MarvinSussman

We disagree. Please examine the following evidence and tell me what you think of it.

http://neweconomicperspectives.org/2013/08/mobilization-and-money.html#more-6200

klsolly

Most of the world’s money is called fait money. The money is backed by the full faith and credit of the government that issues it. In other words, the government promises to be good for it.
The U.S. abandoned the gold-standard over forty years ago. The only problem with the set up is that, if you do the math, over time the government “borrowed” a great—and continuously growing—amount of fiat dollars from the “citizens”. This, in turn, has enabled it, year after year, to spend many more fiat dollars than it collected in taxes, adding more and more fiat dollars to the “citizens” savings and private economy—but eventually and inevitably, it surpassed the amount of gold in its vault to back up those fiat dollars.
This is essentially the problem the U.S. confronted in 1971. The solution was quite simple, and President Richard Nixon implemented it in that year: the U.S. abandoned the gold standard and declared the U.S. dollar would no longer be “convertible” to anything other than itself. The U.S. dollar became pure fait money.
The strange reality of fiat money tells us the only limitations we actually have are the physical resources available, our ability to cooperate, and our willingness to confront and constrain any elite group that seeks to take control of, and manipulate, government spending and taxing for the purpose of self-enrichment and power.
The 2008 Derivative scam and QE. QE has been called a sneaky form of wealth redistribution because the Rich scoop up cheap assets and give the markets confidence where they make money again off their dividends.

MarvinSussman

One correction: prior to 1971, there were no fiat dollars.

The 2008 crash was a market failure induced by private debt/lack of demand. Low interest rates helped it along but higher interest rates would not have avoided the crash much longer.

The fact is that the Fed means well but doesn't have the means to add to consumer demand, as it did during WW II. Only Congress can deficit spend on much-needed infrastructure and add to consumer demand to end the stagnation, killing two birds with one stone.

It has always amazed me that so many flag-waving, patriotic conservatives are dead set against investment in public infrastructure. They are worried about debt and inflation when deficit spending would add to private savings and harmful inflation is nowhere in sight and can be stopped on a dime by raising interest rates. And they love high interest rates!

Actually, deflation will come eventually if big deficits don't replace the cash now flowing into China. Conservative ought to be begging for spending on roads and bridges. It's their country too.

klsolly

I am not against investment in public infrastructure, what I am against is being played and lied to. This administration had a nice big stimulus that it could have used on infrastructure (spending on roads, buildings and the like) instead all we got were funny numbers about what the stimulus was doing to spur the economy. It is no wonder conservatives have a problem. $825 billion later, the results are clear. Instead of producing an economic recovery, the stimulus produced only broken promises and massive debt. The stimulus failed—and by the president's own standards at that.

klsolly

I would like to add that we do agree on some common ground if I understand you correctly: The fact that the democracy did not vote to change the law when the gold-standard was abandoned has created today the confused perception that a great problem exists for which there is no reasonable solution. It is clear that what is called the nation’s “deficit” is, in actuality, a balance-sheet account of the fiat money the government has spent into the private economy but not collected back in taxes, and as you said" deficit spending would add to private savings."
Then when you hear that Ben Bernanke just injected X billion dollars into the economy, it's easy to get worked up and start thinking of hyperinflation and Weimar Germany. But at the stroke of a pen/keyboard the Fed can take most of this money out of the economy whenever it wants.
Then of course it can also set interest rates, which can bring down inflation very quickly if needs be. So all in all I think it's fair to say that the risk of QE resulting in any sort of runaway inflation is pretty much nil.

MarvinSussman

Just a few facts about Republican Senator Olympia Snowe's (not Obama's) stimulus:

About 40% of the stimulus was paid out in tax rebates to fully employed workers who probably paid down debt instead of spending it. That was Snowe's idea.

A major problem was the difficulty of finding "shovel-ready projects. For example, over $10B went to NIH, but it was not set up to use more.

Every condominium board in the nation has a list of projects with cost and time estimates, contractor’s bids, zoning approvals, etc., etc. But tax cutters have reduced the federal (and many state) governments to a level that, outside of the DOD, we have no registry of all the nation’s infrastructure with state of condition, maintenance schedule, plans, available contractors, pending contracts, environmental impact, regulatory and zoning approvals, etc., etc. Small government zealots have starved the beast into imbecility!

