Occasi-Cortez Channeling the Rent's too damn high guy

[GG]

12 minutes ago, TPS said:

It's not a ruse, it's a fact.  By spending in excess of taxes the government increases spending/demand in the private sector which builds private sector wealth. The government can do this because it is the issuer of its own currency.  You can bluster all you want, but that is how the actual mechanics of fiscal policy works. Apparently AOC knows more than you do on this...?

 

That doesn't create wealth.  It only redistributes it.

 

And to clarify it - it distributes it in the form of passive or active income, and it's the individuals who decide what to do with the additional income, whether to spend or save.  If your and AOC's theories were correct, the socialist economies would have won the argument many times over by now.

Edited January 17, 2019 by GG

[ExiledInIllinois]

38 minutes ago, Kevbeau said:

Maybe...but the demo shift is going to happen with or without a wall. Even if they were afraid of change and the wall was entirely about the voting balance , the GOP needs to convince “Brown America” that they have the better vision. Therefore my belief that the wall isn’t about controlling the voting populous.

 

 

 

You gotta be kidding.

 

"Trump's Vision" is really doing that! /sarcasm Yeah, right... His GOP ball washers, appeasers are silent, watching him scare people to the Democrats.

 

Totally unsustainable. Great Vision.  Only thing brown is coming out his mouth!

 

 

 

You're doing one hell of a job Orangie trying to portray a vision!

[TPS]

3 minutes ago, TakeYouToTasker said:

 

No, it doesn't.

 

That's like arguing that babies come some the Simmons mattress factory because they made the bed you ***** in. 

I will gladly entertain attempts to prove that proposition wrong. 

Just now, GG said:

 

That doesn't create wealth.  It only redistributes it

No, only the portion that's taxed is a redistribution.  As I said, deficit spending injects new money/spending into the economy.  The government is required by law to sell bonds equivalent to the difference, but the "money" available to buy those bonds was created when the government FIRST spent out of its account held by the Fed.  Government spends and the FED credits the DD account of the payee as well as the reserve position of the bank. The bank now has additional reserves to buy government bonds.

[GG]

5 minutes ago, TPS said:

I will gladly entertain attempts to prove that proposition wrong. 

No, only the portion that's taxed is a redistribution.  As I said, deficit spending injects new money/spending into the economy.  The government is required by law to sell bonds equivalent to the difference, but the "money" available to buy those bonds was created when the government FIRST spent out of its account held by the Fed.  Government spends and the FED credits the DD account of the payee as well as the reserve position of the bank. The bank now has additional reserves to buy government bonds.

 

Here you go again.  There are two ways to increase the deficit and they're in no way equivalent.  One way is for the government to simply spend more than it takes in, while still soaking the private sector.  The other way is to maintain the same spending levels, but let the private sector keep more of its earnings.   Which one do you think is more conducive to creating real wealth?    Which one do you and AOC don't understand?

[TakeYouToTasker]

16 minutes ago, TPS said:

I will gladly entertain attempts to prove that proposition wrong. 

 

I feel like I've had this discussion with you before.

 

The government issues currency, but currency, even fiat currency which is used as the global marker for trade, is not the same thing as wealth.  It is a marker for wealth used to grease the skids of exchange by making it easier and more convenient.  That is all.

 

Even the dollar is backed by something tangible.  "The full faith and credit of the United States", which is nothing more than a fancy way of saying "the promise of future units of labor produced by Americans".

 

Debt incurred by the government represents labor which must be undertaken at some point in the future.  A cheeseburger today, with the promise to pay tomorrow.

 

So, no, the government does not "create wealth".  But rather, as GG says, it redistributes it both in a linear way, and across time from the future.

 

Wealth is created exclusively by combining capital with labor.

[Foxx]

the US dollar is a debt marker. all fiat is for that matter.

Edited January 17, 2019 by Foxx

[TPS]

4 minutes ago, GG said:

 

Here you go again.  There are two ways to increase the deficit and they're in no way equivalent.  One way is for the government to simply spend more than it takes in, while still soaking the private sector.  The other way is to maintain the same spending levels, but let the private sector keep more of its earnings.   Which one do you think is more conducive to creating real wealth?    Which one do you and AOC don't understand?

