Interesting article on economics

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Re: Interesting article on economics

Postby DropEmJayBird on Wed Jan 01, 2014 1:13 am

My Galaxy S3 only cost like $3 in 1955... then again with a two year contract, it cost $0 in 2012.

But... my MacBook Pro 17 inch Retina display was a cool $94 in 1934... it cost waaay more when I bought it.
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Re: Interesting article on economics

Postby columbia on Wed Jan 01, 2014 7:52 am

Shyster wrote:I'm still primarily focused on retiring some debts, so I'm not actually saving all that much for retirement at the moment. In addition to buying gold and silver (I actually slightly prefer silver to gold) as a form of asset protection, in the new year I plan to open an account with Peter Schiff's Euro Pacific Asset Management, roll over a conventional IRA I have with a bank to a Euro Pac Roth IRA, and then make that my primary investment vehicle. Gold and silver, of course, are not investments. They are merely alternate stores of value.


Out of curiosity, which EPAM fund are you using?
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Re: Interesting article on economics

Postby Shyster on Thu Jan 02, 2014 5:37 pm

columbia wrote:
Shyster wrote:I'm still primarily focused on retiring some debts, so I'm not actually saving all that much for retirement at the moment. In addition to buying gold and silver (I actually slightly prefer silver to gold) as a form of asset protection, in the new year I plan to open an account with Peter Schiff's Euro Pacific Asset Management, roll over a conventional IRA I have with a bank to a Euro Pac Roth IRA, and then make that my primary investment vehicle. Gold and silver, of course, are not investments. They are merely alternate stores of value.


Out of curiosity, which EPAM fund are you using?

I haven't signed up yet, but I was thinking of starting with the International Value Fund and the China Fund.
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Re: Interesting article on economics

Postby ExPatriatePen on Thu Jan 02, 2014 5:56 pm

Shyster wrote:
columbia wrote:
Shyster wrote:I'm still primarily focused on retiring some debts, so I'm not actually saving all that much for retirement at the moment. In addition to buying gold and silver (I actually slightly prefer silver to gold) as a form of asset protection, in the new year I plan to open an account with Peter Schiff's Euro Pacific Asset Management, roll over a conventional IRA I have with a bank to a Euro Pac Roth IRA, and then make that my primary investment vehicle. Gold and silver, of course, are not investments. They are merely alternate stores of value.


Out of curiosity, which EPAM fund are you using?

I haven't signed up yet, but I was thinking of starting with the International Value Fund and the China Fund.

Do some research on the expectations for China funds. You may be way ahead of the curve here.
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Re: Interesting article on economics

Postby columbia on Thu Jan 02, 2014 6:46 pm

Wow...they charge some seriously high fees on those funds (and don't even meet their benchmarks):

http://quotes.morningstar.com/fund/EPHCX/f?t=EPHCX
http://quotes.morningstar.com/fund/epivx/f?t=EPIVX


To each their own.
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Re: Interesting article on economics

Postby ExPatriatePen on Fri Jan 03, 2014 9:09 am

I'd love to hear Paul Krugmans response to this authors position:

"The Biggest Redistribution Of Wealth From The Middle Class And Poor To The Rich Ever" Explained... http://zite.to/1cqmX1F

What a fantastic argument against Central Banks.

Factorial? Columbia? What the author lays out, better than I could ever articulate, is a great explanation of how the current environment is hurting those at the lower end of the spectrum.
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Re: Interesting article on economics

Postby Troy Loney on Fri Jan 03, 2014 9:20 am

Well, first off, your Krugman axe grinding makes it difficult to take your posts seriously.

