Talking Turkey

Good information (4.00 / 1)

at the link. An important takeaway is that removing ANY money from the economy, whether increasing taxes or cutting spending is going to result in a slower economy. That's also true of taxes on the rich although the effect would be very small.

Everyone, whether liberal or conservative, has a horse in this race. The elites are bound and determined to cut the social safety net and they have got to be stopped. A major email, letter writing, phone call campaign targeted at your local Representatives and Senators is desperately needed. (I've heard that calling their local office is the most effective.) This needs to transcend the usual right/left divide. We know the red state citizens use more government benefits than blue state citizens, so we have to persuade them to take action.

The debt and deficit hysteria is fully intended to convince people that we must all sacrifice for the good of the economy. I'll repeat what I said in another comment: BULLS#!T. No one needs to sacrifice. The economy needs MORE money right now, there's not enough in the system to employ everyone who needs a job or get our factories running at capacity. And, the only source of more money for the economy right now is the Federal government. I mean, seriously, they are the ones who make the stuff (dollars).

---

by: zman-mobile @ Tue Nov 20, 2012 at 15:42:53 PM UTC

Sorry but yourimportant takeaway (0.00 / 0)

is pretty much wrong.  Look at the Eisenhower years (the right seems to love everything else about it).  The top tax rate was still over 70% and this was on income exceeding $200,000 (a figure that, for the era, was VERY high), and yet, plenty of good-paying jobs with good benefits to go around and strong unions all around.  And the idea of paying taxes was actually seen as part of one's patriotic duty (bear in mind that this was also an era when young men were still expected to spend time in the military).  Was there some disgruntlement about taxes?  Well, of course, but the vast majority of people understood their tax dollars went to help the country as a whole.

We've also endured a period over the last decade where we've seen that lowering tax rates does NOT lead to more jobs; it only encourages the "jobmakers" to keep the money for themselves and/or the shareholders (and if they do finally spend the money, it's on stuff that doesn't actually employ people over the long term).

As for "the economy needs money NOW," your statement about the government being able to "make the stuff" is absurdism to the extreme.  If the government simply "makes" more money, it causes the money to be devalued (and becomes more fodder for the idiots clamoring to "return to the gold standard").  Granted, your comment isn't quite as absurd as the idea to simply print up a few trillion-dollar denomination bills by backing them with all the gold in Fort Knox and *poof* away goes the debt (simply put, there's not enough gold in Fort Knox to do that--with a $12 trillion debt, you'd need 8 TRILLION OUNCES of gold at $1500 an ounce; the US mint says there's less than 150 MILLION ounces of gold--about 1.9% of what's needed to make the debt go away).  But look back at the last days of the Weimar Republic in the Depression--people were carrying wheelbarrows full of money to pay for loaves of bread.  And the Weimar Republic kept printing more money as the inflation pressures increased (no one worried about being robbed since all that money simply wasn't worth the effort to steal it).  Heck, within the last decade, Zimbabwe's gotten to a point where even triple-digit inflation is essentially the "good old days."  Zimbabwe quit reporting official inflation rates in 2008 but the last official rates reported in July, August and September of that year were 230 MILLION percent, 470 BILLION percent and 3.8 QUINTILLION percent, respectively.  Zimbabwe's effectively abandoned its own currency with most people using foreign currencies, including the US dollar, the Euro and the South African rand.  Zimbabwe, at one point, had printed a 100 Million Zimbabwe dollar bill and, just days later, announced plans to print a 200 Million Zimbabwe dollar bill.  The country even printed a special 21 TRILLION Zimbabwe dollar bill to pay debts to the IMF.  THAT is what happens when the government simply "makes" more money.  (Granted, it's an extreme situation but printed money has to something behind it for it to have value.)