It’s a wonder that the stimulus accomplished what it did, which is more than you think: http://www.pitbulleconomics.com/stimulus.pdf

Above all, you have a total misunderstanding of the problem. Compared to 2006, there was a $3T drop in GDP. To be effective, the stimulus had to be twice as large and twice as efficient in spending. It's just a matter of numbers.

There is no question that stimulus works. We have the results of two major experiments in ending a major financial collapse:

Both Hitler and FDR took office in 1933. Hitler immediately spent heavily on the autobahn, gliders, TV, Volkswagen, concentration camps, boy scouts, gun clubs, etc.
He ended Germany's depression in 1934 and became popular. He never stopped spending as much as he could.

FDR did the same thing with the same result but delayed it until WW II. He should have put everybody to work in 1934 building the interstate highway system (his idea). Spending heavily on infrastructure will end every depression/recession. There is no such thing as spending too much until you get a return to prosperity and the beginnings of harmful inflation.

Believing that anything but huge deficit spending can end a global financial collapse is pure idiocy.

Massive debt? WW II debt was never paid off. No public debt is ever paid off and should never be paid off. That "debt" is savings in the economy.

How does money get into the economy (and only then into your wallet)?
It can’t come from banks. Loans have to be repaid with interest.
It can’t come from a trade surplus, which hasn’t happened in a generation and is nowhere in sight.
It can’t come from a balanced budget, which leaves nothing in the economy.
It can’t come from a budget surplus, which would take money out of the economy.
It has to come from a budget deficit, which is the ONLY way to put money into the economy.
Every spent federal dollar not repossessed by the IRS is saved by the private sector. Our annual budget deficit is exactly equal to the annual increase in private sector savings. YES! DEFICITS = SAVINGS! No deficits, no savings! A tax deficit is a savings surplus. It is money left on the table for the savers by Uncle Sam because he didn’t need it to prevent harmful inflation and because consumers need it to consume. We do not have a “national debt”. We have a “national savings”. The bad “Debt Clock” is really the good “Savings Clock”. How can we have too much savings?

Since bank loans must be repaid with interest and hard cash is moving to China, a tax deficit (savings surplus!) is the ONLY savings source that can sustain our economy. We need to DOUBLE our “national debt” / “national savings” to return it to the World War II level that was followed by 35 years of prosperity without harmful inflation, even with very high tax rates. Our (“national debt: + total bank deposits) / GDP ratio is less than half of the comparable figure for China. Our M2 (money supply) / GDP ratio is half of Switzerland’s ratio and one quarter of Hong Kong’s ratio. Too much savings?

By calling our “national debt” / “national savings” unsustainable, a hoax meant to privatize Social Security and Medicare, Wall Street con artists seeking a fortune in commissions have panicked the ignorant public, journalists, and politicians in Congress and in the White House. And, by bribing Congress into austerity, the Wall Street charlatans are nursing a huge army of unemployed labor to suppress the wages and working conditions of the middle class. As our rotting infrastructure renders our industry incompetent, it is that growing army of unemployed labor that will become “unsustainable”.

klsolly

Unfortunately, whenever you print more currency, it devalues all of the dollars that are already in existence. In short, The Federal Reserve Bank prints more money and hands it out to their friends in the banking sector in order to "save the economy." And every time they do it, the dollars in your wallet lose purchasing power. This purchasing power loss shows up as higher prices. Higher prices in the stock market, higher housing prices, higher energy prices, higher food prices, etc. (The higher prices don't usually show up immediately, but eventually, they do show up!) On a side note, the Federal Reserve Bank was created by the banks, for the banks
Democrats caused the recession of 2008, by forcing banks to make loans to disadvantaged (unqualified) borrowers. Once the banks figured out how to offload their risk, the whole thing snowballed. One of the only things Obama ever did as a lawyer was sue to get Bank of America to make more of these loans.
I see you are wishing FDR had followed Hitler's example, which the New Deal did pull us further towards a welfare state. At this point I see no need in this conversation for I will never convert to fascism. Good by and Good luck selling your propoganda in America. Not really Good luck

MarvinSussman

“Unfortunately, whenever you print more currency, it devalues all of the dollars that are already in existence.”

