patrick.net

Honest Abe says

Democrats, liberals, American socialists, and other bleeding hearts want: even larger government, more taxes, more government expenditures, more government control, more affirmative action, more community organizing, more abortion, more bureaucracy’s, more
Czars, more liberal judges, more welfare, more business regulation, and more bad changes. But wait, they also want less: less freedom, less oil, less free enterprise, fewer individual rights…and in general have less but pay more. In other words, a lower standard of living, something that socialism always produces

Hmmm.. Strawman anyopne?

From:Discretionary Spending Trends: Past, Present, and Future
(http://www.heritage.org/Research/Testimony/Discretionary-Spending-Trends-Past-Present-and-Future)

Conventional wisdom holds that non-defense discretionary spending has been cut to make room for defense spending increases. Conventional wisdom is wrong. According to OMB Historical Table 8.2, non-defense discretionary outlays - adjusted for inflation -surged by 34 percent between 1999 and 2005. That is the largest six-year expansion since the 1970s.

One way to compare current discretionary spending trends is by presidential administration:

Overall discretionary outlays rose 2.3 percent annually under President Clinton, compared to 9.7 percent annually under President Bush. Defense was virtually frozen in nominal dollars under President Clinton, and has averaged 12 percent annual growth under President Bush. Non-defense discretionary outlays rose 4 percent annually under President Clinton, versus 8 percent annually under President Bush.

Let me re-emphasize that last point: Non-defense discretionary spending has grown twice as fast under President Bush as under President Clinton.

So far, Obama will even outdo Bush. But some have observed that these are slightly unusual times. See the main topic of Patricks web site.

It's beginning to look like Nomo is coming around. He's promoting Michael Savage.

Sorry, not even a good try - the liberal "gods" you look up to are mainly responsible. America hasn't ever had a free market, its always had plenty of government manipulation, always.

Did some left leaning, stupid Republicans contribute to the mess we're in? Unfortunately yes, but the primary damage was, and is, caused by the liberal "money grows on trees" "yes Virginia, there IS a free lunch" "full speed ahead, free stuff for votes, to hell with the consequences" mentality of liberal idiots pandering for votes.

Freedom, opportunity, free choice, capitalism is what created the most prosperous nation. Government intervention, government over-regulation, government interference, government oppression, government micro-management, government road blocks, government rules, government manipulation, etc, etc, etc is what is killing the golden goose - NOT the free market.

Why not spend at least 5 minutes and learn what you're talking about. You exhibit many of the pschopathological traits described in "The Liberal Mind"...starting with denial.

Abe--

Do you ever post an example to support your theories? All I ever see from you is strawman arguments about what liberals "believe" and free market nonsense..

Honest Abe says

the primary damage

At this point the primary damage is due to dysfunction. Our country is divided politically to the point where it can't solve problems. It is ironic that Abe's theories are about "mental problems" because the very theory is one that exacerbates psychological dysfunction in it's proponents. When you think that your best argument is that the other guy has mental problems, then you have just embraced what truly is a mental problem for yourself.

Wide sweeping generalizations about the flaws in the other guys ideology, based on exaggerations from 40 years ago are laughable. MY guess is two possibilities for Abe. My best guess: he has money, and this is really ENTIRELY about his desire to not pay higher taxes. I won't elaborate on the other possibility, but either way you can be sure that his incredibly strong right wing bias is one he has had for a very long time. His broken record about psychological problems is just his favorite recent anti liberal obsession.

I still say there must be a special place in hell for the people who write & sell the most insidious propaganda. In a way you can't really blame the fools who buy into it. They are just looking for reasons to hold on to their long held and dear misguided beliefs.

I can't understand why everyone is arguing about the economy on this thread. Obama has proclaimed this the "Summer of Recovery" so what's all the fuss about?

marcus says

insidious propaganda.

Unless there is a higher power and moral authority it is all propaganda. That is part of the problem here, all sides accuse the others of propaganda and ideology. When in reality, we ought to be finding our common ground and working together for solutions that benefit us all.

AdHominem says

higher power and moral authority

I often wonder whether the fundamentalist branch of the republican party actually think that if Jesus was here today that he would be a republican ?

