Reader John H sends along this Detroit News editorial, aptly (if pointedly) titled “An iPod for every kid? Are they !#$!ing idiots?” And while the title may not please many social conservatives (children, after all, need be protected from potty-mouthedness, even when it is referenced quasi-diacritically), fiscal conservatives will almost certainly feel the Detroit News’ pain:
We have come to the conclusion that the crisis Michigan faces is not a shortage of revenue, but an excess of idiocy. Facing a budget deficit that has passed the $1 billion mark, House Democrats Thursday offered a spending plan that would buy a MP3 player or iPod for every school child in Michigan.
No cost estimate was attached to their hare-brained idea to “invest” in education. Details, we are promised, will follow.
The Democrats, led by their increasingly erratic speaker Andy Dillon of Redford Township, also pledge $100 million to make better downtowns.
Their plan goes beyond cluelessness. Democrats are either entirely indifferent to the idea that extreme hard times demand extreme belt tightening, or they are bone stupid. We lean toward the latter.
We say that because the House plan also keeps alive, again without specifics, the promise of tax hikes.
The range of options, according to Rep. Steve Tobocman, D-Detroit, includes raising the income tax, levying a 6 percent tax on some services, and taxing junk food and soda.
We wonder how financially strained Michigan residents will feel about paying higher taxes to buy someone else’s kid an iPod.
That they would include such frivolity in a crisis budget plan indicates how tough it will be to bring real spending reform to Michigan.
Senate Republicans issued a plan a week ago that eliminates the deficit with hard spending cuts. Now their leader, Mike Bishop of Rochester Hills, is sounding wobbly, suggesting he might compromise on a tax hike.
We hope Bishop is reading the polls that say three-quarters of Michigan residents oppose higher taxes.
Reading stories like this is one of the reasons I can’t, in good conscious, vote for Democrats, whose tax and spend magical thinking defies the laws of economics.
On the one hand, I’m tempted to say that the people of Michigan who keep voting these people in deserve what they get. But on the other hand, part of me is beginning to see the workings of a clever conspiracy at play here.
First, it is impossible for me to believe that the Democrats truly believe that raising taxes and spending on entitlement programs is fiscally responsible. On the other hand, though, a $149 per child investment—coupled with those higher taxes and greater spending—will almost assuredly keep families impoverished, making them more likely to vote for the party that promises them things like iPods and increased government spending on entitlement programs.
Such a plan is, of course, economically disastrous. But that assumes that Democrats hope to build strong economies. What if, however, the plan is simply to create a perpetually impoverished and overtaxed class that is beholden to the entitlement promises of Democratic lawmakers? Because seen from such a vantage point, Dem proposals—inasmuch as they rely on bromides and promises of relief without sacrifice (taxes, after all, are viewed by Dems as government entitlement)—create the conditions for keeping Democratic voters reliant on Democratic promises. After all, someone already impoverished is hardly likely to respond well to Republican calls to slash spending and reduce entitlements. And from the perspective of maintaining power, the plan is actually quite clever.
Of course, on the federal level, Republicans haven’t shown the kind of spending restraint that pleases fiscal conservatives, either (spending is up all around, not just militarily, with pork so generously stuffed throughout spending bills that they’re beginning to resemble sausage casings)—though to Bush’s credit, his tax cuts have generated plenty of government revenue and kept the economy robust and growing, despite terrorism, high gas prices, and persistent calls for increased regulation; meaning the Bushies, if you believe the spin, are ahead of schedule with respect to their balanced budget plans.
Couple that with the latest numbers putting the unemployment rate at 4.4%, and it is hard to argue that the economy is in the dumper—though the suggestion that such is the case, a feature of our “neutral” media’s coverage, has the polls showing that people believe the economy is weak.
But then, maybe that’s just another platform in the Democrat’s “economic plan”…
Michigan just might be the Petri dish for runaway American socialism: The southeast urbanites and academics, arguably the densest per capita fiscal dependency in the nation (being added to by other leftist enclaves in places like urban Grand Rapids and the state’s lesser welfare cesspools) finally hitting that 51% status and taking down an entire state of some of the most productive, conservative, but apparently soft-minded voters in America.
