Interesting article on economics

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Re: Interesting article on economics

Postby Factorial on Sat Jan 11, 2014 12:38 pm

ExPatriatePen wrote:
Factorial wrote:ART LAFFER: I Was Wrong About Inflation And The Fed

And in June of 2009, he penned an op-ed warning excessive quantitative easing would inevitably lead to higher inflation and interest rates.

"...we haven't ever seen anything like this in the U.S. To date what's happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits ...Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn't a pretty picture."

Obviously, nothing like that happened.

In an interview with Business Insider from his office in Tennessee, Laffer admitted that he was wrong. The old maxim that dictates increasing the availability of cash through lower interest rates will lead to higher prices, he said, may need to be reexamined.

"Usually when you find the model this far off, you've probably got something wrong with the model, not that the world has changed," he said. "Inflation does not appear to be monetary base driven," he said.



http://www.businessinsider.com/arthur-l ... iew-2014-1


How are you measuring inflation?

Probably the best way to measure it is to look at how affordable it is for lower income individuals to purchase food, clothing, shelter and fuel.

Not the CPI


This thread has come full circle now. You want to cherry pick a few items and say "Look, inflation has risen much faster than the official number indicates". Here are the categories of goods and services in the CPI:


FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals and snacks);
HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture);
APPAREL (men's shirts and sweaters, women's dresses, jewelry);
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance);
MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services);
RECREATION (televisions, cable television, pets and pet products, sports equipment, admissions);
EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).

http://www.bls.gov/dolfaq/bls_ques3.htm
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Re: Interesting article on economics

Postby ExPatriatePen on Sat Jan 11, 2014 1:33 pm

Factorial wrote:
ExPatriatePen wrote:
Factorial wrote:ART LAFFER: I Was Wrong About Inflation And The Fed

And in June of 2009, he penned an op-ed warning excessive quantitative easing would inevitably lead to higher inflation and interest rates.

"...we haven't ever seen anything like this in the U.S. To date what's happened is potentially far more inflationary than were the monetary policies of the 1970s, when the prime interest rate peaked at 21.5% and inflation peaked in the low double digits ...Gold prices went from $35 per ounce to $850 per ounce, and the dollar collapsed on the foreign exchanges. It wasn't a pretty picture."

Obviously, nothing like that happened.

In an interview with Business Insider from his office in Tennessee, Laffer admitted that he was wrong. The old maxim that dictates increasing the availability of cash through lower interest rates will lead to higher prices, he said, may need to be reexamined.

"Usually when you find the model this far off, you've probably got something wrong with the model, not that the world has changed," he said. "Inflation does not appear to be monetary base driven," he said.



http://www.businessinsider.com/arthur-l ... iew-2014-1


How are you measuring inflation?

Probably the best way to measure it is to look at how affordable it is for lower income individuals to purchase food, clothing, shelter and fuel.

Not the CPI


This thread has come full circle now. You want to cherry pick a few items and say "Look, inflation has risen much faster than the official number indicates". Here are the categories of goods and services in the CPI:


FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, full service meals and snacks);
HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture);
APPAREL (men's shirts and sweaters, women's dresses, jewelry);
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance);
MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services);
RECREATION (televisions, cable television, pets and pet products, sports equipment, admissions);
EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories);
OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses).

http://www.bls.gov/dolfaq/bls_ques3.htm


Anyone who's paid there own "freight" for the 20 years knows that Gasoline, healthcare, education and the price of milk have risen much faster than the CPI. Why is that?

(By the way, of course your citing a government website from the very organization responsible for calculating CPI, do you really expect anything other than their trumpeting the validity of their own numbers?)

CPI is a weighted measurement. Just because an item is tracked, doesn't mean it contains the appropriate weight.

CORE CPI, the most widely cited CPI stat, does not include Food and Energy.

CPI is not a leading, but rather is a trailing indicator.

CPI does not include the full cost of health insurance or child care expenses which have been rising exponentially:

(Child care is measured at only .79 of it's actual experience)

Child care and nursery school .790


Worse than any of the above is what will happen when all of the trillions of dollars injected into the economy by the Fed start circulating. That will happen as soon as the "liquidity crisis" normalizes (by Laffers own comments)
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Re: Interesting article on economics

Postby Sarcastic on Sat Jan 11, 2014 5:22 pm

Guinness wrote:
Factorial wrote:Just stop with the pretense that you are pushing a non political agenda.


