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Why do Democrats always insist on tax hikes?

Posted by B. Daniel Blatt at 2:48 pm - June 29, 2011.
Filed under: Big Government Follies

Like the Democratic governor of California, the President of the United States seems beholden to raising our taxes.

“You can’t,” the president said today during his press conference, “reduce the deficit without having some revenue increases in the mix“.

Well, maybe we’d be able to had he not so run up the federal credit card during his first two years in the White House. In the campaign, he promised a “net spending cut,” but delivered instead a dramatic spending increase, raising the rate of growth of the federal government far beyond the accelerated pace of the Bush years.

Seems he’s so insistent on a tax hike because he doesn’t want to scale back those increases.  That “net spending cut” thing was just a campaign gimmick.  Wonder what gimmicks his team has in store for his reelection campaign.

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179 Comments

  1. “You can’t,” the president said today during his press conference, “reduce the deficit without having some revenue increases in the mix“.

    Exactly backward, as always.

    1) “Yes, we can!”

    2) It’s possible, if not likely, that you can’t reduce the deficit *with* some revenue increases in the mix. Hauser’s Law suggests that the federal government can never extract more than about 19-20% of the economy, no matter what the tax rates are. If true, then new taxes / increased rates will not produce more revenue; they will only make the economy less efficient by distorting incentives further (e.g., the incentive to see tax shelter).

    Comment by ILoveCapitalism — June 29, 2011 @ 2:54 pm - June 29, 2011

  2. Why do so many Democrats advocate tax increases, yet they either don’t pay their taxes or find ways to avoid paying taxes in the first place?

    Comment by Sebastian Shaw — June 29, 2011 @ 3:13 pm - June 29, 2011

  3. Parasitism: This is a symbiotic relationship between two organisms in which one species (Democrat) benefits for growth and reproduction to the harm of the other species (taxpayer). It must be emphasized that Democrat and taxpayer interact and that excessive harm done to the taxpayer, which makes it less competitive, also endangers the survival of the Democrat species.

    Also see:

    Saprophyte: A Democrat that grows on and derives its nourishment from dead or decaying taxpayers.

    Parasite Democrats and saprophytic Democrats never evolve. They are bottom feeders and detritus gourmands. See: compost.

    Comment by Heliotrope — June 29, 2011 @ 3:33 pm - June 29, 2011

  4. Most of the people who pay no income taxes( 45%) are Democrat liberals.
    It’s simple really isn’t it.
    Must be nice to have a vote. Not pay income taxes, and sit back and when polled say…..”yeah raise taxes on the productive, to close the deficiet gap. ” Lazy bumms, rotten leeches.

    Comment by Gene in Pennsylvania — June 29, 2011 @ 3:38 pm - June 29, 2011

  5. Liberals always whine that the rich don’t “pay their fair share”. Seems to me that, since the rich are the ones who pay the majority of taxes, shouldn’t they be arguing for the poor to “pay their fair share”?

    And if higher taxes is the answer, shouldn’t Carter have been reelected?

    Comment by TGC — June 29, 2011 @ 3:57 pm - June 29, 2011

  6. TGC, great questions.

    Comment by ILoveCapitalism — June 29, 2011 @ 4:53 pm - June 29, 2011

  7. Sebastian, I would restate your question as an answer: Obama Party members always seek tax hikes because they loot the government treasury and don’t pay taxes themselves.

    Classic example: Charlie Rangel. Dodging taxes and receiving rent subsidies.

    Comment by North Dallas Thirty — June 29, 2011 @ 5:02 pm - June 29, 2011

  8. Hi ILC,
    “Hauser’s Law suggests that the federal government can never extract more than about 19-20% of the economy, no matter what the tax rates are. If true, then new taxes / increased rates will not produce more revenue; they will only make the economy less efficient by distorting incentives further (e.g., the incentive to see tax shelter).”
    Federal tax receipts are currently running at much lower than that, so tax hikes might actually help raise us back to that magic 18% number that the Hauser Conjecture suggests, because I don’t see Federal receipts jumping any-time soon, do you?

    Comment by Cas — June 29, 2011 @ 5:02 pm - June 29, 2011

  9. Federal tax receipts are currently running at much lower than that

    Were. They appear to be headed back up.

    so tax hikes might actually help raise us back to that magic 18% number that the Hauser Conjecture [sic] suggests

    Whoa, Earth to Cas: why would you think that maxing out revenue – having the federal government squeeze as much from the economy as it can – is, in itself, a good thing? You used the word “help”, which implies that maximzing the government’s share should be a goal. But taxes, no matter what level, are not a help to the economy. They are a burden, always. Even if the federal government’s share were down at 5%, cutting it further to 3% would be a boon.

    And if indeed we raised the federal revenue back to 19% – without lifting any of the other burdens that Obama has placed on production, trade and employment, that have made the economy that much weaker – it might be what the thing that pushes the economy finally off the cliff.

    Comment by ILoveCapitalism — June 29, 2011 @ 5:20 pm - June 29, 2011

  10. (Clarification – “Even if the federal government’s share were down at 5%, cutting it further to 3% would be a boon” – assuming that spending could be cut to match. Because deficits/borrowing are, in the end, another form of taxation. The spending level is the ultimate measure of taxation, i.e. of what government takes from the economy regardless of financing details.)

    Comment by ILoveCapitalism — June 29, 2011 @ 5:24 pm - June 29, 2011

  11. Whoa, Earth to Cas: why would you think that maxing out revenue – having the federal government squeeze as much from the economy as it can – is, in itself, a good thing?

    Because the fundamental underpinning of big-government socialist economics as Cas demands is a denial that taxes have any negative effect on the economy whatsoever.

    Closely associated is their belief that a company or person’s earnings and wealth are not in any way correlated with said person’s or company’s competency, productivity, and efficiency, as well as their belief that government administration and programs have zero overhead cost.

    I think we have to understand, ILC, that Cas does not believe that companies and people actually earn their wealth. Cas believes that the drunk on Market Street in San Francisco is just as valuable and productive as the CEO of a company in the Financial District, and that the only reason they are different is because the CEO stole the money. Therefore Cas calls upon the power of government to redistribute the CEO’s wealth to the drunk and thus right the wrong that income disparity always represents — and since Cas believes this always happens at zero cost, Cas can find no rational reason not to do it.

    The decisions of the Obama administration and its supporters like Cas are linked to the fact that they have exactly zero in the way of actual business experience.

    Comment by North Dallas Thirty — June 29, 2011 @ 5:56 pm - June 29, 2011

  12. Hi! NDT,

    Hydrant’s Law is that pedigreed dogs pee on the left side while Hydrant’s Conjecture imagines that untethered dogs prefer trees. In light of this, what do you think the odds are of Salmon swimming downstream to spawn in odd numbered years? (The wind is below 5mph and no clarinet player is using a plastic reed.)

    Comment by Heliotrope — June 29, 2011 @ 6:09 pm - June 29, 2011

  13. Because the fundamental underpinning of big-government socialist economics as Cas demands is a denial that taxes have any negative effect on the economy whatsoever.

    Heh, well I would have said that the underpinning is their view that “the economy” – which means, you and me – is there for government to exploit. A thing to be squeezed. The government doesn’t exist to serve us, rather we exist to serve the government, and all that which the American Revolution overturned, or thought that it had.

    Comment by ILoveCapitalism — June 29, 2011 @ 6:14 pm - June 29, 2011

  14. The tax cuts the Democrats are demanding… higher marginal rates on the top 2% of income earners… would have negligible impact on the deficit and more profound impacts on the economy.

    If the Republicans were smart, they would call the Demonrats’ bluff. If they want substantial increases in taxes of a magnitude sufficient to impact the deficit, the Republicans should put forth for public consideration a bill which will do that: rates of 50% on income of $200,000 or more, 50% on capital gains, 50% corporate tax, elimination of most tax breaks and incentives, double the Medicare tax and increase the social security tax by 50%.

    This tactic would show the public what the alternative to spending cuts and entitlement reform are. That would change the terms of the debate, because the public isn’t broadly aware of what the alternative to spending cuts it.

    But Republicans are far too stupid and timid to do this.

    Comment by V the K — June 29, 2011 @ 6:51 pm - June 29, 2011

  15. Small business isn’t hiring: http://www.foxnews.com/politics/2011/06/28/fiscal-uncertainty-in-washington-shakes-small-business-confidence/

    “Traditionally, we are led out of a recession by small businesses hiring people and creating jobs, and that’s not happening in this recession,” says Dan Danner, President and CEO of the National Federation of Independent Businesses (NFIB).

    His organization has just released a survey that tracks small business trends. The report shows that small business confidence was down for a third straight month in May, and that only 5 percent of small business owners think now is a good time to expand.

    Economist Martin Baily of the Brookings Institution says the lack of investment, hiring and expansion by small businesses is one of the reasons the nation’s economy isn’t recovering as quickly as some expected. Data from the Bureau of Labor Statistics shows start-up businesses are at an all-time low.

    “Even those that are starting are not hiring too many people,” Baily says.

    Read more: http://www.foxnews.com/politics/2011/06/28/fiscal-uncertainty-in-washington-shakes-small-business-confidence/#ixzz1QhwgIiwu

    The article goes on to quote some Establishment dummies claiming that uncertainty over the federal budget process is the cause. That’s like saying uncertainty over which cards I should discard from my poker hand was the cause of my $100,000 gambling loss. It might be true in a narrow, incomplete sense – as it misses the real point. The real reason small businesses aren’t hiring and/or aren’t being started is 3 years and counting of $1.5 trillion-a-year deficits under an out-of-control government that has done much to penalize production, trade and employment as such. The “uncertainty” is whether we, the People, will manage to kick that government’s ass in time.

