Obama To Unleash Racial-Preferences Juggernaut

[Rob's House]

That 47% is just crap. Anyone working pays payroll taxes. They also pay sales taxes, excise taxes, property taxes (many indirectly), etc. In addition, there are retirees including retired military who collect their SS and pensions--do they not deserve it? Did they not pay for it? Do you think they all voted for Obama? That line of Rushit is true class warfare. While there may be a group who relies on entitlements, it is probably less than 15%. The right can continue to delude themselves into believing that 50% of the population simply want handouts, if so they will continue to lose power.

 

As for my argument, what's so hard to understand that you give tax cuts to working Americans who are struggling to get by? They spend all of their income. Aggregate demand is the central problem in the global economy today, especially for the US economy.

 

You are guilty of ignoring the fact that once a "market for a product exists" then demand determines its continued production.

Coming back to this, what you said here exposes the underlying flaw of the demand driven economy theory. It's premised on the marginal cost of production being $0.

[TakeYouToTasker]

 

Coming back to this, what you said here exposes the underlying flaw of the demand driven economy theory. It's premised on the marginal cost of production being $0.

And completely ignores scarcity.

[TPS]

Coming back to this, what you said here exposes the underlying flaw of the demand driven economy theory. It's premised on the marginal cost of production being $0.

How do you come up with that wacko conclusion?

[TPS]

And completely ignores scarcity.5

try checking out the real world sometime. Capacity utilization rates are low (78%) and unemployment is high. We have excess supply of resources right now. There is currently a demand problem.

[Rob's House]

How do you come up with that wacko conclusion?

Think about it. You're a reasonably intelligent guy (for a lib), you can figure it out. Think about how this would work in a barter system & see if it doesn't become clear.

[Rob's House]

try checking out the real world sometime. Capacity utilization rates are low (78%) and unemployment is high. We have excess supply of resources right now. There is currently a demand problem.

You're assuming that the marginal cost to get to 100% utilization rates is $0. There's no other way you could assume throwing money to create demand would be useful. There are additional costs required to produce more, even if you're below max utilization.

 

If you give me a check written off an account with no money in it to buy the additional production, I've incurred greater cost, you've gotten utility & I've gotten nothing in return. But say I go to the bank of government & they cash my check. The loss is still a loss, it's just been passed off to the society at large and spread out across the economy. Now that's fine when you're spreading one man's loss across 300 million people. But when you honor bad checks that add up to a trillion+ $$ the **** tends to hit the fan & there's nothing you can do to remedy that because all you did was artificially manipulate the money supply. That can work in the short run, but just like the tide, currency valuations will naturally recenter & calibrate (correct themselves) & that is called a recession. Although, if you !@#$ with it hard enough the consequence is more severe and you get a depression that is long, deep, & brutal.

Edited November 15, 2012 by Rob's House

[TPS]

You're assuming that the marginal cost to get to 100% utilization rates is $0. There's no other way you could assume throwing money to create demand would be useful. There are additional costs required to produce more, even if you're below max utilization.

 

If you give me a check written off an account with no money in it to buy the additional production, I've incurred greater cost, you've gotten utility & I've gotten nothing in return. But say I go to the bank of government & they cash my check. The loss is still a loss, it's just been passed off to the society at large and spread out across the economy. Now that's fine when you're spreading one man's loss across 300 million people. But when you honor bad checks that add up to a trillion+ $$ the **** tends to hit the fan & there's nothing you can do to remedy that because all you did was artificially manipulate the money supply. That can work in the short run, but just like the tide, currency valuations will naturally recenter & calibrate (correct themselves) & that is called a recession. Although, if you !@#$ with it hard enough the consequence is more severe and you get a depression that is long, deep, & brutal.

This is insane. I thought you repubs knew how business works. If you think firms set price = MC, then that tells me you have no business experience. If sales increase at GM, are you going to tell me they won't produce more? What fantasy land do you live in?

 

Ok, let me play your little theoretical game. First, your specious example of someone writing a check with no money in it is completely irrelevant. Only check kiters do that. Your example has nothing to do with what I'm saying.

If there is significant excess capacity and unemployment, let's say the government spends $1 mil without borrowing it, totally out of thin air. Let's say they bought a plane from Lockheed, since you guys don't mind the government spending trillions on defense. Since the government has the power of the press, there's no cost to crediting Lockheed's bank account. Lockheed now has an extra million and they built another plane which keeps people working and keeps profits flowing. The effect of this, is that workers and Lockheed have increased their deposits at banks by $1 million. Now banks have $1 million in additional reserves. At this point, the government decides to sell a bond to "finance" its spending, and the bank buys the bond.