It is a FACT that taxes come from dollars that would otherwise be in the broader economy. It is a FACT that "monetary policy" (as we're using it here) devalues the currency of an economy.

Those are facts which are relevant to a discussion on economics. Your discomfort with those facts is what is political. Not my statement of them.


G, if you can enlighten me. I have a slightly different view on where the money would go if taxes (from the super wealthy) weren't collected. See, I don't think it would go into the economy. I think the money would go straight in their bank accounts. Just a little quibble. I don't think those people necessarily take any extra money they find and put it to work, but rather just let it sit around. They might invest it, buy stocks, etc., but pay their workers more or hire more people? Eh, I don't believe it anymore. Oh, my crazy view on things.

I can see how lower taxes can help out the small business owner, but it's not quite the same when we're looking at a large, wealthy, corporation or just some dude who can afford a Bugatti.
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Re: Interesting article on economics

Postby Guinness on Sat Jan 11, 2014 5:47 pm

Sarcastic wrote:
Guinness wrote:
Factorial wrote:Just stop with the pretense that you are pushing a non political agenda.


It is a FACT that taxes come from dollars that would otherwise be in the broader economy. It is a FACT that "monetary policy" (as we're using it here) devalues the currency of an economy.

Those are facts which are relevant to a discussion on economics. Your discomfort with those facts is what is political. Not my statement of them.


G, if you can enlighten me. I have a slightly different view on where the money would go if taxes (from the super wealthy) weren't collected.


I didn't say anything about where the money would go. I said that taxes are confiscated from the economy in general, and that monetary policy (again, as it's been discussed here) devalues the currency.

See, I don't think it would go into the economy. I think the money would go straight in their bank accounts. Just a little quibble. I don't think those people necessarily take any extra money they find and put it to work, but rather just let it sit around.


Really? You think that they would just collect money? You don't think that rich people buy things? That they just sit around a dank, dusty, darkly lit victorian mansion like some latter-day Ebenezer Scrooge and count their (depreciating) dollars?

When they spend it on so-called luxury items, they secure jobs for the people who provide those goods.

They might invest it, buy stocks, etc., but pay their workers more or hire more people? Eh, I don't believe it anymore. Oh, my crazy view on things.


Whether they pay their employees more or not is their business. As long as their wealth is legitimately acquired, upon what right can you lay claim to it by presuming to determine what they should do with it?

Would it be legitimate for someone less economically fortunate than you to make such claims on your money?

I can see how lower taxes can help out the small business owner, but it's not quite the same when we're looking at a large, wealthy, corporation or just some dude who can afford a Bugatti.


Unless you are in favor of implementing price controls, there is no way to "tax" a business - large or small - without that burden being either passed onto the customer (in other words, "poor-er people"), or resulting in the ultimate failure of the business. "Taxes" are an operating expense factored into the cost of business, just like labor, material, equipment, overhead, etc. It's another way in which government spending is effectively bailing water out of one end of a pool and dumping it into another. Yes, that money may well be directed toward one favored constituency or another, but with such power - the ultimate power in human society, frankly - comes the inescapable tendency toward corruption... but I've probably said too much in this direction already, so I'll leave it be.
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Re: Interesting article on economics

Postby ExPatriatePen on Sat Jan 11, 2014 6:07 pm

Guinness wrote:
Sarcastic wrote:
Guinness wrote:
Factorial wrote:Just stop with the pretense that you are pushing a non political agenda.


It is a FACT that taxes come from dollars that would otherwise be in the broader economy. It is a FACT that "monetary policy" (as we're using it here) devalues the currency of an economy.

Those are facts which are relevant to a discussion on economics. Your discomfort with those facts is what is political. Not my statement of them.


G, if you can enlighten me. I have a slightly different view on where the money would go if taxes (from the super wealthy) weren't collected.


I didn't say anything about where the money would go. I said that taxes are confiscated from the economy in general, and that monetary policy (again, as it's been discussed here) devalues the currency.

See, I don't think it would go into the economy. I think the money would go straight in their bank accounts. Just a little quibble. I don't think those people necessarily take any extra money they find and put it to work, but rather just let it sit around.


