Best political system (and how to get there).

[Horatio Parker]

Yeah coz govt can't create money. And neither can banks. It just grows on rich people, right?

no, they'd be real constraints, not bogus ones.

Budgets are just as real a constraint as the others I listed.

Budget constraints are self imposed IF the real resources are available.

The resources are obtained through taxes--they come out of the pockets of those you're trying to benefit.

Govt's don't need taxes to spend; the point stands: if there are sufficient real resources, financial constraints are self imposed i.e. political.

 

[Loren Pechtel]

no, they'd be real constraints, not bogus ones.

Budgets are just as real a constraint as the others I listed.

Budget constraints are self imposed IF the real resources are available.

The resources are obtained through taxes--they come out of the pockets of those you're trying to benefit.

Govt's don't need taxes to spend; the point stands: if there are sufficient real resources, financial constraints are self imposed i.e. political.

When governments use the printing press instead of taxes you just get inflation which is a stealth tax and does economic harm besides--it's worse than simply taxing.

 

[bilby]

no, they'd be real constraints, not bogus ones.

Budgets are just as real a constraint as the others I listed.

Budget constraints are self imposed IF the real resources are available.

The resources are obtained through taxes--they come out of the pockets of those you're trying to benefit.

Govt's don't need taxes to spend; the point stands: if there are sufficient real resources, financial constraints are self imposed i.e. political.

When governments use the printing press instead of taxes you just get inflation which is a stealth tax and does economic harm besides--it's worse than simply taxing.

You only get inflation to the degree that growth doesn't absorb the extra cash created. If the government doesn't create more cash than it taxes in a growing economy, you risk deflation.

 

[Underseer]

The best political system is the kind of functional free society/democratic-republic that much of Europe has and that America used to have.

Unfortunately, Republicans decided we don't need that anymore as it gets in the way of putting our children in debt to pay for the latest round of tax cuts for the economic elites.

 

[Horatio Parker]

no, they'd be real constraints, not bogus ones.

Budgets are just as real a constraint as the others I listed.

Budget constraints are self imposed IF the real resources are available.

The resources are obtained through taxes--they come out of the pockets of those you're trying to benefit.

Govt's don't need taxes to spend; the point stands: if there are sufficient real resources, financial constraints are self imposed i.e. political.

When governments use the printing press instead of taxes you just get inflation which is a stealth tax and does economic harm besides--it's worse than simply taxing.

Uh hunh. That's why we have a trillion dollar deficit and 2% inflation. The quantity theory of money makes assumptions which are not present in the real world ie that the velocity of money remains constant, employment is full, the economy is at full productive capacity. None of these conditions hold in the real world. If there are sufficient goods and services to absorb the spending, it won't cause inflation. And it's not.

Not to mention, yet again, that when running a trade deficit, the only way the private sector as a whole can increase its financial assets(cash, treasuries, money) is if the govt spends more than it taxes back.

The deficit and national doomsayers doomsayers have been yammering forever, but it hasn't happened.

But this all missed the point - the difference between nominal and real resources. If the real resources are available, financial or fiscal constraints are self imposed.

 

[Lumpenproletariat]

No, running up debt for instant gratification is not a good political system.

When governments use the printing press instead of taxes you just get inflation which is a stealth tax and does economic harm besides--it's worse than simply taxing.

Uh hunh. That's why we have a trillion dollar deficit and 2% inflation.

No, "deficit" is not the same as "use the printing press instead of taxes"

If the money being spent was borrowed, then it wasn't produced by the "printing press" and doesn't cause inflation. The lenders reduce their consumption (or keep it reduced) while the borrowers spend the money or consume, so there's no inflation.

But if the money is increased by "printing" it, then there's only increased spending and inflation, and no reduced consumption, no new debt.

The quantity theory of money makes assumptions which are not present in the real world, i.e. that the velocity of money remains constant, employment is full, the economy is at full productive capacity.

You're misstating the quantity theory. It does not deny that there are the other factors. The quantity theory in itself is correct in saying that if the amount of money circulating is increased, all else being equal, then the prices increase. It states that an increase in quantity per se leads to higher prices/inflation. But it does not deny that this can be offset by other factors.

None of these conditions hold in the real world.