But anyway, do you agree that business and government are pretty well interlocked together? The incentive is certainly to promote economic growth. The government can either increase spending to induce growth, or ease monetary policy. Considering that it's impossible for the government to raise taxes on the people that have money (republican ayn randisms) to allow for increase government spending, which would be the most effective means for the government to stimulate the economy, the instead use monetary policy to do that. You can come back with your utopian libretarian ideas, but they're not feasible until some sort of major shock takes place to oust the people that control the government and the commerce in this country. But until then, it seems a bit misguided for you, who has been so successful (as you've let us all know), to be so critical of the economic environment you've succeeded in.
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Re: Interesting article on economics

Postby ExPatriatePen on Fri Jan 03, 2014 10:11 am

Troy Loney wrote:Well, first off, your Krugman axe grinding makes it difficult to take your posts seriously.

But anyway, do you agree that business and government are pretty well interlocked together? The incentive is certainly to promote economic growth. The government can either increase spending to induce growth, or ease monetary policy. Considering that it's impossible for the government to raise taxes on the people that have money (republican ayn randisms) to allow for increase government spending, which would be the most effective means for the government to stimulate the economy, the instead use monetary policy to do that. You can come back with your utopian libretarian ideas, but they're not feasible until some sort of major shock takes place to oust the people that control the government and the commerce in this country. But until then, it seems a bit misguided for you, who has been so successful (as you've let us all know), to be so critical of the economic environment you've succeeded in.


Please, settle down. Comments like "Your Utopian Libertarian ideas" and "your Krugman axe grinding makes it difficult to take your posts seriously", are unneccesary. My post was honestly wondering what the Progressive Keynesian counterpoints to a very well written and factual article that shows that the unintended consequeces of QE are.

To address your points:

Paul Krugman has installed himself as the poster boy for Modern Keynesian concepts. He's a public figure with a weekly column in the NYT.
It's not unreasonable to wonder what his response would be to a well written piece that epouses Austrian economic concepts. I truly do wonder what Krugmans response would be.

As for my holding "Utopian Libretarian (sic) Ideals", While I do relate more to Libertarian concepts, I think a true Libertarian like Guinness will tell you that I'm by no means an absolutest and that many of my beliefs would be rejected by those who are "true" Libertarians. (let alone be considered "Objectivest" in the Ayn Rand sense).

Besides which, this article is lamenting the income disparity between "The Rich" and "The Poor" and "Middle-Class". Did you even read it? It's anything but Libertarian. In fact, it points out that your generation is going to be supporting my generation if the current policies continue.

Yes, Business and Government are closely intertwined... what does that have to do with the effects of QE on those in the lower income bracket? QE was meant to stimulate the economy, something I've stated that worked in it's first objective. However, like so many central goverment controls, it has massive "Unintended consequences" that cause even larger problems down the road. (As the author so aptly illustrated). The first round of QE was designed and implemented in aproximately 48-72 hours. Certainly not enough time to structure it as much more than a "give away" to the major financial institutions.

Subsequent QE (II and III) was meant to stimulate the overall economy, not just big business. In fact, the support for the housing and construction industry probably out weighed it's benefit to corporate America.

If you truly want to help those at the lowest income levels, you need to grow the economy, to encourage business formation and stimulate innovation. My biggest issue (not Libertarian at all) is an overhaul of the tax code which I've outlined in these forums before.

As for you taking pot shots at my personal "success" :

it seems a bit misguided for you, who has been so successful (as you've let us all know)


I have had a certain amount of professional and career success, however I've been far from successful in other areas of my life.

I left home shortly after my 18th birthday and have carved this out on my own, (military service, college, and career). I've had some horrible setbacks, such as not being able to find a better job than managing a Starbucks despite over 25 years in IT at that point. I've made great sacrifices to be where I am. (Who, among you, would rather live a single life spending over 300 nights a year in hotels?) I envy those with large families and a stable homelife, much more than any financial success. (to the point that in the Christmas gift thread, one poster wished me "I would get EPP a person to care about him during the holidays", or some such thing.)