    Another article describes how the Establihshment dummies still don’t get it: http://business.financialpost.com/2011/06/29/bad-habits-plague-economic-forecasts/

    The same experts who largely missed the onslaught of the worst recession since World War II have consistently overestimated the strength of the recovery in major Western economies.

    An analysis of Reuters polls shows economists were too optimistic about 20 out of 27 major monthly indicators for April and May in the United States, the euro zone and Britain… the schism between what was “expected” and the gloomier reality that follows reappears with regularity…

    Comment by ILoveCapitalism — June 29, 2011 @ 6:53 pm - June 29, 2011

  16. Envy is a horrible trait to have, and the Dems have it in spades.

    Comment by davinci — June 29, 2011 @ 7:13 pm - June 29, 2011

  17. As Tim Geitner recently said in Congressional testimony, “We have to raise taxes in order not to shrink government.” That’s it in a nutshell. A clear statement of priorities.

    Comment by Stosh2 — June 29, 2011 @ 7:22 pm - June 29, 2011

  18. In my honest opinion, the Republicans MIGHT entertain a short term tax increase IF the Democrats were serious about reducing spending. But history has taught us that they are not serious about it, that entitlements are where their votes come from. Show me a good faith effort to reduce spending to a sustainable level, I would be willing to pay more, for a defined period of time, to reduce the debt that would otherwise be passed on to my children and grandchildren.

    Comment by Megan — June 29, 2011 @ 7:51 pm - June 29, 2011

  19. I’m a small businessman.
    In the summer, we usually add 50 people to our staff, swelling to a total of about 250 employees. This year we didn’t .
    Our plan is to get by with the people we have. Our business top line hasn’t suffered and we are doing ok. This government is anti business and I refuse to play. If Obama and his thugs want to demonize business, fine, but I’m not hiring so he can tell me what benefits I must provide, and how he’s is going to raise business taxes.
    Don’t wonder why small business isn’t hiring. I just told you why.

    Comment by Gene in Pennsylvania — June 29, 2011 @ 8:25 pm - June 29, 2011

  20. Hi ILC,
    “why would you think that maxing out revenue – having the federal government squeeze as much from the economy as it can – is, in itself, a good thing?”
    I am following the Hauser’s approx 18% observation. If we are currently running around 14% and change, this would suggest–using your own figures that there is room for increased tax revenue. I grant it should increase as the economy improves, but isn’t it the consensus of many here, that given where we are, the economy is not improving? So, if I accept that, and 18ish % is the number, why not increase tax receipts? Given the manner folks use Hauser’s “Law” here, this would be consistent with the arguments raised. As you know ILC, I don’t think Hauser made a “law” but an “observation.” It doesn’t have to hold out of necessity, but I am just using the rule of thumb and logic offered by those on the blog, as the “norm” for tax collection… and even if tax receipts are rising a smidgen in % terms, it looks like there is room for increased taxation… using “Hauser’s Law” as a guide. After all, tax rates have been higher in the past (and at least two occasions when they were raised, with attendant clamourings of doom by conservatives that were not fulfilled), with lovely rates of growth attached, so, it is clear that raising taxes will not necessarily result in the “EOCAWKI.”

    Comment by Cas — June 29, 2011 @ 9:21 pm - June 29, 2011

  21. Also ILC,
    When you talk about uncertainty, I don’t think the article is talking about taxation. When it says: ““There’s enormous uncertainty about how the political process is going to grapple with those issues,” I think they are referring–most immediately–to the efforts of politicians willing to take us to the brink of defaulton debt limits with the unknown territory therein, and with what that might do to future investment spending, since variable APRs could climb rapidly overnight, depending on what scenario you play in your head. That is much more the cause of business uncertainty with regards to investment, then possible tax hikes, in my opinion.

    Comment by Cas — June 29, 2011 @ 9:27 pm - June 29, 2011

  22. When it says: ““There’s enormous uncertainty about how the political process is going to grapple with those issues,” I think they are referring–most immediately–to the efforts of politicians willing to take us to the brink of defaulton debt limits with the unknown territory therein, and with what that might do to future investment spending, since variable APRs could climb rapidly overnight, depending on what scenario you play in your head. That is much more the cause of business uncertainty with regards to investment, then possible tax hikes, in my opinion.

    Let’s see, what was Cas whining about just a few weeks ago?

    Oh, that’s right; that banks weren’t lending and that businesses weren’t borrowing — and that both were sitting on piles of cash.

    So let’s see; if businesses aren’t borrowing, interest rates won’t affect them, and if interest rates go up, they’ll be making even more money on the piles of cash.

    Meanwhile, since Obama has already stated he’s going to impose punishing taxes on them for expanding, growing, making a profit, or hiring people, they’re staring at a massive increase in expenses unless they stop growing, stop being profitable, cut operations, and move outside the United States.

    So according to Cas, businesses aren’t expanding because they’re afraid of something that benefits them in their current situation, versus something that will directly increase their expenses, punish their success, and cost you money.

    Uh huh.

    Comment by North Dallas Thirty — June 29, 2011 @ 9:53 pm - June 29, 2011

  23. Dems are famous for do as I say, not as I do.

    Comment by davinci — June 29, 2011 @ 11:12 pm - June 29, 2011

  24. NDT,
    “So let’s see; if businesses aren’t borrowing, interest rates won’t affect them, and if interest rates go up, they’ll be making even more money on the piles of cash.” Yes, if they have piles (ooohh. that has to be uncomfortable…:) ). And won’t the economy be doing great guns, since who will be borrowing, exactly? (Ans: At higher interest rates, maybe the government? But not your companies wanting to invest in productive assets). So, you appear to make the point that uncertainty holds firms back from investing in productive enterprises. Good call. I agree. So…?

    “So according to Cas, businesses aren’t expanding because they’re afraid of something that benefits them in their current situation” Ahh, it may benefit a company that gets the return on a bond–but seriously, how do you perceive this activity benefiting the economy, exactly? That bit I am unclear about, because that looks like an overall disaster for the economy as I see it. What say you–bad news, or not? As for taxes, well, it doesn’t appear to have hurt said companies in the past; and firms may well accept the trade-off of a more vibrant economy for some tax increases. Or, put another way getting taxed a little more on bigger net profits.
    Uh-huh.

    Comment by Cas — June 29, 2011 @ 11:45 pm - June 29, 2011

  25. If we are currently running around 14% and change, this would suggest–using your own figures that there is room for increased tax revenue.

    Maybe if you totally ignore the fascist ass raping of American business by the Retard in Chief. Wouldn’t it be a better idea to let businesses do their thing and stop threatening them thereby increasing employment and revenues instead of screwing them deeper?

    Comment by TGC — June 30, 2011 @ 12:22 am - June 30, 2011

  26. And won’t the economy be doing great guns, since who will be borrowing, exactly?

    No one. But companies won’t need to do so, because they have their own cash reserves.

    As usual, Cas, you demonstrate the typical Obama mentality, which is that one can never save, only spend and consume more. As a result, you don’t understand the value of savings, not the least of which is being a hedge against unfavorable financial conditions and NOT being dependent on outside financing to purchase what one needs and wants.

    As for taxes, well, it doesn’t appear to have hurt said companies in the past; and firms may well accept the trade-off of a more vibrant economy for some tax increases.

    They would, if you could produce it.

    But as the “stimulus” showed, Cas, the only thing you and your Obamabot friends produce is job destruction and a WORSE economy.

    You simply have no economic credibility, Cas. You failed. Your “stimulus” projections were utter bullshit. You lied to American business and you proved that your socialist claptrap does not produce a vibrant economy or help American businesses.

    Comment by North Dallas Thirty — June 30, 2011 @ 12:31 am - June 30, 2011

  27. Keynes is dead in every sense of the word. Unfortunately, the moonbats and Enron advisers don’t get it.

    Comment by TGC — June 30, 2011 @ 1:03 am - June 30, 2011

  28. NDT,
    It is hard to understand what the point is that you are trying to make here. I get that you don’t like Obama. But, when you say that I “lied to American business” (?) I just shake my head in wonderment at such patent absurdity, NDT. Anyway, what exactly is the manner in which you envisage we get back to full-employment equilibrium NDT? I mean, no hand waving, but a clear analysis of the causality you believe gets us back to the halcyon days of production and consumption from where we are now? For example, what model do you have that helps explain the process? Because what ever it is, it isn’t obvious from the baffling rhetoric you shared in #26. I look forward to chatting with you about this.

    Comment by Cas — June 30, 2011 @ 2:02 am - June 30, 2011

  29. I’ve seen this movie before. New/increased taxes only lead to new spending.

    Comment by Richard Bell — June 30, 2011 @ 5:37 am - June 30, 2011

  30. IowaHawk explains how to feed your family on $10 billion a day

    http://iowahawk.typepad.com/iowahawk/2011/03/feed-your-family-on-10-billion-a-day.html

    Video version for people like Cas and Levi:

    http://www.youtube.com/watch?v=661pi6K-8WQ&feature=related

    Comment by TGC — June 30, 2011 @ 6:28 am - June 30, 2011

  31. Even orthodox Keynesian policy doesn’t recommend a tax increase with growth under 2% and the jobless rate at 9.1%. The White House game here can only be an attempt to see if he can use the prospect of a debt-limit financial panic to scare Republicans into voting to raise taxes. We doubt the GOP is this dumb.

