) but exist

and cost a lot in real life would further reduce real productive domestic jobs

via taxation.

Maybe, if you're looking at a global economy. But not if you're looking only at the US.

How? Did you even read what I wrote? You are making the mistake of counting make-belief jobs that pauperize fellow Americans as jobs. A real job exists only if it can deliver something that is less expensive than alternatives therefore the output of which is voluntarily chosen by the consumers seeking better living standards.

tatupu70 says

You've got the chicken and the egg reversed. We have to print money because of the trade deficit. A little inflation is far superior to a lot of unemployment anyway.

You are the one having chicken and egg reversed. The real driving force is government budget deficit. In order to avoid a run-away inflation here, extra money has to be shipped over seas in exchange for real goods shipped here.

tatupu70 says

Good question. By many objective standards, they do. But it's hard to strip away all the other factors and see what is only caused by tariffs.

No they do not. Most identical items cost a lot more money to their consumers than they cost here. There standards of living is negatively impacted by the lack of purchasing power.

tatupu70 says

But you can't enjoy goods and services without having a job.

That's simply not true. If you win the lottery or were simply given $1M, tell me why you can't enjoy goods and services? of course, if everyone is given that money, the purchasing power would plummet, there jobs is just another way of checking and balancing the relative priorities among different consumers.

Most government bureaucrats and welfare recipients don't have real productive jobs . . . yet they do enjoy the money given to them.

Unless you want to completely change the way things are run... I think society is much better off with jobs as opposed to slightly cheaper goods and services.

Only jobs created by consumer choice are sustainable, due to the division of labor creating additional value. Every other "job" is just another welfare recipient position (including government bureaucrats) that costs other people's standards of living. What do you "jobs" created by price protection really are? another form of welfare that ultimately cost the consumers more than the specific recipients receive.

Reality says

How? Did you even read what I wrote? You are making the mistake of counting make-belief jobs that pauperize fellow Americans as jobs. A real job exists only if it can deliver something that is less expensive than alternatives therefore the output of which is voluntarily chosen by the consumers seeking better living standards

The cost of the foreign product plus the tariff will be higher than the cost of the US product. Therefore, jobs will be created in the US.

Reality says

You are the one having chicken and egg reversed. The real driving force is government budget deficit. In order to avoid a run-away inflation here, extra money has to be shipped over seas in exchange for real goods shipped here.

That is laughably incorrect. Look at the history of trade deficits vs. US government deficits. End of story.

Reality says

No they do not. Most identical items cost a lot more money to their consumers than they cost here. There standards of living is negatively impacted by the lack of purchasing power.

Higher cost doesn't mean lower purchasing power. Do you have data showing that they have lower purchasing power?

Reality says

That's simply not true. If you win the lottery or were simply given $1M, tell me why you can't enjoy goods and services? of course, if everyone is given that money, the purchasing power would plummet, there jobs is just another way of checking and balancing the relative priorities among different consumers.

That's your counter argument--winning the lottery? OK--you got me.

Reality says

Only jobs created by consumer choice are sustainable, due to the division of labor creating additional value.

Of course--and with a tariff, the consumers will choose the products made in the US.

Reality says

Every other "job" is just another welfare recipient position (including government bureaucrats) that costs other people's standards of living.

Give me a break. Your dogma is clouding your decision making...

Reality says

It's a common fallacy. Frederick Bastiat addressed this issue more than a century ago: do you think the population would be better off if the candle makers managed to lobby through a law that requires the erection of a giant city cover to block out sun light, so there can be more candle making jobs?

Well, Manchester was created by British Government policy, not by free trade. AFTER centuries of protectionism, when Britain had no equal in the textile industry, it began to indulge in free trade, and even then only with certain European powers, and not in it's own colonies (see: North America in the 18th and India from the 1800s to 1940s).

It's no accident that Asian countries larger than a postage stamp that chose protectionism industrialized. South Korea, Japan, Malaysia, China - all examples of protectionism in action.

