The Critical Critic Loc: Turtle Island

But that doesn’t mean they are well-informed. Indeed, they propagate four myths about the issue.

Most often, those vying for elected office describe income ine******y as static — as though the people who make up each income group do not change.

The “top 1 percent” or the “top 10 percent” of income-earners are portrayed as exclusive clubs that seldom accept new members or see old and current members leave. No fluidity, no change. Political figures also have a tendency only to blame income ine******y on factors like trade, immigration, an insufficiently high minimum wage, inadequate taxes on the wealthy, or the vague concept of “greed.”
They typically ignore the sizeable role of choices under an individual’s control
They downplay the role of regressive government regulations. Reality is much more interesting than soundbites.

Americans often move between different income brackets over the course of their lives. Indeed, over 50 percent of Americans find themselves among the top 10 percent of income-earners for at least one year during their working lives, and over 11 percent of Americans will be counted among the top 1 percent of income-earners for at least one year.

Fortunately, a great deal of what explains this income mobility are choices that are largely within an individual’s control. While people tend to earn more in their “prime earning years” than in their youth or old age, other key factors that explain income differences are education level, marital status, and number of earners per household. As AEI’s Mark Perry recently wrote:

”The good news is that the key demographic factors that explain differences in household income are not fixed over our lifetimes and are largely under our control (e.g. staying in school and graduating, getting and staying married, etc.), which means that individuals and households are not destined to remain in a single income quintile forever.”

According to the U.S. economist Thomas Sowell, whom Perry cites, “Most working Americans, who were initially in the bottom 20 percent of income-earners, rise out of that bottom 20 percent. More of them end up in the top 20 percent than remain in the bottom 20 percent.”

While people move between income groups over their lifetime, many worry that income ine******y between different income groups is increasing. The growing income ine******y is real, but its causes are more complex than the demagogues make them out to be.

Consider, for example, the effect of “power couples,” or people with high levels of education marrying one another and forming dual-earner households. In a free society, people can marry whoever they want, even if it does contribute to widening income disparities.

Or consider the effects of regressive government regulations on exacerbating income ine******y. These include barriers to entry that protect incumbent businesses and stifle competition. To name one extreme example, Louisiana recently required a government-issued license to become a florist. Lifting more of these regressive regulations would aid income mobility and help to reduce income ine******y, while also furthering economic growth.

If our e******ns were more about the substance of serious public policy issues, rather than demagoguery and soundbites, achieving reasonable solutions could move from the land of make-believe to our complex, dynamic reality.

This article first appeared at CapX.



By: Chelsea Follet

(She works at the Cato Institute as a Researcher and Managing Editor of HumanProgress.org.)

Canuckus Deploracus Loc: North of the wall

Superb...

I have had students from economic majors make similar arguments... In China

How have you been?

The Critical Critic Loc: Turtle Island

Been very well, my friend. Happy to hear free market arguments being raised by students in China.

How are things with you? I noticed by your absenteeism that you’ve been keeping yourself busy ...

Radiance3

===================
The lazy, the dumb, the immoral, always speak of income ine******y.

Of course most of the things could not be equal. There is no such thing as e******y except, life, liberty, and the pursuit of happiness. These are all freely given to us. We must use them.

No two people are alike.
Many are lazy, dumb, ugly, cruel, bad, violent. That is the kind of life they chose.

Many are hard working, smart, follow ethics of good morals, and follow God's guidance. Then they improve their lives.

How could you compare the two extremes?

Lonewolf

We should try trickle up for a few years because trickle down never worked!

The Critical Critic Loc: Turtle Island

Lol, you say that with such exuberance, as if you knew what you were talking about.

”The political left wing has long tried to cast doubt on the fairness, and even the efficacy, of free market capitalism by branding it as a "trickle down" system. This epithet is meant to show how the middle and lower classes are dependent on scraps of wealth that happen to fall from the buffet table of the rich. This characterization of an unfair and inefficient system has helped them demonize policies that lower taxes (if they also extend to the wealthy) and reduce regulation on business.

To correct these supposed problems, they have long called for policies to redistribute wealth or for government to inject funds directly into the economy. Either mechanism puts money into the hands of everyday consumers who they claim to be the true engines of economic growth. They believe that consumer spending lies at the root of the economic pyramid. When people spend, business owners are able to sell more products, hire more workers, and reap more profits. In essence, they believe in a system of "trickle up" economics, whereby prosperity flows upward from government into the lower and middle classes and ultimately to the upper class.