    Republicans should stick to their plan of insisting on spending cuts in return for a debt-ceiling vote. Every dollar in lower spending means one less dollar taken from the private economy in borrowing or future tax increases. As for revenues, they will increase when the economy shakes its lethargy caused by Mr. Obama’s policies. A tax increase won’t help growth—or revenues.

    Obama’s Real Revenue Problem

    http://online.wsj.com/article/SB10001424052702304319804576389593090634256.html?mod=djemEditorialPage_h

    Comment by TGC — June 30, 2011 @ 6:41 am - June 30, 2011

  32. One of the Democrats’ biggest supporters has some buyer’s remorse:

    http://networkedblogs.com/jPK1F

    Comment by V the K — June 30, 2011 @ 9:32 am - June 30, 2011

  33. I’m reminded of the ancient cautionary fable, “The Frog and the Scorpion”.
    And we all know that one didn’t turn out well.

    Comment by Ted B. (Charging Rhino) — June 30, 2011 @ 10:13 am - June 30, 2011

  34. We re now bedeviled by Zombie Keynes. . .

    http://danieljmitchell.wordpress.com/2010/08/23/why-is-keynesian-economics-like-a-freddy-krueger-movie/

    http://hammeroftruth.com/2011/zombie-days-are-upon-us-keynesian-economics-just-wont-die/

    http://www.lewrockwell.com/rozeff/rozeff333.html

    Actually, Maynard Keynes HIMSELF would hate modern Keynesian economics, as evidenced by quotes such as:|

    . .“Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget.”

    Or:

    “25 percent taxation is about the limit of what is easily borne.”

    Comment by Ryan M. — June 30, 2011 @ 10:32 am - June 30, 2011

  35. We re now bedeviled by Zombie Keynes. . .

    And to make matters worse, one suspects that due to their lack of sufficient brain function, a simple blow to the head wouldn’t be enough to render them powerless.

    That, my friend, will require nothing short of what they fear the most: a solid, passionate, informed electorate.

    Comment by Eric in Chicago — June 30, 2011 @ 11:14 am - June 30, 2011

  36. Good links, thanks guys!

    If we are currently running around 14% and change, this would suggest–using your own figures that there is room for increased tax revenue.

    You haven’t answered my question, Cas. You talk as if the federal government ought to squeeze every penny it can from the economy – if it’s only taking 14%, let’s see if we can get it up to 18%! (And no, neither of those are figures I use, so don’t attribute them to me.)

    why not increase tax receipts?

    As already stated: Because Obama has already put enough new burdens on production, trade and employment. If those burdens are not simultaneously lifted, the burden of new taxes could well push the economy off the cliff.

    even if tax receipts are rising a smidgen in % terms, it looks like there is room for increased taxation

    There you go again. Why would you believe that just because the federal government *could* take more of the economy (and as just stated, I don’t necessarily agree that it could), it ought to? You still haven’t answered the question. Why would you believe that if there is “room for increased taxation” (so-called), it should necessarily be used? If you are concerned about the deficit (and I highly doubt that you are), how about cutting spending? Do you believe the U.S. government somehow isn’t too big? That even more of the U.S. economy and society ought to be government-run?

    politicians willing to take us to the brink of defaulton debt limits… variable APRs could climb rapidly overnight… That is much more the cause of business uncertainty with regards to investmen

    Bull. If that is a factor at all, it would have only come into play the last few weeks. Whereas, out in the real economy, business has cut back hiring in the face of the “uncertainty” of Obama screwing them (and America) since about, oh, Sept 2008 (when it became clear that he might win and give us some very bad policies… which proceeded to happen). See #19, or Gene’s other comments as a business owner for the last 2 and 1/2 years.

    Comment by ILoveCapitalism — June 30, 2011 @ 11:42 am - June 30, 2011

  37. Putting a lot of those 17,000,000 unemployed Americans back to work through regulatory reform and better border control would do more to raise tax receipts than punishing people who use “corporate jets.”

    And, BTW, regulatory reform doesn’t cost the Government anything.

    Comment by V the K — June 30, 2011 @ 11:54 am - June 30, 2011

  38. The White House game here can only be an attempt to see if he can use the prospect of a debt-limit financial panic to scare Republicans into voting to raise taxes. We doubt the GOP is this dumb.

    We’ll see. I’m afraid the GOP might be that dumb. It sure was in 2008 (TARP / bailouts).

    Comment by ILoveCapitalism — June 30, 2011 @ 11:58 am - June 30, 2011

  39. regulatory reform doesn’t cost the Government anything

    …except its power.

    Comment by ILoveCapitalism — June 30, 2011 @ 12:03 pm - June 30, 2011

  40. ILC @ #1 states:

    Hauser’s Law suggests that the federal government can never extract more than about 19-20% of the economy, no matter what the tax rates are.

    Cas @ #20 states:

    Given the manner folks use Hauser’s “Law” here, this would be consistent with the arguments raised.

    And so it begins. ILC postulates about “Hauser’s Law” which is, in fact, loosely associated with the “Laffer curve” and some nerd in the auditorium latches onto the Krugman nuance of the idea that instead of a “law” it is more a “conjecture” and didn’t that mean that perhaps the nuance of the ambiance in projections by designing entrepreneurs who value style over substance have a salient disagreement with how market fluctuations should be categorized in deference to the shading of definition when two like polar opposites are being readied for comparison.

    And, thus, the issue becomes which end of the egg should be opened.

    Economics can determine how what happened occurred. Economics has a miserable track record at predicting what will happen.

    Paulson created the size of TARP and rammed it home. We can never know what the economy would have done without TARP. We have, as yet, no good picture of what TARP did. But how anyone can insist that we must have another round of TARP is beyond intelligent thinking. It would be a calculated guess at best. Economics is no help in the sense of being a blueprint for recovery.

    However, common sense does play a critical role in how households manage their daily affairs.

    Please point to one, just one, person in the Obama administration that has an ounce of common sense besides Mooch-hell’s mother.

    Comment by Heliotrope — June 30, 2011 @ 12:14 pm - June 30, 2011

  41. I did use Hauser’s Law imprecisely at #1. I was thinking, raising tax rates (or introducing new taxes) can’t do much good. I’m still right, there. But the reason isn’t Hauser’s Law which is more for normal times… the reason is that these aren’t normal times, what with Obama’s war on the economy.

    Also, as TGC and others have brought out, the fact that even if the suggested higher tax “work”, they’d only bring in a couple hundred bil. Our fiscal problem is, in the end, a spending problem.

    Comment by ILoveCapitalism — June 30, 2011 @ 12:27 pm - June 30, 2011

  42. Hi ILC,
    “You haven’t answered my question, Cas. You talk as if the federal government ought to squeeze every penny it can from the economy – if it’s only taking 14%, let’s see if we can get it up to 18%! (And no, neither of those are figures I use, so don’t attribute them to me.)”
    If you enthusiastically quote Hauser’s Observation with approval, as if it has causal validity, especially to lambast tax % of 20+%, then you would seem to stand by what it implies at the other end as well; and ultimately, to argue that there is an optimal level of Fed taxation which is around 18% of GDP. So? If you don’t stand by those apparent implications, then what is the point of using Hauser’s Observation? An empty rhetorical gesture? In any case, I do not think that moving from the 14’s to the 18’s constitutes “squeezing every penny” out of populace. I think that is unhelpful rhetoric. That is my answer to your question.

    To be honest, I would increase government spending–more bang for the buck given our current liquidity trap. I have already explained elsewhere why I think the Repub path will likely lead us to a depression. I think that we could stand some increases in taxation, especially in terms of cutting wasteful subsidies and tax breaks. We could increase marginal rates on the wealthiest (and why? their lower marginal propensity to consume on domestically produced goods, so impact of lower disposable income is less than for average person). If the wealthy keep their rates, I am not going to cry about it. I don’t think overall increases in marginal rates would be helpful right now. That would be something that would be done, when times are better, and we have a solid recovery (Clinton, Reagan). But there is an awful lot of fat in tax breaks that certainly do disproportionately favour the wealthy. Some of the savings could be used for deficit control (though that is not as big a priority for me as for you at the moment–that is true–I don’t see any evidence of the bond market melting down if we do this, nor of massive hyperinflation on the horizon–labour costs are not rising at the rate necessary to make the case of accelerating inflation), more/most for spending, for a net gain to AD and growth. The underlying multiplier effects of the balanced budget multiplier helps here. None of this is new to you ILC–I have made this case many times on this site.

    “Bull. If that is a factor at all, it would have only come into play the last few weeks.” Again I disagree with you. Given the signaling by the GOP that they were not going to play nice with Obama from the time they gained control of the House, this level of uncertainty has been going on over six months already. The uncertainty is primarily about the inability of a divided US government to set course with a coherent, rational, and resolute policy that deals with the problems at hand. The debt limit nonsense is just the latest example of this. This problem has been going on longer than “a few weeks.”

    Comment by Cas — June 30, 2011 @ 12:39 pm - June 30, 2011

  43. HT,
    “And so it begins. ILC postulates about “Hauser’s Law” which is, in fact, loosely associated with the “Laffer curve” and some nerd in the auditorium latches onto the Krugman nuance of the idea that instead of a “law” it is more a “conjecture”

    My feelings are hurt! 🙁 I thought that one all by myself, thank you very much. Tell me, HT, is “Hauser’s Law” a “Law” or an “Observation” that folks then assert has some causal validity? And do you approve of the way it has been used to support arguments for cutting taxes or resisting tax increase?