The contrast between Michigan industry and Michigan dependency almost couldn’t be more vivid.
tw: district17
Ummm… is there some rationale for the iPod purchase other than a gift to Apple and buying future voters on the cheap?
There’s been no indication in any of the clippings so far that there’s actually a plan to use them for anything – or is it just a gift so the students will have something to distract themselves from what the teacher is blathering about?
Which, given the state of the public schools, may not be as bad an idea as it sounds…
Alexis de Tocqueville was almost correct when he said that America would survive until her politicians found out they could bribe the people with their own money. Little did he know that liberals would perfect a way to bribe the majority using money taken from the minority: it‘s called progressive taxation. Progressive taxation makes it possible to use entitlement programs to bribe the majority of the voters—those who pay little or no taxes—by using money from the minority that today are paying almost all of the taxes.
It’s democracy, i.e. mob rule, in action. Republicans have learned to play this game as well, except they use tax cuts to help convince the minority that they are not really being skinned alive. However, tax cuts in the face of spending increases merely replaces the robbery of taxation with the robbery of inflation. We are still being plundered and the competent are still being penalized in favor of the incompetent.
That, of course, is the true motivation behind the Democrats desire to raise taxes: they want to punish the man of ability, they want to see him throttled and forced to work for the benefit of his inferiors. It has nothing to do with lowering deficits.
Magical thinking is leaving our children huge debts to pay off and calling it fiscal responsibility.
Looks like it will take another Clinton to balance the federal budget.
Did you read the post, alphie? Click the links?
Pay specific attention to the portion of the post featuring this.
Like the broken clock, little alphoid’s actually right: It will indeed take another fiscally quasi-responsible Congress to sop up huge tax revenues, shut down a liberal POTUS, and “balance” the budget, leaving the debt entirely intact.
That the left’s stooges, all alphoid-like, refuse to see the irony of benevolent collectivism and its inevitable impact on the economy—and personal freedom—is itself ironic.
Ironic but not surprising, that willful denial of reality being the disease of Leftism. The one afflicting little poptart-addled alphoid the wonder troll.
(Jeff may be referring to SS and Medicare running three times more than national defense, alphee. Were you going to go righteous, cranking furiously on your Bushcowarforoil fiscal air raid siren again?
I especially like the part where SS and Medicare buy up those seven hundred thousand iPods…))
Have you guys seen this?
American families and the federal government are now spending more than they take in.
Last time that happened was the Great Depression.
Federal tax receipts went up 60% during Bill Clinton’s first 6 years in office and he balanced the budget.
How much have they gone up during the necons’ six year spending party?
How did he do that?
By acting like a grownup instead of dumping all our problems on our children, TomB.
And when the unemployment rate get down in the 3% range, like it did under ol’ Bill, you guys can start boasting about it.
Until then, keep on partying, I guess.
Suprisingly you didn’t answer the question, alf.
Considering Congress is tasked by the Constitution with bugetary policy, I want to know what Clinton did to coerce the majority Republicans to raise those tax receipts?
I seem to remember him busting Newt down like a punk, TomB. Worked fine until the neocons took over the playpen.
The Bush Jr. economic legacy will be that he borrowed $5,000,000,000,000 in our children’s name and funneled it to his cronies.
Maybe President Hillary will “spread a little democracy” to the Cayman Islands when she takes over to recover the neocon’s swag?
Now that would be an invasion I could get behind.
That isn’t an answer, alf. WHAT DID HE DO?
Specifically?
Uh, the neocons were in charge of the pursestrings when that wonderful 3.3% unemployment rate was acheived.
Why is anyone arguing with the ‘tard?
I have a question for all of you who spar with alphie on a day-in, day-out schedule.
Is he:
A.)bone-bendingly ignorant
B.)fully delusional
C.)pathologically distortional
D.)seriously masochistic
E.)a bit of all of the above
Psychology has never been my forte and I’m increasingly curious why someone would so relish being pilloried to the degree he suffers.
Uh. Tax cuts increased federal revenues inspite of there being a war and all.
Alph. You’re pretty bright for a 15 year old.
Given his complete inability to keep from making utterly stupid statements, sometimes its just fun to make the monkey dance every now an then.
Although he did run away pretty quickly.
Not incidentally, alphie’s a liar—or, rather, as usual the moonbats who feed him his lines are liars, and he dutifully repeats the “narrative.”