You may be right that in a way all political ideology is propaganda. Maybe most people start with what they want to believe, and come up with their best arguments to support those beliefs. But what I think is evil are those who think about what others wish to believe, or what they wish others to believe, and then find bs to sell them that will satisfy the beliefs they are wishing to reinforce. For example Beck, Limbaugh and Dr. whats his name. It's pandering to peoples emotions. Sometimes pandering to the very worst in people.

Another view might be that the more incorrect the core beliefs are, or the more dishonest the means of selling the beliefs are, the more fitting the word propaganda is. Maybe only God knows which side is the side of propaganda. But looking at who gains on each side of the argument, and which side has more big money and short term profit motives behind it, maybe can give us a clue.

AdHominem says

we ought to be finding our common ground and working together for solutions that benefit us all

I agree

I'd like to add that the Republicans have contributed to our economic quagmire by their incessant desire to force "democracy" down every other country's throat. And who was it that appointed the USA as the worlds savior and protector? We can fight two simultaneous wars but every city in America has crumbling roads. We can continue to explore space but we have bridges that are ready to collapse. We have standing army's all around the world, but we can't "afford" to lower the tax rate (on everyone). The economic burden of our military intervention is probably doing more damage to America than Osama Bin Laden could hope to do. I read that the US spends more on "defense" spending than the next 16 largest military budget's combined. Are we safe yet? Isn't it time to stop the empire building insanity?

Tapupu - as I see it our future boils down to two alternatives: (1) On the one hand, having the opportunity and the freedom to make one's own choices (which would include free market "nonsense" as you call it), or (2) On the other hand, having our opportunity and freedom taken away, and all choices being made for us by our "wise" political "leaders".

I'll take choice #1. My guess is that you would opt for choice #2. Am I right?

Honest Abe says

Tapupu - as I see it our future boils down to two alternatives: (1) On the one hand, having the opportunity and the freedom to make one’s own choices (which would include free market “nonsense” as you call it), or (2) On the other hand, having our opportunity and freedom taken away, and all choices being made for us by our “wise” political “leaders”.
I’ll take choice #1. My guess is that you would opt for choice #2. Am I right?

That is a false choice. How about some more options?

OK, I get it, having opportunity and freedom wouldn't work for you, but you want more options. How much more opportunity and freedom would you willingly give up in order to create the utopia you crave?

Or do you simply want to "handcuff" and punish the "evil", greedy, successful business people (who by the way provide jobs, produce goods and services, and increase the tax base)? Oh, I know what you're going to say "THE RICH PAY N0 TAXES". Even if that were true all their employees pay taxes and the rich pay sales tax on all their purchases, and food tax, and phone tax, and licensee fees (tax), and strom water run-off tax, and gasoline tax, and alcohol tax, and tobacco tax, and a myrid of other taxes, fees, permits and the like. Just look at the sales tax Democrat John Kerry tried to beat (cheat) his home state out of ($450,000)...so gee, the rich DO pay taxes after all.

I've got an idea you libs should like, lets LEVEL THE PLAYING FIELD and authorize the government to confiscate all income above $30,000. That way most working Americans would earn about the same income and the world would be a better place, right? That way we could all be just about equal. Would that make you feel better? MOMMY !!!

The incompentent and sociopathic people in America who are destroying the lives of millions are our elected "officials". Our public "servents", hahaha - what a sick joke. You know, the crooks in Congress. The political class. You're simply too smart to realize the problems of all failed (and failing) civilizations is government, not business. Civilizations fail as the result of (1) currency debasement, (2) deficit spending and (3) imperialistic warfare. All of which in the USA are authorized and approved by Congress.

Wow, our "wise" political "leaders" have gotten us up to our eyeballs in all three of the above elements of destruction. Neither you, your liberal buddies or anyone in Washington D.C. (District of Corruption) will ever acknowledge or admit this. If you did, your whole political agenda would collapse under the weight of its own stupidity.

In November we get an opportunity to "throw out the trash", a day we can vote out the garbage.

Honest Abe says

I’ve got an idea you libs should like, lets LEVEL THE PLAYING FIELD and authorize the government to confiscate all income above $30,000. That way most working Americans would earn about the same income and the world would be a better place, right? That way we could all be just about equal.

