1. Post #401
    Gold Member

    May 2005
    2,268 Posts
    The money isn't taken out of the economy when it is taxed however, it stays within it, and the government will either use it to pay for a various government body or will use it to invest themselves.
    Yeah I'm not disputing that. I'm saying when it stays within the private sector it can be used more efficiently. The government will tend to spend on things that are politically popular, not what's most efficient.


    Which is why you increase taxes on the rich/wealthy.
    That wouldn't even put a dent in the national debt and it may just cause them to absorb their losses elsewhere.

    It depends on ones definition of long term. Long term could be possibly decades. We have all sorts of wars, peak oil, peak phosphorus, energy crisis, political and social revolutions and massive sweeping changes throughout human society at the moment. Having the biggest economic collapse in human history in the middle of all this isn't exactly the wisest thing to do.
    But the collapse is coming regardless whether they cut spending or not. I'm arguing that they can have a less painful crisis by addressing the problem now versus a bigger crisis later.

    The first issue is that mercenaries aren't restricted by various international conventions, and are free to commit various war crimes. The fact they work for the highest payer means that you will get a situation like late medieval Italy where every country used disloyal mercenaries to do their bidding.

    Plus a non-government controlled fire force seems ludicrous to say the least. What is there to stop a private fire force blackmailing somebody whose house is on fire?
    In the system I envision there is a court system that enables enforcement of private property rights, so that would not be a plausible scenario.

    The central bank is however controlled by the government. The government is able to control the money supply, inflation, and keep many other various factors in check. If it doesn't, you are going to get problems once the unregulated free market gets going.
    They actually aren't controlled by the government, if we're talking about the Federal Reserve. They are a private group of bankers. The government might "pressure" them to do things though.

    Debt has always been growing. Inflation always happens. You would need an alternate universe if you wanted to find a country that didn't have national debt that didn't grow.
    Actually debt was pretty flat for a very long time. It has only been growing at these rates in the last several decades. We had relatively low levels of debt in the past yet the country prospered and grew. I don't believe that large piles of debt necessarily helps economic growth.
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  2. Post #402
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    Yeah I'm not disputing that. I'm saying when it stays within the private sector it can be used more efficiently. The government will tend to spend on things that are politically popular, not what's most efficient.
    The private sector can also use money inefficiently. There will be a lot of wealth disparity that will arise. There will be failed investments and bankruptcies and monopolies and a whole host of other problems. The biggest problem of all is that there is no safeguard or safety net once an economic crash happens (Which it will).

    That wouldn't even put a dent in the national debt and it may just cause them to absorb their losses elsewhere.
    It would get a lot of money out of the upper classes, which would allow for a reduction of wealth disparity and give the government extra money to use. (Long term it would help to control national debt as the amount it increases by would be reduced.)

    But the collapse is coming regardless whether they cut spending or not. I'm arguing that they can have a less painful crisis by addressing the problem now versus a bigger crisis later.
    What would be worse than the global economy collapsing?

    In the system I envision there is a court system that enables enforcement of private property rights, so that would not be a plausible scenario.
    Yes it is, if the absolute minimum of government exists to do solely that, how will a country stop dissatisfied mercenaries rampaging around? It's happened before, and its why mercenaries are banned by international conventions.

    They actually aren't controlled by the government, if we're talking about the Federal Reserve. They are a private group of bankers. The government might "pressure" them to do things though.
    They are kinda under a lot of government control though. That's why it was created.

    Actually debt was pretty flat for a very long time. It has only been growing at these rates in the last several decades. We had relatively low levels of debt in the past yet the country prospered and grew. I don't believe that large piles of debt necessarily helps economic growth.
    And during times in which it had no debt, the economy constantly had booms and busts. A wise government is one that intervenes in a private economy when it sees things getting out of hand.
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  3. Post #403
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    They have to pay interest on that money. The trillions of dollars in debt is simply unsustainable, it is never going to be paid off (unless of course they just try to print their way out of it).

    What you describe isn't a bad alternative, as you appear to be implying, it's a painful, but necessarily correction of an unsustainable system, one that is inevitably going to take place.
    as long as we pay off the interest, and don't accumulate any more debt, the debt will stop growing. Once the debt stops growing, we are fine. As I explained earlier, debt is a-okay.

    Edited:

    Taxes do hurt the government, and the economy. Anyone who says otherwise is crazy. I mean really, how is taking someone's money not going to hurt their business? I'm not saying we shouldn't have taxes, but I am saying is that we should look at the downside of taxes before we just raise them for the heck of it. And we can't inflate our way out of debt. Not only would it destroy our relationship with lenders, it would also destroy our economy. Inflation is like a tax, except the money simply disappears instead of going to the government. I say we get out of this mess by lowering taxes, and raising spending (but only in areas that can actually boost the economy). Once we are out of the recession, we can go on a austerity program.
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  4. Post #404
    Gold Member

    May 2005
    2,268 Posts
    The private sector can also use money inefficiently. There will be a lot of wealth disparity that will arise. There will be failed investments and bankruptcies and monopolies and a whole host of other problems. The biggest problem of all is that there is no safeguard or safety net once an economic crash happens (Which it will).
    It's possible, but much less likely. You don't have the same moral hazard in the private sector. Rather than using other peoples money to pay for things that are politically popular, the private sector necessarily has to provide goods and services that consumers want, and do it in the most efficient way possible to maximize revenue and minimize loss. Since the profits and losses are both private, there's much more incentive to spend wisely. There will be failed investments and bankruptcies, of course, I'm not questioning that, but the profit motive (and fear of losses without a government safety net) will drive people away from risky investments that cause those problems. Monopolies are another issue but I would argue that they would not be an issue in 99% of cases, only in those rare instances where a company has control over an area that contains scarce resources (like a diamond mine). If a company has monopolistic control over an industry in the free market, under almost all circumstances it really would be your own fault for not producing better goods and services that are good enough to rival the competition.

    It would get a lot of money out of the upper classes, which would allow for a reduction of wealth disparity and give the government extra money to use. (Long term it would help to control national debt as the amount it increases by would be reduced.)
    The wealth disparity isn't really relevant. Only the absolute standard of living is what matters. Even if they raised taxes across every bracket it would hardly put a dent in the national debt over an entire decade, and the effect will be even smaller if you're only taxing the wealthy alone. (who will just likely absorb their increased taxes in other ways, like downsizing their business, which will hurt the economy)

    What would be worse than the global economy collapsing?
    A bigger collapse in the future when the entire financial system implodes, including a food crisis where millions of people can't eat and start rioting.

    They are kinda under a lot of government control though. That's why it was created.
    It was created as a result of several economic panics that occurred throughout the previous century.

    However, the Federal Reserve had existed prior to the Great Depression, several recessions throughout the past century, and the 2008 crash, so you be the judge of how useful the central bank has been in preventing crisis.

    And during times in which it had no debt, the economy constantly had booms and busts. A wise government is one that intervenes in a private economy when it sees things getting out of hand.
    We still have booms and busts now, so it's not like the lack of debt back then is what caused them. We certainly have no shortage of debt these days.. Also there have been arguments put forward that the actual cause of boom and bust cycles is the fractional reserve banking system.

    as long as we pay off the interest, and don't accumulate any more debt, the debt will stop growing. Once the debt stops growing, we are fine. As I explained earlier, debt is a-okay.
    Yeah but where are they going to get the money to do that (to pay off the interest) without cutting spending? They're already broke. They only have a limited amount of taxes to work with, and if they're having to borrow even more money just to cover mandatory interest payments on previous debt, that's when you know there's a big problem... since that is just going to dig the US government even deeper in debt and interest. Default will be the only way out of such a mess (either through honest default or through inflation).

    I say we get out of this mess by lowering taxes, and raising spending (but only in areas that can actually boost the economy). Once we are out of the recession, we can go on a austerity program.
    How are they going to fund the increased spending though? They can keep borrowing but like I said, eventually it'll get to the point where they can't even make the interest payments on the debt and that's when the shit will really hit the fan.
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  5. Post #405
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    Of course they will borrow in my plan. How else do they make up for the deficit (which would increase in my plan)? but the deficit spending would not make us default; it won't take that long to get out of the recession. After the are out, we can work on cutting spending, raising taxes, and slowly paying down debt.

    And what makes you think we can inflate our way out of debt? it would destroy our economy. We would be a third world nation.

    Edited:

    also, the Federal Reserve is not privately owned, get that silly idea out of your head. The member banks are private, but the Federal Reserve Board, which makes all the decisions, is owned by the federal government. The federal government also gets all the profits.
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  6. Post #406
    Gold Member

    May 2005
    2,268 Posts
    Of course they will borrow in my plan. How else do they make up for the deficit (which would increase in my plan)? but the deficit spending would not make us default; it won't take that long to get out of the recession. After the are out, we can work on cutting spending, raising taxes, and slowly paying down debt.
    They could make up for the deficit by cutting spending, at least that's what I'd argue. Sure they could borrow, as long as they have people still willing to lend, but that money isn't free, it comes at a cost (interest).

    The recession officially ended in 2009, but the "recovery" we've been undergoing since then has been atrocious, and it looks as if we might be heading into another recession soon.

    And what makes you think we can inflate our way out of debt? it would destroy our economy. We would be a third world nation.
    I definitely don't think we can inflate our way out of debt without destroying our economy. That's actually what I've been trying to argue. I think the only way out of this mess is for the US government to default on it's obligations. The government could either default honestly, by admitting it can't pay, or dishonestly, through inflation. Both will cause catastrophic economic pain, I'm definitely not arguing otherwise.

    also, the Federal Reserve is not privately owned, get that silly idea out of your head. The member banks are private, but the Federal Reserve Board, which makes all the decisions, is owned by the federal government. The federal government also gets all the profits.
    Yeah maybe I chose the wrong words. I probably should have said "independent".