    “and didn’t that mean that perhaps the nuance of the ambiance in projections by designing entrepreneurs who value style over substance have a salient disagreement with how market fluctuations should be categorized in deference to the shading of definition when two like polar opposites are being readied for comparison.”
    HT, whatever.

    Comment by Cas — June 30, 2011 @ 12:47 pm - June 30, 2011

  44. Question Cas cannot answer: If the solution is tax increases and the obstacle is Republican opposition, why didn’t the Obamacrats enact tax increases when they had the presidency, a massive majority in the House, and a filibuster-proof majority in the Senate?

    Comment by V the K — June 30, 2011 @ 12:55 pm - June 30, 2011

  45. If the solution is tax increases and the obstacle is Republican opposition, why didn’t the Obamacrats enact tax increases when they had the presidency, a massive majority in the House, and a filibuster-proof majority in the Senate?

    V, consider for a moment “Occam’s Razor:”

    They have been, and always shall be, abject cowards. Lacking the courage of their convictions by virtue of their unwillingness to acknowledge that their positions are abhorrent in the eyes of the very people that elected them, they quickly discovered that being an unassailable majority wasn’t quite what they had expected.

    In other words, without a patsy to pin it all on, why the hell should they have decided to even order lunch, let alone pass legislation?

    Comment by Eric in Chicago — June 30, 2011 @ 1:10 pm - June 30, 2011

  46. Hi ILC,
    “But the reason isn’t Hauser’s Law which is more for normal times… the reason is that these aren’t normal times, what with Obama’s war on the economy.”
    I am sorry, I missed that ad hoc caveat, when listening to your common earlier use of Hauser’s “Law,” in our conversations. Seems a tad convenient to hold that it doesn’t hold right now, doesn’t it? Should we just drop using it then? In any case, I guess we can all agree that Hauser’s Law is not actually a law, right?

    Comment by Cas — June 30, 2011 @ 1:23 pm - June 30, 2011

  47. VK,
    “why didn’t the Obamacrats enact tax increases when they had the presidency, a massive majority in the House, and a filibuster-proof majority in the Senate?”
    Maybe because the tax cuts had not run out at that point, and that it would have been politically easier to just not vote to extend them. No politician wants to be solely responsible for unpopular measures VK. They want “bipartisan cover.” So, politicians are cowardly that way, what else is new?

    Comment by Cas — June 30, 2011 @ 1:27 pm - June 30, 2011

  48. Of both sides…

    Comment by Cas — June 30, 2011 @ 1:28 pm - June 30, 2011

  49. Cas, mathematically demonstrate how elimination of the Bush tax rates will eliminate the deficit.

    Comment by V the K — June 30, 2011 @ 1:35 pm - June 30, 2011

  50. We could increase marginal rates on the wealthiest (and why? their lower marginal propensity to consume on domestically produced goods, so impact of lower disposable income is less than for average person).

    I do so love when the imbecile Cas demonstrates how little it actually knows about mathematics.

    For example, let’s take a family that earns $50,000 in disposable income per year and a family that earns $500,000 in disposable income per year that are looking at a new American-built Ford Fusion that costs $25k. At 0% interest and a 5 year loan, this represents an outlay of $5k per year – or, put differently, 10% of the one family’s disposable income versus 1% of the other family’s.

    But what the imbecile Cas does not understand is that, even though the rate is lower for the wealthier family, the amount being pushed into the economy is the same. The rich spend less as a proportion of their income because they have a higher income.

    So then what the imbecile Cas screams is that this family has a whole 9% more of their disposable income to confiscate, so Cas does so.

    Guess what? Now the wealthy family is in exactly the same situation as the less-wealthy family. Since Cas took away their additional disposable income, they have no more to spend — and thus Cas took away any ability for them to pump more money into the private market. Before, they would have had disposable income of $50,000 to spend, where the other family would have been tapped out. But now, since Cas has confiscated that other $45,000, they CAN’T spend it and CAN’T push money back into the marketplace.

    This is what the delusional idiot Cas can’t figure out. If you spend $100, it matters not whether that was 1% of your income or 100% in terms of raw economic impact of that $100. However, it DOES matter whether you have more money to spend. This is where the stupid Pelosi came from when she was saying that unemployment checks are better for the economy than jobs because people spend a higher percentage of their unemployment checks. Never mind that jobs result in people having a greater amount of money to spend and thus a greater economic impact; the idiot Pelosi and her syncophants like Cas insist that low-income people are better for the economy because they spend the highest percentage of their income.

    Comment by North Dallas Thirty — June 30, 2011 @ 1:59 pm - June 30, 2011

  51. Also, NDT, the money the Government confiscates to give to Hamas to facilitate lauching rockets at Jewish schoolchildren, or is sent to Africa to teach men to wash their pee-pees, or is given to the IMF to give to dictators to deposit in the Cayman islands is a net loss to the American economy.

    And the money spent to pay EPA and NLRB bureaucrats to stall and block economic development has a strongly negative return impact on the American economy.

    Comment by V the K — June 30, 2011 @ 2:35 pm - June 30, 2011

  52. So?

    I’m saying that the 14% and 18% figures are not what I offered and not what I use, and that I don’t know where you got them from. Golly Cas, how hard can it be to understand that?

    I do not think that moving from the 14′s to the 18′s constitutes “squeezing every penny” out of populace… That is my answer

    But if YOU assert 18% as the limit and then YOU suggest moving up to that limit if all possible, then you do indeed want to squeeze every penny out of the populace. Saying so is not “unhelpful rhetoric”; it is unhelpful (to you) truth. And so my point stands.

    I have already explained elsewhere why I think the Repub path will likely lead us to a depression. I think that we could stand some increases in taxation

    Wait. You fear a depression… and you want to tax your way out of it? Well, I guess it worked for Hoover and Roosevelt (not), with their tax increases.

    We could increase marginal rates on the wealthiest (and why? their lower marginal propensity to consume on domestically produced goods, so impact of lower disposable income is less than for average person).

    And, we’re back to one of the most idiotic fallacies of Keynesianism: that spending is “the economy”, that increasing spending is per se a good thing. No, no, no. That’s how we got into the hole we’re in. What’s that popular definition of insanity – doing the same thing over and over, and expecting a different result?

    *Production and trade* are “the economy”, They take (1) Capital, and (2) Opportunity, i.e. political and economic freedom. Obama has taken (2) down several pegs, so that nobody in their right mind should want to save or invest, or should think they’re going to keep the profit if they somehow manage to make one. Then, with business safely knocked out of the competition for capital, he runs $1.5T deficits and QE to consume and/or dilute/destroy what capital is out there.

    IDIOTIC.

    But there is an awful lot of fat in tax breaks that certainly do disproportionately favour the wealthy.

    Orwellian propaganda, shockingly disgraceful. If you think the tax code has too many loopholes and should be rationalized (in a revenue-neutral way), then say so. But being less punitive toward the wealthy is not “fat”, or “favouring them”. IT’S THEIR MONEY. Do you earn money, Cas? If you do, then it’s your money. Not the government’s. Yours. When the government decides to rape you a little less hard, they are not “favouring” you. Only raping you less hard.

    a net gain to AD and growth

    No. For the zillionth time: Money raised by taxes does not result in any net increase in AD. And, growth does not come from AD. If you increase AD while making war on AS, you get stagflation, i.e. some combination of either higher unemployment, or higher inflation, or both.

    Given the signaling by the GOP that they were not going to play nice with Obama from the time they gained control of the House, this level of uncertainty has been going on over six months already.

    So, let me get this. Ignoring what businesses did in 2008 and 2009, you seriously think that they just stopped hiring after November 2010 because they were afraid that Republicans wouldn’t “play nice” with the Dear Leader?

    OH. MY. GOD.

    Comment by ILoveCapitalism — June 30, 2011 @ 2:45 pm - June 30, 2011

  53. Hi VK,
    “Cas, mathematically demonstrate how elimination of the Bush tax rates will eliminate the deficit.”
    Rather than do as you demand, I will do better and just point you to the CBO report which argues the above…
    http://cbo.gov/ftpdocs/122xx/doc12212/06-21-Long-Term_Budget_Outlook.pdf
    The first page gives you the extended baseline scenario which allows tax cuts to expire (for everyone, but I accept that need). The alternative is if they don’t let those cuts expire… Feel free to argue with their maths and assumptions.

    Comment by Cas — June 30, 2011 @ 2:49 pm - June 30, 2011

  54. NDT,
    “The rich spend less as a proportion of their income because they have a higher income.”
    That is a good point, but it actually supports my claim, not yours. If you want me to explain why, I am happy to do so, but there isn’t much point if you have made up your mind that you are right. Let me know.

    PS. “Imbecile,” “idiot,” “delusional.” My, we are working ourselves up into a lather, aren’t we?

    Comment by Cas — June 30, 2011 @ 2:55 pm - June 30, 2011

  55. That’s funny….

    Cas cites the CBO, who admittedly screwed the pooch on the total cost of Obamacare, just in time to allow the Democrat Party to shove the bill down our throats, and only then, after the damage has been done, decided that they’d indeed made a mistake.

