patrick.net

Will see how silver and gold work off the recent sell-off. Looks like they’ll have to establish a new base before they can move higher.

That's the luxury of positioning yourself early. Anyone who piled into the gold/silver markets in 2008 or any time prior doesn't care about short term movements any more. It doesn't matter how volatile they are. I'll sit back and watch. The Johnny come lately investors are either going to get slaughtered from a huge pullback or drive the market into bubble status.

The 111s FYs are 2010 and 2011, not 2009 and 2010. The budget for 2009 was already mostly set when they took office.

That said, the biggest portion of the increase in debt was the $1T lost in tax revenue during the recession, followed closely by the $900B increase in spending on medicare, social security, and Iraq/Afghanistan. TARP cost us a whopping $30B. ARRA was actually significant, at about $550B spent so far.

So, yeah, about $1T of the debt increase since January 1st 2009 has come from completely unavoidable changes related to the recession, nearly a trillion came from the bullshit expectation that military and health care spending only go up, half a trillion was spent trying to dig us out of the recession, and the rest was deficits that already existed in the budget going back to 2001.

But it's fun to be outraged, isn't it?

I'll certainly agree with anyone who wants to complain that ARRA was an ineffective use of $555B so far. Economists seem mixed on the issue, but I'll accept at face value that it was a pure waste of money. Without it we'd still have had over two and a half trillion in debt.

The good news is that deficits are just about guaranteed to shrink in 2011 and 2012. All signs point to an increase in tax receipts for 2011 (even with the tax cut extension), and with ARRA winding down 2012 may actually have a smaller deficit than 2009.

But maybe we would have been better off if congress had tried really hard to reduce the deficit during the recession. You know, kind of like they did under the hoover administration. Didn't that work out really really well?

I've modified the chart I posted yesterday to add the increasing debt:

FRED Graph

The red line is household debt, the blue line is wages, and the green line is the national debt (less the SSTF etc).

I think there are some important dynamics that can be seen here.

1) entering the 2001 recession, debt take-on separated from wages (debt expanded while wages were flat). This was the beginning of the Bush bubble economy

2) The bubble economy was strengthened by the tax cuts, which from 2002-2003 were clearly the primary driver in increasing salaries. We were robbing our kids futures to pay ourselves more last decade. Good thing I don't have kids I guess.

3) 2005 through 3Q07 featured a stupendous rise in household debt, from $10T to $14T. The deficits were going down during this timeperiod thanks to the stimulus of the housing bubble and credit expansion.

4) But from 2009, with the Home ATM blowed up and credit no longer growing at $2T/yr, the US Treasury stepped in to counter-cyclically dump $4T of borrowed money, keeping the blue line from continuing the collapsing trend it had entering 1Q09.

It was ALL Bush’s fault.

Indeed it was, Shreck. Indeed it was. Once you blow an economy up, there is no real fix. Just pain for a very long time.

See that gray bar in my graph stretching from 2008 through 1Q09? That's all Bush's fault. It was his "voodoo economics" that blew up the economy in 2008 and its his administration's laissez faire policies that gave us that $14T debt overhang that is killing us now.

shrekgrinch says

Hoover jacked up income tax rates from the highest of 25% to 90% in just one year

http://en.wikipedia.org/wiki/Revenue_Act_of_1932#Tax_on_Individuals

Looks like a pretty smooth tax regime. Hoover was always an engineer first.

shrekgrinch says

Kevin says

That said, the biggest portion of the increase in debt was the $1T lost in tax revenue during the recession

No, it was from spending more than $1T than they had coming in. It is ALWAYS about spending more because they have full control over that but not as much on the revenue side.

No shit, sherlock. The point here is that even if spending had been completely flat, we would have added $1T to the deficit, because of lower tax revenue. That would have happened no matter what the policies were, unless those policies magically ended the recession.

Still, the $3.22 trillion in new debt accumulated during the record-setting 111th Congress is more than three times the $1.054 trillion in new debt accumulated by the last Republican-majority Congress (the 109th) which adjourned on Dec. 8, 2006.

Thus, it happened under their watch. That’s all John Q Public understands and reacts to. Like they say, “In politics, perception IS reality”. This is true no matter how many excuses folks on here make for them.

Oh, right, since the American voters are fucking morons, it's OK to lie. I forgot.

Kevin says

You know, kind of like they did under the hoover administration. Didn’t that work out really really well?

Given how Hoover jacked up income tax rates from the highest of 25% to 90% in just one year — something the Left is screaming we should also do now — no, I don’t think it will work out any more than it did then.

Well, the top marginal rate was raised to 63%, a rate which affected less than a thousand families in the united states at the time. The rate for the average family was effectively zero, since the standard deduction was $2500 and the average salary was only about $1600.

But that's beside the point.

Hoover managed to screw up in two ways:

1. He reduced personal spending
2. He reduced government spending

Effectively, he made the depression worse.

The only thing that ends recessions is increased economic activity.

Tax rate changes may or may not effect economic activity. It's complicated, and the results of various tax changes throughout america's history are mixed. At best, you can say that tax rates are uncorrelated with economic activity.

However, there is a very strong correlation between government spending and economic activity.

The best time for the US government to have cut spending would have been from about 1995 to about 2005. That money could have been used to eliminate debt, thus better preparing us for taking on necessary debt in the current recession.

But, well, people are stupid and won't re-elect someone who either raises taxes or cuts spending, so we'll just gradually move closer and closer to a complete collapse and reset. Hopefully when that happens here it will be closer to modern day greece and less like 1930s germany.

You forgot the word putz on your bio

That's not true. 90% of his comments are hilarious

shrekgrinch says

tatupu70 says

That’s not true. 90% of his comments are hilarious

Ok Tatu — admit it: This guy even tops me in your book.

I'll drink to that.

Repo4sale, just out of curiosity, why are you yelling at Nomo with poor grammar? If you believe that Patrick shouldn't accept ads, why don't you send him some of your $100m?

repo4sale says

Please stop, because I cannot keep wasting my time with you! I’m trying to join the Billionaire boys club by 2020.

Keep giving blood. You'll get there.

shrekgrinch says

tatupu70 says

That’s not true. 90% of his comments are hilarious

Ok Tatu — admit it: This guy even tops me in your book.

Were you the kid in school who, after the teacher complimented a fellow student, immediately raised his hand yelling--But what about me? I'm smart too!

repo4sale:

I'd like to know what it is that you're smoking, because I'll avoid it like the plague. You make less sense than my confused elderly patients with Alzheimer's Disease.

repo4sale says

I try to be “basic and funny”

You've got the "and" part down pat.

$450,000 for that? Just take that money and buy a decent SFR in Aliso Viejo 10 miles away.

shrekgrinch says

Oh yeah…sure…the taxes were jacked up overnight. That doesn’t constitute ’smooth’. Then the rich folks that had 99% of all the investment capital took their toys home and the rest we all know about.

Except that they didn't. They lost their capital when the stock market collapsed.

shrekgrinch says

Doesn’t matter about the rest. It was those ‘less than a thousand families’ that had the capital to create new jobs who decided ‘oh yeah? Time to invest in tax free munis or even stuff my millions in the mattress instead’. Business investment plummeted as a result. Smooth move.

So you're claiming that investment halted AFTER the tax rate changes? Really? Nice historical revisionism.

shrekgrinch says

Not if the necessarily debt de-leveraging doesn’t happen first, as in our case today.

No, always, in every instance of every recession since the dawn of time. It is the very definition of how recessions end.

shrekgrinch says

Completely ridiculous. Hey! Let’s raise taxes to over 100% then! See how much income tax revenue the government collects! Seriously, in the 1980s Sen. Bob Packwood asked a congressional budget research arm (wasn’t CBO, so they saved face) what the revenue would be for tax rates at 100% and the morons gave back actual numbers.

So, two things here:

1. You don't seem to understand what 'uncorrelated' means. Compare tax rates vs revenue in 1920, 1940, 1960, 1980, and 2000.

2. 100% taxation wouldn't end economic activity, it would just move economic activity to a barter-based model. Don't confuse "money" with "economic activity" (or "government revenue" for that matter!)

shrekgrinch says

No, there isn’t. During the Depression they spent but hardly got any results. It was only after WWII started did they get results. Why? Because FDR was forced to abandon the New Deal JIHAD against the rich/business in order to avoid getting his head chopped off by a katana sword on the White House lawn a few years later down the road, that’s why.

"hardly got any results" other than the 10 point drop in unemployment and a 35% increase in GDP during FDR's first term? Again, nice historical revisionism.

shrekgrinch says

That included removing the disincentives they were constantly putting in place for business to not expand/hire much like Obambi does right now. The cost-plus contracts were invented.

Please enumerate these disincentives that were removed. Be specific. Because things like the wagner act can hardly be classified as "removing disincentives" for hiring.

shrekgrinch says

Uh, now. They had complete control on the policy level to CUT spending to meet revenues.

And where do you suggest that they cut $1T from? Please be specific. Also, please explain how this would have helped bolster the economy.

shrekgrinch says

They had complete power to do so to compensate for the lack of power they had to raise more revenues. Hence why DEFICIT SPENDING is always a SPENDING problem.

So if you lose your job and need to borrow money from your sister so that you can pay your rent, you have a spending problem? That's a very, very interesting point of view.

I suppose third-world countries have spending problems, too, right? The problem isn't that there isn't enough business activity to provide employment and development, it's that they're just spending too much money!

shrekgrinch says

Try going to the store with only $10 in your pocket and attempt to buy $15 in stuff. If the store owner or anyone else won’t spot you that extra $5, what happens? You have to settle for $10 in stuff. You have to cut your ’spending budget’ by $5. If you do get a loan to cover that extra $5, then you are engaged in DEFICIT SPENDING.

Yes, you are, but you're mistaken for insinuating that all debt is bad. Debt is how we smooth the curve from good times in life to bad. The ability to finance purchases and secure lines of credit is what separates poor countries from rich countries in the first place.

We are diversifying into foreign currencies, chinese and euro, while holding onto (long term) dividend paying stocks of large entities with a proven track record.

Ah, that ain't nothin... on the health insurance thread he writes:

repo4sale says

This is an example of why I “date women between 20-30″…. and why I refused to get married. 3 women in the past did not sign my Pre-Nuptial contract (very fortunate). I am looking for a “10 DNA surrogate”… $100-200k???? Must pass background & DNA analysis by my Dr. Present Net worth without Debt about $50-150m. 2020 goal is $1b. Need DNA child to transfer Estate to!

Sounds like he's having trouble getting laid.

I just read it again - I think that he wants the strand of DNA to have a net worth of about $50-150 million, plus be able to pass a background test. I do have a couple of questions:

- how much of a background could a strand of DNA accumulate - or would it be a calculation of predictability? You know, "based on my calculations, this strand of DNA will fail high school and get his girlfriend pregnant. They'll live in a studio apartment over a laudromat in a seedy part of town and work at the tastee freeze..."

- how could the DNA have amassed a net worth of any amount?

- was it "pass background & DNA analysis by my Dr. Present?" Where can I get a doctor present? (all I got was some crappy stuff in comparison...)

- "Net worth without Debt about $50-150m." I'm really struggling with this one. According to about.com, the definition of net worth is:

"Your net worth is essentially a grand total of all your assets minus your liabilities."

So, if he wants a strand of DNA that has a net worth of $50 to $150 million without debt, wouldn't that be equivalent to a double negative? Therefore, he would like his strand of DNA to have a net worth of minus fifty million?

------------------------------------------------------

...can anyone tell that I'm snowed in with nothing to do?

Kevin says

The 111s FYs are 2010 and 2011, not 2009 and 2010. The budget for 2009 was already mostly set when they took office.
That said, the biggest portion of the increase in debt was the $1T lost in tax revenue during the recession, followed closely by the $900B increase in spending on medicare, social security, and Iraq/Afghanistan. TARP cost us a whopping $30B. ARRA was actually significant, at about $550B spent so far.
So, yeah, about $1T of the debt increase since January 1st 2009 has come from completely unavoidable changes related to the recession, nearly a trillion came from the bullshit expectation that military and health care spending only go up, half a trillion was spent trying to dig us out of the recession, and the rest was deficits that already existed in the budget going back to 2001.
But it’s fun to be outraged, isn’t it?
I’ll certainly agree with anyone who wants to complain that ARRA was an ineffective use of $555B so far. Economists seem mixed on the issue, but I’ll accept at face value that it was a pure waste of money. Without it we’d still have had over two and a half trillion in debt.
The good news is that deficits are just about guaranteed to shrink in 2011 and 2012. All signs point to an increase in tax receipts for 2011 (even with the tax cut extension), and with ARRA winding down 2012 may actually have a smaller deficit than 2009.
But maybe we would have been better off if congress had tried really hard to reduce the deficit during the recession. You know, kind of like they did under the hoover administration. Didn’t that work out really really well?

@KEVIN...you crack me up, you seem to always come back with common sense fact based arguments when arch-conservatives attempt to lay blame. Just stop it already. :)

Uhhh ohh --- Kevin vs Shrek.......Part XVIXXIII

shrekgrinch says

Clarence 13X says

KEVIN…you crack me up, you seem to always come back with common sense fact based arguments

I guess the New Year’s Party has started earlier for some people.