    As for their profits, yeah, they created money out of thin air and lent it out at interest. Most of their money comes from government bonds, so for them to turn over their profits back to the treasury is little more than a government shell game anyway. They also keep several billion dollars of those "profits" for their "operating expenses", too.
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  7. Post #407
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    They could make up for the deficit by cutting spending, at least that's what I'd argue. Sure they could borrow, as long as they have people still willing to lend, but that money isn't free, it comes at a cost (interest).

    The recession officially ended in 2009, but the "recovery" we've been undergoing since then has been atrocious, and it looks as if we might be heading into another recession soon.



    I definitely don't think we can inflate our way out of debt without destroying our economy. That's actually what I've been trying to argue. I think the only way out of this mess is for the US government to default on it's obligations. The government could either default honestly, by admitting it can't pay, or dishonestly, through inflation. Both will cause catastrophic economic pain, I'm definitely not arguing otherwise.



    Yeah maybe I chose the wrong words. I probably should have said "independent".

    As for their profits, yeah, they created money out of thin air and lent it out at interest. Most of their money comes from government bonds, so for them to turn over their profits back to the treasury is little more than a government shell game anyway. They also keep several billion dollars of those "profits" for their "operating expenses", too.
    yes, you could make up for the deficit by cutting spending, but that would hurt the economy. By spending more than we take in, we boost the economy. When the economy finally gets good, we can implement austerity. And the US doesn't have to default on it's debt. As long as we eventually balance our budget (and therefore stop the debt from growing), we will be fine. We can take as long as we want to pay back the debt, as long as we make sure the interest stays low enough to handle.
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  8. Post #408
    Gold Member

    May 2005
    2,268 Posts
    If there is any indication that the economy is anywhere near being on the path to improvement I have yet to see it. Remember, the recession officially ended in 2009. What you're seeing today is the "recovery". I think things are actually about to get a lot worse. And what will the government do when interest rates rise and they can't afford to borrow?
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  9. Post #409
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    If there is any indication that the economy is anywhere near being on the path to improvement I have yet to see it. Remember, the recession officially ended in 2009. What you're seeing today is the "recovery". I think things are actually about to get a lot worse. And what will the government do when interest rates rise and they can't afford to borrow?
    I know the current recovery can't really be called a recovery, which is why it is not the time for austerity. And the government is nowhere near the point where they can't borrow anymore, so it's not an issue. And why would interest rates rise all of a sudden?
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  10. Post #410
    Gold Member

    May 2005
    2,268 Posts
    The rates really have nowhere to go but up, since they're already at rock bottom.
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  11. Post #411
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    It's possible, but much less likely. You don't have the same moral hazard in the private sector. Rather than using other peoples money to pay for things that are politically popular, the private sector necessarily has to provide goods and services that consumers want, and do it in the most efficient way possible to maximize revenue and minimize loss. Since the profits and losses are both private, there's much more incentive to spend wisely. There will be failed investments and bankruptcies, of course, I'm not questioning that, but the profit motive (and fear of losses without a government safety net) will drive people away from risky investments that cause those problems. Monopolies are another issue but I would argue that they would not be an issue in 99% of cases, only in those rare instances where a company has control over an area that contains scarce resources (like a diamond mine). If a company has monopolistic control over an industry in the free market, under almost all circumstances it really would be your own fault for not producing better goods and services that are good enough to rival the competition.
    What if companies collaborate to create monopolies or oligopolies?

    Which coincidentally enough, they have done in the past and still do today.

    Plus if there were no safeguards or regulations in place, what is there to stop a company from paying some private contractors to ruin a rival? What is there to stop them from using underhanded tactics?

    The wealth disparity isn't really relevant.
    Yes it is, if the gap between the rich and poor gets big enough then you are going to get a revolution occurring once the poor start to organise themselves. A big enough gap would leave an incredibly tiny upper class (All collaborating to maintain monopolies) that would rule over a vast mass of people working for starvation wages.

    Only the absolute standard of living is what matters. Even if they raised taxes across every bracket it would hardly put a dent in the national debt over an entire decade, and the effect will be even smaller if you're only taxing the wealthy alone.(who will just likely absorb their increased taxes in other ways, like downsizing their business, which will hurt the economy)
    Or perhaps they could invest more into their business and run it more efficiently so as to produce larger profits?

    A bigger collapse in the future when the entire financial system implodes, including a food crisis where millions of people can't eat and start rioting.
    Except under laissez faire capitalism in the 19th and 20th century this happened all the time. People couldn't earn enough to eat, so they formed trade unions, held strikes, got voted in, proposed new laws, passed them, implemented them, and soon enough living conditions for people remarkably improved.

    Plus it was found that when treated well, workers are much more productive. Treat their labour and themselves as a commodity in a market and they will resent this immensely.

    It was created as a result of several economic panics that occurred throughout the previous century.

    However, the Federal Reserve had existed prior to the Great Depression, several recessions throughout the past century, and the 2008 crash, so you be the judge of how useful the central bank has been in preventing crisis.
    Except they weren't caused by the Federal Reserve. The Great Depression was caused by a large multitude of factors, one of which was rampant speculation in the stock market, overproduction of goods and little government intervention to actually control any of it.