Wrong! When an economy is threatened by deflation / liquidity trap / zero lower bound, there is no inflation whatsoever by printing money. Printing money is the same as deficit spending, which has been and will be going on forever without any threat of harmful inflation (over 3%) unless we reach prosperity first. We need 2% inflation to avoid deflation, which would be hell on earth. Who would spend a dollar today if it would buy more tomorrow?


“In short, The Federal Reserve Bank prints more money and hands it out to their friends in the banking sector in order to "save the economy." And every time they do it, the dollars in your wallet lose purchasing power.”

The Fed is buying bonds and other securities to lower the long US bond interest rate and make borrowing easier. Borrowing can’t get much easier but there isn’t much borrowing. They are pushing on a string without effect. But they are afraid to stop because the situation could get even worse.

The Fed money is mostly staying in bank reserves. There are trillions in savings available without the Fed money. Most of it is bidding up stocks, bonds, and commodities. We call that capitalism. Some of it is boosting real estate prices, which is good. Energy prices are dropping due to supply.


“the Federal Reserve Bank was created by the banks, for the banks”

The Fed was created by Congress working for the banks. Banks don’t like crises and bank runs. Who does?


“Democrats caused the recession of 2008, by forcing banks to make loans to disadvantaged (unqualified) borrowers”

Of the top 25 banks troubled by sub-prime loans, only one was subject to the CRA. When you examine the records of CRA-restricted banks, their sup-prime loan record was better than the other banks.
http://www.ritholtz.com/blog/2011/11/examining-the-big-lie-how-the-facts-of-the-economic-crisis-stack-up/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29&utm_content=Yahoo%21+Mail

The fact is that banks have captured the regulators. Clinton and Rubin were just as guilty as the Republicans. Leftists like Elizabeth Warren have always fought against deregulation.

There was just too much money to be made with liar loans. Holder is just beginning to go after the banks, about 5 years late. I don’t know how far he will go. I have doubts. Too Big to Jail!


“I see you are wishing FDR had followed Hitler's example, which the New Deal did pull us further towards a welfare state.”

Hitler did not push Germany into a welfare state. Bismarck did that. Hitler did spend Germany out of a depression, as did FDR eventually, proving that deficit spending works. I know you don’t have the courage to face that simple fact. I understand your cowardice. It is awful to have one’s faith destroyed.

Good luck to you!

OldSchool Loc: Moving to the Red State of Utah soon!

Lay off the comic books, they're warping your feeble mind. What you just wrote is pure garbage.

MarvinSussman

I gave you facts that you could not dispute because you have not the knowledge nor the IQ to get the knowledge.

You will need the luck.

tony21james49

but we must also remember, this crisis that you so blame the democractic elected Congress, and that President, what's his name (Obama) for was already in full swing before he ever envisioned being the President. Thanks to you beloved Mr Bush, and his son Bush Jr. I don't really beleive that just because I'm mostly vote democrat, that ever idea they propose is something I stand behind. There have been many republicians that have proposed or had signed into law that are wonderful, so to blame president Obama for this messy economy that he inherited is quite obsured. Do you really believe that this mess happened on his watch? If you are into your politics and not just a particular party, then you can see clearly why they elected him, he has tried to straighten out this economy that was sick from war and wallstreet scandal, cook up mostly by republician, our prior president Mr Bush inherited a economy in the surplus and look what happened to that, so for you blaming Obama, just give him a break. What would Mick Romney have done better?

cant beleve Loc: Planet Kolob

Glad to have you and all seniors and Marvins on Butler's design orders DRUGS

cant beleve Loc: Planet Kolob

Hi I'm new looking around for insightful communication hope I've arrived

slatten49 Loc: Lake Whitney, Texas

Klsolly, aka, Gray-Haired Geezer: I am late, but welcome aboard! Your introductory post has evolved into another OPP "open discussion".

That's the way the OPP rolls! :mrgreen:

slatten49 Loc: Lake Whitney, Texas

Explain this post, please. :roll:

And..it is in response to whom :?: