Alexandria Ocasio-Cortez

[Loren Pechtel]

Laffer curve.

Don't make me laff.

There is a point where it's beneficial. There's a point where it's harmful.

What is "it"? I listed a bunch of positives and negatives; To which (if any) are you referring?

​

Beneficial goals include:

• A low inflation target managed by adjusting interest rates
• Fiat money not pegged to any commodity or external currency
• Infrastructure construction and maintenance paid for through deficit spending
• Increased deficits in response to low growth (or recession); smaller deficits (or even small surpluses) in response to strong growth.
• A balance between public and private ownership, with natural monopolies and essential services (eg healthcare) publically owned and funded, while competitive and luxury goods are made and marketed by private companies.

​

Detrimental goals include:​

• Central planning of production
• Balanced budgets (treating national budgets like household budgets)
• Commodity money, or money pegged to a commodity
• Income Tax cuts (or increased deductions/exeptions/exemptions) for the wealthy
• Privatisation of natural monopolies, and/or allowing monopolies to form (including regional or local monopolies)

You seem to think that no matter what the optimum amount is higher. But look at what has happened to countries that let it get out of hand.

The optimum amount of what?? I should look at what has happened to countries that let what get out of hand???

Your response apoears to be a knee-jerk reaction to reading the first few words of my post, and (incorrectly) guessing what the rest of it would say.

Perhaps read it, try to understand it, think about it, and then respond to what it actually says. I know it's easier to scan for keywords, and then re-type your canned reaction to seeing those keywords; But it does make you look like a crazy person or an idiot, when your canned response is such a wild non-sequitur.

I guess I didn't make myself clear enough.

The Republicans take it on faith that we are on the right side of the Laffer curve.

You are taking it on faith that we are on the left side of the curve for deficit spending.

 

[Loren Pechtel]

Because prices = money supply/goods and services.

I thought I'd pointed out the arithmetic blunder here before.

M⋅V = P⋅T​

It is V, the Velocity of Money, that you overlook.

I've snipped off the rest of your post. To pursue it would be like answering questions about relativity after you start with E-c².

"Money supply" can be interpreted either way. I was interpreting it as with the velocity already factored in.

 

[Loren Pechtel]

where G is govt spending (except transfers such as wefare payments). It's a component of - not something subtracted from - national income.

People struggle with this because they somehow think the same doctors treating the same patients - or the same teachers teaching the same pupils, etc - in the private sector adds to GDP, but is subtracted from GDP in the public sector. The common confusion of macroeconomics with a household budget.

If the govt net ("deficit") spends a billion dollars, both GDP and national debt increase by a billion dollars. Same debt to GDP ratio, bigger economy, all else being equal.

But all else is rarely equal since that spending effects the other components of GDP. That effect is called the 'fiscal multiplier'. Net govt spending might "crowd out" more efficient private sector use of real resorces and have a negative effect on the other components.

The problem here is that you also added a billion dollars * velocity to the money supply.

And your percentage is bonkers. Check your math!!

If your argument was correct governments could simply fund themselves with the printing press. But we know what happens when they try it.

 

[Loren Pechtel]

(affects, apologies..)

..just to add that it isn't a silver bullet or free lunch. Multipliers are variables, not constants. Enough net govt spending would eventually "crowd out" more efficient private sector use of real resources (Soviet Union..?), but evidence suggests that we're some way from that.

The problem here is that the costs take a long time to roost. The ever increasing portion of the budget that simply goes to paying interest. We simply do not have a long enough observation window to truly measure the effects.

In the short run deficits clearly help and austerity clearly hurts. That doesn't mean the same thing applies to the long run.

 

[Swammerdami]

Because prices = money supply/goods and services.

I thought I'd pointed out the arithmetic blunder here before.

M⋅V = P⋅T​

It is V, the Velocity of Money, that you overlook.

I've snipped off the rest of your post. To pursue it would be like answering questions about relativity after you start with E-c².

"Money supply" can be interpreted either way. I was interpreting it as with the velocity already factored in.

Really?? Anyway, that's all the more reason for your formulation to be wrong. Money sitting idle in excess reserve accounts has very low Velocity.

 

[Swammerdami]

Because prices = money supply/goods and services.

I thought I'd pointed out the arithmetic blunder here before.

M⋅V = P⋅T​

It is V, the Velocity of Money, that you overlook.