What's the impact? Employment is maintained, profits are up, and government has financed its spending, after the fact.

 

Think about this one.....

[Rob's House]

This is insane. I thought you repubs knew how business works. If you think firms set price = MC, then that tells me you have no business experience. If sales increase at GM, are you going to tell me they won't produce more? What fantasy land do you live in?

 

Ok, let me play your little theoretical game. First, your specious example of someone writing a check with no money in it is completely irrelevant. Only check kiters do that. Your example has nothing to do with what I'm saying.

If there is significant excess capacity and unemployment, let's say the government spends $1 mil without borrowing it, totally out of thin air. Let's say they bought a plane from Lockheed, since you guys don't mind the government spending trillions on defense. Since the government has the power of the press, there's no cost to crediting Lockheed's bank account. Lockheed now has an extra million and they built another plane which keeps people working and keeps profits flowing. The effect of this, is that workers and Lockheed have increased their deposits at banks by $1 million. Now banks have $1 million in additional reserves. At this point, the government decides to sell a bond to "finance" its spending, and the bank buys the bond.

What's the impact? Employment is maintained, profits are up, and government has financed its spending, after the fact.

 

Think about this one.....

The theory isn't based on MC = price. And the check kiting thing was a metaphor; I thought that was pretty obvious. The point that seems to elude you is you essentially stole the money to make the plane & took scarce resources that would have been otherwise allocated had you not taken it here. I get the whole process you describe, you're just ignoring the void it creates on the other end. It assumes the money that was created out of thin air has inherent value all it's own. You can't get around the reality that you just traded a plane for a bag of confetti. In the grand scheme of things buying that plane with money printed out of thin air is no different from buying it with counterfeit money.

[TPS]

The theory isn't based on MC = price. And the check kiting thing was a metaphor; I thought that was pretty obvious. The point that seems to elude you is you essentially stole the money to make the plane & took scarce resources that would have been otherwise allocated had you not taken it here. I get the whole process you describe, you're just ignoring the void it creates on the other end. It assumes the money that was created out of thin air has inherent value all it's own. You can't get around the reality that you just traded a plane for a bag of confetti. In the grand scheme of things buying that plane with money printed out of thin air is no different from buying it with counterfeit money.

This is more total crap from you. How can you say that something is taking away from resources when people are out of work and factories are running at way under capacity? You throw out weird right wing theoretical stuff, which has nothing to do with reality Please, go through my example and tell me why it's wrong. How is it stealing from anyone when people are unemployed? You don't seem to realize that the ultimate end of production is labor. And when labor is idle, you can still produce things. Please, in concrete terms describe that "void on the other end."

 

Production requires real resources. When there is a huge surplus of labor and capital, then you need some entity to increase demand. And,in fact, you can create demand by an entity called government, which needs no previous savings to fund its spending, it just needs to spend--especially when we are in a depression. You guys need to stop reading the crap you read.

[....lybob]

This is more total crap from you. How can you say that something is taking away from resources when people are out of work and factories are running at way under capacity? You throw out weird right wing theoretical stuff, which has nothing to do with reality Please, go through my example and tell me why it's wrong. How is it stealing from anyone when people are unemployed? You don't seem to realize that the ultimate end of production is labor. And when labor is idle, you can still produce things. Please, in concrete terms describe that "void on the other end."

 

Production requires real resources. When there is a huge surplus of labor and capital, then you need some entity to increase demand. And,in fact, you can create demand by an entity called government, which needs no previous savings to fund its spending, it just needs to spend--especially when we are in a depression. You guys need to stop reading the crap you read.

Bravo!!! IMO you are the only one on this board who understands economics at all, the Tragedy of this long recession and slow recovery isn't government debt level but the number of people who have gone from unemployed to almost unemployable- a tremendous loss of national wealth.

[TakeYouToTasker]

This is more total crap from you. How can you say that something is taking away from resources when people are out of work and factories are running at way under capacity? You throw out weird right wing theoretical stuff, which has nothing to do with reality Please, go through my example and tell me why it's wrong. How is it stealing from anyone when people are unemployed? You don't seem to realize that the ultimate end of production is labor. And when labor is idle, you can still produce things. Please, in concrete terms describe that "void on the other end."

 

Production requires real resources. When there is a huge surplus of labor and capital, then you need some entity to increase demand. And,in fact, you can create demand by an entity called government, which needs no previous savings to fund its spending, it just needs to spend--especially when we are in a depression. You guys need to stop reading the crap you read.

I have an exceptionally busy day today, but I'll be by later on in the evening to knock over this pile of steaming turd.