Go here and change the start time to 1990.
The lowest unemployment rate under Clinton, just before he left office, was 3.8%. Those of us with looooooooong memories will also recall that that’s when the tech boom crashed.
The Clinton peak unemployment, right after he took office, was 7.8%—whereas Bush’s peak, in 2003, was 6.3%.
It’s interesting to set the start point to 1960, which puts the graph lines on election years, and see the correlation. Sort of explains all by itself why Carter and Bush I didn’t get re-elected, doesn’t it?
Regards,
Ric
Two things to add: if you follow the link, you have to have Java (not just JavaScript) installed and enabled. That’s why I took so long to respond—I didn’t, and had to download it.
The second thing is that the graph from 1960 also explains why the Democrats want to increase taxes. If they can kill unemployment, have it be on a strong upswing during the elections in 2008, the likelihood is that another Republican won’t be elected.
And a mea culpa—Clinton doesn’t own the 7.8%; that belongs to Bush I. 1992 was the election year; BC didn’t take office ‘til January 1993.
Regards,
Ric
Technically, aphid is what is known as a masochist troll.
A masochist troll, always a reactionary lefist, btw, is one who reads a conservative blog and then post stupid/inane/”provocative” posts.
When the sane readers of said conservative blog react by hurling insults and invective at said troll, the troll reads the insults and invective, all the while playing “yankee-my-wankee”.
I once considered it odd that since lowering tax rates increases tax revenue and raising rates lowers tax revenue, why wouldn’t Democrats be the ones in favor of lower tax rates in order to increase the size of government? Then I realized that what they want is not “big” government so much as “powerful and in control” government. Higher tax rates may lower tax revenues but they lower the size of the private sector economy more. This results in government controlling a greater share or the economic pie even if the pie is smaller. Democrats would rather be the big frog in the little pond.
I live in SW Michigan and for the past several years my taxes to the State of Michigan (income, sales, property, and gasoline) are larger than my Federal taxes. I’m not rich or poor but blue collar and middle class.
Well, considering the serendipity of Ronald Reagan’s budget withdoctor David Stockman heading off to jail for defrauding an auto parts maker’s stockholders once he got control of the company (he’s from Tejas, natch), let’s discuss wingnut economic mythology:
If you cut taxes $1.00, how much do tax revenues increase?
Trick question, if you answer less than $1.00, you expose your b.s. for the economic fraud that it is.
Well it is Michigan, where kids are routinely killed for their Michael Jordan sneakers or NBA jackets, so yeah, I see no problem with having them all carry around iPods.
Since he showed up, I assumed alphie had a room-temperature IQ. His recent pronouncements suggest that he has a room-temperature IQ in Centigrade.
Take this seemingly innocuous statement. Alphie’s too stupid to realize that you don’t cut taxes in dollar amounts, you cut taxes in percentage amounts. He’s too stupid to realize that the goal of cutting taxes to increase revenue is that you’ll end up with a smaller percentage share of a bigger economic pie.
CLICK.
Got Kevlar, alfrade the wonder troll?
The new troll is officially more of a telephone pole than actus was.
It’s kind of sad, in an “America’s Dumbest Home Videos” sort of way.
It’s not even worth debunking it anymore. I mean, what’s the point in telling someone the difference between rates and amounts and explaining capital investment to them when they’re just going to blink and change the subject anyway?
But he was just endearing himsef’ to us all, geoffb, what wi’ all ‘em cute lil’ turns ‘o phrase…
No, Civilis, it’s just a red herring strategy.
If taxes are zero, clearly you have no tax revenue.
If taxes are 100%, you get to collect them once; after that there is no economic activity to tax, because nobody has any money, and again tax revenue is zero.
Somewhere in between is a maximum. If you go past that, economic activity decreases and you get less revenue. If you go below it, economic activity increases but you don’t get the full benefit in tax collections. So the answer to alphie’s question is that it depends on where you are economically before the tax change.
He can ask the question in good faith because he’s an ignoramus who doesn’t think anybody changes behavior when stimuli change.
Based on observation, I would suggest that at this point the answer is somewhere around $1.01 to $1.05, but I haven’t actually run the numbers.