Conversely, they argue, if consumers aren't buying, business sales decline and workers lose jobs. The jobless spend less than the employed, putting even more pressure on businesses. This leads into a vicious cycle of falling sales and increased unemployment. They believe that if a shock is not applied to reverse the cycle it is possible for an economy to regress, in theory, right back to the Stone Age. Using such logic, it is easy to identify the foundation upon which the economy rests: it's the spending, stupid. Some progressives have likened this process to a natural ecosystem wherein government spending is the rain that makes grass grow. The grass attracts zebras and antelopes (consumers), which then offer sustenance to the lions (capitalists).

If this is your diagnosis, then your prescription should be patently obvious: restore the demand lost through unemployment and get people spending again. How to accomplish this is also equally simple: take the money from the rich who really aren't using it anyway. Without entering into a parallel discussion of fairness, demand side economists simply see the redistribution of money from the rich as a way to generate economic growth, which benefits society as a whole. As they see it, the rich have more money than they need to satisfy their own personal demand. No matter how rich, a single individual can only eat in so many restaurants, buy so many cars, or go see so many movies. The money they don't spend is saved instead, thereby sucking needed demand out of the economy. In contrast, the lower and middle classes spend a much higher percentage of their net worth. To break the vicious cycle, all that is needed is to direct these idle funds where it will be spent rather than saved. In a June 19th Wall Street Journal cover story, reporter Jon Hilsenrath underscores this point in explaining why the impact of the Fed's low interest rate policies are being weakened by the current preference for high credit score borrowers. Says Hilsenrath, "Financially secure households are less likely than lower-income households to spend their interest rate savings. Wealthier households are more likely to save or invest."

A policy prescription such as this is seductive. It allows people to advocate a moral position (it's a shame that the poor don't have as much as the rich) in purely practical terms (redistribution creates economic growth). And if spending is the panacea, then government can easily wipe out suffering, even if they lack the political ability to raise taxes. After all, what stops them from printing all the money needed for people to spend the economy back to health? According to Nobel Prize-winning economist Paul Krugman, only the political cynicism of Republicans, who try to wring v**es out of Americans' misplaced hopes for upward mobility and their stubborn fixation on thrift, prevents this painless and readily available cure.

But as usual, they have it exactly backwards. The savings that they find so unproductive is actually the foundation upon which the economy rests. Nothing can be consumed until it is produced. The act of spending is meaningless without something to buy. The savings of the rich forms the capital that funds business investment which increases productivity. The more that society produces, the more that can be consumed. The key here is the supply, not the demand. The grass that feeds the zebras comes from seeds, not rain. Capitalists provide the surplus seeds that are planted.

Demand always exists and does not need to be stimulated by cash redistribution. 21st century Americans are no more desirous of cell phones than their parents were. But in 1980 cell phones were in very limited supply and were therefore very expensive. They were the trophy possessions of the super-rich. The reason why they are now as ubiquitous as key chains is not that government stimulated demand, but that industry figured out how to supply them far more efficiently. The supply satisfied the demand. Investment in the telecom sector, which came from real savings of Americans, allowed for that increased productivity.

In this example, the savings of the wealthy and the innovation of entrepreneurs combined to create a huge benefit for society. Call it trickle down if you want, but it would be more honest to simply call it effective. This is the system that built this country. Relying on trickle up will surely destroy it.”

By: Peter Schiff

Lonewolf

Is that why after every republican administration we go into a recession

The Critical Critic Loc: Turtle Island

The bull cycle is already much longer than is typical, historically.

U.S. stock-market investors should know better than to base their investments on superstitions or trivia, but there’s a curious trend that has persisted for decades that could serve as yet another reason to be cautious about markets.

Since the presidency of Theodore Roosevelt, who left office in 1909, every single Republican president has seen a recession take hold in their first term.

While analysts consider this a fluke of timing more than an explicit economic reaction to Republican policies, the odds of this streak continuing during the presidency of Donald Trump are seen as plausible, particularly as he presides over what is already the second-longest bull market in history.

“Republican presidents seeing recessions has more to do with cycles — both political and economic — than policy,” said Sam Stovall, chief investment strategist of U.S. equity strategy at CFRA. “Most economic cycles last five to six years, p**********l terms are four years, and you usually don’t see more than two straight terms of the same party. Right now we’re already late in an economic cycle that’s already much longer than average ones.”