The quantity theory does not say these conditions always hold. These conditions do sometimes exist and sometimes not, but whether they do or not, increasing the money quantity in itself as an additional condition does increase the inflation above what it would have been had the money quantity not been increased. But with the other conditions also added to the mix, the inflation can be offset, or can go one way or the other. The quantity theory never said that the money quantity is the only factor which influences inflation.

If there are sufficient goods and services to absorb the spending, it won't cause inflation.

It will cause the inflation rate to be higher than it would have been otherwise.

Not to mention, yet again, that when running a trade deficit, the only way the private sector as a whole can increase its financial assets (cash, treasuries, money) is if the govt spends more than it taxes back.

That's snake-oil economics. The economists ("economists"?) who advance that theory are a tiny fringe who are just on a crusade for protectionism and are paranoid about the trade deficit (e.g., Peter Navarro, Steve Bannon). Most economists don't accept that theory.

Also, that theory is refuted by the experience of the late 1990s when the trade deficit soared to record high levels and yet the federal deficit went down to zero. There is no empirical data or sound economic theory connecting higher trade deficit to higher budget deficits.

Or, if there is any causal relation at all, the evidence is that the higher federal deficits cause a higher trade deficit. This is indicated by the history after 1930, at which point the federal deficits were greatly increased, and as this continued mostly uninterrupted through later decades into the 80s and 90s, the trade deficits began and increased. So the order was

first --- New Budget Deficits, followed by

second --- New Trade Deficits

A > B. I.e., what happens first causes what happens second.

If you understand cause-and-effect, this means it was the new federal deficits which caused the later trade deficits. Not the other way around. But also there may be no causal relation at all.

The deficit and national doomsayers doomsayers have been yammering forever, but it hasn't happened.

What hasn't happened? There is damage caused by these higher and higher federal deficits.

If you think there is no damage, then why not increase the annual deficits to 4 trillion $$$ to pay the entire federal budget? You are refuted by your refusal to address this question. If you have any reason to say there is no damage from Trump's trillion-dollar deficit, you'd have to say the same for a 4-trillion-dollar deficit. Or any amount. You have no logic to explain why it's OK to run up the debt by 1 trillion per year, but not OK to double it (or triple or quadruple it).

Your only reasoning is that the higher debt now gives us instant gratification, so let's do it, no matter what harm it will do later.

But this all missed the point - the difference between nominal and real resources. If the real resources are available, financial or fiscal constraints are self imposed.

So, NO FISCAL RESTRAINTS is your bottom line. So again, why not run up the annual deficit to 4 trillion, to pay the whole federal budget?

(Your phrase "If the real resources are available" is meaningless. There's always "real resources.")

The fiscal restraints are imposed by the condition that we don't want to inflict future harm onto the economy i.e., onto people. Of course you can imagine almost any unrestrained borrowing and spending now, for a year or 2 or 3, and perhaps a net short-term gain, more "jobs" or "growth" etc., for each additional billion/trillion borrowed, but the damage occurs later when those debts have to be repaid, and then the only way to repay it is to run up still more debt, and then more and more, with no end.

 

[Canard DuJour]

Some reading : (snipped for brevity - see post #114)

I'm far from an expert on Werner,

Lerner, not Werner. Actually policy prescriptions based on Keynes. As Keynes said of Lerner, "His argument is impeccable. But heaven help anyone who tries to put it across to the plain man at this stage of the evolution of our ideas."

but his policies seem like they would lead to extreme hyperinflation. And I just don't see the advantage.

Mmm.. kinda. In functional finance, inflation constrains spending and taxation constrains inflation. The danger is of politicians not adhering to it. But, yeah -a very real danger.

Some suggest something like the Federal Reserve Board setting spending limits based on economic indicators, while spending priorites remain political. Others say that's undemocratic. I don't see how it'd be any less democratic than what we have now (fiscal expansion off the table and monetary voodoo behind closed doors) .

The advantages would be :

1) Real resource usage not constrained by artificial scarcity of money. What we can produce, we can afford - as Keynes put it.

2) The economy could grow without indebting the private sector, so that growth isn't hindered by cyclical debt deflations.

(conversely, we'd be less dependent on growth to clear debt. We could prioritise leisure or the environment)

As the Wiki entry notes : "Lerner's ideas were most heavily in use during the Post-World War II economic expansion, when they became basis for most textbook presentations of Keynesian economics and the basis for policy." That began under govt "debt" levels dwarfing today's. The expansion took care of the debt and continued until the 'stagflation' of the 1970s. The causes of that are still disputed. If it was above-productivity wage inflation, we are now at the far opposite end of that cycle.