You must realize that you rarely cite non-partisan facts, right?....most of your citings seem to be aimed at defaming the Obama administration in any form possible. It almost reminds me of when Bush was in office, how Liberals would attack his policies regardless of their outcome.

Seeing that the recent housing and economic downturn were pretty much caused by BUSH Sr and CLINTONS gramm-leach-bliley act dont you think your anger should be directed towards them?

I mean, if your simply satisfied with returning the favor to the Liberals after the past 8 years of attacks have at it...but I want to see improvements in our economic and educational outlook.

shrekgrinch says

Has nothing to do with the stock market. Sorry if you are on Planet Whatever, as usual.

When FDR took office, most of the capital was already gone. Investment was dead. This happened long before FDR took office, and before Hoover's tax rate changes.

shrekgrinch says

What historical revisionism? Business investment didn’t pick up by any appreciable degree until WWII started. The taxes weren’t responsible for all of that — FDR’s jihad against business via non-tax means did its part just as badly.

BUSINESS INVESTMENT HALTED BEFORE THE TAX RATE CHANGES.

That is the historical revisionism I'm talking about.

If you want to argue that the tax rates didn't help, sure, that was clearly the case, at least under Hoover, but to claim that they halted investment is an outright lie. Investment was already halted.

shrekgrinch says

On Planet Whatever, maybe. But on Planet Where People Live Who Know What The Hell The Are Talking About, not always

I can't believe I'm even having this argument. Please look up the definition of recession and recovery.

shrekgrinch says

Not when the only results that mattered to everyone was the NET difference compared to what the economy was before. By that measure, FDR was a disaster. It is also the same measure the voters applied to the Democrats this past November, in case you have been missing out on recent events as you do on basic logic and history.

Yes, the NET DIFFERENCE from January 1933 to November 1936 was that the unemployment rate was down 10 points and GDP was up 35%. FDR won in a fucking landslide, because his policies were working.

I mean. Really. Jesus.

No, FDR did not single handedly put things back the way they were in 1920s by 1936, but to claim that the "net difference" wasn't a dramatic improvement from when he took office is simply a lie.

Obama and the dems didn't have anywhere close to the results that FDR had, and they spent a hell of a lot less (relative to GDP).

shrekgrinch says

Nope. I’m not your Google Bitch. If you don’t know what disastrous effects New Deal legislation had on business even on a basic level as determined by unbiased economists, then it worthless to waste my time on you. Ever hear of the Undistributed Profits Tax? No? Case in point.

Oh, I'm quite familiar with legislation that was enacted during the New Deal. You're discussing legislation that was created during the new deal that created disinecntives here, not legislation that removed disincentives. Like I said -- please cite one disincentive that FDR removed. Just one would be fine.

shrekgrinch says

They could have cut from anywhere. They get elected to make those choices, after all.

Again, where? How? Where were the votes? Who would support it?

It doesn’t matter where with regards to what we were discussing what the cause of deficit spending is.

But it does. Deficits don't exist in a vacuum. Cutting one program may make the deficit worse, cutting another may make it better.

As regards to bolstering the economy, that has nothing to do with this point either. Nice red herring attempt. Won’t work.

It's not a red herring, it's a serious question. Your entire argument is that they should have cut, but you can't make an argument as to how that would have helped the economy. Americans want, and expect the federal government to make the economy better. That is job number one.

You can make the argument that American's are wrong for wanting their government to have this job, and that's fine -- but that's not the reality. Job creation, wage growth, quality of life improvements. That's what the people want, and that is exactly what congress thinks it's trying to do.

Again, if both the credit and printing presses weren’t available to them suddenly what would have happened? They would have been forced to only spend that which they had money for - as per my example.

More likely we'd default and the entire country would collapse.

shrekgrinch says

Uh, if you don’t have many options on the revenue side (income) to increase it, which we assume is the case in both your example, my example and the reality of governments collecting revenues, then yes…you have a spending problem. Adding on a debt problem only exacerbates the spending problem in the long run.

Like I said, very, very interesting viewpoint.

If you're starving in the streets, with no money at all, and you borrow a dollar from your mother so that you can eat, you have a spending problem? That eating lets you have enough energy to get a job, that job lets you make more money.

But, please, continue this line of thinking. It's utterly fascinating and explains so much about everything else you've said. You can't understand the difference between living beyond your means and having your means suddenly and rapidly cut out from under you (or not even having any means to start with...). I'm guessing you've never had to work your way up from nothing.

shrekgrinch says

What does business activity/unemployment have to do with governments spending more than they take in? If they are spending more than they have (regardless of the reasons), then they are engaging in deficit spending. Period.