You should be more clear.  Starting from G=T, there are three ways: 1) Increase G; T constant; 2) G constant, decrease T; 3) change both, as Trump did. In cases 1 and 2, if G and T are changed by an equal amount, the impact on the deficit in year one is about he same.  In both cases, the deficits increase demand in the economy stimulating growth.  You believe the supply side argument the lower taxes will create an incentive for businesses to expand independent of the expansionary impact of deficits. The evidence I as I recall shows that effect is insignificant.

[GG]

Just now, TPS said:

You should be more clear.  Starting from G=T, there are three ways: 1) Increase G; T constant; 2) G constant, decrease T; 3) change both, as Trump did. In cases 1 and 2, if G and T are changed by an equal amount, the impact on the deficit in year one is about he same.  In both cases, the deficits increase demand in the economy stimulating growth.  You believe the supply side argument the lower taxes will create an incentive for businesses to expand independent of the expansionary impact of deficits. The evidence I as I recall shows that effect is insignificant.

 

Economics models are always backwards looking and always try to tie in how government creates private sector demand, when there's zero causal relationship.  Ever.

[TPS]

3 minutes ago, TakeYouToTasker said:

 

I feel like I've had this discussion with you before.

 

The government issues currency, but currency, even fiat currency which is used as the global marker for trade, is not the same thing as wealth.  It is a marker for wealth used to grease the skids of exchange by making it easier and more convenient.  That is all.

 

Even the dollar is backed by something tangible.  "The full faith and credit of the United States", which is nothing more than a fancy way of saying "the promise of future units of labor produced by Americans".

 

Debt incurred by the government represents labor which must be undertaken at some point in the future.  A cheeseburger today, with the promise to pay tomorrow.

 

So, no, the government does not "create wealth".  But rather, as GG says, it redistributes it both in a linear way, and across time from the future.

 

Wealth is created exclusively by combining capital with labor.

We agree on the first and last points. The dollar is simply the unit of account which is "good for all debts public and private."  Physical dollars or Demand Deposits expressed in $s are wealth in that they can purchase physical things, but all financial assets have that same quality--they are pieces of paper that can be converted to a means of payment which can then be used to buy things.   If financial assets are wealth, then so are physical $s and deposits.  But this isn't what we really disagree on.  The question is how does new money get injected into the economy?   There are two sources:

1. If the private sector wants to spend more than it receives in income, then it borrows from the private banking system.  Expanding businesses require lines of credit to fund production; or a family can buy a new house by obtaining a mortgage.  In each case, Deposits go up on the banks liability side and loans go up on the asset side.  In the aggregate, the money supply goes up when net loan creation is positive.  Physical $s depend on the public's desire to hold cash or DD.  The more we desire to hold cash, the more in circulation.

2. What I've described. Here's a micro example. When government spends, the Fed credits the DD of (say) Halliburton and simultaneously credits the reserve account of (say) B

of A. If the spending occurred without increasing taxes, then government has to sell a bond as the law requires. BofA uses the additional reserves to purchase the bond, so it now has a t-bond instead of reserves (its reserve account at the Fed reduced by same).  The end result: Halliburton's revenue is higher by the value of its DD, and BofA has a new interest earning treasury bond. This is how it works.  The government's deficit has created an asset for BofA and higher revenue for Halli.

 

As for the debt, the government never has to pay it off.  It has to make the interest payments and then it rolls over maturing debt as it always has.  Another example for you. Suppose we balance the budget for the next 25 years and keep rolling over the debt.  If GDP grows at its historical norm of 3%, the in will double over this period.  The Debt-GDP ratio will be halved, from 100% to 50%.  Now, go another 25 years....

 

Absolutely wealth is created by capital labor, but money puts both of them to work. Unfortunately, too much has been directed at creating wealth in the form of factories that produce means of destruction not production....

 

 

[unbillievable]

10 minutes ago, TPS said:

You should be more clear.  Starting from G=T, there are three ways: 1) Increase G; T constant; 2) G constant, decrease T; 3) change both, as Trump did. In cases 1 and 2, if G and T are changed by an equal amount, the impact on the deficit in year one is about he same.  In both cases, the deficits increase demand in the economy stimulating growth.  You believe the supply side argument the lower taxes will create an incentive for businesses to expand independent of the expansionary impact of deficits. The evidence I as I recall shows that effect is insignificant.

 

You're confusing demand with wealth creation.

 

Deficit spending manipulates the equilibrium point by producing large areas of waste. While it may seem to increase production in the short term, the market has to account for the waste by devaluing the product, currency or both to bring it back to where it was before. However, because of the inherent inefficiency of government, wealth is destroyed in the process.

 

While government spending can be a useful to tool to regulate the economy, the temporary economic high it brings ALWAYS creates an equally low swing to maintain balance. What you're arguing isn't actually creating wealth, but advocating for more volatile swings in the economic pendulum, with a naive belief that someone "smart" can figure out how to keep it under control.

 

So while you're trying to convince us that deficit spending will bring with it improved infrastructure, social programs, and jobs for everyone (Venezuela) We're telling you that we're afraid of the eventual swing to starvation, homelessness, and riots (also Venezuela).

 

Your understanding of wealth seems to be inflation, where bread that used to cost $2 is now worth $4.

[TPS]

31 minutes ago, GG said:

 

Economics models are always backwards looking and always try to tie in how government creates private sector demand, when there's zero causal relationship.  Ever.

From 1940 to 1945 real GDP grew by 75% or 12% annually.  Did the private sector cause  that growth? if so, how?

[TPS]

5 minutes ago, unbillievable said:

 

You're confusing demand with wealth creation.

 

Deficit spending manipulates the equilibrium point by producing large areas of waste. While it may seem to increase production in the short term, the market has to account for the waste by devaluing the product, currency or both to bring it back to where it was before. However, because of the inherent inefficiency of government, wealth is destroyed in the process.

 

While government spending can be a useful to tool to regulate the economy, the temporary economic high it brings ALWAYS creates an equally low swing to maintain balance. What you're arguing isn't actually creating wealth, but advocating for more volatile swings in the economic pendulum, with a naive belief that someone "smart" can figure out how to keep it under control.

 

So while you're trying to convince us that deficit spending will bring with it improved infrastructure, social programs, and jobs for everyone (Venezuela) We're telling you that we're afraid of the eventual swing to starvation, homelessness, and riots (also Venezuela).

 

Your understanding of wealth seems to be inflation, where bread that used to cost $2 is now worth $4.

Obama increased the deficit by $7.3 trillion from 2009 to 2016. Do you know what the average rate of inflation was over this period?

[Foxx]

NIRP, coming soon to an economy near you.

[Chef Jim]

21 minutes ago, TPS said:

From 1940 to 1945 real GDP grew by 75% or 12% annually.  Did the private sector cause  that growth? if so, how?

 

So you're going to pull THAT 5 years of our history to argue that the public sector drives economic growth?? 

[TPS]

8 minutes ago, Chef Jim said:

 

So you're going to pull THAT 5 years of our history to argue that the public sector drives economic growth?? 

The other way around.  For those who say government doesn't create growth/wealth, then what was the cause of the rapid expansion of output during this 5-year period?  

Where did the funding come from?

 

I would never say the public sector drives economic growth; it can stimulate growth just as Trump has done with increased spending and cutting taxes.  It does so by injecting additional demand into the economy, NOT by redistributing income. 

 

[Foxx]

37 minutes ago, Chef Jim said:

 

So you're going to pull THAT 5 years of our history to argue that the public sector drives economic growth?? 

it was war driven, nothing more. i guess it could be said that the .gov drove it....

[Chef Jim]

Just now, Foxx said:

it was war driven, nothing more. i guess it could be said that the .gov drove it....

 

Well it was also we had a long way up to go after the beat down of the depression.  Add those two together, the likes of which we will hopefully never see again, of course your see incredible growth.  

[GG]

21 minutes ago, TPS said:

The other way around.  For those who say government doesn't create growth/wealth, then what was the cause of the rapid expansion of output during this 5-year period?  

Where did the funding come from?

 

I would never say the public sector drives economic growth; it can stimulate growth just as Trump has done with increased spending and cutting taxes.  It does so by injecting additional demand into the economy, NOT by redistributing income. 

 

If your theory is correct why didn't you pull the growth figures from the decade prior to the 5 years you selected?

 

Please remind me if that was another period of government stimulating the demand.  

[TPS]

1 minute ago, Chef Jim said:

 

Well it was also we had a long way up to go after the beat down of the depression.  Add those two together, the likes of which we will hopefully never see again, of course your see incredible growth.  

The issue is that Tasker and GG think that government can only redistribute income, which has no impact on growth/wealth.  In the case of a balanced budget that is true. With deficit spending, that's not the case.  Government stimulates demand via deficits which causes the private sector to produce more output--wealth. 

 

23 minutes ago, GG said:

If your theory is correct why didn't you pull the growth figures from the decade prior to the 5 years you selected?

 

Please remind me if that was another period of government stimulating the demand.  

From 1935 to 1940, RGDP grew by about 6% annually vs 12 % during the war.  The average deficit in the first period was just under 3%/year; the average deficit in the second period was 17%/year.

 

The impact of deficits of course depends on what's happening in the other sectors.  Usually they go up when the private sector (C+I) is contracting, so higher deficits are associated with lower growth (as in Obama's first term).  However, if the economy is growing and you juice it with deficits, it will juice the economy, just as we saw last year.  

 

It's really straight-forward.  Unfortunately it's usually ideology that prevents using deficits to stimulate the economy more than if left alone, though republicans certainly realize "deficits don't matter."  For conservatives, it seems deficit spending is fine as long as it for a wall or a war.....

 

The only thing that limits us from producing more wealth is labor and capital as Tasker stated.  Government deficit spending is a mechanism that puts more labor and capital to use.  It's up to us to influence our politicians on how we want those resources used.

[GG]

1 minute ago, TPS said:

The issue is that Tasker and GG think that government can only redistribute income, which has no impact on growth/wealth.  In the case of a balanced budget that is true. With deficit spending, that's not the case.  Government stimulates demand via deficits which causes the private sector to produce more output--wealth. 

 

From 1935 to 1940, RGDP grew by about 6% annually vs 12 % during the war.  The average deficit in the first period was just under 3%/year; the average deficit in the second period was 17%/year.

 

The impact of deficits of course depends on what's happening in the other sectors.  Usually they go up when the private sector (C+I) is contracting, so higher deficits are associated with lower growth (as in Obama's first term).  However, if the economy is growing and you juice it with deficits, it will juice the economy, just as we saw last year.  

 

It's really straight-forward.  Unfortunately it's usually ideology that prevents using deficits to stimulate the economy more than if left alone, though republicans certainly realize "deficits don't matter."  For conservatives, it seems deficit spending is fine as long as it for a wall or a war.....

 

The only thing that limits us from producing more wealth is labor and capital as Tasker stated.  Government deficit spending is a mechanism that puts more labor and capital to use.  It's up to us to influence our politicians on how we want those resources used.

 

You just can't get your head out of the class.  You are talking about the results of what happens in the private sector when the government allows people to keep more of their earnings and assets.  You are approaching it from the leftist perspective that the property belongs to the government and it's up to the Treasury's whims when to release it and how it gets deployed, therefore, the more that the government releases, the faster the growth.   If that were the case, Zimbabwe would be the envy of the free world, because with the government giving money away would not only drive supersized growth but would invite outside investment to partake in that government stimulous.

 

Our position is that the property belongs to the individual, and government's decision to allow the individuals to keep more of their property and have the people decide what to do with that property is really what makes the economy grow faster.   

 

This shouldn't even be up for a debate.

 

Government cannot create wealth.  Period.  It can only take it away or redistribute it