patrick.net

CL says

Assuming there will be inflation (despite the Libertarian dream of ending the Fed), and assuming the Trust Funds of SSA and Medicare need to grow, at least to support future old sickies, they have a fiduciary responsibility to grow the fund. Insurance companies invest some of their profits in securities or bonds for the same reasons, right?

Sort of. But just because there is inflation doesn't mean you can invest smart enough to track/beat it. Insurances calculate that into whatever they return for policies, but they can go broke theoretically, and practically as seen in 2008. The government should only invest in the safest vehicles, or, like you said, it could print money or sell debt to make up for the difference (obviously not the preferred approach). But they should never take any money out.

CL says

It's a free market, right? As long as one side of Government (the non-discretionary side) trusts that the Government will make good on its promise, what is wrong with the transaction?

True, they could use other means to fill it back up, but that is a way too dangerous game. You take out enough and are suddenly faced with a huge shortfall, then you need to print and brutally debase and/or sell some debt until nobody wants to buy your debt anymore and you go into a currency crisis. The closed system is much safer - after all, who ever keeps their promise to refill what was taken out without screwing others royally?

CL says

Maybe it's not such a terrible thing? Am I missing something, or am I extra smart?

We will see how the debt game unfolds. I say the US won't be able to pay it back without massive debasement or selective default.

bob2356 says

That's why the chart says discretionary spending at the top. Military is part of
discretionary spending.

Yah - but the chart totally ignores the fact that over 50% of the US Federal Budget (Mandatory Spending) is on social progams like entitlements and welfare.

The reason why we are spending so little of our discretionary budget on building infrastructure etc, is that mandatory spending on entitlements is GROWING and crowding everything else out.

Military spending per GDP and % of Federal Budget has been declining for the last half century. It is flatly dishonest to only complain about military spending and not address the much higher entitlement spending that is GROWING with no end in sight.

It's like all of these California cities that are going bankrupt blaming declining property values and tax revenue and not the elephant in the room.........Ponzi scheme pensions.......which is by far the biggest liabilities they have on their books.

socal2 says

Yah - but the chart totally ignores the fact that over 50% of the US Federal Budget (Mandatory Spending) is on social progams like entitlements and welfare.

The chart doesn't ignore it, the chart refutes that incorrect statement.

sbh says

It's a longish read from an erudite econometrcian (and, I might add, one of the few who writes well) whom many of you will simply ignore, but, nonetheless: He debunks dogma starting with the Phillips curve and moves on to QE. I dare you to read it. Below is a snippet.

You left out the parts where he attributes where he attributes effects such ash high-yield chase to QE. Generally I agree with him that inflation is not good and that QE is not effective, in fact it's bad. However the continued printing, debasement (albeit a small part of the total credit market) adds up and the suppression of short (and to some extent long-term) rates propels continued yield chasing in the stock market or even housing. If your takeaway from this is that the Fed/QE is not effective at all much, then why are you opposing to do away with it? Printing money and deciding who gets it is crony capitalism - you would't like if I take some of your money or value thereof and claim to have better recipients for it that have more use for it than you do. It's inherently unfair and goes along with the general mantra that the rule of law should apply equally to all incl. the Fed/gov, and counterfeiting is illegal because it destroys the monetary value.

sbh says

I bought 18% CDs back then. Today I buy common stock. Why can't you deal with it?

Who said I don't? Doesn't mean you can't have a political direction to promote a sound, stable money system for the better of the economy/society and stave off neo-keynesian, crony-capitalist cannibal anarchy.

sbh says

Because I don't want the world to suffer a massive economic destruction for the sake of an experiment in the "natural law" of money and freedom.

So now you're saying the Fed is effective, but just not to the markets, instead it somehow magically staves off depression - which one is it? My take is it prolongs depressions!
sbh says

The coercion you obsess over is the least important thing to manage. If freedom matters as much to you as you say, then you should know what you need to do.

This is not about our personal lives and I won't brag about my financial achievements like our usual suspects and economics power-players on patnet as it adds nothing to the topic on what's best for the economy.

sbh says

executive stock option is big a number one CEO compensation method. no execative want salary no more no more. stock price rise bigtime if bigtime profit. no fix cost dummy. go back and learn you suppose to know by now

doesnt amount to anything... stock options a non cash expense are "fixed expenses" spread over long period of time... 5-10 years... ASC 718 (FAS123r).

thomaswong.1986 says

your point ? compensation is fixed cost.. its not variable with increasing or declining profits. as a landlord do you increase or decrease your costs equally to "offset raising profits".