I think I see what you don't understand. I don't want progressive taxation because of any sense of fairness or to "level the playing field" as you call it. The reason behind it is to make the economy vibrant. It's simple-wealth disparity eventually leads to destruction.

All I see is blah blah blah

Isn't that a Police song from the 80s ?

How about Rome. Thats a simple well known example but you conveniently omitted #3...empire building with endless war.

So tell me, what are all the benefit's to society of (1) currency debasement, (2) deficit spending and (3) empire building. I can't wait to see the psychopathological spin you'll put on your answer, I can't wait.

Nomo - I'm waiting for your response. Honest Abe

OMG, where did you go to school? This from: roman-colosseum-reason why the roman empire fell:

"REASONS WHY THE ROMAN EMPIRE FELL"

"CONSTANT WARS AND HEAVY MILITARY SPENDING. Constant warfare required heavy military spending". (I called it imperialistic warfare above)

"UNEMPLOYMENT OF THE WORKING CLASS. The people of Rome became dependent on hand-outs from the state." (I called that deficit spending).

"FAILING ECONOMY. The Government was constantly threatened by bankruptcy. The cost of defending the Empire, the failing economics, heavy taxation and high inflation were other reasons why the Roman Empire fell. The currency was devalued to such an extent that a system of barter returned to one of the greatest civilizations the world had ever seen." (I called that currency debasement above). BTW-you libs won't admit it, but this paragraph describes the existing condition of the United States economy in a nutshell.

This goes back to my point that most, if not all, problems in society are created by the sociopaths in office, and those - like you- who support them.

elliemae says

All I see is blah blah blah

marcus says

Isn’t that a Police song from the 80s ?

Or a song from a German band called "Trio" from the 80's.

I didn't see too much substance debated on the actual article...that's a shame. The column clearly points out sound economic logic...

I'm still waiting for the pun.

Couldn't cut it in public school, Nomo?

The only thing I see debated is the cost of entitlements and the process by which the Fed uses to "print" money...both of which are not the focus of the article.

scottporter1212 says

the only thing I see debated is the cost of entitlements and the process by which the Fed uses to “print” money…both of which are not the focus of the article.

In my view he gets all of his facts wrong. He's wrong on how the Fed works. As others have said, even his first sentences are wrong. He's right that our economy is sick, and still by some measures in "depression." but for example this is just factually wrong.

The Fed deceives businessmen and entrepreneurs, who because of the lower interest rates, are falsely signaled more resources are available to invest in long term projects. These artificially cheap rates cause banks to make more business loans, and more credit is granted. As a result, more projects are started, and more investments are made. Politicians in office are praised for healthy economic prosperity.

Yes, interest rates are artificially low. But banks are being careful about who they lend to, and the credit worthy borrowers aren't borrowing a lot.

Our primary illness now is that we have tried to deny that our economy has been sick. By doing so, we have merely prolonged the recession

I don't think it is denial. More like extreme measures have been taken to prevent us from feeling the pain that was due. If an injured athlete takes cortisone injections or pain killers to not feel an injury, it doesn't mean that he is denying the injury. Only denying himself from dealing with the pain, but at the same time choosing to risk further injury. Most economics reporters use metaphors like kicking the can down the road.

the author does say this which is sort of right, but not a great insight:

Our denial has exchanged short term pain for long term misery

But I would argue that the objective, although never stated, was to TRY to trade a short few year period of devastating pain (maybe worse than we could have handled, given possible cascading negative feedback from much worse foreclosures, bankrupcies etc), for a medium to long term period of below average economy and yes maybe eventually, inflation.

I've read a lot of these analyses from "Monday morning quarterbacks." This one was not a particularly compelling one, because of all the outright falsehoods as well as the use of terms such as "counterfeit." I tend to believe that we really were and still are in a situation that is a choice between different very bad consequences. The author doesn't acknowledge how bad the alternative would or could be.

Some have suggested that we have postponed dealing with pain and realignment of our economy, and maybe of our role in the world for decades. It's hard to buy in to such a pessimistic perspective, and to see that at this point we no longer have good choices. Obama and the Fed are trying to engineer a "soft landing" for a 747 that has nearly lost it's engines. The alternative would be to umm,.....what's the word I'm looking for ?