    Cas, I suggest you check out the Wall Street Journal link cited by today’s guest blogger for a more accurate picture of the situation…from people who actually participate in the economy.

    For God’s sake…you may as well have cited DailyKos in support of an argument on civil discourse.

    Staggering ignorance.

    Comment by Eric in Chicago — June 30, 2011 @ 2:58 pm - June 30, 2011

  56. And perhaps, Cas, you need a little dose of reality.

    You’re all about demand and consumption, right?

    Well, guess who’s creating both.

    Feroli estimates the top 20 percent of wage earners account for about 40 percent of spending, while Dean Maki, chief US economist at Barclays Capital Inc. in New York, puts their contribution at closer to 50 percent.

    So what do you think the effect of taking more money away from these people is going to be, Cas?

    Better yet, why would you want to reduce the amount of money these people have, when they’re driving nearly half of the spending and demand creation?

    Comment by North Dallas Thirty — June 30, 2011 @ 3:03 pm - June 30, 2011

  57. Hi ILC,
    “And, we’re back to one of the most idiotic fallacies of Keynesianism: that spending is “the economy”, that increasing spending is per se a good thing. No, no, no. ”
    Any time you want to explain your model’s inability to take into account fluctuations in income (which is intimately tied to changes in expenditures–and that is the key Keynesian point), I am all ears. That goes for any of the other criticisms that I have raised about the model you have guiding your thinking.

    “So, let me get this. Ignoring what businesses did in 2008 and 2009, you seriously think that they just stopped hiring after November 2010 because they were afraid that Republicans wouldn’t “play nice” with the Dear Leader?”

    No. You raised this issue in the context of “the last few weeks.” In the context of political gridlock, that is a major contributing factor to a lack of business confidence, in the current context. However, I would point out that we did (do?) have a rather nasty recession, with shattered business confidence and depressed spending (on consumption and investment goods). We are in the midst of a rather uneven recovery (to put it mildly with 9+% u/e), something that has become more clearly understood in the last six months. And companies are still worried if there will be a market for their products–you know, Aggregate Demand. Or, more correctly, worried about those with lower incomes who cannot currently buy their products…

    Comment by Cas — June 30, 2011 @ 3:07 pm - June 30, 2011

  58. Eric,
    “Staggering ignorance.” OK, ignore the CBOs take. It would not be the first time that a commentator here, when faced with evidence that disagrees with their beliefs, dismisses such research. Out of curiosity, what are the assumptions you disagree with, Eric? What exactly is it that you feel is unwarranted or unrealistic?

    Comment by Cas — June 30, 2011 @ 3:13 pm - June 30, 2011

  59. OK, ignore the CBOs take.

    Why shouldn’t I ignore it? Everyone else with a brain seems to.

    Comment by Eric in Chicago — June 30, 2011 @ 3:16 pm - June 30, 2011

  60. Cas, just in case you’re loathe to click on links, here’s the CBO’s newfound position on Obamacare (and hence, their total incompetence):

    Well, a new Congressional Budget Office report on the long-term trend in the federal budget finds that the costs of Medicare and Medicaid will drive federal spending and debt to all-time highs in coming decades. In one scenario, federal health-care spending doubles over the next 25 years, to 11% of GDP in 2035 from 5.6% this year. In another scenario, the debt eclipses 100% of GDP by 2021 and 190% of GDP by 2035. That’s higher than where Greece is right now, and we see what the bond vigilantes are doing there.

    Any questions?

    Comment by Eric in Chicago — June 30, 2011 @ 3:18 pm - June 30, 2011

  61. NDT,
    “Better yet, why would you want to reduce the amount of money these people have, when they’re driving nearly half of the spending and demand creation?”
    OK, I’ll assume you are asking in good faith.
    The first key issue is that if you gave the same amount of money to those with a higher propensity to consume, they will spend more of the money, thus increasing the impact of the consumption buck on the economy.
    The second key issue is that the article you point to says NOTHING about what these wealthy folks spend that money on, except diamonds and leather goods. My guess is that these are mostly imports, with some possible value added here (maybe). So, our gain in domestic aggregate demand is lower than if we spent this money on domestically produced goods. Rich folks have a higher propensity to spend on imports than do the less wealthy. Why? Imports at the high end are seen as luxuries–superior goods, so disproportionately more of these are demanded as income rises.

    Comment by Cas — June 30, 2011 @ 3:24 pm - June 30, 2011

  62. Rich folks have a higher propensity to spend on imports than do the less wealthy. Why? Imports at the high end are seen as luxuries–superior goods, so disproportionately more of these are demanded as income rises.

    In other words, the wealthy (who, at some point, have made enough, remember) aren’t spending their money the way we’d like them to, correct?

    And by their words, shall we know them.

    Comment by Eric in Chicago — June 30, 2011 @ 3:27 pm - June 30, 2011

  63. Eric,
    “Why shouldn’t I ignore it? Everyone else with a brain seems to.” The article does not address the issue that was raised by VK, and which I answered. Notice, the article avoids the “deficit’ word entirely. It says we will have record gov’t spending and debt. But that is because we have record debt right now. It doesn’t say anything about “rising” debt on the base scenario. It speaks about “one scenario” causing debt to rise to 190% of GDP–but guess which scenario, Eric? That is right–the “alternative” scenario, where we keep the Bush (now Obama) tax cuts. Why do you think the WSJ is being so coy about that fact, Eric?

    Comment by Cas — June 30, 2011 @ 3:29 pm - June 30, 2011

  64. Eric,
    “aren’t spending their money the way we’d like them to, correct?” No. I just pointed out that they have a lower propensity to spend on domestic goods, so money in the hands of the wealthy has less impact then money in the hands of the less wealthy. Redistributing some wealth away from them (in this economic climate) to the less wealthy will help increase consumption of domestic goods in the economy, and provide businesses with consumers who demand their products.

    Comment by Cas — June 30, 2011 @ 3:32 pm - June 30, 2011

  65. The first key issue is that if you gave the same amount of money to those with a higher propensity to consume, they will spend more of the money, thus increasing the impact of the consumption buck on the economy.

    And this is where Cas’s imbecility comes to the fore.

    Cas himself whines that people with a certain amount of money don’t spend it all.

    Then Cas insists that, as he hands out more government money to people to give them the “same amount” as those who already have, they will spend it all.

    Cas is making two assertions that are fundamentally contradictory to each other. He is arguing that spending patterns and behavior do not change with income.

    Furthermore, notice how dysfunctional this system is. Cas wants to reward those who spend, versus those who save. Cas wants to punish those who create value and reward those who do nothing but consume.

    In short, Cas is an Obama Party idiot. Cas screams and whines that taking money away from company CEOs and handing it out to drunks on the street so they have the “same amount” is better for the economy.

    Comment by North Dallas Thirty — June 30, 2011 @ 3:43 pm - June 30, 2011

  66. Redistributing some wealth away from them (in this economic climate) to the less wealthy will help increase consumption of domestic goods in the economy, and provide businesses with consumers who demand their products.

    I think we all know where this is headed. Cas, I appreciate your passion, but I’m at once sorry and gratified that you are sorely mistaken.

    Sorry, in that you seem incapable and/or unwilling to see beyond the point of view you’ve bought into, and supremely gratified that such a naively arrogant economic approach is being corrected by those far more qualified to analyze such matters.

    I understand your frustration at having to resort to pontificating on a site owned and operated by gay conservatives, and I sincerely wish you well in your future endeavors.

    Comment by Eric in Chicago — June 30, 2011 @ 3:45 pm - June 30, 2011

  67. The entertaining thing — or the horrifying thing — to me, Eric, is that every word that Cas is saying is what Obama is saying.

    Cas is too foolish to realize what happens when you base an economy on envy and class warfare, as Obama has. Cas does not realize that his Obama Party prefers people to be unemployed and has pursued policies to that end, as Nancy Pelosi states, because they believe the more unemployed people there are, the more the economy will be “stimulated”.

    Comment by North Dallas Thirty — June 30, 2011 @ 3:50 pm - June 30, 2011

  68. The second key issue is that the article you point to says NOTHING about what these wealthy folks spend that money on, except diamonds and leather goods. My guess is that these are mostly imports, with some possible value added here (maybe).

    Of course it is.

    That’s because you need it to be, Cas.

    You have no proof. You have no links. You simply sit here and claim that the rich spend their money on imports and that the poor only spend their money on domestically-produced goods.

    If you were not such an imbecile, you might be able to reconcile your insistence that we need more regulation to protect the poor people who buy so many imported goods because they’re cheaper with your insistence that the poor only buy domestic goods.

    But you are a desperate imbecile who is looking for any excuse to justify its agenda of class envy, hatred of those wealthier than you are, and using government to forcibly redistribute wealth so that you can benefit from other peoples’ work and savings.

    Comment by North Dallas Thirty — June 30, 2011 @ 3:56 pm - June 30, 2011

  69. The entertaining thing — or the horrifying thing — to me, Eric, is that every word that Cas is saying is what Obama is saying.

    Absolutely, ND30. It is horrifying, but it took me a decade to earn the tuition for my MBA, and almost 20 years working in capital development so I’ll be damned if I’m going to spend this glorious afternoon trying to debate economics with someone who’s living in an echo chamber.

    I mean…have you seen that site? It’s almost…sad.

    Comment by Eric in Chicago — June 30, 2011 @ 4:00 pm - June 30, 2011

  70. “OK, I’ll assume you are asking in good faith.”
    Got that one wrong, didn’t I!