Interesting. So, you agree that corporate tax cuts don't create jobs then?

zzyzzx says

I'd like to see a NYTimes article about the War on the taxpayers

Funny how nobody was saying that 50 years ago when taxes were WAY WAY higher.

Tim Aurora says

debyne says

I don't begrudge it, I just don't want them to rob me to pay for it. Let them pay for it themselves...no one is stopping them.

Hey, I do not want to pay for the military. Whoever wants it can pay. Do you agree with that.

But defense is a constitutional requirement. Next it'll be who wants to choose to pay for police protection and the fire department. Some functions are gov't functions, others are not

Bellingham Bill says

CL says

n any case, why do we begrudge the elderly their food and the poor their healthcare?

That they paid for! Today's boomers have been paying Medicare taxes for going on 50 years now, and are getting close to receiving back the thousand and thousands they've been paying in.

Like SSA, Medicare is structured such that you pay in to support the previous generation(s) and the next generation(s) supports you in turn.

(This level of indirection fries conservative brains [that 'got mine screw you' fixation they have], so don't try to explain it to them)

...and then....

debyne says

I don't begrudge it, I just don't want them to rob me to pay for it. Let them pay for it themselves...no one is stopping them.

right on cue.

debyne says

But defense is a constitutional requirement. Next it'll be who wants to choose to pay for police protection and the fire department. Some functions are gov't functions, others are not

Sure--I want to pay the same amount per capita for defense as Sweden. And not a penny more. Can I reduce my taxes accordingly?

sbh says

Answer me this obviously extreme question: who's intention poses less risk to you as an economic entity A. Barney Frank, Nancy Pelosi ( big government liberals), or B. Phillip Morris, BP (remember the seven dwarves?, Deep Horizon).

Of course Barney Frank and Nancy Pelosi. I haven't bought anything from Phillip Morris (or even Kraft Foods) or BM for over a decade. I have to endure Barney and Nacy's pillaging every single day!

sbh says

Only government is powerful enough to countervale capitalism. Left in "an environment of extreme freedom" you and CaptainShuddup would be begging in the streets. Answer me this obviously extreme question: who's intention poses less risk to you as an economic entity A. Barney Frank, Nancy Pelosi ( big government liberals), or B. Phillip Morris, BP (remember the seven dwarves?, Deep Horizon). You don't get to quibble or mitigate. For now you take A or B. It's a shitty question, but I know what my poison would be.

Not sure where you make your assumptions from as you don't know the captain's or my job(s). In fact I moved here to enjoy more free market capitalism.

As to your question, it does not make much sense to compare big politicians to big corporations, but I buy mostly fresh (raw, non-processed) organic food from mostly local farmers, so Kraft Foods is out (although they had the best Mango pickles manufactured in India for years before discontinuing that item).

I hardly ever smoke and ride my bike mostly and am for stricter environmental regulations than quite a few libertarians as harming the environment cuts into other peoples freedom of pursuing a happy and healthy life.

By the way tobacco is not bad if you keep it raw and free of additives. Anatabine which is found in tobacco is a natural anti-inflammatory alkaloid effective against harsh auto-immune responses and brain degeneration (alzheimers etc.).

sbh says

Reality says

Of course Barney Frank and Nancy Pelosi. I haven't bought anything from Phillip Morris (or even Kraft Foods) or BM for over a decade. I have to endure Barney and Nacy's pillaging every single day!

The natural law of cockroaches proves you needn't act by virtue of purchase to be coerced by capitalism. Besides you already have and continue to purchase from these entities. Go to your kitchen and open the cabinet. Say: "Are you now or have you ever been associated with a cockroach quantum event." All your goods have been coerced by cockroaches. You don't understand reality.

Big government actually often makes it easier for those entities to dominate the market. Big dairy subsidies go to a few big non-organic farms, raw dairy farmers are harassed by the FDA goons at every step and local organic farmers have to fight global spraying and engineered crop invasion and price fixing. Luckily there are still plenty of local organic farmers to choose from here in CA, but I am sure there are states where this is harder to come by.

http://www.nytimes.com/2013/11/07/us/billionaires-received-us-farm-subsidies-report-finds.html?ref=business&_r=0

sbh says

Capitalism is amoral, sociopathic. It's Hannibal Lector.

We have to agree to disagree on this blanket statement. I'd sit down with Whole Foods, but not with Monsanto ;)

Screw Corporations and Government. What's wrong with an autonomous collective?