Meanwhile, the trade deficit grows alongside the national debt (both public and private), because a trade deficit adds to national debt as imports are not being paid for with exports. We get away with it for now because we hold the world's reserve currency. If we dealt in gold and silver like many libertarians want, our trade deficit would have been made unsustainable a long time ago.

EDIT: Oops, Tatupu already hit this point.

BTW, the US not only industrialized thanks to a high tariff, but because US Judges refused to enforce European - particularly British - patents and trademarks. God knows how many millions of books, machines, etc. were copied without royalties by infant US industry. Just like what China is doing to us today, and why without a war we can forget about getting the Chinese to enforce our patents in their country. It's just too lucrative and important for them to respect our copyrights.

And why the hope that replacing export goods with "intellectual Property" (What Lattitude is your idea?) from R&D is doomed to failure.

Reality says

That's preposterous. If I owe you $1M, and suggest we just forgive all debts between "us," how would you feel about that? Start think in terms of individuals instead of collectives . . . or tell your wife/girlfriend to share herself with me because I'm part of "we/us." I'm not sharing mine. LOL.

If I owe a $1M to myself, I can just say "Myself, I told myself I would give myself $1M at age 40 in return for spending grandma's $100 she gave me when I was 18 for my birthday on tapes. Not even CDs cause it was that long ago. Looks like I'm skint. Myself, will you forgive me?"
"Sure, myself. I forgive myself all my debt."
"Thanks, myself, you're a pal!"

When I own the printing press that makes the world's reserve currency, it's even easier! I can slowly print more money to pay myself the $1M and don't even have to default on the money I owe myself.

tatupu70 says

The cost of the foreign product plus the tariff will be higher than the cost of the US product. Therefore, jobs will be created in the US.

All right let's try a really simple example: prescription pill re-importation ban. The tariff is essentially raised to the pill's price difference between US and Canada. Does a higher cost of prescription pills create new jobs in the US? Sure it creates jobs at the drug maker and the border patrol / customs inspection, but the higher cost of meds kills jobs in this country and reduce standards of living in this country.

tatupu70 says

That is laughably incorrect. Look at the history of trade deficits vs. US government deficits. End of story.

Sure, let's look at the history: the LBJ government deficit due to the Great Society and Vietnam War directly led to trade deficit so out of control that the Nixon administration had to close the "gold window" to foreign central banks. The deficit spending of Reagan years led to massive trade deficit vis Japan, hence the Japanese buying spree in the US around 1990. The deficit brought on by the 2001~ wars led to massive trade deficit with the developing world, in turn the sky-rocketing oil prices.

tatupu70 says

That's your counter argument--winning the lottery?

Winning the lottery is just one form of getting money without a job. Any form of being given money would work just the same, including being given a government bureaucratic "job" not to do anything. It is the benefits and purchasing power that every worker is after, not the work itself. If you insist on disputing that, you are more than welcome to come work for me without pay!

tatupu70 says

Of course--and with a tariff, the consumers will choose the products made in the US.

And they'd be poorer because of it, just like when they are banned from re-importing the same pills from Canada.

tatupu70 says

Give me a break. Your dogma is clouding your decision making...

You are calling that "dogma" only because you don't understand economics, don't respect another human being as a fully conscience individual just as intelligent as you are, and have from a young age been brainwashed with MagicThinking that presumes government bureaucrats don't cost anything and are all-knowing and selfless . . . in other words, the dogma of Government as God!

Reality says

More commonly repeated nonsense. The ports are owned private entities. They are not in the business for losing money. The US government gets to tax the ports as businesses. In any case, tariff barriers primarily hurt the people who are deprived of the goods. You go to work in order to buy goods that you like, not in order to work. Otherwise, you are welcome to work for me without pay.

Coast Guard? Interstate Highways? Mississippi river dredging? US Army Corps of Engineers? Customs Inspectors? FAA? PATH? Don't forget a ton of goods are flown in, not shipped in, too. LORAN C/NDGPS. Ice Patrol. NWS. NAIS. Newark. LAX. Midway. "Government Cut" Port of Miami. Etc.