Really? You think that they would just collect money? You don't think that rich people buy things? That they just sit around a dank, dusty, darkly lit victorian mansion like some latter-day Ebenezer Scrooge and count their (depreciating) dollars?

When they spend it on so-called luxury items, they secure jobs for the people who provide those goods.

They might invest it, buy stocks, etc., but pay their workers more or hire more people? Eh, I don't believe it anymore. Oh, my crazy view on things.


Whether they pay their employees more or not is their business. As long as their wealth is legitimately acquired, upon what right can you lay claim to it by presuming to determine what they should do with it?

Would it be legitimate for someone less economically fortunate than you to make such claims on your money?

I can see how lower taxes can help out the small business owner, but it's not quite the same when we're looking at a large, wealthy, corporation or just some dude who can afford a Bugatti.


Unless you are in favor of implementing price controls, there is no way to "tax" a business - large or small - without that burden being either passed onto the customer (in other words, "poor-er people"), or resulting in the ultimate failure of the business. "Taxes" are an operating expense factored into the cost of business, just like labor, material, equipment, overhead, etc. It's another way in which government spending is effectively bailing water out of one end of a pool and dumping it into another. Yes, that money may well be directed toward one favored constituency or another, but with such power - the ultimate power in human society, frankly - comes the inescapable tendency toward corruption... but I've probably said too much in this direction already, so I'll leave it be.

How many jobs has the Bill and Melinda Gates foundation created so far?

Seems to me that all if the lives saved, all of the research done in health care and other life saving technologies, that money isn't just sitting in a bank account.

Lets look at Paul Allen, how many businesses has he provided investment capital for? How
Many jobs have been created?

Those things seem to be overlooked.

What progressives focus on is that fire fighters and ex cops in NY need a system to corrupt.
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Re: Interesting article on economics

Postby Sarcastic on Sat Jan 11, 2014 8:24 pm

ExPatriatePen wrote:Seems to me that all if the lives saved, all of the research done in health care and other life saving technologies, that money isn't just sitting in a bank account.

Lets look at Paul Allen, how many businesses has he provided investment capital for? How
Many jobs have been created?

Those things seem to be overlooked.

What progressives focus on is that fire fighters and ex cops in NY need a system to corrupt.


Gates is very generous. But what of the Waltons (Walmart). They do nothing but exploit masses. Let's not make heads of corporations or heads of financial institutions into a bunch of saints. They're like vampires, sucking anything they can out of people for their own benefit, first and foremost. Whatever positive benefit comes as a result is a bi-product. That's like praising a company for hiring a few people but totally ignoring that they're underpaid and mistreated.

A friend of mine who is still looking for work but finally had 3 meaningful meetings with a European-style company (benefits, pay) and will likely be hired has been showing me how difficult it is to find something and how little is being paid to people. This job market is a joke. CEO's are getting richer, people.. seems to me.. keep getting poorer. That's a choice, not a circumstance.
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Re: Interesting article on economics

Postby ExPatriatePen on Sat Jan 11, 2014 8:40 pm

Sarcastic wrote:
ExPatriatePen wrote:Seems to me that all if the lives saved, all of the research done in health care and other life saving technologies, that money isn't just sitting in a bank account.

Lets look at Paul Allen, how many businesses has he provided investment capital for? How
Many jobs have been created?

Those things seem to be overlooked.

What progressives focus on is that fire fighters and ex cops in NY need a system to corrupt.


Gates is very generous. But what of the Waltons (Walmart). They do nothing but exploit masses. Let's not make heads of corporations or heads of financial institutions into a bunch of saints. They're like vampires, sucking anything they can out of people for their own benefit, first and foremost. Whatever positive benefit comes as a result is a bi-product. That's like praising a company for hiring a few people but totally ignoring that they're underpaid and mistreated.

A friend of mine who is still looking for work but finally had 3 meaningful meetings with a European-style company (benefits, pay) and will likely be hired has been showing me how difficult it is to find something and how little is being paid to people. This job market is a joke. CEO's are getting richer, people.. seems to me.. keep getting poorer. That's a choice, not a circumstance.