Yes, they are engaging in deficit spending. The WHOLE POINT OF MY ARGUMENT is that deficit spending is a way (and a very effective one if the spending is done right) to improve your overall economic standpoint.

At the micro level this might mean buying a house now and paying it off over 30 years rather than saving for 20 years and then buying a house. It might mean getting a loan for a car so that you can drive to your new job instead of having to take a lower paying job that you can walk to.

That you don't understand, or choose to ignore, this reality, is amazing to me.

shrekgrinch says

No I am not. What the debt is used for or not has no bearing on whether someone/entity is engaging in deficit spending or not. We are debating over a definition, remember?

No, we're not debating over a definition, and I have no idea why you believe that to be the case. The debate, this thread, is about the debt that congress has taken on in recent years. Nobody is arguing about "the definition of deficit spending" except for you, because you can't seem to make actual arguments about the actual topics at hand.

shrekgrinch says

No, it isn’t. Or rather, it is not a causal distinction but rather a symptomatic one of outcome from the true root causes that create first world vs third world nations.

It's funny that the ability to get credit is one of the few things that pretty much all economists, regardless of their stances on anything else, agree on as a primary driver for economic growth.

If it would largely solve our economic problems, I would just send in my 10K. I guess the trick would be that I would need some assurance that everyone else would, too.

I don't comment enough to be facile at quoting. One of you was talking about a 100% tax rate. The thing I see there is that I would likely stop gong to work. I would need to I would think so that I could come up with things to barter. I suppose I might be able to barter some of my services at work, but at some point I could see that getting dicey. At what point would that high tax rate be useful if everyone quit working?

I am a pretty socially liberal person. I think I would be fine cutting the budget to match the amount we have to spend. I guess I am socially liberal and more financially conservative. It seems like politically, people just aren't ever going to make the sweeping changes that would be needed to fix this.

WHen people talk about American's being stupid and appearances being reality, I think you are probably right. I don't want to see it that way, but I just fear you are right.

pw says

If it would largely solve our economic problems, I would just send in my 10K. I guess the trick would be that I would need some assurance that everyone else would, too.

A few problems with this:

1. Each person's share of the debt is ~$45,000, not $10,000. $10,000 is just recently acquired debt.
2. Assuming that everyone equally owes $45,000 is ridiculous. A newborn child certainly doesn't owe the same as a 90 year old man.
3. Most people couldn't possibly pay off $45,000. If I were to pay off my share, my wife's, and each of my children's, it would run $225,000. That's most of my net worth, and I'm far better off than the majority of people.

I don’t comment enough to be facile at quoting. One of you was talking about a 100% tax rate. The thing I see there is that I would likely stop gong to work. I would need to I would think so that I could come up with things to barter. I suppose I might be able to barter some of my services at work, but at some point I could see that getting dicey. At what point would that high tax rate be useful if everyone quit working?

Several problems with this, too:

1. You, personally, would never be affected by such a tax rate. When people talk about 100% tax rates, they're talking about top marginal rates in general. The point of such high rates (whether it be 90 or 100% is irrelevant) is not to extract more revenue, it's to encourage certain behavior. If you have a system that taxes idle profits at 100%, but does not tax profits that are reinvested or distributed, you encourage reinvestment and paying of dividends.

2. In a 100% taxation situation, people would simply lie about their income, and do things off the books.

I am a pretty socially liberal person. I think I would be fine cutting the budget to match the amount we have to spend. I guess I am socially liberal and more financially conservative. It seems like politically, people just aren’t ever going to make the sweeping changes that would be needed to fix this.

Several problems with this, too.

1. How much do we have to spend? Budgets don't work that way. You mostly guess how much money you'll bring in and guess how much you'll have to spend.

2. Debt is not an inherently bad thing. High, unsustainable levels of debt are. Would you really not want the government to be able to take on debt in the event that we were invaded by another country, or if there was a massive natural disaster?

I don't consider myself to have any strong ideology about economics except for my strong scientific ideology. Rather than rhetoric and bullshit, we should look at facts and figure out what actually produces the best outcome. If government spending at zero produces the best outcome, that's what we should do. If government spending at 100% of GDP produces the best outcome, that's what we should do.

Most people talk about economics entirely on an emotional and ideological level, and it's ridiculous. Ideology doesn't put food on my table or clothes on my back.

WHen people talk about American’s being stupid and appearances being reality, I think you are probably right. I don’t want to see it that way, but I just fear you are right.