If we want to prevent banks from going crazy, just increase their capital requirements and prevent them from becoming too concentrated.

Which is what I meant by limiting their power to lend money into existence. But the money supply still needs to expand with growth. Do it with fiat money, not debt money.

 

[Canard DuJour]

You only get inflation to the degree that growth doesn't absorb the extra cash created. If the government doesn't create more cash than it taxes in a growing economy, you risk deflation.

Nutshell.

 

[ZiprHead]

No, "deficit" is not the same as "use the printing press instead of taxes"

If the money being spent was borrowed, then it wasn't produced by the "printing press" and doesn't cause inflation. The lenders reduce their consumption (or keep it reduced) while the borrowers spend the money or consume, so there's no inflation.

But if the money is increased by "printing" it, then there's only increased spending and inflation, and no reduced consumption, no new debt.

The quantity theory of money makes assumptions which are not present in the real world, i.e. that the velocity of money remains constant, employment is full, the economy is at full productive capacity.

You're misstating the quantity theory. It does not deny that there are the other factors. The quantity theory in itself is correct in saying that if the amount of money circulating is increased, all else being equal, then the prices increase. It states that an increase in quantity per se leads to higher prices/inflation. But it does not deny that this can be offset by other factors.

None of these conditions hold in the real world.

The quantity theory does not say these conditions always hold. These conditions do sometimes exist and sometimes not, but whether they do or not, increasing the money quantity in itself as an additional condition does increase the inflation above what it would have been had the money quantity not been increased. But with the other conditions also added to the mix, the inflation can be offset, or can go one way or the other. The quantity theory never said that the money quantity is the only factor which influences inflation.

If there are sufficient goods and services to absorb the spending, it won't cause inflation.

It will cause the inflation rate to be higher than it would have been otherwise.

Not to mention, yet again, that when running a trade deficit, the only way the private sector as a whole can increase its financial assets (cash, treasuries, money) is if the govt spends more than it taxes back.

That's snake-oil economics. The economists ("economists"?) who advance that theory are a tiny fringe who are just on a crusade for protectionism and are paranoid about the trade deficit (e.g., Peter Navarro, Steve Bannon). Most economists don't accept that theory.

Also, that theory is refuted by the experience of the late 1990s when the trade deficit soared to record high levels and yet the federal deficit went down to zero. There is no empirical data or sound economic theory connecting higher trade deficit to higher budget deficits.

Or, if there is any causal relation at all, the evidence is that the higher federal deficits cause a higher trade deficit. This is indicated by the history after 1930, at which point the federal deficits were greatly increased, and as this continued mostly uninterrupted through later decades into the 80s and 90s, the trade deficits began and increased. So the order was

first --- New Budget Deficits, followed by

second --- New Trade Deficits

A > B. I.e., what happens first causes what happens second.

If you understand cause-and-effect, this means it was the new federal deficits which caused the later trade deficits. Not the other way around. But also there may be no causal relation at all.

The deficit and national doomsayers doomsayers have been yammering forever, but it hasn't happened.

What hasn't happened? There is damage caused by these higher and higher federal deficits.

If you think there is no damage, then why not increase the annual deficits to 4 trillion $$$ to pay the entire federal budget? You are refuted by your refusal to address this question. If you have any reason to say there is no damage from Trump's trillion-dollar deficit, you'd have to say the same for a 4-trillion-dollar deficit. Or any amount. You have no logic to explain why it's OK to run up the debt by 1 trillion per year, but not OK to double it (or triple or quadruple it).

Your only reasoning is that the higher debt now gives us instant gratification, so let's do it, no matter what harm it will do later.

But this all missed the point - the difference between nominal and real resources. If the real resources are available, financial or fiscal constraints are self imposed.

So, NO FISCAL RESTRAINTS is your bottom line. So again, why not run up the annual deficit to 4 trillion, to pay the whole federal budget?

(Your phrase "If the real resources are available" is meaningless. There's always "real resources.")

The fiscal restraints are imposed by the condition that we don't want to inflict future harm onto the economy i.e., onto people. Of course you can imagine almost any unrestrained borrowing and spending now, for a year or 2 or 3, and perhaps a net short-term gain, more "jobs" or "growth" etc., for each additional billion/trillion borrowed, but the damage occurs later when those debts have to be repaid, and then the only way to repay it is to run up still more debt, and then more and more, with no end.

Wow. You're like a flag in the wind. You argued for the exact opposite position in your thread trying to give Bonespurs the credit for this economic "boom".

 

[Horatio Parker]

No, "deficit" is not the same as "use the printing press instead of taxes"

If the money being spent was borrowed, then it wasn't produced by the "printing press" and doesn't cause inflation. The lenders reduce their consumption (or keep it reduced) while the borrowers spend the money or consume, so there's no inflation.

But if the money is increased by "printing" it, then there's only increased spending and inflation, and no reduced consumption, no new debt.

First of all, govt spends first, then issues debt. It doesn't "borrow" in the sense that we must borrow first in order to spend. Since the debt issued exactly equals the deficit spending, it's a swap. It's not inflation control, since nothing is removed from the economy.

The quantity theory of money makes assumptions which are not present in the real world, i.e. that the velocity of money remains constant, employment is full, the economy is at full productive capacity.

You're misstating the quantity theory. It does not deny that there are the other factors. The quantity theory in itself is correct in saying that if the amount of money circulating is increased, all else being equal, then the prices increase. It states that an increase in quantity per se leads to higher prices/inflation. But it does not deny that this can be offset by other factors.

"all else being equal". All else is not equal.

If there are sufficient goods and services to absorb the spending, it won't cause inflation.

It will cause the inflation rate to be higher than it would have been otherwise.

Maybe in the Bizarro universe.

Not to mention, yet again, that when running a trade deficit, the only way the private sector as a whole can increase its financial assets (cash, treasuries, money) is if the govt spends more than it taxes back.

That's snake-oil economics. The economists ("economists"?) who advance that theory are a tiny fringe who are just on a crusade for protectionism and are paranoid about the trade deficit (e.g., Peter Navarro, Steve Bannon). Most economists don't accept that theory.

I'm not arguing for cause and effect between deficit spending and trade deficits. The point is that if the private sector wishes to save overall, the surplus must come from another sector. Therefore, if the foreign sector is in deficit, then any overall increase in private sector savings must come from the govt.

Exporters such as Norway or Germany can run govt surpluses while the private sector increases its savings because the foreign sector is in surplus.

The US is an importer, and therefore cannot increase private sector saving without running govt deficits.

The deficit and national doomsayers doomsayers have been yammering forever, but it hasn't happened.

What hasn't happened? There is damage caused by these higher and higher federal deficits.

What has happened? Where's the Doom?

If you think there is no damage, then why not increase the annual deficits to 4 trillion $$$ to pay the entire federal budget? You are refuted by your refusal to address this question. If you have any reason to say there is no damage from Trump's trillion-dollar deficit, you'd have to say the same for a 4-trillion-dollar deficit. Or any amount. You have no logic to explain why it's OK to run up the debt by 1 trillion per year, but not OK to double it (or triple or quadruple it).

Your only reasoning is that the higher debt now gives us instant gratification, so let's do it, no matter what harm it will do later.

There's two things. One point is that operationally there's nothing to prevent us from spending as much as we like. Just as in a game there is no limit to how many points are available.

The second is that the first point is not a policy recommendation. Eventually spending will cause inflation. What many economists are saying is that we are nowhere near that point, and all the brouhaha about deficits is just that and nothing more.

But this all missed the point - the difference between nominal and real resources. If the real resources are available, financial or fiscal constraints are self imposed.

So, NO FISCAL RESTRAINTS is your bottom line. So again, why not run up the annual deficit to 4 trillion, to pay the whole federal budget?

(Your phrase "If the real resources are available" is meaningless. There's always "real resources.")

The fiscal restraints are imposed by the condition that we don't want to inflict future harm onto the economy i.e., onto people. Of course you can imagine almost any unrestrained borrowing and spending now, for a year or 2 or 3, and perhaps a net short-term gain, more "jobs" or "growth" etc., for each additional billion/trillion borrowed, but the damage occurs later when those debts have to be repaid, and then the only way to repay it is to run up still more debt, and then more and more, with no end.