Regards,
Ric
You guys are too funny.
I don’t think I’ve ever seen so much squid ink.
Simple question:
If you cut taxes $1.00, how much do tax revenues increase?
As a bonus here’s the rising taxpayer bill for all the money the neocons have pocketed.
Well, since you’re still scurrying around alfie, how about finally answering the question?
How, exactly, did Clinton cause federal tax receipts to go up 60% and balance the budget?
Oh, see, now it’s engaged its “human” routine again, running a crude attempt at humor. I think it’s part of that same lump of code that ends questions with truncated monikers. It is cute, isn’t it?
Why yes… the Bush admin has a computer with a database of card-carrying neocons and we all get a nice printed check at the end of the month.
alpee is a prime example of what you get from social promotion in public schools.
…showing an unfortunate dip, alfreak, after 2001.
War’s profitable! Yet another Neocon treachery vindicated!
alpee
Try this little thought experiment
Look around your neighborhood…how come owner-occupied homes are [usually] in far better condition than homes occupied by renters?
Darleen, that strategy is useless.
alphie is too stupid to think in ratio and proportion, and is easily hypnotized by numbers with lots of zeroes. Oooooh, shiny…
Regards,
Ric
jihadi boy isn’t going to answer that for two reasons:
1 – he’d argue other dynamics before acknowledging the connection.
2 – if he was held to logic, it’d blow his nonsensical position right out of the water, so he’ll disappear
Why do you all bother with the a-bot? It’s just a lot of noise and stink, but in the end it’s nothing.
Ignore the shit-for-brains already.
Darleen, does this futility come before or after telling pigeons to stop shitting on statues in the park?
Sigh,
Even more squid ink?
…though to Bush’s credit, his tax cuts have generated plenty of government revenue…
If you cut taxes $1.00, how much do tax revenues increase?
You mean like avoiding my question?
If you raise taxes .50, how much do tax revenues increase? Easy, they don’t.
Da good news frum Michigan: Propurty is fur sale real cheap, a buyer’s market. Yer less likely to get ticketed fer speedin’ here, ‘cause da lawmen are bean laid off. Der are plenty a casinos waiting to take yer spare cash. Our Governor is prettier den yer Governor.
and free IPods eh!
Okay… I know better, but let’s suppose little alpee really doesn’t know.
Every $1.00 a corporation or small business owner saves in taxes is $1.00 he/she can invest in their business, pay to employees in the form of salaries, etc.
So that $1.00 doesn’t raise the tax revenues by much, but a 1.00% decrease for a business making, say, $1,000,000 profit, would mean an extra $10,000 going into the economy just for that one business. Make that decrease 2.00%, or 5.00% and spread it over all businesses, large and small, and it’s hard to miss the impact, no?
But maybe you have to be willing to see it.
TW: Guessing this has served73 no purpose, indeed.
$1.00 will have no effect on our enormous economy/revenue. Now fuck off.
One day, people will come to read this blog and it won’t be about an obtuse contrarian nitwit.
And cats and dogs will live in blissful harmony.
Interesting couple of factoids I came across in my readings the other day (again, in my day job, I work with fixed income securities):
– Not sure where I saw it – might have been a think piece from Bank Credit Analyst in Toronto (yes, the home of pillow fight monitors) – but the much ballyhooed record proportion of debt vs. family income can be attributed in fair part to an explosion of credit services now being offered to higher-risk clients. Why? The resulting debt can be securitized and sold off to investors, particularly via collaterized debt obligations (CDOs), meaning more investors can get in on the game, proving more credit to more people.
(Now, reasonable adults – which excludes one specific person here – can argue whether this is an unalloyed good or not; can these new credit consumers adequately budget for this increased leverage? Nonetheless, the issue is a wee more complex than the Left’s invocation of Tennessee Ernie Ford’s “another day older and deeper in debt.”)
– In today Wall Street Journal, it was noted that car rental companies in Michigan are no longer allowing one-way rentals to points out of state. Why? Because no one is taking one-way trips (i.e. moving into) Michigan, so there’s no easy way to get the cars back.
Of course, I live in Illinois, so I can’t be smug; our governor’s new health plan calls for a tax hike on business revenues that will place a huge hurdle in front of anyone trying a start-up. Not to mention that Chicago is proposing to blow $2 billion (so figure $4 billion) in unneeded facilities if we get the Olympics.