    If you look at your “reply,” NDT, I notice at NO point do you actually mount an argument that engages mine. You assert a contradiction, but no where do we see anything about differentials in marginal propensity to consume domestically or otherwise to back this claim up. You can’t be bothered to actually address the argument that I do make. And what you do address, you get wrong! After all, you say I expect the less wealthy to consume “all” of the extra income. I said “more.” Get some glasses NDT! Don’t worry, I don’t expect you to acknowledge that goof because as we all know, you never ever get anything wrong. Also, I don’t think the word “contradictory” means what you think it does….

    Comment by Cas — June 30, 2011 @ 4:05 pm - June 30, 2011

  71. NDT,
    “You have no proof. You have no links. You simply sit here and claim that the rich spend their money on imports and that the poor only spend their money on domestically-produced goods.”
    Like you do, right? 🙂

    As for the import propensity–I made that claim on the basis of an intellectual argument. I notice that you have no argument to present to me concerning the income elasticity of imported goods. It is an intellectual argument that requires familiarity with the economic concepts. So, you are economically literate, why not engage that argument, NDT?

    Anyhow, if I did have links, would it actually change your mind or at least leave you open to the possibility that you might have to broaden your viewpoint, to consider the possibility that such an argument is worthy of consideration? Be honest. Would it, NDT?

    Not that it will make a shred of difference:
    http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_151-200/WP170.pdf
    http://www.federalreserve.gov/pubs/feds/2000/200052/200052pap.pdf

    Comment by Cas — June 30, 2011 @ 4:58 pm - June 30, 2011

  72. Eric,
    “Sorry, in that you seem incapable and/or unwilling to see beyond the point of view you’ve bought into, and supremely gratified that such a naively arrogant economic approach is being corrected by those far more qualified to analyze such matters.” Feel free to respond to what I wrote @#63, concerning the article you linked to…

    Comment by Cas — June 30, 2011 @ 6:09 pm - June 30, 2011

  73. As for the import propensity–I made that claim on the basis of an intellectual argument.

    So you are acknowledging that your argument is completely your own speculation and is not based on any sort of fact or data.

    But then:

    I notice that you have no argument to present to me concerning the income elasticity of imported goods.

    You are now demanding that people present facts to you to refute what you yourself acknowledge is a speculation that is not based in fact.

    Furthermore, your intellectual argument doesn’t even make sense. Your Barack Obama Party and yourself have demanded higher and higher tariffs and regulatory hurdles to punish and raise prices on numerous imported goods because they are cheaper and (supposedly) to protect the poor who are overwhelmingly purchasing them. You are attacking US companies who outsource and demanding that they bring work back to the United States even though it raises prices.

    Do you really think the poor, who have much less flexibility in what they can afford to purchase, are spending more money to purchase domestically and are foregoing cheaper imports?

    You’re just spamming threads now, Cas. Only an imbecile with a desperate need to “prove” why the government should take everyone else’s money and give it to them would be making this ridiculous of an argument. Your posts fail even basic logic and rational evaluation, much less any type of economics.

    Comment by North Dallas Thirty — June 30, 2011 @ 6:29 pm - June 30, 2011

  74. That is right–the “alternative” scenario, where we keep the Bush (now Obama) tax cuts. Why do you think the WSJ is being so coy about that fact, Eric?

    Probably because they read the report and saw this on page 9 of Chapter One.

    Under the current-law assumptions of the extendedbaseline scenario, Medicare’s sustainable growth rate mechanism would reduce payment rates for physicians by nearly 30 percent in January 2012 and by additional amounts in later years. Under the alternative fiscal scenario, by contrast, Medicare’s payment rates for physicians would remain at their 2011 levels for the next decade.

    The upshot of those differences is that Medicare spending in 2035 is projected to be 13 percent higher under the alternative fiscal scenario than under the extendedbaseline scenario—a difference that persists in later years because the growth rates of spending beyond that point are assumed to be the same under the two scenarios.

    And this:

    A larger difference between the two scenarios involves projections of federal spending for everything besides the major mandatory health care programs and Social Security. Other primary spending (including the offsetting effects of Medicare premiums and other offsetting receipts) currently equals about 12 percent of GDP. It would fall to 8 percent of GDP in 2021 under the extended-baseline scenario and 9 percent under the alternative fiscal scenario, declining slowly thereafter in both cases. (By comparison, such spending has represented more than 8 percent of GDP each year since the 1930s.) Interest payments by the government would increase from 1 percent of GDP now to 4 percent by 2035 under the extended-baseline scenario and then remain at that percentage. Under the alternative fiscal scenario, annual interest spending would grow to 9 percent of GDP by 2035 and would continue to rise dramatically thereafter.

    In short, they realized in comparing the scenarios that the “alternative” one was the correct one to use, since the Obama Party would never under any circumstances cut spending in any meaningful fashion.

    That’s what makes your lies hilarious, Cas. You insisted that the one rosy scenario involved just getting rid of tax cuts, when anyone who read the report would realize it also involved MASSIVE cuts in government spending — which the Obama Party absolutely in any way opposes — and extending the AMT to the middle class. In contrast, you insisted that the deficit in the dark one was due solely to tax cuts, whereas anyone who read the report saw that tax cuts were a tiny fraction of the amount compared to the continuation of the Obama Party spending spree that you absolutely refuse to reduce in any way, shape, or form.

    In other words, Cas, had you actually read the report instead of repeating your talking points, you wouldn’t look like a fool now for blaming tax cuts when the report clearly points the finger at out-of-control spending.

    But you didn’t read it, and now you look like even more of a fool.

    Comment by North Dallas Thirty — June 30, 2011 @ 6:50 pm - June 30, 2011

  75. “You are now demanding that people present facts to you to refute what you yourself acknowledge is a speculation that is not based in fact.”
    For goodness sakes, I am trying to engage you in conversation. You know, and intellectual conversation. Apparently you think differently, but you are being uncharacteristically coy about engaging on the topic. Why, I have no idea.

    “yourself have demanded higher and higher tariffs.” By all means show me where I have said that, but I have this feeling that this is another one of those NDT moments, I have talked about earlier.

    “Do you really think the poor, who have much less flexibility in what they can afford to purchase, are spending more money to purchase domestically and are foregoing cheaper imports?”
    To the extent that those imports are less expensive than domestically produced goods, sure, I agree with you. But I don’t see the poor buying Moet champagne, Ferrari’s or other items of such ilk. But the argument about what the poor (I point out that I referred to the “less wealthy” which is not the same as the “poor”, but okey dokey) is on what they spend their money–they buy some cheap plastic crap, sure, and cheap clothing true, but a bigger percentage of their income goes on food, utilities and housing, etc, which are mostly domestically produced–wouldn’t you agree–than is the case for the wealthy (who might also have that place OS to holiday in…).

    Finally:
    “You’re just spamming threads now, Cas.” What does this even mean, NDT?
    “Only an imbecile with a desperate need to “prove” why the government should take everyone else’s money and give it to them would be making this ridiculous of an argument.” Ad hominem, assertion based on , who knows what… no evidence to back another assertion.
    “Your posts fail even basic logic and rational evaluation, much less any type of economics.”
    Assertion based on who knows what. I am not the one misrepresenting what is being said. Arguments I have used to address your points are ignored. OK, NDT. Its all good.

    Comment by Cas — June 30, 2011 @ 7:00 pm - June 30, 2011

  76. ILC,

    I took up Hauser’s Law as an example of how things like Cas work.

    Understand that I have more than once responded to Cas as if it were an actual sentient human being.

    But Cas has a talent/technique for putting the emphaSIS on the wrong syllABle and then arguing the fine points of diction.

    No business leader in this country is the bit concerned about the concepts suggested in Hauser’s Law.

    Eliminate all of Cas’s comments on Hauser’s Law and what is left to examine? That means, take all of the back and forth over Cas’s entry in this thread and what is missing? Nothing.

    It would be interesting to see Cas show up with something cogent.

    In my classroom, I ultimately ask the Cas types to make their point and how it applies to the discussion. It is not our job to understand, it is the Cas type’s job to make itself understood and salient.

    Comment by Heliotrope — June 30, 2011 @ 7:03 pm - June 30, 2011

  77. Cas has a talent/technique for putting the emphaSIS on the wrong syllABle and then arguing the fine points of diction.

    Yes I caught that 🙂

    Comment by ILoveCapitalism — June 30, 2011 @ 7:40 pm - June 30, 2011

  78. HT,
    “In my classroom, I ultimately ask the Cas types to make their point and how it applies to the discussion. It is not our job to understand, it is the Cas type’s job to make itself understood and salient.”

    Right back at you, HT. What is the point of your vaguely superior tone of voice? Vague generalities about HL and the way I challenge views on it. Golly gosh. I am glad that it is clear in your mind, HT. By all means pontificate away, but I notice that you do not bother to set out how HL has been used on this site to support certain anti-gov’t views, with an at times quasi-evangelical fervour, I might add. Or ignoring the other arguments I raise on other points raised by other commentators. Knock yourself out.

    Comment by Cas — June 30, 2011 @ 7:42 pm - June 30, 2011

  79. Cas,

    You specialize in magnifying the kneecap of a gnat as if you are honing in on the rhythm of the universe.

    Your HL reference is ample evidence of your insouciant aim to distract.

    I reject any reference to a vague(ly) superior tone. You quite simply fail at making an intellectual contribution to the conversation and thus take the role of underwhelming distraction.