There are not always real resources. We could easily buy everyone in the country a hot dog or an ice cream cone. With a major effort, we could probably buy every household a car. But no way could we produce enough jumbo jets or space shuttles for everyone. The constraint is real resources.

Why do you think foreign govts get into trouble borrowing foreign exchange? Because the resources they want are not available in their own currency.

 

[Loren Pechtel]

no, they'd be real constraints, not bogus ones.

Budgets are just as real a constraint as the others I listed.

Budget constraints are self imposed IF the real resources are available.

The resources are obtained through taxes--they come out of the pockets of those you're trying to benefit.

Govt's don't need taxes to spend; the point stands: if there are sufficient real resources, financial constraints are self imposed i.e. political.

When governments use the printing press instead of taxes you just get inflation which is a stealth tax and does economic harm besides--it's worse than simply taxing.

You only get inflation to the degree that growth doesn't absorb the extra cash created. If the government doesn't create more cash than it taxes in a growing economy, you risk deflation.

In reality government spending would be cut roughly 90% if it just relied on the printing presses for funding and didn't cause inflation.

 

[Loren Pechtel]

Uh hunh. That's why we have a trillion dollar deficit and 2% inflation. The quantity theory of money makes assumptions which are not present in the real world ie that the velocity of money remains constant, employment is full, the economy is at full productive capacity. None of these conditions hold in the real world. If there are sufficient goods and services to absorb the spending, it won't cause inflation. And it's not.

Not to mention, yet again, that when running a trade deficit, the only way the private sector as a whole can increase its financial assets(cash, treasuries, money) is if the govt spends more than it taxes back.

The deficit and national doomsayers doomsayers have been yammering forever, but it hasn't happened.

But this all missed the point - the difference between nominal and real resources. If the real resources are available, financial or fiscal constraints are self imposed.

Borrowing != printing presses. Your argument doesn't address the actual situation.

And you say it hasn't happened? Off the top of my head Zimbabwe and Venezuela. That's what happens when you fund your government with the printing press.

 

[Loren Pechtel]

You only get inflation to the degree that growth doesn't absorb the extra cash created. If the government doesn't create more cash than it taxes in a growing economy, you risk deflation.

Nutshell.

But we are far from this realm. In the real world you have to use taxes to fund the government.

 

[bilby]

You only get inflation to the degree that growth doesn't absorb the extra cash created. If the government doesn't create more cash than it taxes in a growing economy, you risk deflation.

Nutshell.

But we are far from this realm. In the real world you have to use taxes to fund the government.

Nobody is suggesting that taxes are unnecessary. Only that they need not be equal to spending - a deficit is not only acceptable, it is essential to avoid disaster. Which is the exact opposite of the situation that prevails in a household economy.

 

[Horatio Parker]

Uh hunh. That's why we have a trillion dollar deficit and 2% inflation. The quantity theory of money makes assumptions which are not present in the real world ie that the velocity of money remains constant, employment is full, the economy is at full productive capacity. None of these conditions hold in the real world. If there are sufficient goods and services to absorb the spending, it won't cause inflation. And it's not.

Not to mention, yet again, that when running a trade deficit, the only way the private sector as a whole can increase its financial assets(cash, treasuries, money) is if the govt spends more than it taxes back.

The deficit and national doomsayers doomsayers have been yammering forever, but it hasn't happened.

But this all missed the point - the difference between nominal and real resources. If the real resources are available, financial or fiscal constraints are self imposed.

Borrowing != printing presses. Your argument doesn't address the actual situation.

And you say it hasn't happened? Off the top of my head Zimbabwe and Venezuela. That's what happens when you fund your government with the printing press.

It hasn't happened here, tho according to the deficit scolds, we should have slid off into oblivion long ago.

Combine commodity shocks with corruption and incompetence and you get your examples. Not by simply deficit spending.

And what actual situation are you talking about?

 

[Horatio Parker]

Excerpt from Taxes For Revenue Are Obsolete, written in 1946 by Beardsley Ruml, the former Chairman of the Federal Reserve Bank of New York

The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government. Two changes of the greatest consequence have occurred in the last twenty-five years which have substantially altered the position of the national state with respect to the financing of its current requirements.

The first of these changes is the gaining of vast new experience in the management of central banks.
The second change is the elimination, for domestic purposes, of the convertibility of the currency into gold.

Free of the Money Market

Final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity.