In an April interview with MarketWatch, Stovall noted that bull markets don’t die of old age, but because of worsening economic conditions. However, he sees signs the economy may have already peaked, prompting him to forecast a recession at some point in Trump’s term. He added, “By the way, that’s not a brave forecast.”

The first year of the Trump administration was a positive one for the U.S. stock market by almost any metric. There was historic low volatility, a record number of records, and an unprecedented length of time that the S&P 500 SPX+0.24% went without falling 5% or even 3% from record levels. The gains in the Dow Jones Industrial Average DJIA+0.15% over Trump’s first year were the best for any president since Franklin Roosevelt.

Such an environment came to a swift end in the first quarter of 2018, a sign that stocks may be starting to wake up to the prospect of the bull market’s eventual end.

Major indexes have been rangebound for weeks, with both the Dow and the S&P in their longest stretch in correction territory in a decade. Volatility has been elevated throughout the year, and markets just entered the month of May — historically a treacherous one, particularly in midterm years. If current “sideways trading” trends persist, the S&P threatens the ominous technical pattern of a “death cross” by Memorial Day.

At the same time, leadership in the market is at multiyear lows, and Morgan Stanley recently calculated that expectations for future returns were at their lowest level since before the financial crisis. Furthermore, the yield on the U.S. 10-year Treasury note BX:TMUBMUSD10Y-0.48% recently hit a four-year high, a cautious signal for stocks for a variety of reasons, and changes to Federal Reserve policy — including both rising interest rates and a shrinking balance sheet — could further diminish the attractiveness of stocks.

“I view central banks as being like dads at Disneyworld, carrying their kids on their shoulders,” Stovall said. “They look pretty vibrant at 10 a.m., but now it’s 4 p.m. and they look pretty exhausted from supporting the economy.”

There’s no shortage of potential that could threaten equity performance, ranging from escalating trade tensions to issues with North Korea and other geopolitical concerns. Domestically, both the upcoming midterm e******ns and the investigation currently being conducted by special counsel Robert Mueller are seen as potential risks.

More fundamentally, while earnings growth has been at a multiyear high in the first quarter, some analysts have suggested growth may have peaked in the quarter. GDP growth came in at 2.3% in the first quarter, its slowest pace in a year. While slowing growth isn’t the same as a contraction, it adds to the concerns that the period of synchronized global growth is coming to an end.

Earlier this week, the Wells Fargo Investment Institute wrote that the U.S. economy was “entering the late stage of expansion,” a phase marked by moderating growth, earnings pressure, rising interest rates and confidence peaking. While it doesn’t see an imminent recession — defined as a significant fall in activity across the economy, with the National Bureau of Economic Research considered the ultimate arbiter — it indicated that one could only be a matter of time, pointing to how the yield curve was moving in the direction of inverting.

“If a trade war breaks out and spreads, that could clearly have implications for the global economy, especially since there are already a few signs that global growth may be peaking,” said David Joy, chief market strategist at Ameriprise Financial. He added that Ameriprise hadn’t forecast a recession, and that “maybe the earliest we could see one would be 2020.”

Despite that, “we could certainly reach a point where trade headwinds overwhelm the tailwinds of tax reform. A deteriorating trade situation could overwhelm what we still see as strong fundamentals.”

By: Ryan Vlastelica

https://www.marketwatch.com/story/should-markets-expect-a-recession-every-republican-since-teddy-roosevelt-has-had-one-in-their-first-term-2018-05-02

The Critical Critic Loc: Turtle Island

With the 2020 p**********l e******n on the horizon, there are currently over 15 serious Democratic contenders competing for the party’s nomination. Some candidates, like Andrew Yang, have detailed policy proposals they are consistent about. Others seem to keep maneuvering left with their positions in order to outflank their competitors, while a few seem content to be like weather vanes, ready to move in wh**ever direction the winds of populism are blowing.

It’s a diverse group, but the one thing they have in common is that they are running on the platform that capitalism is broken—and only politicians can fix it. We’re told that income ine******y is a great threat to American society, that the gap between rich and poor has been widening for almost 50 years, and that if it keeps on going like this, the bottom half will grab the pitchforks and society will collapse. According to them, the only solution to save the middle class is the implementation of massive government social programs that can redistribute wealth to make everything fairer.