    How many references to Hauser’s Law have you catalogued outside of this thread on this site? I ask, because you posit that commenters here labor under it.

    Comment by Heliotrope — June 30, 2011 @ 8:05 pm - June 30, 2011

  80. In answer to the question at the top of the post: Since the Reagan era, more wealth in this country has been moved from the middle class to a very small percentage at the top (approximately 1% controlling 1/2 of the nation’s wealth). In addition, massive tax cuts for these people has never led to this wealth being distributed back into the economy. In fact, the opposite effect appears to be true: not only do the very wealthy hang on to their money, they work hard to amass more. Check out Jamie Johnson’s documentary “The One Percent”. At times when the super wealthy had higher tax rates, is really when the country progressed – think about things like the federal highway project.

    So, there’s your answer.

    Comment by Kevin — June 30, 2011 @ 9:01 pm - June 30, 2011

  81. HT,
    “I reject any reference to a vague(ly) superior tone. You quite simply fail at making an intellectual contribution to the conversation and thus take the role of underwhelming distraction.”
    Thank you for proving my point.

    As for Hauser’s “Law”, referencing, check out:
    http://www.gaypatriot.net/2011/04/11/just-as-rome-wasnt-built-in-a-day-the-federal-government-wont-be-adequately-downsized-in-one-round-of-budget-negotiations/
    http://www.gaypatriot.net/2011/06/05/federal-spending-the-democratic-addiction/
    http://www.gaypatriot.net/2011/03/10/so-if-michael-moore-claims-a-right-to-bankers-money/
    Is that enough, or would you like more?
    http://www.gaypatriot.net/2011/01/24/dems-prefer-academic-theories-of-job-creation-to-economic-reality/
    http://www.gaypatriot.net/2010/12/03/obama-democrats-policies-continue-to-destroy-recovery/
    http://www.gaypatriot.net/2010/12/01/pentagon-report-favors-gradual-implementation-of-dadt-repeal/
    IS that enough for you, HT, or …?
    It mainly references ILC, because he pushes its significance more than most; but he is not alone, as the above briefly shows.

    I guess then, that “Your HL reference is ample evidence of your insouciant aim to distract,” must also refer to ILC as well, since he uses it so much. Though why you would say this this is totally unclear, and ILC can take great comfort from the fact that you make this claim without any apparent evidence–it appears to be just a lazy pontificating unsupported claim. OK.

    Now, what exactly is your opinion on this particular “law” HT. After all, you read up on it, so, is it a law, or more an “observation” to you?

    Comment by Cas — June 30, 2011 @ 9:05 pm - June 30, 2011

  82. But the argument about what the poor (I point out that I referred to the “less wealthy” which is not the same as the “poor”, but okey dokey) is on what they spend their money–they buy some cheap plastic crap, sure, and cheap clothing true, but a bigger percentage of their income goes on food, utilities and housing, etc, which are mostly domestically produced–wouldn’t you agree–than is the case for the wealthy

    And, as I pointed out above, it was patently stupid for you to say “percentage of income”.

    But let me demonstrate more completely.

    As in our example, two families spend the same amount on a car – $5k.

    You are stating that the economic impact of a family making $50k a year spending $5k on a car is far greater than the economic impact of a family making $500k per year — because the former is spending 10% of their income and the latter 1%.

    Let’s take it even farther. The family that makes $500k spends $25k per year on a car, rather than $5k on a car — and your argument is that, since it’s 5% of their income, they’re still providing less economic push and stimulus than the family that is paying only $5k, because that is 10% of their income.

    In short, Cas, you are such an imbecile that you are stating that someone with an income of $500k who spends $100k is worse for the economy than someone with an income of $50k who spends $25k — because the latter spends a higher percentage of their income and the former spends a lower percentage.

    Comment by North Dallas Thirty — June 30, 2011 @ 9:07 pm - June 30, 2011

  83. HT,
    Hopefully this will post–the posting program doesn’t like so many links, when I tried to do it just now, so I have cut out the http part, but left the title of the thread and the date. Maybe it will show up later…
    “I reject any reference to a vague(ly) superior tone. You quite simply fail at making an intellectual contribution to the conversation and thus take the role of underwhelming distraction.”
    Thank you for proving my point.

    As for Hauser’s “Law”, referencing, check out this site threads:
    2011/04/11/just-as-rome-wasnt-built-in-a-day-the-federal-government-wont-be-adequately-downsized-in-one-round-of-budget-negotiations/
    2011/06/05/federal-spending-the-democratic-addiction/
    2011/03/10/so-if-michael-moore-claims-a-right-to-bankers-money/
    Is that enough, or would you like more? How about:
    2011/01/24/dems-prefer-academic-theories-of-job-creation-to-economic-reality/
    2010/12/03/obama-democrats-policies-continue-to-destroy-recovery/
    2010/12/01/pentagon-report-favors-gradual-implementation-of-dadt-repeal/
    IS that enough for you, HT, or …?
    It mainly references ILC, because he pushes its significance more than most; but he is not alone, as the above briefly shows.

    I guess then, that “Your HL reference is ample evidence of your insouciant aim to distract,” must also refer to ILC as well, since he uses it so much. Though why you would say this, by implication, about ILC is totally unclear to me. ILC can take great comfort from the fact that you make this claim without any apparent evidence–it appears to be just a lazy pontificating unsupported claim. OK. Its all good.

    Now, what exactly is your opinion on this particular “law” HT. After all, you read up on it, so, is it a law, or more an “observation” to you?

    Comment by Cas — June 30, 2011 @ 9:10 pm - June 30, 2011

  84. In answer to the question at the top of the post: Since the Reagan era, more wealth in this country has been moved from the middle class to a very small percentage at the top (approximately 1% controlling 1/2 of the nation’s wealth).

    And since the Reagan era, fewer and fewer middle-class and below people have been paying taxes.

    So here we have a case of Kevin and his ilk whining and crying about how much money “the rich” make even as they refuse to pay their own “fair share”.

    Comment by North Dallas Thirty — June 30, 2011 @ 9:20 pm - June 30, 2011

  85. Even the charts Cas cites don’t show the deficit being eliminated by eliminating the Bush tax rates, and that’s even discounting the excessively optimistic rates of economic growth the CBO “predicted.”

    Comment by V the K — June 30, 2011 @ 9:21 pm - June 30, 2011

  86. And also, V the K, like I pointed out above, Cas simply lied when he claimed his scenario balanced the budget by eliminating the Bush tax rates; the CBO report, had he actually read it, made it clear that the spending that Cas and his fellow Obamabots absolutely refuse to cut or manage is the vast majority of the deficit created, not tax cuts.

    Comment by North Dallas Thirty — June 30, 2011 @ 9:28 pm - June 30, 2011

  87. Now, what exactly is your opinion on this particular “law” HT. After all, you read up on it, so, is it a law, or more an “observation” to you?

    I made it this far in life without a moment’s notice of the Hauser blather and I will do just fine without it from here on.

    You fully demonstrate what I said about you. You dutifully trotted off to count how many angels can dance on the head of pin and dashed right back with your show and tell report.

    Then, painfully and woefully predictably, you challenge me to thrash out Hauser’s Law with you.

    Pull my finger.

    Oh, look! Krugman has a corollary. Gadzooks, Van Schmerdlap has questioned the varying methods of calculating GDP over the course of application and has suggested subsets to offset the discrepancies. Now the FDA rules that it must be calculated without the deleterious effects of transfats. We could reach 300 comments on this without half way trying.

    Comment by Heliotrope — June 30, 2011 @ 9:41 pm - June 30, 2011

  88. But there is an awful lot of fat in tax breaks that certainly do disproportionately favour the wealthy.

    Maybe because they disproportionately pay more taxes than anyone?

    Comment by TGC — June 30, 2011 @ 9:51 pm - June 30, 2011

  89. NDT, Cas’ argument is a variation of an excuse for redistributionism that you used to hear a lot (and maybe still do – I don’t know) – “To prevent a depression, we have to maintain the purchasing power of the worker.” It’s false, on several fronts.

    First, capitalism (not government) raises the purchasing power of the worker. Capitalism is using capital (i.e. tools) under free markets, to increase the productive power of human labor. When a company does that, it can pay workers higher real wages – and it must, because if it doesn’t, then someone else will. Even unskilled wages (e.g. janitors) go up, assuming the job is still needed at all, as increasing numbers of people get sucked into other fields. Thus, the real value of market-clearing wages keeps going up, which is another way of saying that living standards keep going up. Government isn’t necessary (beyond a government that impartially protects individual rights to life, liberty and property). Capitalism/freedom is.

    Second, in the Great Depression they *did* maintain the purchasing power of the worker, i.e. above-market real wages maintained through labor market interference. It was part of the Depression’s cause, not part of its solution. Force wages *above* market and you prevent the market from clearing, i.e., you create long-term / “structural” unemployment. That is one of the most basic and consistent findings in economics, although am I not sure if Cas knows it.

    Third, to focus more on redistributionism per se.. in the Depression they taxed job creators at rates over 90%. When you “tax the rich” i.e. anyone making over some number like $250k in today’s world, you are really taxing small business owners. Result: Even more small-business deaths, even fewer small-business formations, even less small-business hiring.

    That last is another reason we cannot tax our way out of the deficit. “Taxing the rich” may (or I think, it will) lead to a declining tax base, as it chokes small business owners. As I’ve implied in earlier comments, if you were to repeal Obama’s other cost-raising measures (like ObamaCare) *simultaneously with* tax rate increases, then you might be able to get away with the higher tax rates – just barely.