International Trade uses a ton of government services.

thunderlips11 says

If I owe a $1M to myself, I can just say "Myself, I told myself I would give myself $1M at age 40 in return for spending grandma's $100 she gave me when I was 18 for my birthday on tapes. Not even CDs cause it was that long ago. Looks like I'm skint. Myself, will you forgive me?"

"Sure, myself. I forgive myself all my debt."

"Thanks, myself, you're a pal!"

Why would there have been a money in that economy that consists of only one actor, yourself, to begin with? Money has lost all its meaning if there is only one actor. The economic ignorance floating around here is truly astounding.

When I own the printing press that makes the world's reserve currency, it's even easier! I can slowly print more money to pay myself the $1M and don't even have to default on the money I owe myself

You do not owe yourself anything when you are the only actor in the economy. In an economy that have other actors, your counterfeiting would essentially steal purchasing power from other actors in pay the debt you owe them.

s

thunderlips11 says

Well, Manchester was created by British Government policy, not by free trade. AFTER centuries of protectionism, when Britain had no equal in the textile industry, it began to indulge in free trade, and even then only with certain European powers, and not in it's own colonies (see: North America in the 18th and India from the 1800s to 1940s).

Where do you learn your history and economics? The British midlands industrialized because of easy access to high quality coal mine. Sre, some of the industrialists may indeed have lobbied the government to give them special privileges one way or another, but that invariably hurt the British people, just like the Stalinist program to industrialize on the backs of Ukrainian and Russian farmers.

thunderlips11 says

It's no accident that Asian countries larger than a postage stamp that chose protectionism industrialized. South Korea, Japan, Malaysia, China - all examples of protectionism in action.

That's because most of those countries during their periods of industrialization were controlled by a small group of industrialists, who were more than happy to treat their own population as captive labor and captive markets using the police power and tariff power of their own countries against their own fellow citizens.

What next, you are going to tell me in order to industrialize all countries have to let the police beat up their workers to put their noses to the grinder? That's somehow good for the country and the people in the long run? That's essentially what protectionist tariff systems do: depriving the workers the purchasing power of their wages in order to benefit the crony industrial captains.

thunderlips11 says

And why the hope that replacing export goods with "intellectual Property" (What Lattitude is your idea?) from R&D is doomed to failure.

I'm not a big fan of patents or copyrights, frankly, as IMHO they are restrictions on trade even in our own country. There are however other types of goods besides manufactured goods. Food for example. As the Chinese massively pollute their own country making all the widgets for us, the quality of our pristine food products can be quite attractive to them. Besides, NYC has been thriving for 200+ years now despite not exporting much food or manufactured products to the rest of the country. So why can't the US be the NYC for the rest of the world? Ideas and opportunities matter.

Reality says

Why would there have been a money in that economy that consists of only one actor, yourself, to begin with? Money has lost all its meaning if there is only one actor. The economic ignorance floating around here is truly astounding.

Economics is more complicated than Henry Hazlitt's book. Government has the power to tax and coin money. This is fiat money, not gold and silver like in the time of the French or American revolution. The vehicles for disbursing the printed money are much more advanced. The entity that owes the money also owns the world's reserve currency. So it's not the same as some private actor owning money.

The power of a theory lies in it's ability to predict. Libertarianism isn't doing so well. Where the vaunted hyperinflation at that Schiff and the Dude with the Newsletter whose name I forget are always pimping and have been for 5 years now?

Edit: Casey is the guy I'm thinking about.

thunderlips11 says

Coast Guard? Interstate Highways? Mississippi river dredging? US Army Corps of Engineers? Customs Inspectors? FAA? PATH? Don't forget a ton of goods are flown in, not shipped in, too. LORAN C/NDGPS. Ice Patrol. NWS. NAIS. Newark. LAX. Midway. "Government Cut" Port of Miami. Etc.

International Trade uses a ton of government services.

Most of their activities are either unnecessary or can easily be replaced by private sector service providers if necessary. Just like the moment the USPS stopped mail delivery on Saturdays, FedEx stepped in with a Saturday delivery service.

International trade uses a ton of government service because some industrialists decided it that he'd rather have the taxpayers pay the bill instead of paying for the cost of doing business out of his own pocket.

Reality says

Most of their activities are either unnecessary or can easily be replaced by private sector service providers if necessary. Just like the moment the USPS stopped mail delivery on Saturdays, FedEx stepped in with a Saturday delivery service.

So FedEx doesn't use the highways, airports, radars, weather reports, etc.? All guarded by the USCG, Navy, and USAF?

Maybe FedEx will take over from the Customs Department and inspect all it's own imports? Yeah, that isn't a conflict of interest with the wants of their customers.

Reality says

International trade uses a ton of government service because some industrialists decided it that he'd rather have the taxpayers pay the bill instead of paying for the cost of doing business out of his own pocket.

No, it's because shit like Ice Patrols and LORAN/GPS systems are expensive services that are better done by one entity and spread out over everybody, rather than being voluntary.

thunderlips11 says

Economics is more complicated than Henry Hazlitt's book. Government has the power to tax and coin money. This is fiat money, not gold and silver like in the time of the French or American revolution. The vehicles for disbursing the printed money are much more advanced.

There's nothing new about fiat money. Ancient Romans had that too, and they were not the first ones either. Contrary to what you were taught in a typical public schools, borrowing at interest has had several thousands years of history. That's why there were biblical bans against it. Didn't it ever occur to you, if banking didn't exist before the 15th century, how did the bible and other old documents advocate the banning of something that didn't even exist and having never existed? Why did they ban it? Fractional reserve and fiat bubble bursts bringing enormous suffering to the population.

The power of a theory lies in it's ability to predict. Libertarianism isn't doing so well. Where the vaunted hyperinflation at that Schiff and the Dude with the Newsletter whose name I forget are always pimping and have been for 5 years now?

Schiff is not the only Libertarian; he is not even an economist. There are other libertarian economists predicted the deflation. If one-mistake-and-you-are-out standards applies to everyone, Bernanke should be out 3 years ago when his prediction about sub-prime being contained proved wrong. Krugman's promotion of Argentina and Brazilian monetary expansion policy last year blowing up in his face as hyperinflation right now! should mean the end of his credibility.

thunderlips11 says

So FedEx doesn't use the highways, airports, radars, weather reports, etc.? All guarded by the USCG, Navy, and USAF?

At what price? Are you sure FedEx' cargo security needs to have Afghanistan and Iraq invaded? Needs 170+ military bases all over the world? That's what FedEx is forced to pay for in taxes when "protection" is a monopoly service.

Maybe FedEx will take over from the Customs Department and inspect all it's own imports? Yeah, that isn't a conflict of interest with the wants of their customers.

You don't think the Customs and border security offloads some of the inspection to FedEx foreign locations already? What planet are you on?

thunderlips11 says

Edit: Casey is the guy I'm thinking about.

Neither Schiff nor Casey are economists. They are fund managers and commentators selling their respective services if you wish to buy. In contrast, men like Bernanke are paid by money forcibly taken from you, and are supposed to be correct therefore allowed to wield special privileges like deciding how much your money is worth.

thunderlips11 says

No, it's because shit like Ice Patrols and LORAN/GPS systems are expensive services that are better done by one entity and spread out over everybody, rather than being voluntary

That's total nonsense. It's obvious shit like Ice Patrol is big shipping companies offloading the cost to taxpayers. Loran and GPS systems were built by the government for military purposes. If they hadn't been there, private sector solutions may have come online a little later than historically the case, but would have cost much much less . . . just like all the government-subsidized trans-continental railroads went bankrupt whereas the private Great Northern built at a slow pace and stay profitable . . . because the private sector do things that are actually create more value than they consume . . . unlike the glory-hound nonsense like monopolizing space for half a century sending some flat-raising mission to the moon then never go back there again.

Reality says

There's nothing new about fiat money. Ancient Romans had that too, and they were not the first ones either. Contrary to what you were taught in a typical education, borrowing at interest has had several thousands years of history. That's why there were biblical bans against it. Didn't it ever occur to you, if banking didn't exist before the 15th century, how did the bible and other old documents advocate the banning of something that didn't even exist? Why did they ban it? Fractional reserve and fiat bubble bursts bringing enormous suffering to the population.