I've snipped off the rest of your post. To pursue it would be like answering questions about relativity after you start with E-c².

"Money supply" can be interpreted either way. I was interpreting it as with the velocity already factored in.

Really?? Anyway, that's all the more reason for your formulation to be wrong. Money sitting idle in excess reserve accounts has very low Velocity.

Was I too dismissive? Should I have asked for a citation for this new terminology and hoped that the ground-breaking research was not behind a pay wall?

But then I remembered that this was not the first time you'd misunderstood "Money." IIRC, I advised that you start with Wikipedia:  Money supply. Did you ever do that? Or are you still stuck in your iconoclastic view from 2022?

• Money is created by private banks, in a process called "fractional-reserve banking."

This depends on how you define "money".

Uhhhh. Are physicists confused about the differences among force, energy and power? Why do you think economists haven't agreed on the meaning of "money"?

Fractional reserve banking certainly increases the movement of money, but that doesn't mean the total amount of money has actually increased even though for economic purposes it has.

I like to compare it to a wheel. Stick a dollar on it and turn the wheel. From the standpoint of the economy you count that dollar every time it comes around and you see it again--but it's really still just a dollar. Fractional reserve banking is spinning the wheel, not printing dollars.

For the kibitzers: This is all completely wrong. Or rather it's a Humpty-Dumptyish viewpoint by someone who didn't take college econ because he "didn't need to"; can figure it out all for himself; and is careful to avoid even a page like  Money supply for fear of being exposed to academic propaganda.

- - - - - - - - - - - - - - - - -

This Board is really something! In the "Historical Jesus" thread, for example, we have several players who know much more than the professional historians. And unlike the professionals, who scrutinize ancient documents for clues, IIDB's historians don't need to review a single document! They can pull all the conclusions they need out of thin air.

 

[bilby]

Laffer curve.

Don't make me laff.

There is a point where it's beneficial. There's a point where it's harmful.

What is "it"? I listed a bunch of positives and negatives; To which (if any) are you referring?

​

Beneficial goals include:

• A low inflation target managed by adjusting interest rates
• Fiat money not pegged to any commodity or external currency
• Infrastructure construction and maintenance paid for through deficit spending
• Increased deficits in response to low growth (or recession); smaller deficits (or even small surpluses) in response to strong growth.
• A balance between public and private ownership, with natural monopolies and essential services (eg healthcare) publically owned and funded, while competitive and luxury goods are made and marketed by private companies.

​

Detrimental goals include:​

• Central planning of production
• Balanced budgets (treating national budgets like household budgets)
• Commodity money, or money pegged to a commodity
• Income Tax cuts (or increased deductions/exeptions/exemptions) for the wealthy
• Privatisation of natural monopolies, and/or allowing monopolies to form (including regional or local monopolies)

You seem to think that no matter what the optimum amount is higher. But look at what has happened to countries that let it get out of hand.

The optimum amount of what?? I should look at what has happened to countries that let what get out of hand???

Your response apoears to be a knee-jerk reaction to reading the first few words of my post, and (incorrectly) guessing what the rest of it would say.

Perhaps read it, try to understand it, think about it, and then respond to what it actually says. I know it's easier to scan for keywords, and then re-type your canned reaction to seeing those keywords; But it does make you look like a crazy person or an idiot, when your canned response is such a wild non-sequitur.

I guess I didn't make myself clear enough.

The Republicans take it on faith that we are on the right side of the Laffer curve.

You are taking it on faith that we are on the left side of the curve for deficit spending.

No, I am not.

Where in my post did I say, or imply, anything of the sort?

My ONLY mention of deficit spending was:

• Increased deficits in response to low growth (or recession); smaller deficits (or even small surpluses) in response to strong growth.

Even if you were to incorrectly assume that my position is as pathetically simplistic as to treat all deficit spending as equal (which it emphatically is NOT, rendering the "Laffer Curve" more than a little silly), I would appear to be "taking it on faith" that whether deficits are good or bad varies depending on the state of the economy.

Which is so utterly at odds with your accusation as to force me to assume that yet again you have failed to read, or to understand, my post.

So, again, could you PLEASE respond to what I actually said, rather than to what you hoped I might say, as I refuse to let you speak for me in order to fit my position in to your simplistic and frankly insulting assumptions.

 

[Loren Pechtel]

Because prices = money supply/goods and services.

I thought I'd pointed out the arithmetic blunder here before.

M⋅V = P⋅T​

It is V, the Velocity of Money, that you overlook.

I've snipped off the rest of your post. To pursue it would be like answering questions about relativity after you start with E-c².

"Money supply" can be interpreted either way. I was interpreting it as with the velocity already factored in.

Really?? Anyway, that's all the more reason for your formulation to be wrong. Money sitting idle in excess reserve accounts has very low Velocity.

There are different numbers that are labeled "money supply", depending on exactly what is being counted. Perhaps it's one of these cases where misuse becomes common enough that it becomes use but I have many times seen "money supply" referring to the movement of dollars, not merely their existence.

 

[Loren Pechtel]

Laffer curve.

Don't make me laff.

There is a point where it's beneficial. There's a point where it's harmful.

What is "it"? I listed a bunch of positives and negatives; To which (if any) are you referring?

​

Beneficial goals include:

• A low inflation target managed by adjusting interest rates
• Fiat money not pegged to any commodity or external currency
• Infrastructure construction and maintenance paid for through deficit spending
• Increased deficits in response to low growth (or recession); smaller deficits (or even small surpluses) in response to strong growth.
• A balance between public and private ownership, with natural monopolies and essential services (eg healthcare) publically owned and funded, while competitive and luxury goods are made and marketed by private companies.

​

Detrimental goals include:​

• Central planning of production
• Balanced budgets (treating national budgets like household budgets)
• Commodity money, or money pegged to a commodity
• Income Tax cuts (or increased deductions/exeptions/exemptions) for the wealthy
• Privatisation of natural monopolies, and/or allowing monopolies to form (including regional or local monopolies)

You seem to think that no matter what the optimum amount is higher. But look at what has happened to countries that let it get out of hand.

The optimum amount of what?? I should look at what has happened to countries that let what get out of hand???

Your response apoears to be a knee-jerk reaction to reading the first few words of my post, and (incorrectly) guessing what the rest of it would say.

Perhaps read it, try to understand it, think about it, and then respond to what it actually says. I know it's easier to scan for keywords, and then re-type your canned reaction to seeing those keywords; But it does make you look like a crazy person or an idiot, when your canned response is such a wild non-sequitur.

I guess I didn't make myself clear enough.

The Republicans take it on faith that we are on the right side of the Laffer curve.

You are taking it on faith that we are on the left side of the curve for deficit spending.

No, I am not.

Where in my post did I say, or imply, anything of the sort?

My ONLY mention of deficit spending was:

• Increased deficits in response to low growth (or recession); smaller deficits (or even small surpluses) in response to strong growth.

Even if you were to incorrectly assume that my position is as pathetically simplistic as to treat all deficit spending as equal (which it emphatically is NOT, rendering the "Laffer Curve" more than a little silly), I would appear to be "taking it on faith" that whether deficits are good or bad varies depending on the state of the economy.

Which is so utterly at odds with your accusation as to force me to assume that yet again you have failed to read, or to understand, my post.

So, again, could you PLEASE respond to what I actually said, rather than to what you hoped I might say, as I refuse to let you speak for me in order to fit my position in to your simplistic and frankly insulting assumptions.

You are sorting out beneficial and detrimental uses of the money, you're not looking at the benefits and detriments of deficit spending per se.

 

[Canard DuJour]

where G is govt spending (except transfers such as wefare payments). It's a component of - not something subtracted from - national income.

People struggle with this because they somehow think the same doctors treating the same patients - or the same teachers teaching the same pupils, etc - in the private sector adds to GDP, but is subtracted from GDP in the public sector. The common confusion of macroeconomics with a household budget.

If the govt net ("deficit") spends a billion dollars, both GDP and national debt increase by a billion dollars. Same debt to GDP ratio, bigger economy, all else being equal.

But all else is rarely equal since that spending effects the other components of GDP. That effect is called the 'fiscal multiplier'. Net govt spending might "crowd out" more efficient private sector use of real resorces and have a negative effect on the other components.

The problem here is that you also added a billion dollars * velocity to the money supply.

And your percentage is bonkers. Check your math!!

Dunno what you mean, but what you've written suggests that you haven't understood what you've read.

If your argument was correct governments could simply fund themselves with the printing press. But we know what happens when they try it.

Govts like the US and UK always spend with the "printing press". The portion they don't tax (back) out of circulation is called the "deficit". If you mean they could run arbitrarily big deficits, that doesn't follow from anything I've said

 

[Swammerdami]

,

,

There are different numbers that are labeled "money supply", depending on exactly what is being counted. Perhaps it's one of these cases where misuse becomes common enough that it becomes use but I have many times seen "money supply" referring to the movement of dollars, not merely their existence.

(1) Cite for the above claim?

(2) Did you ever read Wiki's musings on Money Supply? Do you now agree that private banks create money?

 

[bilby]

You are sorting out beneficial and detrimental uses of the money, you're not looking at the benefits and detriments of deficit spending per se.

No shit, Sherlock. I do exactly that; But to be fair, only because I am not a complete idiot.

Do you think it is OK for a person to borrow money?

Yes or no. No fair "sorting out beneficial and detrimental uses of the money"; If it's OK to borrow money to buy a home or a car, then it must also be OK to borrow money to play roulette, or so you can use dollar bills to light fires, or to use as matress filling.

Assuming that your objection here isn't batshit crazy, that is.

 

[Gospel]

Alright, look, given the direction of this discussion, I got to pop thought bubbles. Despite the many valid angles for debating the U.S. deficit, controlling and reducing it will require a phased approach. This involves balancing tax increases, spending adjustments, and policies promoting economic growth over [insert the amount of time needed here]. However, this will NEVER happen because there are too many conflicting interests from players with different agendas, both domestically and internationally.

Every time the discussion about the U.S. deficit comes up, I can't help but shake my head at how futile it all is.

 

[thebeave]

Alright, look, given the direction of this discussion, I got to pop thought bubbles. Despite the many valid angles for debating the U.S. deficit, controlling and reducing it will require a phased approach. This involves balancing tax increases, spending adjustments, and policies promoting economic growth over [insert the amount of time needed here]. However, this will NEVER happen because there are too many conflicting interests from players with different agendas, both domestically and internationally.

Every time the discussion about the U.S. deficit comes up, I can't help but shake my head at how futile it all is.

I like your idea, but unfortunately, it would take about a hundred years to bring it down to a reasonable level, if its possible at all. I hate to say this, but I think its hopeless. There will be a reckoning someday soon, and its going to be ugly. I weep for the next couple of generations.

 

[Gospel]

An example of what I'm getting at is Clinton achieved a budget surplus during his administration. If we continued to follow those fiscal policies, with necessary adjustments along the way, for another say 100 years, the large deficit could become a thing of the past. However, this isn't feasible as long as successive administrations implement changes and the international community engages in actions that negatively impact the U.S. deficit. I don't count acts of God because, with solid fiscal policies, we can be adequately prepared for those. Hell, we might even be able to prepare for misguided actions like Russia invading Ukraine or financially supporting a country built under a religious premise like Israel.

 

[Jimmy Higgins]

An example of what I'm getting at is Clinton achieved a budget surplus during his administration*.

* - when including the Social Security surplus.

If we continued to follow those fiscal policies, with necessary adjustments along the way, for another say 100 years, the large deficit could become a thing of the past.**

** - our aging population says otherwise. The vast majority of increased spending is related to our aging population.

The problem with assessing future economic models for the nation using historical models is that the nation and the world continues to change and adapt. Our population is drawing a lot more from Social Security and Medicare, which are the primary causes to our spending increases. Yes, we've increased other parts of our budget, but the big hits are retirement programs. Right now, we could stop all discretionary spending and still have a deficit.

The solution to Social Security was doing something about it 20 years ago. W promised to not touch it, but it helped the math to justify that budget surplus funded tax cut.... with the budget surplus that never happened. Then W wanted to privatize a portion of Social Security, but when people found out that they'd need to borrow a trillion or so and the investor would need to make 2 or 3% to break even, that died off and nothing else was done.

The GOP have convinced 75% of America that if we just tightened the belt a little, we can make the numbers work. That is a lie, but we seem overly attached to it, still believing it.

 

[Gospel]

You seem to be highlighting some complex issues surrounding U.S. fiscal policy, and I don't dispute that. I can't even wrap my head around it all. I believe, addressing the deficit (and by this I mean the size), if it's even possible, will require multi-faceted policy solutions implemented consistently over many years. Am I wrong for believing that? This would necessitate sustained cooperation from all parties, including the international community, which is unlikely to ever happen. Am I wrong for thinking that?

 

[Jimmy Higgins]

You seem to be highlighting some complex issues surrounding U.S. fiscal policy, and I don't dispute that. I can't even wrap my head around it all. I believe, addressing the deficit (and by this I mean the size), if it's even possible, will require multi-faceted policy solutions implemented consistently over many years. Am I wrong for believing that?

It'll require a lobotomy. Americans are programmed to believe that we are so close to a balanced budget if it weren't for those damn liberals. The reality is, we aren't remotely close. And part of the reason for that is the set in stone Social Security and Medicare cost growth. We'd need to increase taxes federally and state wise.

 

[Toni]

The issue is: Does the deficit actually matter? Not all economists think it does. Who owns the debt? Well, we do.

One of the issues with SS is that it now covers people/situations it was neither designed or funded to cover. I am NOT disputing the necessity or the social good that comes from providing SS payments to disabled children, or rather their families or to addicts. I'm just saying that SS was never designed nor funded to pay for these.

 

[bilby]

Alright, look, given the direction of this discussion, I got to pop thought bubbles. Despite the many valid angles for debating the U.S. deficit, controlling and reducing it will require a phased approach. This involves balancing tax increases, spending adjustments, and policies promoting economic growth over [insert the amount of time needed here]. However, this will NEVER happen because there are too many conflicting interests from players with different agendas, both domestically and internationally.

Every time the discussion about the U.S. deficit comes up, I can't help but shake my head at how futile it all is.

Deficits are completely irrelevant. No serious economist cares about deficits as a problem in their own right; They are an accounting tool that provides just one of many data points to help understand which way things are trending.

Politicians love deficits, because they are something that the voters can be depended upon to become terrified by. People imagine (or actually are in the position of) owing a huge sum of money, and how horrible that would be (or is); And they genuinely believe that the national debt is the same kind of thing.

It's not.

At all.

If your worry is how the imbalance between taxation and government spending is affecting (and will in the future affect) the economic wellbeing of the country and its citizens, the size of the national debt, and of the budget deficit, is of far less importance than the rate of inflation, GDP growth, unemployment, and the foreign exchange rates against other major currencies.

And, of course, neither side of politics cares about deficits except as a tool to bludgeon their opponent.

To reduce a deficit, you must cut spending by more than you cut taxes; Or increase taxes by more than you increase spending. But neither party is interested in that.

One party pushes for tax cuts as though a cut in revenue will force a reduction in expenditure (it won't); The other wants to increase spending, but not increase taxation (at least, not by the same amount), which (if the spending is appropriately targetted) can be economically sensible, but drives up debt.

The problem being that Joe Lunchpail cannot accept the idea that it is economically sensible to drive up debt. But it can be, even for an individual. It makes sense to borrow money to invest in future income growth.

It makes even more sense to do that if your future income isn't constrained - if you cannot grow old, will never retire, are effectively immortal, and have a huge diversity of income streams. People are never in that position, but countries are.

Deficits are a red herring. They are one of the least important indicators of the merit of a policy platform.

Taxes are necessary to maintain the value of the currency. If the inflation rate is low, and foreign exchange value of the dollar is not collapsing, then the balance between taxation and spending is about right. Attempting to target zero deficit, or worse, to target a surplus in order to reduce national debt, are stupid (and futile).

A successful economy is one that has growth that outstrips inflation, and whose currency holds its value internationally. Debt and/or deficit are irrelevant to these objectives.

Controlling or reducing the deficit doesn't require any approach at all; It is an objective without merit. Nobody's life will in any way be improved by "controlling or reducing the deficit", and anyone who pledges to attempt to do so has no business anywhere near policymaking.

Look after GDP growth, inflation, and unemployment, and leave the deficit to do whatever it does. By definition, if those three things are doing OK, the budget deficit (and the national debt) are not a problem, no matter how large they might be; Their magnitude will roughly reflect the growth rate of, (and size of, respectively) the overall economy, adjusted for foreign trade.

Nobody will ever demand that the USA pay back her entire national "debt"; And there is no sum denominated in US dollars that the USA could ever find herself unable to afford to pay.

You needn't worry that you will come back to your nation one day to find that the baliff has stacked all your furniture in Canada, and changed the locks.