I don't actually think that Americans are stupid (or, at any rate, any stupider than people anywhere else). What I do think is the case is that our politicians have gotten very good at creating a narrative that is counter to reality, and it plays on American's innate optimism. We keep saying that if we just grow the economy everything will be fixed, while the reality is that when the economy is as large as it is today, it's very, very difficult to make it have significant growth.

The growth lie is something that probably works fine in India or China, but, barring some massive revolution in technology, economic growth in the US is going to be very slow.

Mark_LA says

E-man says

Katy Perry says
Or do what my single 40 yr old friends do and spilt the $1800 rent on a 4/3 in Riverside four ways. thats $450 a month each. save the rest and buy once, when cash is really king (five years from now IMO)
Katy, you’re too practical. Most people don’t want to make this short-term sacrifice for long-term gain. That’s the problem.

I lived like that in college!
Given that your friends are 40 yrs old doing this tells me they’re slackers and will never, ever save money to pay cash for any home, unless it’s a mobile home. They’ll just use the low $450 monthly rent payment as an excuse to work less, have less ambition, less stress, like most hippies love to do. Either that or they’ll spend more on bar tabs or useless junk.
The most important thing I learned from my human resources class in school: The best predictor of future behavior is past behavior.

Careful with your stereotypes. I did this during my graduate training. I continue to live small and save a big portion of my income. It doesn't mean people are slackers or that people have been living small to be wasteful.

I am going to invest in my kids' educations. Also, in repairs to my old house, repairs to my old vehicles, glasses for my old eyes, and thyroid replacement pills for my old dog.

There's an interesting article about the simple tactic of buying on the last day of each month and selling on the 1st. Thus holding stocks for only 1 day, and that it's been a winning strategy versus buy & hold:

CNBC: How to beat the market? Only stay a day at a time

What about potato futures?

I am surprised to find there is a "cannibal anarchist" license plate.

Your ideas intrigue me, and I would like to subscribe to your newsletter.

Kevin says

pw says

If it would largely solve our economic problems, I would just send in my 10K. I guess the trick would be that I would need some assurance that everyone else would, too.

A few problems with this:
1. Each person’s share of the debt is ~$45,000, not $10,000. $10,000 is just recently acquired debt.
2. Assuming that everyone equally owes $45,000 is ridiculous. A newborn child certainly doesn’t owe the same as a 90 year old man.
3. Most people couldn’t possibly pay off $45,000. If I were to pay off my share, my wife’s, and each of my children’s, it would run $225,000. That’s most of my net worth, and I’m far better off than the majority of people.

I don’t comment enough to be facile at quoting. One of you was talking about a 100% tax rate. The thing I see there is that I would likely stop gong to work. I would need to I would think so that I could come up with things to barter. I suppose I might be able to barter some of my services at work, but at some point I could see that getting dicey. At what point would that high tax rate be useful if everyone quit working?

Several problems with this, too:
1. You, personally, would never be affected by such a tax rate. When people talk about 100% tax rates, they’re talking about top marginal rates in general. The point of such high rates (whether it be 90 or 100% is irrelevant) is not to extract more revenue, it’s to encourage certain behavior. If you have a system that taxes idle profits at 100%, but does not tax profits that are reinvested or distributed, you encourage reinvestment and paying of dividends.
2. In a 100% taxation situation, people would simply lie about their income, and do things off the books.

I am a pretty socially liberal person. I think I would be fine cutting the budget to match the amount we have to spend. I guess I am socially liberal and more financially conservative. It seems like politically, people just aren’t ever going to make the sweeping changes that would be needed to fix this.

Several problems with this, too.
1. How much do we have to spend? Budgets don’t work that way. You mostly guess how much money you’ll bring in and guess how much you’ll have to spend.
2. Debt is not an inherently bad thing. High, unsustainable levels of debt are. Would you really not want the government to be able to take on debt in the event that we were invaded by another country, or if there was a massive natural disaster?
I don’t consider myself to have any strong ideology about economics except for my strong scientific ideology. Rather than rhetoric and bullshit, we should look at facts and figure out what actually produces the best outcome. If government spending at zero produces the best outcome, that’s what we should do. If government spending at 100% of GDP produces the best outcome, that’s what we should do.
Most people talk about economics entirely on an emotional and ideological level, and it’s ridiculous. Ideology doesn’t put food on my table or clothes on my back.

WHen people talk about American’s being stupid and appearances being reality, I think you are probably right. I don’t want to see it that way, but I just fear you are right.