So Michigan, hold on, ‘cause Illinois is catching up to you.
Alphread, I’d like y’all’s take on why the debt declined after 2001, just as the NeoconDeathStarâ„¢ was installing McChimpyâ„¢ the imperial president and dialing in the PlanetRayâ„¢ and training it on ole’ Sadam so as to take all that mideastern oul and pipe it into Dallas.
Now. You done being a useless impedement to the human race yet?
tw: well17?
Doesn’t this figure also reflect the surge in home-ownership?
Actually it’s an easy question.
The “velocity of money” in our economy is about 7, that is, any given dollar changes hands 7 times.
So a dollar left in the hands of the economy is worth $7. If the effective marginal tax rate is 20% (pretty close, I think) the resulting revenue is $1.40.
Regards,
Ric
Velocity is a per annum figure yes?
Out of curiosity, what kind of return should the American taxpayers expect on their $500+ billion investment in Iraq, percy?
I see none of the economists here can answer my simple question, because there isn’t an answer.
While the idea that cutting taxes increases tax revenue is an oft-repeated talking point among the Paris Hilton fan club on the right, no respected economist, left or right, would make such a claim.
It’s just a way to ease the guilt of once again, selling out your kid’s future for an extra round drinks at Hooters today.
How exactly are you using this term ‘densest’?
Only because he died.
Precisely.
Aplhie,
You’ve got an answer to a (poorly-formed) question. Now what?
BRD
That’s all well and good, but it would be more fun to see the armadillo dance.
Actually, happyfeet, on an annualized basis it’s more.
The 2006 GDP was about 13,246.6 billion. According to the New York Federal Reserve Bank, which keeps those statistics, M1 or the “real money” supply (as opposed to M2, which is funds available for capital investment and includes a lot of moving money) was around 1.4 trillion. So in fact every dollar had to be used a little less than ten times—being taxed as income in almost every case. At a velocity of 10 and a marginal rate of 20%, a dollar reduction in tax gives $2.00 in ultimate revenue.
The contrary is of course true. What the Democrats want is a disastrous economy in the summer and fall of 2008, so people won’t vote for Republicans. That’s why they want a tax increase—they don’t want the money; if they wanted money they’d reduce taxes, because we’re well beyond the peak of the Laffer curve. What they want is the tax (to prove they’re strong enough to push one through) and the economic hit that will put people out of work for the election. And of course they will prey to the max on the ignorance of people like alphie, screaming “fiscal responsibility!” all the way to 8% unemployment.
Regards,
Ric
Highest.
Seriously. It is like suggesting that giving more seed to productive farmers would lead to a bigger harvest. How retarded would you have to be to believe something like that?
Barring that, seems they’ll happily settle for the perception of a disastrous economy. Here’s one of my favorites in recent days. Interesting that on balance Reuters’ advice, if taken, would lead to a reduction of the velocity of money, at least the way I read it.
no respected economist, left or right, would make such a claim.
Milton Friedman comes to mind.
aphid, has anyone told you today that you are and idiotic, obnoxious twat?
TW: Just a guess here, but I’d say that aphid ain’t married61
I almost forgot Jack Kennedy. While not an economist he cut taxes and increased federal revenues.
A bright 15 year old indeed.
Well, the notion of the investment in the current GWOT is essentially a concrete manifestation of Democratic peace theory. Is that particularly hard to follow?
Friedman, Kennedy, and Dr. Arthur Laffer, who first put numbers on the concept. The overly simplistic analysis I gave above was an alphie-level example of the so-called “Laffer Curve.”
alphie asked a mind-bogglingly stupid question based on abysmal ignorance—that is, above average for him—then, when anybody tried to clarify the nuance he started smirking about “squid ink.” So I replied on exactly the same level, showing that even at mollusc-level intelligence his analysis is full of shit. I notice he hasn’t been back. Funny how that works, innit?
Regards,
Ric
BRD,
Just hopng the Republicans leave the fantasy of faith-based land and return to reality.
I’d hate to have to keep voting for the damn Democrat party.