[Rob's House]

This is more total crap from you. How can you say that something is taking away from resources when people are out of work and factories are running at way under capacity? You throw out weird right wing theoretical stuff, which has nothing to do with reality Please, go through my example and tell me why it's wrong. How is it stealing from anyone when people are unemployed? You don't seem to realize that the ultimate end of production is labor. And when labor is idle, you can still produce things. Please, in concrete terms describe that "void on the other end."

 

Production requires real resources. When there is a huge surplus of labor and capital, then you need some entity to increase demand. And,in fact, you can create demand by an entity called government, which needs no previous savings to fund its spending, it just needs to spend--especially when we are in a depression. You guys need to stop reading the crap you read.

I want to thank you because, while your regurgitation of debunked neo-Keynesian theory (because even Keynes knew that what you're peddling is bull ****) was less than informative, it helped me to understand something that has perplexed me for some time. Particularly, how people who understand investment enough to work in the field can be so clueless about how the economy works. Now I get it. You understand how the money flows through the system & how that effects one business or industry relative to others, but are completely unaware of the impact it has on the back end - on the money supply, currency valuations, stability - basically the economy overall. It's unfortunate because it seems you have the intellectual capacity to understand, but your arrogance in your belief prevents you from seeing anything you don't want to see.

[TPS]

I want to thank you because, while your regurgitation of debunked neo-Keynesian theory (because even Keynes knew that what you're peddling is bull ****) was less than informative, it helped me to understand something that has perplexed me for some time. Particularly, how people who understand investment enough to work in the field can be so clueless about how the economy works. Now I get it. You understand how the money flows through the system & how that effects one business or industry relative to others, but are completely unaware of the impact it has on the back end - on the money supply, currency valuations, stability - basically the economy overall. It's unfortunate because it seems you have the intellectual capacity to understand, but your arrogance in your belief prevents you from seeing anything you don't want to see.

I would say the same thing back to you.

 

Money is simply a claim on real things. Sometimes we store those claims in longer term paper claims, but in the end you don't eat paper (I hope not at least). I agree with you when the economy is at full employment; then, any resource claim by government must be offset by a decrease in the claims by the private sector. This is why rationing and Patriotism were used to get people to buy less (use fewer claims) during the war, so resources could be marshalled toward war production. It is simply not the case when resources are unemployed.

 

Resources, labor and physical capital, are what create value, and money is an instrument that allows "economic agents" (including governments) to make claims on resources. If too many claims are created relative to your ability to produce things, then you have a problem. The key is to regulate those claims consistent with the ability to produce real things. Historically, the problem has been that governments have abused their power of the printing press, and they have tended to create more claims on resources then what the real economy can produce. That's why most countries went to an independent central bank, to take the power of the printing press away from uncontrollable politicians.

I (serioulsy) look forward to your response to this.

Edited November 16, 2012 by TPS

[Rob's House]

I would say the same thing back to you.

 

Money is simply a claim on real things. Sometimes we store those claims in longer term paper claims, but in the end you don't eat paper (I hope not at least). I agree with you when the economy is at full employment; then, any resource claim by government must be offset by a decrease in the claims by the private sector. This is why rationing and Patriotism were used to get people to buy less (use fewer claims) during the war, so resources could be marshalled toward war production. It is simply not the case when resources are unemployed.

 

Resources, labor and physical capital, are what create value, and money is an instrument that allows "economic agents" (including governments) to make claims on resources. If too many claims are created relative to your ability to produce things, then you have a problem. The key is to regulate those claims consistent with the ability to produce real things. Historically, the problem has been that governments have abused their power of the printing press, and they have tended to create more claims on resources then what the real economy can produce. That's why most countries went to an independent central bank, to take the power of the printing press away from uncontrollable politicians.

I (serioulsy) look forward to your response to this.

What you're describing is often referred to as "priming the pump." I used to agree with this line of thought until faced with examples of its failures & I had to look deeper into it. The only way I can really explain it is in terms of the value of what you're producing. Input > output. All the workers you're employing and materials & energy you're using are being paid for, not with the money produced out of thin air, but with real labor & production of others. And even though you're creating something of value, in the process you're consuming more than you're producing.

[TPS]

What you're describing is often referred to as "priming the pump." I used to agree with this line of thought until faced with examples of its failures & I had to look deeper into it. The only way I can really explain it is in terms of the value of what you're producing. Input > output. All the workers you're employing and materials & energy you're using are being paid for, not with the money produced out of thin air, but with real labor & production of others. And even though you're creating something of value, in the process you're consuming more than you're producing.