Certainly the Walton's could do better:

http://walmart1percent.org/the-walton-f ... d-to-whom/

They just need to be shamed into it.
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Re: Interesting article on economics

Postby Sarcastic on Sat Jan 11, 2014 9:02 pm

Guinness wrote:
I didn't say anything about where the money would go. I said that taxes are confiscated from the economy in general, and that monetary policy (again, as it's been discussed here) devalues the currency.


We agree on that in principle, yet I believe that some tax collection is needed just needs to be spent wisely. What they do with our tax dollars is nauseating.

Really? You think that they would just collect money? You don't think that rich people buy things? That they just sit around a dank, dusty, darkly lit victorian mansion like some latter-day Ebenezer Scrooge and count their (depreciating) dollars?

When they spend it on so-called luxury items, they secure jobs for the people who provide those goods.


I think the very wealthy are so rich today they don't need to wait for a tax cut to buy Lamborghini #3. They already own anything they want to own, so yes, they put it in the bank. I completely believe that. Show me a person who's worth mega-millions, yet only a million in the bank with everything else currently used in building a new wonderful place to work for the people. The money just sits there, probably hidden in banks around the globe somewhere.

Whether they pay their employees more or not is their business. As long as their wealth is legitimately acquired, upon what right can you lay claim to it by presuming to determine what they should do with it?

Would it be legitimate for someone less economically fortunate than you to make such claims on your money?


This is where you and I differ. Your stance is that a rich puck (I changed the letter f to p, but you know that) like that has a right to enslave and exploit masses of people. I don't. I think we need someone or something to look over everything that's going on to prevent that. Sorry, but times when 12 year old kids worked in coal mines should never happen again. We either try to make it a fun life for everyone or we are ruthless animals that would probably be better off blowing up the whole place into pieces.

Taxes are tricky. We have been burned badly by the governments we've had, but the idea of everybody putting a bit into a pot for some bigger purpose isn't so bad. I wouldn't mind sharing some of my money, as long as everybody else did. That's why I want a universal or single-payer healthcare, for instance.

Unless you are in favor of implementing price controls, there is no way to "tax" a business - large or small - without that burden being either passed onto the customer (in other words, "poor-er people"), or resulting in the ultimate failure of the business. "Taxes" are an operating expense factored into the cost of business, just like labor, material, equipment, overhead, etc. It's another way in which government spending is effectively bailing water out of one end of a pool and dumping it into another. Yes, that money may well be directed toward one favored constituency or another, but with such power - the ultimate power in human society, frankly - comes the inescapable tendency toward corruption... but I've probably said too much in this direction already, so I'll leave it be.


I agree with a lot of thinking in that last paragraph, yet the fact that the owners and CEO's, as you well know, continue to increase their pay at an alarming rate, while worker pay not only has been stagnant but it some cases has decreased in the last 20 years, has me fuming. Somehow that needs to be curbed and if a set of laws needs to be passed, then so be it. Won't happen, as these business owners are in the same boat as the government officials you hate so much, while everyone else is drowning. It will be a long and hard road to change that.
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Re: Interesting article on economics

Postby Guinness on Sat Jan 11, 2014 9:42 pm

I didn't say anything about hating government officials... in fact, I don't think I ever have. Your post is almost entirely political in nature and as such, regardless of how much I would like, I am forbidden from commenting at this forum.
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Re: Interesting article on economics

Postby Shyster on Mon Jan 13, 2014 7:52 pm

Sarcastic wrote:G, if you can enlighten me. I have a slightly different view on where the money would go if taxes (from the super wealthy) weren't collected. See, I don't think it would go into the economy. I think the money would go straight in their bank accounts. Just a little quibble. I don't think those people necessarily take any extra money they find and put it to work, but rather just let it sit around. They might invest it, buy stocks, etc., but pay their workers more or hire more people? Eh, I don't believe it anymore. Oh, my crazy view on things.

What is so bad with money sitting in a bank account? Of course, nowadays banks can borrow just about all of the funny money they want from the Fed at essentially no interest, but back in the good ol' days the deposits made by people were what banks used to lend money to other people, like in the classic scene from It's A Wonderful Life:



Savings are the vehicle for economic growth. I suppose if the wealthy all kept their cash in giant money bins like Scrooge McDuck in the Disney cartoons, then there might be a basis for opprobrium. But if the wealthy keep their money in places where it can be used as lendable funds, then they are providing the means for others to borrow.
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