    The recession we have at the moment could be very easily summed up with this:

    We still have booms and busts now, so it's not like the lack of debt back then is what caused them. We certainly have no shortage of debt these days.. Also there have been arguments put forward that the actual cause of boom and bust cycles is the fractional reserve banking system.
    How the hell does fractional reserve banking cause booms/busts? If a bank had no minimum to keep when it lent out money what is to stop speculation in which they lend out too much, their customers come back unexpectedly demanding some cash, the bank doesn't have it, so there's a bank run, bank goes tits up, then it ripples throughout the economy.

    Yeah but where are they going to get the money to do that (to pay off the interest) without cutting spending? They're already broke. They only have a limited amount of taxes to work with, and if they're having to borrow even more money just to cover mandatory interest payments on previous debt, that's when you know there's a big problem... since that is just going to dig the US government even deeper in debt and interest. Default will be the only way out of such a mess (either through honest default or through inflation).
    The worlds biggest economy can't just use defaulting as a way to fix their national debt. The effects would be utterly catastrophic.

    If there is any indication that the economy is anywhere near being on the path to improvement I have yet to see it. Remember, the recession officially ended in 2009. What you're seeing today is the "recovery". I think things are actually about to get a lot worse. And what will the government do when interest rates rise and they can't afford to borrow?
    We are seeing new stuff go on every day. Advances in economics, technology and scientific understanding means that the new world we are in is constantly adapting. We can't just go back to a bastardised pseudo-economic plan that doesn't utilise the scientific method and is based off outdated 19th century ideals about as accurate as saying that Social Darwinism is still applicable today.
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  12. Post #412
    Dennab
    May 2012
    338 Posts
    Which is why you increase taxes on the rich/wealthy.
    "Oh, we can just tax the wealthy" is a common myth. When firms hire more workers, they do so using profit. When firms hire more workers, they will hire less workers in the fact that they have less money to hire workers with. It is a very simple concept. Most of the burden is not really on the wealthy but on the workers who have less jobs available because reinvestment is discouraged.

    The central bank is however controlled by the government. The government is able to control the money supply, inflation, and keep many other various factors in check. If it doesn't, you are going to get problems once the unregulated free market gets going.
    An open market committee raises and lowers the interest rates by buying and selling bonds, the government has limited say in what they do. "If it doesn't, you are going to get problems once the unregulated free market gets going." Wow, do you know what the Federal Reserve does? Alright, I'll explain, their job used to be lender of last resort. The idea was that people will contract the money supply during recessions, causing even deeper recessions and bank runs, by taking money out of the bank. The job of the federal reserve is to prevent this contraction of the money supply during recessions, however, during the start of The Great Depression, the fed contracted the money supply, denying loans to small commercial banks, and a lot of people argue that this bad monetary policy caused the depression. Also the FFR is .25%, that's just ridiculously too low even though we've been out of a recession for 3 years now..

    There's a lot of problems and issues with that stuff, but it is rather fundamental that universal healthcare should be a human right.
    The issue is healthcare is too expensive in the US for poor people to afford. Healthcare inflation is the issue. The reason why healthcare is so expensive in the US is because people can use whichever health service they want with no expense. People have no incentive to shop around for the best medical deal, and thus health services in the US are not competitive. In order for healthcare in the US to be cheaper, and for this problem to be solved, we must encourage competition amongst healthcare providers by moving towards a consumer driven system. Additionally medicare encourages seniors to engage in frivolous healthcare spending, the burden of which is put on you. Since the average man almost never spends more than 10k/year on health insurance, it would be sensible to think that his health insurance for going to a checkup 2 times a year is completely unnecessary. Despite going to the clinic 2 times a year, bob will pay 10k a year for his insurance because old folks on his policy are getting all sorts of mri scans and tests done. The solution is to get rid of health insurance and encourage out of pocket payments, by doing this we will move to a more consumer-driven system. If you worry about the cost of being resuscitated, catastrophic health insurance is much cheaper and covers the big-risk deductibles. Covering big-risk deductibles is the very point of health insurance.

    Debt has always been growing. Inflation always happens. You would need an alternate universe if you wanted to find a country that didn't have national debt that didn't grow.
    Liquidy bubble. Google it.

    We are seeing new stuff go on every day. Advances in economics, technology and scientific understanding means that the new world we are in is constantly adapting. We can't just go back to a bastardised pseudo-economic plan that doesn't utilise the scientific method and is based off outdated 19th century ideals about as accurate as saying that Social Darwinism is still applicable today.
    Lol, the only reason why Keynesianism exists is because the great depression happened and it probably caused it. We have no idea whether or not it actually works and the data and observations in Milton Friedman's A Monetary History of the United States suggests it doesn't. I think the best monetary policy is 3% a year money supply increase for stable economic growth.
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  13. Post #413
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    Lol, the only reason why Keynesianism exists is because the great depression happened and it probably caused it.
    How did you manage this leap in logic? A was created as the result of B, yet A caused B in the first place. What compelled you to think that it caused it when it didn't even exist?

    Furthermore, can you explain how it caused it?

    We have no idea whether or not it actually works and the data and observations in Milton Friedman's A Monetary History of the United States suggests it doesn't.
    But we have had decades of study and experimentation and Keynesian economics seemed to work well enough to the extent that it was a popular economic theory up until the 1970s. (And is seeing some resurgence in popularity today.) It was very much successful at helping to end the Great Depression.

    I think the best monetary policy is 3% a year money supply increase for stable economic growth.
    What made you choose this arbitrary number?
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  14. Post #414
    Gold Member
    BlueFlash's Avatar
    June 2008
    5,147 Posts
    I feel like the fact that the general public is more interested in the Kardashians than where their tax money goes is definitely not helping America.
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  15. Post #415
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    I feel like the fact that the general public is more interested in the Kardashians than where their tax money goes is definitely not helping America.
    The general public in all countries are stupid. As long as we have good leaders, we will be okay. Well, make that reasonable leaders, since we rarely actually have good leaders. And Sobotnik, income inequality really does not matter. What matters is the standards of living, like Noble said. The whole idea of a proletariat revolution is ridiculous, so I think it's funny you brought it up. And starvation wages? as noble said, standards of living are what matters. High standard of living != starvation wages. Stop putting words in people's mouths.

    Edited:

    You also say that higher taxes on businesses would force them to invest more in to their business, so they can make more of a profit. Really? Everyone knows that higher taxes make people less likely to want to earn money. Why work so hard if a large chunk is being taken away? Plus, those taxes limit the amount of money they can invest in themselves. You seem to know a good deal about economics, so you should understand that taxes always hurt businesses. On the other hand, I do agree with you that Keynesian economics is a good philosophy. And Fenderson's idea of 3% inflation rate is a bit sketchy.
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  16. Post #416
    Gold Member
    BlueFlash's Avatar
    June 2008
    5,147 Posts
    The general public in all countries are stupid. As long as we have good leaders, we will be okay. Well, make that reasonable leaders, since we rarely actually have good leaders.
    That's my point though. Everyone can see how corrupt many politicians are, but everyone just turns a blind eye to them. If people cared about politics, I think people would wise up to what's going on and then at least some progress could be made. But because people don't care, the corrupt will just grow more corrupt.
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  17. Post #417
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    The general public in all countries are stupid. As long as we have good leaders, we will be okay. Well, make that reasonable leaders, since we rarely actually have good leaders. And Sobotnik, income inequality really does not matter. What matters is the standards of living, like Noble said. The whole idea of a proletariat revolution is ridiculous, so I think it's funny you brought it up.
    If there was a libertarian system in which no minimum wages, safety regulations, unemployment subsidies, etc did not exist and trade unions were powerless to change any of that, they would become increasingly desperate and turn to more extreme tactics.

    And starvation wages? as noble said, standards of living are what matters. High standard of living != starvation wages. Stop putting words in people's mouths.
    They very much did happen all the time in laissez faire capitalism though. People worked for abysmally low wages and competition did not raise wages because all the businessman cared about was labour, which was incredibly cheap.

    People were forced to pool their resources, time and manpower to create trade unions that had enough bargaining power to change things sufficiently to the point that they could lobby for things such as minimum wages or residents parking.
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  18. Post #418
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    That's my point though. Everyone can see how corrupt many politicians are, but everyone just turns a blind eye to them. If people cared about politics, I think people would wise up to what's going on and then at least some progress could be made. But because people don't care, the corrupt will just grow more corrupt.
    I actually wasn't even talking about corruption. Most of our leaders are pretty stupid, even if they are not corrupt. Though I do admit having people not care does not help. Even worse, most who do care about politics see it as some sort of game, where the only way to win is to make the other party look bad.

    Edited:

    If there was a libertarian system in which no minimum wages, safety regulations, unemployment subsidies, etc did not exist and trade unions were powerless to change any of that, they would become increasingly desperate and turn to more extreme tactics.



    They very much did happen all the time in laissez faire capitalism though. People worked for abysmally low wages and competition did not raise wages because all the businessman cared about was labour, which was incredibly cheap.

    People were forced to pool their resources, time and manpower to create trade unions that had enough bargaining power to change things sufficiently to the point that they could lobby for things such as minimum wages or residents parking.
    I have never suggested that we remove safety regulations, or that we should go towards laissez faire capitalism. I said that income inequality is an almost pointless statistic, and we should worry much more about standards of living than income inequality.
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  19. Post #419
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    I have never suggested that we remove safety regulations, or that we should go towards laissez faire capitalism. I said that income inequality is an almost pointless statistic, and we should worry much more about standards of living than income inequality.
    That is however what Noble is suggesting, as Noble is seemingly for a system in which the government barely exists. (If at all)
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  20. Post #420
    Gold Member

    May 2005
    2,268 Posts
    What if companies collaborate to create monopolies or oligopolies?

    Which coincidentally enough, they have done in the past and still do today.

    Plus if there were no safeguards or regulations in place, what is there to stop a company from paying some private contractors to ruin a rival? What is there to stop them from using underhanded tactics?
    That sort of operation wouldn't be able to sustain itself for very long under free market conditions. They would be fighting a constant battle against an ocean of new competition coming into the market. Price fixing and predatory pricing is completely inefficient and hurts the business doing it far more than it hurts their "target".

    Yes it is, if the gap between the rich and poor gets big enough then you are going to get a revolution occurring once the poor start to organise themselves. A big enough gap would leave an incredibly tiny upper class (All collaborating to maintain monopolies) that would rule over a vast mass of people working for starvation wages.
    Well again, it's the standard of living that matters, not the wealth disparity. The poor are not going to revolt just because rich people have more money than them, they'd revolt if they had a truly deplorable standard of living.

    Or perhaps they could invest more into their business and run it more efficiently so as to produce larger profits?
    Higher taxes means they have less money for investment, not more. I'm saying they'll find other ways to absorb that loss, for example by cutting back on spending and maybe even letting a few workers go.

    Except under laissez faire capitalism in the 19th and 20th century this happened all the time. People couldn't earn enough to eat, so they formed trade unions, held strikes, got voted in, proposed new laws, passed them, implemented them, and soon enough living conditions for people remarkably improved.

    Plus it was found that when treated well, workers are much more productive. Treat their labour and themselves as a commodity in a market and they will resent this immensely.
    Well that wasn't a free market, and I'm not talking about people not being able to afford food. I'm talking about a different, completely catastrophic situation where food is so scarce after an economic collapse, that millions of people starve.

    How the hell does fractional reserve banking cause booms/busts? If a bank had no minimum to keep when it lent out money what is to stop speculation in which they lend out too much, their customers come back unexpectedly demanding some cash, the bank doesn't have it, so there's a bank run, bank goes tits up, then it ripples throughout the economy.
    I'm not convinced whether or not fractional reserve banking is the cause of the boom and bust system, I'm just arguing that debt (or lack of) is not the cause. There are some decent arguments why fractional reserve banking could be the case though.

    The worlds biggest economy can't just use defaulting as a way to fix their national debt. The effects would be utterly catastrophic.
    I agree entirely that it would be catastrophic. I just believe that it is the inevitable outcome. I don't see how there could be a painless way out of this situation.

    We are seeing new stuff go on every day. Advances in economics, technology and scientific understanding means that the new world we are in is constantly adapting.
    Sure, but how is any of that going to help improve our economic recovery and our situation with the debt?
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  21. Post #421
    Well again, it's the standard of living that matters, not the wealth disparity. The poor are not going to revolt just because rich people have more money than them, they'd revolt if they had a truly deplorable standard of living.
    this is true only if humans are rational actors, which we are not. certain quirks of human psychology mean that income inequality actually is an issue separate from absolute standards of living.
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  22. Post #422
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    this is true only if humans are rational actors, which we are not. certain quirks of human psychology mean that income inequality actually is an issue separate from absolute standards of living.
    True, some people do care more about income inequality than standards of living, but that does not mean they would revolt. Even members of the Occupy Movement (who's main problem is income inequality) aren't going to organize a protest anytime soon.

    Edited:

    That is however what Noble is suggesting, as Noble is seemingly for a system in which the government barely exists. (If at all)
    yes, I guess he is. But I stand by the idea that standards of living are more important than income inequality.
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  23. Post #423
    True, some people do care more about income inequality than standards of living, but that does not mean they would revolt.
    how do you know? all it would take is one good demagogue
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  24. Post #424
    Dennab
    May 2012
    338 Posts
    How did you manage this leap in logic? A was created as the result of B, yet A caused B in the first place. What compelled you to think that it caused it when it didn't even exist?

    Furthermore, can you explain how it caused it?



    But we have had decades of study and experimentation and Keynesian economics seemed to work well enough to the extent that it was a popular economic theory up until the 1970s. (And is seeing some resurgence in popularity today.) It was very much successful at helping to end the Great Depression.



    What made you choose this arbitrary number?
    The Great Depression created monetary policy as we know it. Early on in the great depression the federal reserve contracted the money supply, denying loans to small central banks short on money. Less money is available to the public, less loans are made and bankruns ensue. This worsened the great depression. Since firms can only hire additional workers using profit, the higher taxes used to pay for the fed's funding of public works projects once the money printer started rolling supposedly strained economic growth during the great depression. Recession is supposed to be sorta a realigning of the economy. Firms step back production on negative expectations, try to stay profitable, then step up production once they are sure enough they can make profit. Somewhere along the line, a bad mass investment decision was made. Something was produced that was not needed. According to Milton Friedman, low interest rates (through money printing) encourage these bad investment decisions that create bubbles and because of this the best monetary policy is 3% a year money growth because money growth should be consistent with gdp growth, and 3% a year gdp growth is the healthiest rate of growth. Japan used to have 10% a year gdp growth, now they have japan's lost decade.
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  25. Post #425
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    because of this the best monetary policy is 3% a year money growth because money growth should be consistent with gdp growth, and 3% a year gdp growth is the healthiest rate of growth.
    http://en.wikipedia.org/wiki/Post–Wo...omic_expansion

    Sorry but during the post war era quite a lot of countries surpassed the 3% rule and managed well from the 1940s right into the 1970s.
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  26. Post #426
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    how do you know? all it would take is one good demagogue
    because the Occupy Movement (which is dedicated to complaining about income inequality) has only amounted to a bunch of unemployed people sitting around in parks. Unless some sort of revolutionary movement evolves out of Occupy, we are safe. Plus, I doubt very many people would want to spend the energy needed for a revolt, unless they are seriously suffering.

    Edited:

    The Great Depression created monetary policy as we know it. Early on in the great depression the federal reserve contracted the money supply, denying loans to small central banks short on money. Less money is available to the public, less loans are made and bankruns ensue. This worsened the great depression. Since firms can only hire additional workers using profit, the higher taxes used to pay for the fed's funding of public works projects once the money printer started rolling supposedly strained economic growth during the great depression. Recession is supposed to be sorta a realigning of the economy. Firms step back production on negative expectations, try to stay profitable, then step up production once they are sure enough they can make profit. Somewhere along the line, a bad mass investment decision was made. Something was produced that was not needed. According to Milton Friedman, low interest rates (through money printing) encourage these bad investment decisions that create bubbles and because of this the best monetary policy is 3% a year money growth because money growth should be consistent with gdp growth, and 3% a year gdp growth is the healthiest rate of growth. Japan used to have 10% a year gdp growth, now they have japan's lost decade.
    what? you said inflation encourages bad spending and creates bubbles, yet at the same time inflation is a good thing? how does that make sense?
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  27. Post #427
    Dennab
    May 2012
    338 Posts
    http://en.wikipedia.org/wiki/Post–Wo...omic_expansion

    Sorry but during the post war era quite a lot of countries surpassed the 3% rule and managed well from the 1940s right into the 1970s.
    Yeah, then the 70's recession happened, the last big recession to happen prior to 2008. The stock market crashed as a result of the 70's oil crisis and a devalued dollar due to Nixon converting to fiat currency to finance Vietnam. He overprinted the money and didn't have enough gold to back it up. Coincidentally, the world gold supply increases 3% a year.
    what? you said inflation encourages bad spending and creates bubbles, yet at the same time inflation is a good thing? how does that make sense?
    If the money supply is increased/decreased at the same rate as demand for money, the result of no inflation.
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  28. Post #428
    Gold Member
    Lonestriper's Avatar
    September 2008
    5,717 Posts
    That sort of operation wouldn't be able to sustain itself for very long under free market conditions. They would be fighting a constant battle against an ocean of new competition coming into the market. Price fixing and predatory pricing is completely inefficient and hurts the business doing it far more than it hurts their "target".
    The whole notion that an ocean of competition arising is presumptuous.
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  29. Post #429
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    Coincidentally, the world gold supply increases 3% a year.
    The gold standard is utterly useless today.
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  30. Post #430
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    Yeah, then the 70's recession happened, the last big recession to happen prior to 2008. The stock market crashed as a result of the 70's oil crisis and a devalued dollar due to Nixon converting to fiat currency to finance Vietnam. He overprinted the money and didn't have enough gold to back it up. Coincidentally, the world gold supply increases 3% a year.

    If the money supply is increased/decreased at the same rate as demand for money, the result of no inflation.
    but you said we should have a 3% inflation rate, not a 3% growth in the money supply. You seem to be confusing inflation with growth in money supply.

    EDIT: sorry, you did say growth in money supply. but how can we make our growth in money supply equal to our GDP growth? GDP growth is not constant, and it is very hard to regulate growth in money supply (we can't know when bills leaves circulation).

    and do you have a source on this 3% a year growth in gold supply? more importantly, how can that growth continue for much longer? we only have so much gold.

    Edited:

    The whole notion that an ocean of competition arising is presumptuous.
    but it can and does happen. The Big Three used to own the auto industry, but they're inefficiency caused them to go bankrupt. RIM and Palm used to be the big names in smartphones, but now Palm is dead and RIM is dying too. Apple dominated the smartphone market for a bit, before being over thrown by Android. Even with all their stupid patent lawsuits, they are still losing market share.
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  31. Post #431
    Gold Member

    May 2005
    2,268 Posts
    The whole notion that an ocean of competition arising is presumptuous.
    If there's nothing stopping them from entering the market (like expensive regulations), and there is a potential profit to be made, then it's inevitable that new competitors will enter the market. They will try to offer better goods and services than their competition in order to make a profit, and in the process of doing so, they benefit everyone else (by providing jobs, more choice of goods/services, and lower prices for consumers). It's unsustainable for a cartel to keep its prices below market levels for very long, it will eat away at their profits and new competitors seeking to make a profit would just keep coming into the market anyway, so the cartel would have to keep lowering prices and losing profit to fight their competition. Eventually, that will come to an end. It's not an efficient way to do business and I don't see how it would be a significant issue.
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  32. Post #432
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    If there's nothing stopping them from entering the market (like expensive regulations), and there is a potential profit to be made, then it's inevitable that new competitors will enter the market. They will try to offer better goods and services than their competition in order to make a profit, and in the process of doing so, they benefit everyone else (by providing jobs, more choice of goods/services, and lower prices for consumers). It's unsustainable for a cartel to keep its prices below market levels for very long, it will eat away at their profits and new competitors seeking to make a profit would just keep coming into the market anyway, so the cartel would have to keep lowering prices and losing profit to fight their competition. Eventually, that will come to an end. It's not an efficient way to do business and I don't see how it would be a significant issue.
    There's other ways of attacking the competition.

    What is there to stop a company literally becoming so powerful from the use of underhanded tactics that it eventually grows into a government itself?
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  33. Post #433
    Dennab
    May 2012
    338 Posts
    but you said we should have a 3% inflation rate, not a 3% growth in the money supply. You seem to be confusing inflation with growth in money supply.

    EDIT: sorry, you did say growth in money supply. but how can we make our growth in money supply equal to our GDP growth? GDP growth is not constant, and it is very hard to regulate growth in money supply (we can't know when bills leaves circulation).

    and do you have a source on this 3% a year growth in gold supply? more importantly, how can that growth continue for much longer? we only have so much gold.
    You can't make money supply growth completely consistent with GDP growth by increasing the money supply according to the data. Data lags make precision money printing difficult as gdp data is always a few months old and not always accurate in representing the state of the economy. The best way to keep the money supply consistent with economic growth is the 3% thing, because after the wins and loses of the boom/bust cycle are sorted out, that is what the GDP averages to be. The idea that the best monetary policy is one that aims to keep markets on equilibrium is a monetarist view.
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  34. Post #434
    Gold Member

    May 2005
    2,268 Posts
    There's other ways of attacking the competition.

    What is there to stop a company literally becoming so powerful from the use of underhanded tactics that it eventually grows into a government itself?
    How would you propose that they are going to get all the money and influence needed to do that and keep it running?
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  35. Post #435
    Proudly supporting the JIDF
    Dennab
    July 2010
    22,111 Posts
    How would you propose that they are going to get all the money and influence needed to do that and keep it running?
    Imagine a company becomes very successful, and then using their wealth and influence they use underhanded tactics to attack the competition?

    A lot of companies have done, still do, and will continue to do that.

    The British East India Company literally conquered India through such tactics.
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  36. Post #436
    Gold Member

    May 2005
    2,268 Posts
    Imagine a company becomes very successful, and then using their wealth and influence they use underhanded tactics to attack the competition?

    A lot of companies have done, still do, and will continue to do that.

    The British East India Company literally conquered India through such tactics.
    I don't know what kind of underhanded tactics a company could use, in the absence of government interference, that would allow them to gain such a level of control. Right now, companies can sink their hooks into the government (political donations) to get what they want. That's an underhanded tactic that exists today and distorts the market, but it wouldn't exist in a free market.

    A company simply couldn't get the influence and the resources needed to take over without the government's existence. How are they going to build up an army and establish all this control without anyone noticing what they're doing and putting a stop to it in its early stages? They're never going to establish that control unless they have a central point of influence over everyone that they can manipulate (the government).
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  37. Post #437
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    You can't make money supply growth completely consistent with GDP growth by increasing the money supply according to the data. Data lags make precision money printing difficult as gdp data is always a few months old and not always accurate in representing the state of the economy. The best way to keep the money supply consistent with economic growth is the 3% thing, because after the wins and loses of the boom/bust cycle are sorted out, that is what the GDP averages to be. The idea that the best monetary policy is one that aims to keep markets on equilibrium is a monetarist view.
    what? since when is 3% the average GDP growth? any data to back that up?
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  38. Post #438
    Dennab
    May 2012
    338 Posts
    what? since when is 3% the average GDP growth? any data to back that up?
    Usually the GDP growth of a country is 1 to 6. If you took the all the US's GDP data from 1912 to 2012 and averaged it, you'd end up with a average annual growth of about 3%.
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  39. Post #439
    The Kakistocrat's Avatar
    November 2011
    1,353 Posts
    Imagine a company becomes very successful, and then using their wealth and influence they use underhanded tactics to attack the competition?

    A lot of companies have done, still do, and will continue to do that.

    The British East India Company literally conquered India through such tactics.
    British East India Company? you do realize that the British East India Company was given a monopoly by the government. The East India Company did not grow into a government, it was taken over by the government. In a true free market, it never would have happened.

    Edited:

    idk my economics teacher told me
    from the little research I just did, GDP growth (for America) is usually close to, but not equal to 3%. So your idea would simply lead to cycles of inflation and deflation.
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  40. Post #440
    Dennab
    May 2012
    338 Posts
    from the little research I just did, GDP growth (for America) is usually close to, but not equal to 3%. So your idea would simply lead to cycles of inflation and deflation.
    Assuming we can not know what the increase or decrease in economic growth is during the printing of the money, by the time the money has any effect the data you printed it on has been way way out of date, thus suggesting that this monetary policy is any less stable than price level targeting it stupid.
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