The United States is a national state which has a central banking system, the Federal Reserve System, and whose currency, for domestic purposes, is not convertible into any commodity. It follows that our Federal Government has final freedom from the money market in meeting its financial requirements. Accordingly, the inevitable social and economic consequences of any and all taxes have now become the prime consideration in the imposition of taxes. In general, it may be said that since all taxes have consequences of a social and economic character, the government should look to these consequences in formulating its tax policy. All federal taxes must meet the test of public policy and practical effect. The public purpose which is served should never be obscured in a tax program under the mask of raising revenue.

What Taxes Are Really For

Federal taxes can be made to serve four principal purposes of a social and economic character. These purposes are:

As an instrument of fiscal policy to help stabilize the purchasing power of the dollar;
To express public policy in the distribution of wealth and of income, as in the case of the progressive income and estate taxes;
To express public policy in subsidizing or in penalizing various industries and economic groups;
To isolate and assess directly the costs of certain national benefits, such as highways and social security.

In the recent past, we have used our federal tax program consciously for each of these purposes. In serving these purposes, the tax program is a means to an end. The purposes themselves are matters of basic national policy which should be established, in the first instance, independently of any national tax program.
Among the policy questions with which we have to deal are these:

Do we want a dollar with reasonably stable purchasing power over the years?
Do we want greater equality of wealth and of income than would result from economic forces working alone?
Do we want to subsidize certain industries and certain economic groups?
Do we want the beneficiaries of certain federal activities to be aware of what they cost?

These questions are not tax questions; they are questions as to the kind of country we want and the kind of life we want to lead. The tax program should be a means to an agreed end. The tax program should be devised as an instrument, and it should be judged by how well it serves its purpose.

https://www.huffingtonpost.com/warren-mosler/taxes-for-revenue-are-obs_b_542134.html

 

[Lumpenproletariat]

"economic stimulus" = higher deficit = instant gratification.

No, "deficit" is not the same as "use the printing press instead of taxes"

If the money being spent was borrowed, then it wasn't produced by the "printing press" and doesn't cause inflation. The lenders reduce their consumption (or keep it reduced) while the borrowers spend the money or consume, so there's no inflation.

But if the money is increased by "printing" it, then there's only increased spending and inflation, and no reduced consumption, no new debt.

. . . .

Of course you can imagine almost any unrestrained borrowing and spending now, for a year or 2 or 3, and perhaps a net short-term gain, more "jobs" or "growth" etc., for each additional billion/trillion borrowed, but the damage occurs later when those debts have to be repaid, and then the only way to repay it is to run up still more debt, and then more and more, with no end.

Wow. You're like a flag in the wind. You argued for the exact opposite position in your thread trying to give Bonespurs the credit for this economic "boom".

The simple unchanging Truth is this:

A higher deficit -- an "economic stimulus" -- has a short-term result of producing more economic "growth" and "job creation" which eventually runs up the federal budget, 5 or 10 years later, so that there is no net long-term improvement in the economic numbers. But there is always the short-term improvement in those numbers, and thus an instant gratification benefit.

And Trump's current increased deficit can explain the improved numbers we're seeing, because such deficits do produce those short-term gains, like higher "growth" etc. But the only way to keep it going is to run up still more debt in the future.

 

[DrZoidberg]

No, "deficit" is not the same as "use the printing press instead of taxes"

If the money being spent was borrowed, then it wasn't produced by the "printing press" and doesn't cause inflation. The lenders reduce their consumption (or keep it reduced) while the borrowers spend the money or consume, so there's no inflation.

But if the money is increased by "printing" it, then there's only increased spending and inflation, and no reduced consumption, no new debt.

. . . .

Of course you can imagine almost any unrestrained borrowing and spending now, for a year or 2 or 3, and perhaps a net short-term gain, more "jobs" or "growth" etc., for each additional billion/trillion borrowed, but the damage occurs later when those debts have to be repaid, and then the only way to repay it is to run up still more debt, and then more and more, with no end.

Wow. You're like a flag in the wind. You argued for the exact opposite position in your thread trying to give Bonespurs the credit for this economic "boom".

The simple unchanging Truth is this:

A higher deficit -- an "economic stimulus" -- has a short-term result of producing more economic "growth" and "job creation" which eventually runs up the federal budget, 5 or 10 years later, so that there is no net long-term improvement in the economic numbers. But there is always the short-term improvement in those numbers, and thus an instant gratification benefit.