I don’t actually think that Americans are stupid (or, at any rate, any stupider than people anywhere else). What I do think is the case is that our politicians have gotten very good at creating a narrative that is counter to reality, and it plays on American’s innate optimism. We keep saying that if we just grow the economy everything will be fixed, while the reality is that when the economy is as large as it is today, it’s very, very difficult to make it have significant growth.
The growth lie is something that probably works fine in India or China, but, barring some massive revolution in technology, economic growth in the US is going to be very slow.

This is why I never debate with Kevin, too many fact based statements....I'd rather watch and learn...:)

Oh man, are you still on about this stuff?

shrekgrinch says

Thus, it happened under their watch. That’s all John Q Public understands and reacts to. Like they say, “In politics, perception IS reality”. This is true no matter how many excuses folks on here make for them.

That admission in post # 2 is the end of your argument right there. Amazing that you keep on.

Good luck...

Well Shrekgrinchonemanarmy, you acknowledge right there that the financial problems started prior to O and state that the problem is one of perception. PR. Yet you still continue to argue as if O was the financially responsible party.

But its no surprise, as near I can tell you haven't the slightest interest at all in actual financial issues, its just a screen & platform for attacking O/democrats and I wish you'd just admit it and start going for the throat instead of tracing around with these invented half-true/hyped issues. ...which O bears some responsibility, sure, but more to the reality of the situation both parties are responsible for and a broader system should be attacked. So may I suggest you replace all the text in your monster posts with "blah blah blah blah".

If you want something real & recent to scream about here's a few items:

http://online.wsj.com/article/SB10001424052970204204004576049651801089800.html
http://www.presstv.ir/detail/157560.html
http://www.informationclearinghouse.info/article27158.htm
http://www.informationclearinghouse.info/article27160.htm
http://www.huffingtonpost.com/2011/01/02/austan-goolsbee-debt-ceiling_n_803307.html

Anyway, I didn't notice you praising O on the recent tax cuts. Maybe I missed it?...

In a Moral Bankrupt society, paying back debt,(You can't afford to pay back) should be less thing on anyone's mind. It's not like there's not ample example from the top, on how exactly to navigate bad credit. Run Don't Walk!

Chasity, Chivalry and Prudence is dead. If society isn't judging you on how you repay debt, why give a Crank what the bank thinks?

"Do you swear to pay back this debt?"

Real answer:"Yes as long as my salary dictates that I can..."

I don't really know what Shrek is talking about anymore since I started ignoring him a while back, but it's pretty clear that the dude has no real interest in debating real issues on their merits, he'd rather hold to some ideology and rail against anything that contradicts his world view.

This whole thread has gone like this:

Shrek: Look at all the deficits these guys are accumulating!
Others: Yeah, here's a nuanced view as to why they accumulated those deficits and the relative merits or problems with doing so.
Shrek: BUT THEY WERE ACCUMULATING DEFICITS, DON'T YOU UNDERSTAND?
Others: Yes, we understand. Here are some more nuanced views on the subject of deficits from a historical perspective.
Shrek: BUT DEFICITS! THEY HAVE DEFICITS AND ALL THAT MATTERS IS WHAT THE DEFINITION OF A DEFICIT IS!
Others: [ignore]

But he knows on a deep level how wrong we are, he really does, and how our point of view CAN NOT be legitimate. Do you have any idea how irritating we must be to him ?

Yeah, I learned a long time ago that people overwhelmingly hold the belief that anyone who disagrees with them is an idiot. This way of thinking is most prevalent amongst the poorly educated and outright stupid (see also: every book Glen Beck has ever written). Educated people, regardless of their opinion on an issue, generally acknowledge their opponents arguments and give rational reasons for disagreeing with them.

Two smart people may have wildly different conclusions on an issue, but they will at least agree on the facts.

Debt is the legal way to have indentured servants.

On a bright side I don't think any sane human thinks that debt is great, except for those who directly benefit from it.

Debt is bad, yes.

That's why the Democratic Congress passed the tax rises in 1993 that balanced the budget in Clinton's second term.

You know how the voters thanked them for that in 1994?

Then Bush was voted in in late 2000 and the first order of business was abandoning the general fiscal discipline that Clinton maintained in the 90s.

Federal Debt Held by the Public (FYGFDPUN)

Parallel to that malfeasance they also allowed a $3T debt bubble to blow, 2002-2004:

Household Sector: Liabilites: Household Credit Market Debt Outstanding (CMDEBT)

Combining the two into one chart (red is treasury debt and blue is household debt).