Alphie,
I am going to guesstimate that your comment was meant to be some sort of response. However, being a Bear of Very Little Brain, you’re going to have to explain to me what you meant in your comment. And where you’re going with that.
Being that I’m suffering a surplus of magnanimity, I’ll try to answer your questions – I just may need you to explain what you mean with your commentary.
BRD
Excuse, me that should read as:
However, being that I am a Bear of Very Little Brain, you’re going to have to explain to me what you meant in your comment.
Ric
Alpee takes the progg view of economics akin to a witchdoctor’s view of modern medicine…that it exists separate, and mysterious, from human beings.
Notice s/he/it never addresses any point raised…surely alpee never gave even a passing nod to my challenge re: homeowners/renters.
Any savvy business owner or manager knows it is the intangibles that spell success or failure. Human beings are not machines and our behavior, based on our self-interest, will endrun any attempt by the government that approaches confiscatory taxation.
Case in point, the infamous “Yacht tax” where Dems were congratulating themselves on raising revenue from the hated “rich”…
Well, in short order the “rich” stopped buying American built yachts. Oh, they still have their luxury boats and American builders went broke.
Alpee sees economics and emotes “ooga booga”
Darleen,
alphie is a member of what is probably a majority, certainly a majority in the world at large. He is, for all practical purposes, a gold bug.
As I’ve said before, it’s worth remembering that Karl Marx was absolutely right—if you accept his assumptions. If you gave alphie enough time he would come up with Capital all on his own, because his assumptions are the same: wealth is fixed and can only be divided up “fairly” or not; “capitalists” are mega-rich; money has to have intrinsic value. There are others…
Real capitalists, as opposed to bedtime bogeymen, saw the limitations of that long before the Prophet Karl ever got his library card, and have been working on it steadily ever since. Like most leftists, alphie never noticed. Capitalists have been laughing (and baiting the Left) ever since. alphie’s too stupid to get the joke.
There hasn’t been a capitalist of any stature (by alphie’s definition) since 1929, and (again by alphie’s definition) we haven’t had “money” in this country since 1932, or in the world in general since 1971. I’m not sure why he’s so adamant about not spending it for whatever we want.
Regards,
Ric
Me too, allfever, me too. Darn embarrasing having Dubya always doing those SOTU speeches from the pit of the Mormon Tabernacle, what with the pointy sheets standing around in the candlelight and all.
Damn fine acoustics, tho.
When Hilary’s in, I’m so looking forward to some of that objective, morals-free collectivist secularism, spoken right from the Oval Office, where socialism belongs, dammit. Women and children first!
Because a benevolent government is a good government! And higher taxes!
I’m just a guy who believes increasing spending while cutting taxes causes deficits.
I also think someone is going to have to pay back the trillions of dollars we’ve borrowed over the past few years, probably our children.
As with most faith-based things, I can’t even imagine what the people who don’t agree with those two statements do believe.
Something along the lines of:
1. Screw America’s children?
2. The world will end before we have to pay all that money back?
3. America will never experience another recession/depression, so it’s all good?
Since my vote will cancel out exactly one Democrat vote, I choose to cancel out alphie’s vote in 2008.
A tard who can’t distinguish between dollar amounts and percentages is obviously not able to grasp how JFKesque tax cuts increase the size of the economy, nor can he discern that the war will never bankrupt anyone, because the cost is a nominal % of the ever expanding total GDP.
How much money have the liberals spent in their war of choice, trying to “obliterate poverty” over the past 50 years?
I’ll giver you a hint – 500 billion is closer to the number of zeros in that figure. Their “war” is a complete and utter failure, a tragic comedy of Herculean errors. They haven’t eliminated poverty and have in fact made it much worse in nearly every city and state in which they implement their perpetually failed “Marx-esque solutions.” Not a promising track record.
Alphie, for the good of the nation, go play on a see saw. Let the adults handle the money.
Exit questions for alphpole- How many homeless people could have been fed by Cold Cash Jefferson’s $90,000 bribes? Why won’t you answer this question? Where is your decency? Where is your ethical Congress? Why are they kneecapping the troops in the field? Why are they increasing pork spending to the highest levels in years while cutting the troops throats for peanuts, shrimp and bullshit? Why are the Democrats in Congress twiddling in the low 30%s?
I don’t expect answers to any of those, because that would require being honest, understanding economic theory and reality, knowing basic math, knowing history, reading newspapers and polls, etc.
That’s all too much to expect from a third grade candy-ass Clintonoid automaton.
Consistency is the hobgoblin of small minds. In alpo’s case, the hobgoblin is more like a large mountain troll that repeatedly beats him about his brainless cranium.
Fun to watch a moron slam his head into a wall over and over again, though.
tw: Thinking77 is fun!
And quickly, I’ll play alphie for a sec:
What have the Democrats and their recent pork spending frenzy done for American’s children, besides spent them further into bankruptcy?
Nothing.
Next!
shorter alpee: OOGA BOOGA!
Alphie,
Why, in particular, do you believe: “Someone is going to have to pay back trillions of dollars?â€Â
BRD
To All,
Am I completely off my rocker in thinking that government debt works in a fashion to any sort of other tradable debt – i.e. an option for financing other than equity?
BRD
On the other hand, though, a $149 per child investmentâ€â€coupled with those higher taxes and greater spendingâ€â€will almost assuredly keep families impoverished, making them more likely to vote for the party that promises them things like iPods and increased government spending on entitlement programs.
I refuse to believe they can think that far ahead, or are really that cynical. That’s actually the scary thing—they think they’re helping people this way.
I mean, come on, even the Communists didn’t INTENTIONALLY bankrupt their societies. They were just morons who couldn’t stop it from happening.
How’s the old saying go? “Never ascribe to malice what can be explained by stupidity.”
BRD,
No, you’re exactly correct. Rock with confidence.
In fact, if there were no government debt it would cause enormous problems. The simplest solution to those problems would be for it to issue some, just to give the banks somewhere to start from.
Regards,
Ric
And that despite the fact your own linked data likely proves you wrong.
Not to mention no end of your mental superior’s explanations.
So … bravo!
BRD,
Government debt is a partially deferred tax, essentially.
Alphie,
As helpless as our children look now, bear in mind they will most likely be, on average, significantly wealthier than we are, just as we are wealthier than people were in the 1970s, because later generations inherit all the previous cumulative productivity improvements.
Also, it’s worth noting our long-term debt situation is much better than most Western countries, because we’re already considerably wealthier on a per capita basis than any other major country and our economy grows faster to boot.
So – in overly simplistic terms, there are three ways that an entity can get capital: debt, equity, and direct revenue.
Direct revenue has some advantages since its pretty straightforward and can be easier to get a handle on. However, it makes investment for future growth much more difficult, owing to the fact that the money put away while sufficient funds are accrued is saved at a loss (if it weren’t being saved at a loss, then the ROI of the longer-term improvement wouldn’t be worth spending money on).
Equity isn’t bad, but is harder for governments to do, and in a horribly inept comparison, trading of fiat currency acts as close to equity financing a country will ever see. Granted, the national government itself doesn’t realize any gain on currency positions if the currency is truly allowed to float, but it does serve as a measure of confidence in a nation as a whole.
Debt financing is debt financing. It’s a means for something like a government to gain access to capital for spending in the near term at market rates, with the expectation that the long term increase in revenue will increase. However, if it gets too far out of whack, then the simple maintenance on the debt gets to be prohibitive and can spark a credit spiral.
I think.
Actus, if you’re out there, please come back! You were such a better resident troll!
OK, I’ll say it. Where’s actus? Because this alphie/aphid character makes him look like a Nobel Prize winner in comparison.
Actus, before you shit yourself with pride, I’m comparing you with Jimmie Carter and Yassir Arafat.
MarkD,
Is this the difference?
Actus: shit yourself with pride
Alphie: pride yourself with shit
BRD
TallDave,
That’s one way of looking at it.
Another, equally valid, is the remarkable discovery made since 1929, and confirmed since the collapse of the Bretton Wood agreements: one man’s debt is another man’s equity. This can, and does, have some remarkable (and counterintuitive, especially for alphoids) effects.
Suppose you give me $50, and I write you a note for it: “IO TallDave4 $50.” Given the proper administrative tools, including the ability to assess my likelihood of paying you back, that can easily end in a situation where you can sell that note for $45, with the difference being the banker’s risk that I won’t pay. He might lose in my case, but if he does a hundred or a thousand such the law of averages is in his favor.