With $22 trillion dollars in federal government debt that is now adding $1 trillion more to the pile every year, a sane person can recognize that more massive spending is not a good idea because we can’t even properly manage our already massive spending. To be fair, Republicans are also guilty of not practicing what they preach when it comes to fiscal conservatism. Since 2000, we have had 12 years of Republican presidents and 14 years of Republicans controlling the House of Representatives, and the debt increased by more than $15 trillion dollars in that time.

Assuming that defaulting on the debt is not an acceptable solution, the United States needs to reverse spending and pay down the debt. One tool in their box to silently do this without causing much attention is through manipulating monetary policy.

However, this has the unintended consequences of hurting the poor and middle classes. Deflation and inflation are two consequences of poor monetary policy that can have disastrous effects. Since 1913, the Federal Reserve has been charged with managing the monetary supply of the United States with the goal of maintaining financial stability.

There are many causes that contributed to turning the recession of 1929 into the Great Depression, and one of those factors was deflation. The amount of money in the US economy decreased as stock market losses wiped out wealth, banks failed and lost their depositors savings, and people chose to keep money stashed in their houses rather than invest it.

Prices and wages dropped, though not together with each other, which contributed to people being out of work and not having enough money to satisfy basic needs. People with mortgages were still expected to make their fixed monthly mortgage payment with less monthly income, which led to widespread defaults and then more bank failures.


Inflation happens when the monetary supply grows at a faster pace than the supply of goods in the market, which leads to price increases. During the 1970s, many Americans saw the purchasing power of their life savings shrink thanks to out of control inflation that was eventually reigned in with high-interest rates. This process began when President Nixon took the United States off the gold standard, which meant the supply of money was no longer restricted to a physical item.

Maintaining inflation at a rate of two percent is the official policy of the Federal Reserve. On paper, this seems like a small amount, but two percent every year adds up, and it lowers the value of money sitting in individual bank accounts because bank interest has been a lot less than two percent for quite a few years now.

Inflation is also called the silent tax. Everyone knows it’s there, but not many people feel threatened by it because it seems like it’s under control. Governments like a little inflation because it helps reduce the actual value of the debt they owe; all they need to do is fire up the printing press. But inflation is dangerous to individuals because it has the power to erode retirement savings along with the savings that younger people make for future down payments on assets like houses.

Inflation can be harmful when wage increases lag behind housing and food increases. It can be harmful when your only asset is the money in your savings account. It can be helpful if you own stocks and their value increases. It’s helpful when you increase the rent on property you own, and it’s even helpful to the middle-class homeowner who sells their home for more than they paid for it. It can also be harmful because it creates the illusion that asset prices always increase, which in turn causes bubbles.

If you have assets, you’re not as vulnerable to inflation as others because your wealth has t***sferred from money to a physical object that can hold its value. But if your only source of wealth is cash, and it loses value every year, you become poorer.


There are many studies that claim wages have not kept up with inflation and that this has contributed to growing wealth ine******y. While this is true for some industries and occupations, a lot of people are blaming the people paying the wages for this instead of blaming inflation itself. Many academics and commentators point the finger at technological innovations, loss of union power, and globalism while they ignore how inflation spiked after the gold standard officially ended.

It’s hard to build a nest egg when the value of that egg gets lower and lower each year.


The $22 trillion national debt is one of the biggest threats to the future of American prosperity. To put into perspective how serious it is, according to the Federal Reserve, there is only $1.7 trillion of US currency circulating in the world. GDP for 2017 was $19.4 trillion. The value of the entire US economy is approximately $120 trillion. If 15 percent of the assets in the United States disappeared overnight to pay off the debt, it would create a new economic disaster.

There are only three ways to reverse this trend: Cut spending drastically, raise taxes, and print money out of thin air to pay this down (inflation).

Politicians avoid the first two solutions because they fear it would be unpopular and get them v**ed out of office (although that seems to be changing on the Democratic side). But inflation is the silent tax that most people hardly think about.

Printing more money to get out of debt is not a revolutionary idea, though Paul Krugmanwould like you to think otherwise. It has been done before, and devastating results have often followed. In Germany after World War I, inflation spiraled out of control as the government printed more money to pay its war debt, and the country entered a process called hyperinflation. By 1920, prices on average were 12 times higher than they were before the war. Many people, who were not rich with assets, were economically ruined, and this policy would help lead to the rise of the N**is and World War II.