So I think the venom in that post is uncalled for. I'm truly interested in what the Keynesian/Progresive counterpoints are to that article. Listening to the other side is what allows us to broaden our views beyond the pendanic, dogmatic, myopic positions.
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Re: Interesting article on economics

Postby Troy Loney on Fri Jan 03, 2014 10:36 am

I guess i'm just not sure why you'd care what Krugman thinks, you've already made it clear that you don't consider him to be an economist or anything. So clearly your comments about what Krugman thinks are really just meant to antagonize.

But anyway, he'd bemoan the sequestor cuts and state that the federal reserve is stepping in to fix the government's mess.
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Re: Interesting article on economics

Postby ExPatriatePen on Fri Jan 03, 2014 10:44 am

Troy Loney wrote:I guess i'm just not sure why you'd care what Krugman thinks, you've already made it clear that you don't consider him to be an economist or anything. So clearly your comments about what Krugman thinks are really just meant to antagonize.



ExPatriatePen wrote:Listening to the other side is what allows us to broaden our views beyond the pendanic, dogmatic, myopic positions.


Troy Loney wrote:But anyway, he'd bemoan the sequestor cuts and state that the federal reserve is stepping in to fix the government's mess.


I'm not sure that I follow. The sequester cuts are what six months to a year old? QE has been around in various forms since 2008.

But I do think you've hit the proverbial "nail on the head" by saying that one branch of the government (The Fed) is trying to fix mistakes made by other parts of the federal government.

That's just the problem, it's a vicious cycle.
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Re: Interesting article on economics

Postby Troy Loney on Fri Jan 03, 2014 10:56 am

Again, government has two means of stimulating economic growth, spending. GDP = Consumer spending + Investment (business spending) + Government spending + Net Exports. With G off of the table, the government (or technically the Fed) will then increase the money supply to lower capital costs and induce I & C to increase.

I assume Krugman wouldn only advocate QE because the government is unable to increase G. I'm not sure if the unintended consequences were unknown. I am pretty sure that most economists are aware of the implications that tinkering with the money supply does. But Bernanke's job is to prevent large scale recessions and economic collapse...which were things the country was dealing with not too long ago. QE would be a necessary evil as the government at all levels decrease spending in an environment of already high unemployment.
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Re: Interesting article on economics

Postby ExPatriatePen on Fri Jan 03, 2014 11:08 am

Troy Loney wrote:Again, government has two means of stimulating economic growth, spending. GDP = Consumer spending + Investment (business spending) + Government spending + Net Exports. With G off of the table, the government (or technically the Fed) will then increase the money supply to lower capital costs and induce I & C to increase.

I assume Krugman wouldn only advocate QE because the government is unable to increase G. I'm not sure if the unintended consequences were unknown. I am pretty sure that most economists are aware of the implications that tinkering with the money supply does. But Bernanke's job is to prevent large scale recessions and economic collapse...which were things the country was dealing with not too long ago. QE would be a necessary evil as the government at all levels decrease spending in an environment of already high unemployment.


Great. Absolutely describes the economy and the challenges facing Bernanke and the Fed. But you forgot to even mention the largest part of the economy.

Spoiler:
The Private Sector


That's the problem, the government has grown so large, that it's crowding out the private sector. It's a vicious cycle.

And yes, many many many economists were warning us as to the long term effects of QE even from the very start in the fall of 2008.
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Re: Interesting article on economics

Postby columbia on Fri Jan 03, 2014 11:15 pm

Not Krugman, but...

Ben Bernanke, crisis manager
http://www.washingtonpost.com/opinions/ ... days-opeds
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Re: Interesting article on economics

Postby ExPatriatePen on Sat Jan 04, 2014 6:54 am

columbia wrote:Not Krugman, but...

Ben Bernanke, crisis manager
http://www.washingtonpost.com/opinions/ ... days-opeds

With all due respect, the only quote from Bernanke in that article was:

"I’ll be interested to see. I hope I live long enough to read the textbooks.”

The rest of the article was an opinion piece from the author.

I also take exception to the authors suggestion of who has benefitted by QE.
He provided none of the supporting background (and nothing to dispute the facts in the article I quoted) to justify his supposition.
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Re: Interesting article on economics

Postby Guinness on Sat Jan 04, 2014 6:36 pm

Troy Loney wrote:Well, first off, your Krugman axe grinding makes it difficult to take your posts seriously.

But anyway, do you agree that business and government are pretty well interlocked together? The incentive is certainly to promote economic growth. The government can either increase spending to induce growth, or ease monetary policy.


From a purely economic perspective, I have to ask how anyone can believe that government spending can truly stimulate economic growth? There is no question that a government can indeed stimulate a certain sector of economic growth. Governments do not generate revenue, under any definition of the term. Therefore governments cannot contribute to an economy without first confiscating wealth from the economy. Thus government spending is the proverbial act of dipping water out of one end of the pool and dumping it into the other. More broadly through monetary easing it is somewhat accurate to say that a government can stimulate an economy - but one must take into account the fact that monetary easing has long term and short term negative overall consequences. Short term, the nominal increase in the price of goods outpaces the increase in the price of labor, which inevitably negatively impacts those on the lower end of the economic spectrum the most, naturally. Long term, the same applies, but also more broadly across an economy, as debts come due.

Keynes' popular response to this question was, "in the long run, we're all dead". In other words - don't worry about it. Let your kids worry about it. Responsible people don't behave that way.

Considering that it's impossible for the government to raise taxes on the people that have money (republican ayn randisms) to allow for increase government spending, which would be the most effective means for the government to stimulate the economy,


Raising taxes does not stimulate an economy. When businesses are taxed, they simply figure those expenses into the cost of doing business and pass it along to the consumer. Raising taxes on the broader general public simply removes spend-able dollars from an economy to the government, which then spends it in some particular sector of the economy or another, after of course paying its own "overhead" expenses.

This is OBVIOUSLY a practice gaping wide open for graft and corruption.

the instead use monetary policy to do that. You can come back with your utopian libretarian ideas, but they're not feasible until some sort of major shock takes place to oust the people that control the government and the commerce in this country. But until then, it seems a bit misguided for you, who has been so successful (as you've let us all know), to be so critical of the economic environment you've succeeded in.


There isn't anything hypocritical for a person to recognize that the fix is in and use it to his advantage.

Just my .02
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Re: Interesting article on economics

Postby Factorial on Sat Jan 04, 2014 8:44 pm

Guinness wrote:From a purely economic perspective, I have to ask how anyone can believe that government spending can truly stimulate economic growth? There is no question that a government can indeed stimulate a certain sector of economic growth. Governments do not generate revenue, under any definition of the term. Therefore governments cannot contribute to an economy without first confiscating wealth from the economy. Thus government spending is the proverbial act of dipping water out of one end of the pool and dumping it into the other.


You can't have it both ways. First, you state that from a "From a purely economic perspective," then you bring up "confiscating wealth from the economy", the latter of which is purely a philosophical/political statement.

Taxes on the wealthy redistributed to low/no income people most assuredly increase aggregate demand and can make the economy grow.
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Re: Interesting article on economics

Postby ExPatriatePen on Sat Jan 04, 2014 8:58 pm

Factorial wrote:
You can't have it both ways. First, you state that from a "From a purely economic perspective," then you bring up "confiscating wealth from the economy", the latter of which is purely a philosophical/political statement.

Taxes on the wealthy redistributed to low/no income people most assuredly increase aggregate demand and can make the economy grow.

An increase in the money supply, by definition, creates an additional supply of dollars which decrease the value of every dollar in circulation.

Which is absolutely "confiscating wealth from the economy".

That's inarguable.
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Re: Interesting article on economics

Postby Guinness on Sun Jan 05, 2014 12:05 am

Factorial wrote:
Guinness wrote:From a purely economic perspective, I have to ask how anyone can believe that government spending can truly stimulate economic growth? There is no question that a government can indeed stimulate a certain sector of economic growth. Governments do not generate revenue, under any definition of the term. Therefore governments cannot contribute to an economy without first confiscating wealth from the economy. Thus government spending is the proverbial act of dipping water out of one end of the pool and dumping it into the other.


You can't have it both ways. First, you state that from a "From a purely economic perspective," then you bring up "confiscating wealth from the economy", the latter of which is purely a philosophical/political statement.

Taxes on the wealthy redistributed to low/no income people most assuredly increase aggregate demand and can make the economy grow.


You need to check your math. I'm not the one trying to have it both ways. You are.
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Re: Interesting article on economics

Postby Factorial on Sun Jan 05, 2014 12:35 am

ExPatriatePen wrote:
Factorial wrote:
You can't have it both ways. First, you state that from a "From a purely economic perspective," then you bring up "confiscating wealth from the economy", the latter of which is purely a philosophical/political statement.

Taxes on the wealthy redistributed to low/no income people most assuredly increase aggregate demand and can make the economy grow.

An increase in the money supply, by definition, creates an additional supply of dollars which decrease the value of every dollar in circulation.

Which is absolutely "confiscating wealth from the economy".

That's inarguable.


What are you talking about? My comment was in reference to taxation not changes in the money supply.
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Re: Interesting article on economics

Postby Factorial on Sun Jan 05, 2014 12:36 am

Guinness wrote:
Factorial wrote:
Guinness wrote:From a purely economic perspective, I have to ask how anyone can believe that government spending can truly stimulate economic growth? There is no question that a government can indeed stimulate a certain sector of economic growth. Governments do not generate revenue, under any definition of the term. Therefore governments cannot contribute to an economy without first confiscating wealth from the economy. Thus government spending is the proverbial act of dipping water out of one end of the pool and dumping it into the other.


You can't have it both ways. First, you state that from a "From a purely economic perspective," then you bring up "confiscating wealth from the economy", the latter of which is purely a philosophical/political statement.

Taxes on the wealthy redistributed to low/no income people most assuredly increase aggregate demand and can make the economy grow.


You need to check your math. I'm not the one trying to have it both ways. You are.


Just stop with the pretense that you are pushing a non political agenda.
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Re: Interesting article on economics

Postby Guinness on Sun Jan 05, 2014 8:51 am

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.
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Re: Interesting article on economics

Postby Factorial on Sun Jan 05, 2014 4:48 pm

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
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Re: Interesting article on economics

Postby columbia on Sun Jan 05, 2014 4:53 pm

I'll remind everyone that I pointed this out, earlier in this thread.
Thanks to Mr. Laffer for coming to his senses and backing me up. :thumb:

Since EPP wants me to read Krugman, I decided to see if he had anything to say on the subject. He did:


This is a remarkable act of intellectual honesty — remarkable because it happens so rarely.

I do wonder exactly what model Laffer was using. As I pointed out again and again, basic IS-LM analysis said that even huge increases in the monetary base aren’t inflationary in a liquidity trap; and yes, I was making that prediction in advance. From where I sit, our models have worked just fine.

But still, credit where it’s due — Laffer, unlike almost everyone else in the inflationista camp, has admitted both that he was wrong and that some rethinking is needed.


http://krugman.blogs.nytimes.com/2014/0 ... ffer/?_r=0
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Re: Interesting article on economics

Postby Factorial on Sat Jan 11, 2014 12:18 pm

What makes Laffer's reversal so relevant is his scribble on a napkins 30 years ago that radically changed taxation in this country. I'm waiting for him to come clean on how that simple graph was just that, overly simple and was a lousy model for the complex world we live in.
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Re: Interesting article on economics

Postby ExPatriatePen on Sat Jan 11, 2014 12:25 pm

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
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