So I’ve got $50 and you’ve got $45. Between us we can spend almost a hundred bucks. Care to go drinking? I’ll buy the first round…
The Government is a special case, because worst case they can print the money to pay their debts. It might screw the economy for other reasons, but the debt as such is not a problem. It is, in fact, a way for them to print money without getting into the problems of how to add enough zeroes to the bills.
The real thing is wealth. Like energy, wealth is not a “thing”—it is detectible only by its effects on things. And, like energy, one of the ways we manipulate wealth is symbolically; energy using mathematics, wealth using money. Again like energy, it can be hard for the noninitiated to distinguish between the thing itself, which is intangible, and its effects. Heat is not energy, but energy makes things hot. Gold is not wealth, but wealth can acquire gold.
I’m no libertarian, but applying libertarian principles to a problem, especially in economics, is the shortest way to a simple, approximately-right answer in a remarkable number of cases. Suppose A has X, and B has Y. Four cases occur:
A prefers X, and B prefers Y
A prefers Y, and B prefers Y
A prefers X, and B prefers X
A prefers Y, and B prefers X
If each prefers what he has, there is no reason for either of them to change the status quo. If either prefers what the other has, but the other prefers the same thing, no change occurs—one wants a change, the other does not and vetoes the proposition. In the case where each prefers what the other has, they exchange—and both are happier; that is, they are both wealthier than before, and so is the society in which they are embedded. If money is a symbol of wealth, we can find ways to express that improved condition in a form that enables us to carry it forward—and that’s precisely what we do, largely using the concept of “debt” in ways not contemplated by the writer of the 23rd Psalm. Or alphie, poor confused fellow.
Regards,
Ric
So when debt is repaid, the pie shrinks. I don’t think Reuters has our best interests at heart.
Is it fair to say that, outside of cases of sheer excess, that debt and equity issues basically serve to increase the velocity of money, achieving increased liquidity, and therefore making more wealth creation possible?
Depends where the money is spent, BRD.
The money the government borrowed has been sunk into Iraq, doubt it will ever pay off.
And as a resident of one of America’s bubbles of enormous prosperity, where the bulk of the tax returns went, I can tell you that most of the tax returns were spent on:
Investments in China
Cars from Germany
Fashion from Italy
Vacations in France
And huge houses made out of Canadian lumber by Mexican laborers
That’s why America’s economy is growing 2% a year slower than the world’s average economic growth rate of 5.5% a year.
Alphie,
What does, indeed, happen when money is spent? Does it disappear? Evaporate? is it eaten by bunnies. Please do tell. Your grasp of the velocity of money and concepts of liquidity are painfully lacking, at the bare minimum.
I am not an economist, but rather than follow your example of triumphing in ignorance, I thought it might be worthwhile to try to find out more.
BRD
Why BRD,
You do know Milton Friedman was well liked, but his ideas on economics have been, well, eclipsed.
His theories, like Libertarianism, are the first steps college kids take on the road to true economic understanding.
Some kids never move beyond them, though.
Arrested development.
Alphie,
I yet again am overwhelmed by your vast understanding and knowledge of the universe. So much so that I can’t tell if you actually answered anything I’ve asked you.
So, perhaps, in your great forbearance, you might deign to answer one of the many questions asked of your eminence.
I wait with unreserved anticipation at whatever crumb of wisdom you might see fit to bless this unworthy peasant with.
Slavishly yours,
BRD
Not just any Wonder Trollâ„¢, Vicarious Wonder Trollâ„¢!
damn. looks like alphie’s right.
By Jove, you’re right too!
Does it strike anyone as odd that Alphie – he of no worldview – thinks that there is such a thing as ‘true economic understanding’?
I thought true economic understanding meant you knew how to look at the “price per unit” in the small print on the corner of the price tags at Ralph’s.
I am really entertained by those of you arguing with alphie, and if you’re doing it for your own amusement, please don’t let me stop you. However, if you think, even whimsically, that you’re going to get anywhere, forget it.
alphie is a troll. His goal in every thread is to make it about him. The degree to which is succeeds is remarkable.
I guess I think of him more as a goonie than a troll.
But that’s probably one of those things that mostly just makes sense in my head.