If inflation contributes to the poor getting poorer, and inflation is caused in part by the government as a way to decrease their out-of-control debt, then programs that add additional debt to the debt will hurt the poor. Three-quarters of US debt has accrued over the past 20 years. Serious reforms need to be applied to government spending, and the budget needs to be completely overhauled so that surpluses are happening instead of deficits.

Politicians have a well-earned stereotype for being dishonest. While there are some people in the field who do believe in civic duty and serving their country’s best interests, they are greatly outnumbered by a permanent political/government class whose primary interest is to increase their own power. They will say and promise many things in order to secure v**es.

But history shows that those who propose new massive government programs—in addition to the already existing ones we can’t afford—in the name of “fighting ine******y” are deeply misguided. Bad policies lead to bad results regardless of the intentions behind them.

By: Daniel Kowalski

(He is an American businessman with interests in the USA and developing markets of Africa.)

Canuckus Deploracus Loc: North of the wall

All is well... Busy preparing for the summer trip back home... Lots of things to catch up on...

I enjoyed your responses to lonewolf...

Lonewolf

Continuous war hasn't helped , how much money has the Pentagon been unable to account for was it 600 billion.and hardly a peep from congress.

Radiance3

=================
Printing of money will have devastating effects. The value of dollar will drastically be lower, thus inflation gets worst. When the value of the dollar gets lower, China takes advantage of buying more of our bonds or treasury bills. China holds at present, the largest US debts to $1.12 trillion, ahead of Japan of $1.08 trillion.

Controlling inflation by raising interest rates will have devastating effects to our national debts. At present our national debts is $22.2 trillion. Annual interest are accrued on those debts, thus by raising rates, our debts get higher.

Balance budget is difficult to achieve. Funding these tens of millions of illegal invaders inside our country, and controlling those still crossing costs us taxpayers approximately $338 billion per year. That is more than 50% of our annual trade deficits.

Trade imbalance adds more to our budget deficits. More outflows than inflows result to our consumer spending getting out of our country. Thus tax revenue collected from corporate businesses is lesser.

The deficit in goods and services was $621 billion in 2018. Imports were $3.1 trillion and exports were only $2.5 trillion.

If we continue this trade imbalance, we could not control our national debts but keeps on growing. This is due to the fact that lesser tax revenue is collected, to help our budget deficit.

With budget deficits, in order to continue operations the Federal Reserves issue bonds, treasury notes, treasury bills, on behalf of the US Treasury. These add to our national debts, plus the annual accrued interest. Higher interest rates, is one of the negative effects, though it may curb inflation.

Inflation occurs when there are more demands than supplies. In good economy like ours today, where 96.4% of adults work, there is a tendency for more demands, cause people have money to buy. Interest rate is carefully monitored, though president Trump wants it contained at same level.

I tend to agree with president Trump about increasing tariff with our imports. Though, it needs careful analysis of the bad and good effects overall to our economy.

All the democrat candidates I think are all DUMB to solving these problems. Their brains are now loaded with Socialism, or C*******m. Their solutions to solve income ine******y. Enlarge the government power that consumes and spend our money. Then re-distribute the money to the masses to have e******y as they demand from everybody who work hard and produce. They also will use our money to buy the v**es of these people with lucrative promises of free everything, paid by us the taxpayers.

That will be a very dangerous precedence, and will cause demise to our democratic-republic. Then our country becomes Socialist like Venezuela, North or Central America. This is the future and plan of the democrat party for our country.

Please get rid of the DEMS on Nov. 2020. They'll syphon all our hard earned money, and redistribute to dumbbells and lazy ones and i*****l a***ns for income e******y.

Their hypocrisy is so blatant. Capitalize, support and sympathize with kids of those i******s, while they murder their own babies, via a******ns, and even when the baby is already born alive.

In addition, notice that all the States, Cities, and Counties managed by DEMOCRATS have more than half a million homeless people. The DEMS abandon their own, while they feed and support the tens of millions of illegal invaders. They call their support compassion.

teabag09

While they are enriching themselves off of us. Fking bastards but we put them there and let them get away with it. How STUPID is that? Mike

teabag09

It's summer here what is the season there? I'm wishing and praying a safe trip home for you and yours. Mike

The Critical Critic Loc: Turtle Island

Hoping your trip is a safe one.. how long will you be able to stay?

Kind of you to say... thank you for taking the time to read them.