And Trump's current increased deficit can explain the improved numbers we're seeing, because such deficits do produce those short-term gains, like higher "growth" etc. But the only way to keep it going is to run up still more debt in the future.

Ehe... nope. The point of economic stimulus is to prevent the market from collapsing completely in a sudden crash. Stimulus packages were introduced following the depression. Once there's been a near total collapse of the market it takes a very long time to get the wheels spinning again. A stimulus can act as a temporary plug in a sinking boat, to keep it afloat until we reach harbour.

This is a weakness in a democratic system. In an economic collapse people become very extreme in their political views. Extreme political views almost always lead to violence and war. So for a democratic country (or groups of countries) this is very dangerous and should be avoided at all costs. War is incredibly expensive for all involved. Even trade wars. Like what Trump is doing now.

But if you use stimulus packages at any other time than in a serious market collapse then that's just burning money for no reason. Whenever the government gets involved to move money from one person to another about 1/3 of that money is wasted. For the economy as a whole it's almost always better for the government not to get involved.

 

[ZiprHead]

The simple unchanging Truth is this:

A higher deficit -- an "economic stimulus" -- has a short-term result of producing more economic "growth" and "job creation" which eventually runs up the federal budget, 5 or 10 years later, so that there is no net long-term improvement in the economic numbers. But there is always the short-term improvement in those numbers, and thus an instant gratification benefit.

And Trump's current increased deficit can explain the improved numbers we're seeing, because such deficits do produce those short-term gains, like higher "growth" etc. But the only way to keep it going is to run up still more debt in the future.

Ehe... nope. The point of economic stimulus is to prevent the market from collapsing completely in a sudden crash. Stimulus packages were introduced following the depression. Once there's been a near total collapse of the market it takes a very long time to get the wheels spinning again. A stimulus can act as a temporary plug in a sinking boat, to keep it afloat until we reach harbour.

This is a weakness in a democratic system. In an economic collapse people become very extreme in their political views. Extreme political views almost always lead to violence and war. So for a democratic country (or groups of countries) this is very dangerous and should be avoided at all costs. War is incredibly expensive for all involved. Even trade wars. Like what Trump is doing now.

But if you use stimulus packages at any other time than in a serious market collapse then that's just burning money for no reason. Whenever the government gets involved to move money from one person to another about 1/3 of that money is wasted. For the economy as a whole it's almost always better for the government not to get involved.

Tax cut triggers $437 billion explosion of stock buybacks

Flooded with cash from the Republican tax cut, US public companies announced a whopping $436.6 billion worth of stock buybacks, according to research firm TrimTabs.

Not only is that most ever, it nearly doubles the previous record of $242.1 billion, which was set during the first three months of the year.

 

[Canard DuJour]

Uh hunh. That's why we have a trillion dollar deficit and 2% inflation. The quantity theory of money makes assumptions which are not present in the real world ie that the velocity of money remains constant, employment is full, the economy is at full productive capacity. None of these conditions hold in the real world. If there are sufficient goods and services to absorb the spending, it won't cause inflation. And it's not.

Not to mention, yet again, that when running a trade deficit, the only way the private sector as a whole can increase its financial assets(cash, treasuries, money) is if the govt spends more than it taxes back.

The deficit and national doomsayers doomsayers have been yammering forever, but it hasn't happened.

But this all missed the point - the difference between nominal and real resources. If the real resources are available, financial or fiscal constraints are self imposed.

Borrowing != printing presses.

Govt "borrowing" != funding deficits.

Central bank reserves created by deficit spending (i.e. govt having credited private sector bank accounts) are swapped for bonds so that the interbank "overnight" rate isn't driven down. The requirement that govt issue the bonds is a self-imposed rule, not a hard budget constraint. The central bank needs it to defend a target interest rate. It's nothing like what households or firms do when they need to get money from somewhere else.

And you say it hasn't happened? Off the top of my head Zimbabwe and Venezuela. That's what happens when you fund your government with the printing press.

Which wouldn't even be possible if govt had to tax in order to spend. Govt spending would be deflationary or neutral. Saying govt should tax if it spends is a different proposition. It's why "there isn't enough money" is a bogus constraint and "there aren't enough real resources" to absorb the spending is the real one.