You're describing a process where a business would not make a profit in producing something--no one produces more if they can't cover their costs. Prices are set as a mark-up over average total costs. As long as you meet your sales target, you meet your profit target. If you sell less, your profits are lower; and if you sell more your profits are even higher. There does come a point when resources become scarce that costs will rise and passing along the costs could actually lower sales. But not when firms are operating at low capacity and there is high unemployment. They can hire workers at the same wage rate, if not lower.

[keepthefaith]

 

Production requires real resources. When there is a huge surplus of labor and capital, then you need some entity to increase demand. And,in fact, you can create demand by an entity called government, which needs no previous savings to fund its spending, it just needs to spend--especially when we are in a depression. You guys need to stop reading the crap you read.

 

And so the spiral continues. Government borrows and spends and has to at least pay interest on the borrowing. This leads to either more borrowing and spending or greater taxation to reduce borrowing. More taxation leads to less demand. The fiscal problems at the fed level lead to lowered consumer and business confidence which further suppresses demand. While we're at it let's add 10+ million to the labor force in the form of immigrants to further enlarge the labor surplus. So where does it end? Interest on national debt getting close to 15% of the annual budget and increasing as a percentage of that budget every year. At some point this thing blows up.

[Rob's House]

You're describing a process where a business would not make a profit in producing something--no one produces more if they can't cover their costs. Prices are set as a mark-up over average total costs. As long as you meet your sales target, you meet your profit target. If you sell less, your profits are lower; and if you sell more your profits are even higher. There does come a point when resources become scarce that costs will rise and passing along the costs could actually lower sales. But not when firms are operating at low capacity and there is high unemployment. They can hire workers at the same wage rate, if not lower.

You keep repeating this like it somehow makes your argument logical. Granted, it shifts the ratio to where what you're suggesting is less harmful, and theoretically could in very limited instances be feasible. The problem still is that you're highly unlikely to get output that is greater than the input EVEN IF you're operating at low capacity with high unemployment. Why? Because you still have to pay the unemployed and pay for the materials and the energy that you're using, and that has to be paid with real tangible wealth, and that wealth is almost certain to have a higher value than this other thing you're producing that the market didn't demand. I get what you're saying, you just don't see the bigger picture.

 

For illustrative purposes I'll use an example. Say I've got a 50 year old manual generator that is powered by a man peddling bike peddles to create electricity. That machine isn't being used, and my neighbor is unemployed. So I pay him $50 a day to come over and peddle my generator to create more electricity, and he produces $30 of electricity/day. He's now working, where before he was idle, and my machine is producing utility, where before it was idle, but the net return is -$20. I'm better off leaving him idle. The only way your scenario is different is that in yours the money is just printed out of thin air. That doesn't change the value ratio, it just hides it so that the cost isn't felt up front, but rather on the back end where it's taken out of the overall economy. The loss is just as real, it's just spread out across hundreds of millions of people. And when you're doing that with a few hundred or few thousand dollars it doesn't really matter, you're just scooping cupfulls out of the ocean. But when you're Taking trillions of dollars out the back door, it becomes a very real problem that is felt by everyone.

[TPS]

You keep repeating this like it somehow makes your argument logical. Granted, it shifts the ratio to where what you're suggesting is less harmful, and theoretically could in very limited instances be feasible. The problem still is that you're highly unlikely to get output that is greater than the input EVEN IF you're operating at low capacity with high unemployment. Why? Because you still have to pay the unemployed and pay for the materials and the energy that you're using, and that has to be paid with real tangible wealth, and that wealth is almost certain to have a higher value than this other thing you're producing that the market didn't demand. I get what you're saying, you just don't see the bigger picture.

 

For illustrative purposes I'll use an example. Say I've got a 50 year old manual generator that is powered by a man peddling bike peddles to create electricity. That machine isn't being used, and my neighbor is unemployed. So I pay him $50 a day to come over and peddle my generator to create more electricity, and he produces $30 of electricity/day. He's now working, where before he was idle, and my machine is producing utility, where before it was idle, but the net return is -$20. I'm better off leaving him idle. The only way your scenario is different is that in yours the money is just printed out of thin air. That doesn't change the value ratio, it just hides it so that the cost isn't felt up front, but rather on the back end where it's taken out of the overall economy. The loss is just as real, it's just spread out across hundreds of millions of people. And when you're doing that with a few hundred or few thousand dollars it doesn't really matter, you're just scooping cupfulls out of the ocean. But when you're Taking trillions of dollars out the back door, it becomes a very real problem that is felt by everyone.

In the real world, since many of your neighbors are unemployed, one of them would be willing to peddle for $20/day, so that you'd have a positive net return.

I agree with what you said about having to pay the labor, materials and energy to cover the costs, but where we disagree is that you don't think a firm can sell more output and recover their costs. That simply ignores how the majority of firms produce and price their output in the real world.