Did I mention lending at interest not being around since ancient times? Or that lending money didn't happen before fiat money?

Reality says

Schiff is not the only Libertarian; he is not even an economist. There are other libertarian economists predicted the deflation.

All the big ones I'm familiar with have been on the hyperinflation alarm warpath since the crisis began (and actually, long before it). Lew Rockwell's site and associated contributors have been grinding their teeth over expected hyperinflation since the 90s, and probably before. In fact, some have been on the "Coming Hyperinflation" since the 70s.

Shit, Gary North's first publication was a pamphlet on inflation in 1964.

thunderlips11 says

Did I mention lending at interest not being around since ancient times? Or that lending money didn't happen before fiat money?

Fiat money existed at least as early as the beginning of the 1st century AD, if not earlier. "The Brave New World" may look new to the really uninitiated, but is nothing new.

thunderlips11 says

All the big ones I'm familiar with have been on the hyperinflation alarm warpath since the crisis began (and actually, long before it).

Eventually the collapse of the existing monetary system will be due to hyperinflation. That doesn't mean however there can't be bouts of deflation on the way there. Michael Shedlock and Bob Wenzel have been quite correct in their diagnosis of the 2009 crunch. Besides, even Schiff correctly diagnosed the housing crash in 2007-2008. He was one of the loudest voices calling for the (then coming) housing crash. What's a housing crash if it is not temporary deflation? They have also been correct so far about subsequent massive inflation. We are still waiting to see the next shoe drop.

Compared to them, the Keynesian clowns like Bernanke and Krugman never saw the housing crash coming, and never saw the inflation either.

Reality says

At what price? Are you sure FedEx' cargo security needs to have Afghanistan and Iraq invaded? Needs 170+ military bases all over the world? That's what FedEx is forced to pay for in taxes when "protection" is a monopoly service.

Yep, a standing military sometimes gets abused. Better than a private force. You see, eventually even the inbred dumbass Kings of Europe realized, "Shucks, when there's no war on, these Condottieri* tend to rape and pillage the countryside as they are unemployed and have no trade other than whacking people with maces and pranging them with crossbow bolts. We'd better have a national standing army."

Of course, you can't build a Navy or Air Force overnight, but I agree with a citizens' militia being the primary land force. A good compromise, since to occupy or 'really have a war' at some point you generally need more than a marine division or two.

BTW, I did not see corporate America opposing the various wars. In fact, they all lined up to take money. Nor did I see AT&T and the other telecoms saying "We won't help you intercept people's private communications without an email, that would be Tyranny!" Instead, they put out their hand and said "Glad to help you spy, Gov, if you'll only help us, ahem, defray some of the costs..."

* Italian for "Contractors", by the way.

Reality says

That's total nonsense. It's obvious shit like Ice Patrol is big shipping companies offloading the cost to taxpayers.

And fishermen, and ferry services that connect parts of the Northwest and Alaska...

Loran and GPS systems were built by the government for military purposes.

Would a private company had invested all that money before the first handheld GPS was created? ARPA long preceded the internet, which grew from it. Those who developed ARPA had no clue the internet we use today would arise from it when they first started working on it.

Thanks government investment in untested new technology!

If they hadn't been there, private sector solutions may have come online a little later than historically the case, but would have cost much much less . . .

How do we know this? Do we have an alternative timeline transconfabulator than can see what tech would be like today without massive investment in GPS, LORAN, DARPA, Radar, Rocketry, etc.?

What private company was going to pour in billions and billions over years and years just to develop satellite launching systems, which are only marginally profitable at best, to even get to the point where GPS could become a possibility?

Even the private launching of satellites today (which is in it's infancy) is only possible due to massive, long time theoretical investment (and subsidy of commercial and military satellites).

Nothing new under the sun - Prince Henry the Navigator, and later the British Admiralty, heavily subsidized shipbuilding and innovations in order to make navigation safe and possible. No private entity was interested in or had the resources to build prototype ships, subsidize tar and pitch production, figure out ways to defeat shipworms, etc.