Yes, debt is bad. Where the fuck were you in 2002? Household debt should be around $11T now, but instead it's $14T. The entire Bush economy was built on this $6T debt bubble.

I don't like how the national debt has jumped from $5T to $9T since 2008, but the one thing we have -- and need to do -- is weaken the dollar by printing our way out of this debt hole.

But that path is also fraught with hazards.

This nation simply has to start paying its bills. We were doing so in the 90s, but then we elected idiots that failed to govern responsibly.

Kevin says

This way of thinking is most prevalent amongst the poorly educated and outright stupid (see also: every book Glen Beck has ever written).

It's called arrogance. But who knows, cut him some slack, maybe the guy keeps a tight lip most the time, and never gets a chance to express his "know it all side" to "liberals" except when does get to here, anonymously.

Naaaah, he's probably that way all the time.

By the way Shrek, nobody thinks that the deficits are sustainable. It's just not a good time to cut too much. Cutting spending excessively right now, when unemployment is 9.6 (while if you count underemployed it's closer to 20%), would be far more counterproductive to the economy than letting high incomes tax rates expire would have been.

Why is that relevant ? Because it seems hypocritical to say (as many republicans do) that economically we can't afford to let those tax rates go back to what they were, but at the same time we need to cut spending sharply right now, spending that clearly goes in to our domestic economy far more than tax cuts to the rich do. There is a balancing act going on now, but also big danger looming with States and municipalities facing serious financial risks. It seems to me that cutting spending aggressively at this moment would be like an attack by the federal government on many cities and states. Then again, maybe they are thinking sure, bring everything down, the fed will probably have to bail out states and cities at least to an extent either way, sure lets destroy the economy.

It would help make Obama less reelectable, but at what price ?

marcus says

It’s just not a good time to cut too much. Cutting spending excessively right now, when unemployment is 9.6 (while if you count underemployed it’s closer to 20%), would be far more counterproductive to the economy than letting high incomes tax rates expire would have been.

I'm actually going to disagree with that, at least partially.

I see plenty that could be cut from the current budget, particularly the incredible amount of waste in the military and in medicare.

Cutting itself isn't even what I'm arguing against.

What I'm arguing against is the idea that cutting is something that politicians can just do, or that there's some magical salve to fix it all. There are massive repercussions for any major changes in the budget, and pretending like cuts exist in a vacuum is naive at best.

I'm also arguing against the notion that just because tax revenue fell that you should immediately cut spending. Spending for spending's sake rarely works. Spending for directed, functional, productive uses most definitely helps the economy more than deficits harm it.

So, really, what I'd like to see happening right now is cutting wasteful, inefficient spending in military and health care, and direct that money towards things that boost job growth. Low interest loans for small businesses, public works programs, R&D funding, etc. These are all productive ways to inject money into the economy that businesses have removed from it because of their own fear about the economy.

That innovative, powerful, large companies aren't really spending money is the biggest problem in the economy right now. Apple is now the largest non-energy company in the world, and they're hoarding in excess of $50B in cash. Google and Microsoft are in similar positions, as are countless other companies.

We absolutely need to find ways to either force those companies to spend their money, or have the government do it instead. That is the engine that will drive growth and truly fix the economic situation.

marcus says

Why is that relevant ? Because it seems hypocritical to say (as many republicans do) that economically we can’t afford to let those tax rates go back to what they were, but at the same time we need to cut spending sharply right now, spending that clearly goes in to our domestic economy far more than tax cuts to the rich do. There is a balancing act going on now, but also big danger looming with States and municipalities facing serious financial risks. It seems to me that cutting spending aggressively at this moment would be like an attack by the federal government on many cities and states. Then again, maybe they are thinking sure, bring everything down, the fed will probably have to bail out states and cities at least to an extent either way, sure lets destroy the economy.

It would help make Obama less reelectable, but at what price ?

There are three groups with this "lower taxes, higher spending" mentality:

1. True believer Keynesians, who think that America is still capable of double-digit GDP growth despite controlling a quarter of the world economy. These people are foolish.

2. People who simply don't know the realities of the budget and think we spend more money on foreign aid than we do on the military. These people are ignorant.

3. People who are attempting a "starve the beast" strategy, because they believe that dealing major harm to America's overall prosperity is acceptable if it means that states, religion, and corporations become more powerful. These people are either ideologically naive (they ignore the reality of other powerful nations that will crush us if this comes to pass) or downright evil.

3/4ths of congress are in one of these categories, both current and incoming.