---

by: BamaRainbow @ Thu Nov 22, 2012 at 03:43:19 AM UTC

[ Parent ]

One point at a time... (0.00 / 0)

You are correct that we had a much more prosperous country during the Eisenhower years. And the high tax rates did not impair job creation and productivity. You make a great argument for the high taxation of high incomes in order to reduce the huge income inequality we have now. In fact, the Republicans recently suppressed a Congressional Research Service (CRS) report that showed that lower tax rates on higher incomes has not increased jobs, productivity, or anything else. What it has done is caused a massive shift of income to the 1% from the 99% and created the enormous income gap between the 1% and everyone else. But that is a social equity justification for a progressive tax system with high marginal rates at the top. It is also the case that in the 1950's we were still on a gold standard and taxes were needed to fund the government. That changed on August 15, 1971, when Nixon closed the international gold window and freed us completely from the gold standard.

Since that time we have had a pure fiat money system. It works differently than a gold standard and most mainstream economists have not caught up to the changes. It is no longer necessary to collect taxes to fund government operations. The Federal government creates our currency (dollars) by typing numbers into a spreadsheet on a computer. That's how the government pays its bills when it buys goods and services and pays its employees. There is no operational limit to how many dollars can be created. There is a practical limit that could create inflation pressure, but that is only reached when we have full employment and full capacity usage at our factories. With a GDP output gap of $3 trillion we are a long way from inflationary pressures.

As far as Weimar and Zimbabwe are concerned the massive money printing was a result of the hyperinflation, not its cause. In the case of Germany the Treaty of Versailles required them to pay reparations in gold or dollars. They had to buy these on the open market. That was sort of working until the French came in and occupied the Ruhr Valley which was Germany's manufacturing base. Without that, Germany had no way to produce the real goods and services to sell to acquire dollars or gold. The result was the hyperinflation. In Zimbabwe it was much the same as Mugabe (I think) tried to redistribute land to his cronies and other elites and GDP fell by 80%. Again, money printing was the result.

As to your final comment about money needing something to back it up. That is true only of commodity money, i.e., money which has a value pegged to a commodity (gold, silver, etc.). We don't use commodity money in the US anymore. In a fiat money system money is backed by the assets, productivity and initiative of the country and its population.

For more information on Modern Monetary Theory see neweconomicperspectives.org, the blog of the Economics Dept. at the Univ. of Missouri, Kansas City, moslereconomics.com (esp. his books Soft Currency Economics and 7 Deadly Innocent Frauds), and mikenormaneconomics.blogspot.com.

---

by: zman-mobile @ Fri Nov 23, 2012 at 12:38:35 PM UTC

[ Parent ]

How about... (4.00 / 1)

...telling them you feel it's in poor taste to discuss politics in a family setting like that, that what you should be doing is finding ways to get along and be thankful for what you have as compared to others who are less fortunate? 

If they decide to continue a harangue, tell them you're not feeling well and excuse yourself to leave. It's just not worth putting up with the agitation to please someone most obviously unconcerned about anything other than their own petty desires to carp in rudest oblivion to those around them. 

Why argue? No one will change anyone's mind. Life is too short to put up with jerks, regardless of whether you're connected to them through accidental genetics or not. 

---

by: CreoleCat @ Tue Nov 20, 2012 at 17:16:19 PM UTC

THIS (4.00 / 2)

"Deficits and debts are the results, not the cause, of our economic crisis"

and we have let the Right get away with painting the deficit as the problem for too, too long.

Thankfully I will be spending Thursday among like-minded folks but I appreciate the wake up call!

"If guns kept America safe, then America would surely be the safest country in the whole world." - Rep. Carolyn Maloney

---

by: mpmarus @ Tue Nov 20, 2012 at 23:13:09 PM UTC

Food (0.00 / 0)

 Food is always makes for a good Thanksgiving Day discussion. And this is a good year to give extra thanks for tomorrow's feast. This year's record drought looks like it will bring about a food shortage in 2013.

 Climate change affects everybody and everybody needs to be talking about. 

October 2012 was the 332nd consecutive month with a global temperature above the 20th century average. The last month with below-average temperature was February 1985. - N.O.A.A.

---

by: Dragontide @ Wed Nov 21, 2012 at 19:40:09 PM UTC