So even at the dawn of the age of Discovery, governments played a key role in trade.

Vasco da Gama was not a private employee, but a government bureaucrat. Magellan also, his expedition paid for by the government. Every Iberian Merchant must have drank to his memory thanks to all the money these guys helped make them.

just like all the government-subsidized trans-continental railroads went bankrupt

because the private sector do things that are actually create more value than they consume . . .

http://www.youtube.com/embed/qnWbI9RzJqY

http://www.youtube.com/embed/9sOlIvx7Pvs

http://www.youtube.com/embed/CdS16pWSKoE

http://www.youtube.com/embed/mubCkCAEiDQ

Nothing new under the sun.

Of course, private companies often create value, as government often creates value.

Sometimes the microwave is better, sometimes the oven or the stovetop.

unlike the glory-hound nonsense like monopolizing space for half a century sending some flat-raising mission to the moon then never go back there again.

Wow dude. The onion said it best "Man lands on the FUCKING MOON!"

The way you put it, it sounds like the government paid $300 for a toilet seat.

Reality says

Sure it creates jobs at the drug maker and the border patrol / customs
inspection, but the higher cost of meds kills jobs in this country and reduce
standards of living in this country.

Why would the higher cost of meds kill jobs in this country? The money is staying in the local economy. And will be spent in the local economy.

That's the fallacy of your dogma--lower costs don't create jobs. Lower costs lead to increased profits which trickle up to the 1% and stay there. No increased demand, no new jobs.

Reality says

Any form of being given money would work just the same, including being given a
government bureaucratic "job" not to do anything.

Of course, which is why I said that unless you plan on changing the system. If you are proposing communism, then you'd have a point. Otherwise, you need a job.

Reality says

You are calling that "dogma" only because you don't understand economics,
don't respect another human being as a fully conscience individual just as
intelligent as you are, and have from a young age been brainwashed with
MagicThinking that presumes government bureaucrats don't cost anything and are
all-knowing and selfless . . . in other words, the dogma of Government as
God!

Excellent strawman. Well played, sir.

tatupu70 says

Why would the higher cost of meds kill jobs in this country? The money is staying in the local economy. And will be spent in the local economy.

That's the fallacy of your dogma--lower costs don't create jobs. Lower costs lead to increased profits which trickle up to the 1% and stay there. No increased demand, no new jobs.

Is this a joke? You claim to be have some economic background, then write something like this? Do you understand the basics of division of labor via mutually willing exchanges? Why don't you position a cop every mile on every road and charge $100 for every mile traveled? The money is all still staying in the economy, isn't it? The economy would be dead due to the dramatic increase in cost of exchanges. Why not raise electricity rates to $10/kilowatt-hour? why not raise property tax to $100/sqft? Why not raise medicine cost 10x? The money is all still staying in the economy, isn't it? Again and again the cost of basic economic exchange (aka "making a living") would be so high that the economy and division of labor would be dead!

tatupu70 says

Reality says

You are calling that "dogma" only because you don't understand economics,

don't respect another human being as a fully conscience individual just as

intelligent as you are, and have from a young age been brainwashed with

MagicThinking that presumes government bureaucrats don't cost anything and are

all-knowing and selfless . . . in other words, the dogma of Government as

God!

Excellent strawman. Well played, sir.

Read what I wrote again. You, sire, are utterly ignorant when it comes to economics.

thunderlips11 says

Yep, a standing military sometimes gets abused. Better than a private force. You see, eventually even the inbred dumbass Kings of Europe realized, "Shucks, when there's no war on, these Condottieri* tend to rape and pillage the countryside as they are unemployed and have no trade other than whacking people with maces and pranging them with crossbow bolts. We'd better have a national standing army."

Do you just pull history out of your ass like that? Standing military and private force are not mutually exclusive at all. In fact, the first standing armies of post-Roman Western Europe were private armies of the lords, funded by the church money in the domain. That's Charles Martel's "contribution" to medieval western Europe. What the heck does national standing army have to do with the need for 170+ military bases all over the world?

thunderlips11 says

Of course, you can't build a Navy or Air Force overnight, but I agree with a citizens' militia being the primary land force. A good compromise, since to occupy or 'really have a war' at some point you generally need more than a marine division or two.

