OT-Taxing the rich

This is a big, big subject. Let me point out that most of the financial transactions we engage in are based on projections of future revenues -- the mortgage on your house, your investments in stocks, a company's investment in plant and equipment for anticipated market growth -- the whole world runs on it. If you try to run an entire economy on current revenues, you soon wind up with no revenues to run on.

The problem with government's handling of it is that it's often based on unrealistic projections. That's a big part of what happened here in NJ, for example. Politics get involved, and it's in the political interest of the officials in power to make rosy projections. They won't be around when the bills come due. As least, that's true most of the time. The net effect is that we tend to dig unmanageable holes -- at least, at the state level.

As for the accumulated national debt, that's another big, big issue. I'll make the point that you don't EVER, EVER want to pay off the national debt. Not if it's well-invested in things that lead to growth in our economy.

I'll drop one oversimplified example and then I'll go away. If the government borrows money and uses it to build infrastructure, or to run services that make money or prevent the loss of money (like the SEC), then the interest on US Treasury bonds are going to cost us a lot less than the revenue made with that investment -- or in the case of deficit spending during a recession, a lot less than the loss caused by a collapse in consumption.

From there, it gets very sticky. I'll just finish by saying that there is NO real, evidence-based or numbers-based economic thinking that says it's wise to reduce spending during a recession. None. A sovereign nation is not a household. If you apply the methods you use for managing your household income to a sovereign nation, that nation goes broke. At the national level, there is no place to invest money, except in your own economy. We can't buy Enron, or even Treasury bonds, because that's nothing but a circular money trail and a delusion. I don't want us to buy French Treasury bonds, either.

This stuff ain't easy. If anyone gives you an easy answer, back away carefully.

"John R. Carroll" wrote

I understand such things. Some people don't matter if they make $800 a month or $8,000, they live right to the last dollar. My point was that if he was smarter, he would have ended up in a better position than he is currently in. But he did spread the wealth around, in accordance with some people's philosophies, while he had it that is.

Steve

Heart surgery pending?

Any suggestions which one ?

--Mr. Roberto is too fugly from what I've heard...

========== Don't confuse the bankers with the banks.

The *BANKS* did indeed lose very significant amounts of money, directly for their stock holders and creditors, who in many cases were wiped out, and indirectly huge sums, running to trillions of dollars for the taxpayers, not only for the taxes, but the huge opportunity costs when their jobs were eliminated.

By contrast, the *BANKERS* made out like bandits, with huge amounts of bonus money and other compensation/perks skimmed from their banks, based on the phoney baloney bubble profits. A pitifully small percentage of this money has been recovered, [most of it paid by the bank and not the accountable individual] and almost no one has gone to prison.

-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).

"buy that" being the investment in production machinery for the component I helped develop, instead another order goes to China. Of course this unintended negative consequence MUST be invisible in government statistics, just like the deleterious effects of environmental and employment regs. We have the society we asked for.

George,

After reading you note this morning I went looking for anything about this (little problem) on the news sites.

One video report (on Fox, of course - 80% sure it won't happen).

Nothing anywhere else that I saw.

I guess they are all saving it for a surprise?

========== It has been observed that life is what occurs while you are making other plans...

Current news is that the true Republicans and financial conservatives are refusing to even consider additional continuing resolutions so the federal government is scheduled to begin shutting down 08 April until a new budget can be enacted.

Even more critical in the slightly longer term is not only the refusal of the true Republicans and the new tea-party affiliated members of Congress to vote for any increase in the national debt, but their avowed intentions to "spike" [prevent] even the consideration of such increase in either house.

It should be crystal clear the politicians at every level of government in the US will spend every cent they can get their hands on, and the only way to prevent financial/fiscal disaster is to chop the money tree down, i.e. no increase in the debt limit. To be sure this will cause great hardship and upheaval for many people, but nothing approaching the universal catastrophe of a fiscal crisis with sovereign debt default that is sure to occur in a few years if the US national debt limit is again increased or, god forbid, removed.

-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).

============= Not so much a surprise as more important news like Barry Bonds steroid use crowded it off the radar.

see

Also see Senator Moran's [R-Kansas] statement on increasing the debt limit.

-- Unka George (George McDuffee) .............................. The past is a foreign country; they do things differently there. L. P. Hartley (1895-1972), British author. The Go-Between, Prologue (1953).

Nonsense, George. The "great hardship" includes the fact that the confidence in US Treasury securities will go down the toilet, raising interest rates until servicing debt really IS a problem. It's a minor one right now but it quickly would become a major one.

The sovereign debt of the US CANNOT default. I'm sure you realize why.

The Teabaggers are idiots who are playing games with the future of our economy. They believe nonsense like that which Chris posted in his last couple of messages. Call it "economics without numbers," which is to say, economics without any knowledge of what's really going on. It's pure ideology and there is no evidence to back it up.

If you need some analysis of the difference between stimulative effects of cutting taxes, versus the stimulus that results from short-term (less than four or five years) deficit spending, there's an abundant supply. Remember, Reagan stimulated the economy with VAST amounts of deficit spending. He's the one who put us on that big credit card in the sky.

Do you need references? Just ask.

If you have time and interest to really understand what's going on, read this and follow the links. Set aside some evenings to read the studies:

The rest is myths.

Where are Moran's numbers? He's blowing smoke.

Nah, Barry Bonds is like so yesterday:

Cheers! Rich

Well, _I_ never asked for it. But then again, Democracy consists of stuff like two wolves and a sheep voting on who's for dinner.

"Let's all vote on what everybody's favorite color is!"

That's why the Founding Fathers established a Republic rather than a mobocracy, although the unionized propaganda mills don't teach hard stuff like history any more, just "Self-Esteem:" "Duh, I dunno how to add two plus two, but I feel REAL GOOD about myself, yup, yup, yup, yup!"

Thanks, Rich

Reagan ran up the national debt by deficit spending:

The budgets that Reagan requested during his terms were HIGHER than the ones that Congress approved:

You've been breathing their blue smoke, Chris. Reagan ran a deficit even when the economy was improving -- a no-no, according to everything that was known about economics at that time, and a no-no under Keynesian theory.

That's why the GDP and employment kept improving. Reagan put us on that big credit card, and he didn't even try to pay it down when the economy turned up. Neither did either of the Bushes. Only Clinton did.

When you look at the actual numbers, practically all of the Tea Party economic myths collapse like a house of cards.

Not true, Ed. Bush 1 recognized the problematic direction the budget was headed in and raised taxes significantly.

Calling the teabagger's economic policy a "myth" is given them to much credit by half. It's either willful ignorance, fraud, or a combination of the two.

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He was much smarter than Reagan, but he ran up the deficit, nonetheless.

They hopped on this horse 30 years ago and now that they are in the deep shit part of the river they want to change horse. Ooops wait forgot to bring another horse along.

-jim

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The govt debt increased under Bush1 as fast as under Reagon. By the time those 12 years were done they had created 3 times more debt than all debt combined of all the presidents preceding.

-jim

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When you actually sit down with one of these anti-tax, anti-deficit folks and show them what Reagan *actually* did to stimulate the economy, you tend to get this look of disbelief, followed by a period of quiet...followed by a reversion to anti-tax, anti-deficit mythology.

The psychology of buying into myths and not wanting to be confused by the facts must be really interesting.