Well I get your point that the Fed is trying to soften the blow--that's what they believe they are doing, but the reverse is true. The Fed caused the boom in the first place, along with all the moral hazards that fed the inevitable collapse.

And its laughable that you say "He's wrong about how the Fed works"...its a generic description of the process, yes...but the Fed does PRINT money...that's the whole point....regardless of how they do it. If you deny that the Fed does not increase the supply of money then you're a fool. Even Bernanke readily brags about this.

"Yes, interest rates are artificially low. But banks are being careful about who they lend to, and the credit worthy borrowers aren’t borrowing a lot."

It does not matter where banks lend the newly printed expansion of credit...they can be as "credit worthy" as anyone else in the market...the boom will take place, it's just a matter of where the expansion of credit manifests itself in the market. The central bank orchestrates inflationary expansion of the money supply across the banking industry, permitting banks to inflate in concert. Entrepreneurs are fooled...the market interest rate is the all-important ingredident which coordinates the timing of market activity. Artificially lowering rates discoordinates the entire method by which economic calculation can take place. And you claim its not counterfeit? Are you an idiot?

Lastly, banks WERE NOT careful about who they lent money to...the moral hazard created with the government-backed sub-prime market is self-evident of this.

And "Monday morning quarterbacks"? Pay attention moron...everyone who saw it coming are the same people who are being neglected for advice now....everyone who had absolutely no clue are the people advising the administration on these intellectually corrupt Keynesian ideas. These guys--like Krugman and Galbraith--have absolutely no idea how markets function--and after the collapse--which they continually claimed would never happen--they are the guys you cite? Your credibility is shot...

scottporter1212 says

Lastly, banks WERE NOT careful about who they lent money to…the moral hazard created with the government-backed sub-prime market is self-evident of this.

Government backed? This issue has been beaten to death. Banks lent to sub-prime borrowers of their own accord. They underestimated the risk of these loans. period. The government was at best peripherally involved.

scottporter1212 says

but the Fed does PRINT money

It's a bit of semantics, but the FED does not print money. It's the Bureau of Printing and Engraving which is part of the US Treasury.

Finally--reread the first paragraph and tell me again that this is a good article. It is complete BS.

scottporter1212 says

And its laughable that you say “He’s wrong about how the Fed works”…its a generic description of the process, yes…but the Fed does PRINT money…that’s the whole point….regardless of how they do it. If you deny that the Fed does not increase the supply of money then you’re a fool. Even Bernanke readily brags about this.

It's simplistic, and implies what isn't true.

They print money (or cause the treasury to do it) but they take on debt equal to what they print, whether that be in new T-bills and T-bonds, or in toxic mortgage backed securities. You could think of it this way, the fed took a lot of toxic bank assets on to their books (yes, a situation that only has a happy ending if there is eventually some inflation), and replaced those assets with money. Assets and liabilities, they cancel each other out.

Banks aren't lending. Sometimes the dog actually wags the tail rather than the other way around (or do I have this backwards?). I agree that the Fed manipulates things, but part of what is going on is that the economy is so bad (see unemployment numbers) that lending isn't happening, even with close to zero interest rates. That is, demand for money really is that bad.

Look in to "velocity of money."

Look in to Japan. They had interest rates so (artificially?) low for a decade and people were borrowing in yen to invest in the US in what was called the "carry trade." And yet Japan did not have the boom or inflation that your inference would suggest.

They may wish they could create another boom, and some inflation, or at least enough to get us out of this. But it ain't happening so far.

who is this guy tatupu...who is obviously a complete dipshit. Of course banks lent to sub-prime borrowers on their own accord, no one ever debated that moron...but moral hazard causes people to act with less caution than what they otherwise would. Duh. If I need to elaborate, then there's no reason too.

Lastly, the Fed does print money...reread that line, and if you still want to argue to the contrary, your IQ obviously can't understand abstract concepts...or certain truths.

If I had seen this last comment, I might not have posted my last comment.

Can't we all get along ?

marcus--your a bit more even-keeled, I like it. You are right that the Fed takes on the according amount of debt equal to what they purchase. But here's the kicker...the resources the Fed utilizes...where do these resources come from? How did they purchase these toxic assets? 1.2 trillion or so...at least that's the valuation from the banks' balance sheet...who knows what they're really worth...or how much the Fed actually paid...but again, the Fed derives its power from the government....the money comes from thin air....this is the "printing" process...or at least, one of its tools to expand the money supply.