Once again, what does this have to do with having 170+ military bases all over the world?

thunderlips11 says

BTW, I did not see corporate America opposing the various wars. In fact, they all lined up to take money. Nor did I see AT&T and the other telecoms saying "We won't help you intercept people's private communications without an email, that would be Tyranny!" Instead, they put out their hand and said "Glad to help you spy, Gov, if you'll only help us, ahem, defray some of the costs..."

No kidding genius, what do you think corporations are? They are just individuals conducting business behind corporate veil, individuals that are quite capable of utilizing another constructed concept "the government" to loot you, in the names of maintaining all the "necessary" monopoly services (aka "government services" and "government contracts") that you praise so much.

thunderlips11 says

How do we know this? Do we have an alternative timeline transconfabulator than can see what tech would be like today without massive investment in GPS, LORAN, DARPA, Radar, Rocketry, etc.?

DARPA doesn't do research of its own. It's an outfit of about 100 people only, essentially a hedge fund investing DoD money not for monetary gain but for access/steering/backdoor to new emerging technology. If government funding hadn't been around (and it wasn't around until the 1950's), the sheer curiosity of innovators would be helped by private investors to bring us all the innovations like the previous 100 years with "far greater innovations" (Paul Krugman's recent description comparing technology gains in the late 19th and early 20th century to technological gains in the past few decades . . . and he is correct on this: the internal combustion engine and automobiles made far greater impact on the society; internet is only a new version of telegraph). Steam engine, telegraph, telephone, internal combustion engine, automobile were all invented and brought to the public by the private sector without any government funding. To say that all the technology would be impossible would be as silly as saying food is impossible without the Department of Agriculture.

thunderlips11 says

What private company was going to pour in billions and billions over years and years just to develop satellite launching systems, which are only marginally profitable at best, to even get to the point where GPS could become a possibility?

Probably numerous private companies, just like how the automobile and the personal computer were brought forth, first as very expensive impractical toys, then gradually becoming ubiquitous and indispensable tools. For many years people thought the automobile could never surpass the horse carriage when you really need to get somewhere.

For the available manufacturing technology, doing aviation in the early 1900's was a lot more difficult than rocketry in the second half of the 20th century. The private sector was banned from space launch from the 1950's till 1998 because of the NASA monopoly in space. Now a little more than a decade later there are already more privately owned satellites in space than government owned satellites.

thunderlips11 says

Even the private launching of satellites today (which is in it's infancy) is only possible due to massive, long time theoretical investment (and subsidy of commercial and military satellites).

About as silly as claiming food is impossible without Department of Agriculture subsidies to the farmers. Heck, how would you poor little people be able to buy anything if not for the government collecting a sales tax on it? LOL.

Government "investing" in space industry consists of taking resources and smart scientists/engineers from the private sector, waste most of it and then place the remainder under bureaucratic red-tapes. It's just like sales tax "bringing" you goods and Department of Agriculture "bringing" you food when it actually pays farmers not to grow. Food comes to your table DESPITE the Department of Agriculture. You can afford to buy goods at the store DESPITE the sales tax. Space technology is available today DESPITE NASA ban on private launches for nearly half a century.

thunderlips11 says

Nothing new under the sun - Prince Henry the Navigator, and later the British Admiralty, heavily subsidized shipbuilding and innovations in order to make navigation safe and possible. No private entity was interested in or had the resources to build prototype ships, subsidize tar and pitch production, figure out ways to defeat shipworms, etc.

Why? Because private sailors always had a suicide wish? Prince Henry the Navigator was operating in his private capacity, not some natioanl government. British Admiralty, like most government bureaucrats, would like to take credit for what's done in the private sector, just like NASA claims credit to Tang, plastic, and numerous other inventions that long preceded NASA. The same shipbuilding problems (and non-problems) were solved in other parts of the world long before British Admiralty even existed; there goes your argument of "impossible otherwise."