It appears though that you defend the Fed and inflation...and from your earlier posts it seems as if you may label yourself as "liberal". I don't understand how any liberal who professes to help the poor and "main street" could back inflation as a "good thing". This is the worst sort of robbery there is...as its discrete and hidden.

scottporter1212 says

I don’t understand how any liberal who professes to help the poor and “main street” could back inflation as a “good thing”. This is the worst sort of robbery there is…as its discrete and hidden.

The question is, AT THIS POINT, what's the alternative ?

Practical alterative?, or optimal solution?

The Fed has to go...the only way we'll ever "fix" our financial industry is to subject banks to market forces once again. Gaining a clear view of history helps...most of the banking history written about from the pre-fed days is inaccurate...even Friedman's classic is way off and relies too much on statistics and supposed empircal data...but we shouldn't be scared that somehow, we couldn't sustain a banking industry without the almighty lender of last resort. How about permitting competing currencies...repeal legal tender laws...etc. At least then the government would have to actually openly tax the public for its expeditures.

scottporter1212 says

who is this guy tatupu…who is obviously a complete dipshit. Of course banks lent to sub-prime borrowers on their own accord, no one ever debated that moron…but moral hazard causes people to act with less caution than what they otherwise would. Duh. If I need to elaborate, then there’s no reason too.
Lastly, the Fed does print money…reread that line, and if you still want to argue to the contrary, your IQ obviously can’t understand abstract concepts…or certain truths.

And another poster has to resort to name calling. The last refuge for someone who can't hold a reasonable discussion.

Aww, did I hurt your feelings.

scottporter1212 says

where do these resources come from? How did they purchase these toxic assets? 1.2 trillion or so…at least that’s the valuation from the banks’ balance sheet…who knows what they’re really worth…or how much the Fed actually paid…but again, the Fed derives its power from the government….the money comes from thin air

Not from thin air. I guess I left out one piece, but there is new debt, in the form of T-Bill or Bonds that financed the purchase or mortgage backed securities. What I said before was a little misleading. The mortgage backed securities I was describing as a debt, are actually Assets on the Feds books, but offset by Treasury securities (a wash to them really). Ultimately they borrowed money, to buy the mortgage securities from the banks. What you call the "printing of money" can always be traced back to the issuance or some treasury securities.
This is money that will be repaid.

I'm just not convinced that the Federal Reserve is evil. And my opinion is that usually those who argue against it the strongest, are the ones who understand it the least. By the way, I do not mean to suggest that it's easy to understand.

scottporter1212 - BRAVO !!! Well said. The Fed depends on the "Open Market Committee" to determine interest rates, not the open market. Thats complete double-speak. And the Fed gets the interest rate wrong every time. Rather than allow lenders and borrowers to decide for themselves what rate they would accept, the Fed decides for them. Artifically low rates are a false stimulus - a fraud. It gives the illusion that there is more money available than actually is. Consumers "feel" like they have more money than they actually have and producers sense a demand that isn't really there. The Fed misleads everyone.

Marcus - the point you missed is that the producers and manufactures borrow money while it is available, produce a vast inventory of product...and THEN THE MARKET GOES SIDEWAYS. Consumers stop buying but the producers and manufactures are now stuck with lots of inventory but no buyers. Or buyers purchase a home at an inflated rate based on false signals and then when people stop buying, the price declines. Millions of people suffer some, some people suffer $Millions.

What should happen is simple. The economy should be allowed to produce based on real, not false demand. Artifically low rates cause production to be based on a level of demand that doesn't exist. This type of decieption can go on for a long time. Eventually however, a free market adjustment will take place to erase the fraud. Its called a recession. And the pain of the recession is generally equal to the deception and fraud which preceeded it. I hope that helps.

The supply of money increases...that new debt you refer to...which has to be repaid....that is the new money. It matters little how the Fed "logs it"...anyway, I think its safe to say that the Federal Reserve has the power to increase the supply of money. Increases in the supply of money are the root causes of economic depressions.