    Any time you want to explain your model’s inability to take into account fluctuations in income (which is intimately tied to changes in expenditures–and that is the key Keynesian point), I am all ears.

    The statement makes no sense. Real income is a function of production and trade. When government promotes (i.e. allows) production and trade, real incomes go up. When government makes war on production and trade, real incomes are down. There’s your fluctuations in income, and I have maintained/explained it consistently.

    political gridlock… isa major contributing factor to a lack of business confidence, in the current context.

    Again, not remotely in the way you mean. Let’s say the gridlock was resolved because Obama and you won everything you wanted (socialized medicine, high taxes, more “stimulus” leading to QE 8 and $3 trillion deficits). Would that improve business confidence? Not one whit. Quite the reverse: business confidence would plummet even lower than we’ve seen.

    Now, suppose the Tea Party won everything it wants: Obama’s War on Business rolled back, free markets and a balanced budget under sound money and market interest rates and permanent low taxes, after drastic spending cutbacks. Would that improve business confidence? Enormously. The prosperity (i.e., the increase in REAL PRODUCTION AND TRADE) would be unbelievable.

    We are in the midst of a rather uneven recovery

    …*caused by* Obama’s Big Government policies. Just as the Great Depression was caused first by Hoover’s Big Government policies, and then Roosevelt’s.

    HT…

    Cas, it’s dangerous for you to presume what would “comfort me”. Heliotrope understood correctly, that you have in many instances not understood my points correctly, because you were picking up weeds with your back to the forest.

    Comment by ILoveCapitalism — June 30, 2011 @ 9:52 pm - June 30, 2011

  90. Hi VK
    “Even the charts Cas cites don’t show the deficit being eliminated by eliminating the Bush tax rates, and that’s even discounting the excessively optimistic rates of economic growth the CBO “predicted.”” Really, I missed that bit. Where exactly is that in the CBO report, so I can continue our conversation? And what about the growth projection do you not like, VK?

    Comment by Cas — June 30, 2011 @ 10:03 pm - June 30, 2011

  91. Really, I missed that bit. Where exactly is that in the CBO report, so I can continue our conversation? And what about the growth projection do you not like, VK?

    V, let me head off this one; you will provide the growth rates, then Cas will make some sort of whine about Paul Ryan’s budget and its growth projections, and off we go.

    Simply consider this as an admittance on Cas’s part that it lied when it blamed tax cuts for the deficit and that it does not want to deal with the fact that the CBO report clearly shows that the out-of-control spending that Cas and the Obama Party demands is the cause of future deficits.

    Cas is simply spinning away from its lies and its stupid statement that percentage of income matters more than amounts spent. Like Helio and ILC put it, Cas is obsessing over weeds and gnat’s knees in a desperate attempt to hide, cover up, obfuscate, and run away from its screaming, childish desire that the government take money away from those who earn it and give it to those who, like Cas, refuse to work.

    Comment by North Dallas Thirty — June 30, 2011 @ 10:12 pm - June 30, 2011

  92. P.S. The dependent identity of “income” with “production and trade” can be seen most clearly in a simple example.

    Suppose that Able, Baker and Charlie live on a desert island and catch fish with their hands. Their production, individually and collectively, is low. Now suppose Able develops a net, quadrupling his production. He has also quadrupled his real income.

    Now suppose Charlie decides to start a construction business, building a fancy new hut for Able, because he’s the best at that and Able can pay him more fish than Charlie could catch on his own. Now Charlie’s production is up – his production of huts, something he is better at than fish – and with it, his income… even his income measured *in fish*, due to his trade with Able.

    Thus, the island’s income is its *production*. And the individuals’ incomes are their *production*. Real income is “what you can buy”, and is purely dependent on real production.

    Now instead of 3 people, say that you have 300 million, or 6 billion, who trade (and measure value) not by barter, but via some type of currency. It’s a vastly more complex economy. But nothing about that complexity alters the basic principle. Real income depends on, and fluctuates with, real production. Giving people money to increase their alleged “demand” does not raise real incomes, only nominal incomes i.e. nominal PRICES, i.e. INFLATION. Getting (or keeping) government out of the way so that people can increase their real production, increases real income i.e. real living standards.

    Comment by ILoveCapitalism — June 30, 2011 @ 10:14 pm - June 30, 2011

  93. (continued) That is the truth that Keynesian and/or demand-side economics has choked to death beneath layers of garbage until they can’t see it anymore. Because they want to justify Big Government – i.e., redistributionism – i.e., parasitism – so badly.

    Comment by ILoveCapitalism — June 30, 2011 @ 10:17 pm - June 30, 2011

  94. HT,
    “How many references to Hauser’s Law have you catalogued outside of this thread on this site? I ask, because you posit that commenters here labor under it.”
    I do provide evidence.
    “You dutifully trotted off to count how many angels can dance on the head of pin and dashed right back with your show and tell report.”
    Woe is me! I feel into the “providing evidence for HT, after he asked me to” trap! Now all is lost. No. It is not the first time you pulled that stunt, and, it is clear that you just don’t like people actually giving you what you request when it doesn’t accord with the pre-determined HT heavens. Sorry to disappoint you. That dog won’t hunt with me, HT. You just come off as game-playing, not as intellectually rigourous, in my opinion.

    “I made it this far in life without a moment’s notice of the Hauser blather and I will do just fine without it from here on.” Sorry it annoyed you to ask your opinion on the very topic you had talked about back at #40 (looks like life has been incredibly short for you, though, with #40 and all… either that, or its a selective memory… Its all good.

    Comment by Cas — June 30, 2011 @ 10:48 pm - June 30, 2011

  95. OK ILC,
    Hate to break it to you, but when you claim: “The statement makes no sense. Real income is a function of production and trade. When government promotes (i.e. allows) production and trade, real incomes go up. When government makes war on production and trade, real incomes are down. There’s your fluctuations in income, and I have maintained/explained it consistently.” that is not an answer, no matter how much you want to think it is. My question to you is in the context of a downturn, not government intervention. My observation is simply this–incomes are down–what allows firms to start producing again? Since people cannot afford to buy their goods, in either dollar denominations or in terms of goods, a point I have made before, and which you continue to ignore. I ask what mechanism gets you back to equilibrium. Enough of the hand-waving–“government gets out of the way, income increases.” Really? How?

    As for: “they *did* maintain the purchasing power of the worker, i.e. above-market real wages maintained through labor market interference. It was part of the Depression’s cause, not part of its solution” so what. I am not arguing about artificially holding workers’ wages higher than market clearing rates–in fact I helped point out to you that in your model, real wages would have to fall to get equilibrium. So, you are shooting at the wrong target on that one ILC.

    “in the Depression they taxed job creators at rates over 90%. ” I would point out that no one is talking about 90% here. I even said the emphasis should be on closing loopholes. I have been very consistent on this point. Do I think the wealthy can pay a higher marginal rate, yes… but how you relate that to 90% rates is a little beyond me.
    Gotta fly.

    Comment by Cas — June 30, 2011 @ 11:00 pm - June 30, 2011

  96. I get the idea Cas and his ilk (the entire left-wing) would rather live under an economy that was stagnant or declining but where what was left more “equally” distributed, than an economy that was growing, where everyone was getting more, but some were getting more than others.

    And, yes, NDT, Cas ought never to be mistaken for someone who wishes to take part in a serious discussion.

    Comment by V the K — June 30, 2011 @ 11:37 pm - June 30, 2011

  97. NDT,
    “V, let me head off this one; you will provide the growth rates, then Cas will make some sort of whine about Paul Ryan’s budget and its growth projections, and off we go.”
    Tag team, NDT—woo-oo!

    “Cas is simply spinning away from its lies and its stupid statement that percentage of income matters more than amounts spent. Like Helio and ILC put it, Cas is obsessing over weeds and gnat’s knees in a desperate attempt to hide, cover up, obfuscate, and run away from its screaming, childish desire that the government take money away from those who earn it and give it to those who, like Cas, refuse to work.”
    It is sad that you cannot mount a positive argument, NDT; continuously misread arguments; and, are incapable of addressing the points that I raise. So what else is new? I’ll just live, sigh, with the disappointment… sigh…

    Comment by Cas — June 30, 2011 @ 11:59 pm - June 30, 2011

  98. Hi ILC,
    “Thus, the island’s income is its *production*. And the individuals’ incomes are their *production*. Real income is “what you can buy”, and is purely dependent on real production.”
    I am not disagreeing with you. In the last thread we chatted, I made exactly this point about what constitutes income in your model, together with the critique I offered of this, see http://www.gaypatriot.net/?comments_popup=37507#comment-638312, with regards to fluctuating income and the business cycle.

    As for the need for currency, again, I make the observation that there doesn’t seem to be a real point to having currency in your model, apart from its use as a means of keeping account, same comment, and ongoing critique.

    Comment by Cas — July 1, 2011 @ 12:00 am - July 1, 2011

  99. Hi VK,
    “under an economy that was stagnant or declining but where what was left more “equally” distributed, than an economy that was growing, where everyone was getting more, but some were getting more than others.”

    Since NDT feels the need to step in on your behalf to stop you from falling into my devilish rational argument trap, I’ll refrain from conversation, to avoid the additional ire of the increasingly lathered NDT being. 🙂

    All I will say with regards to your speculation regarding myself: no.

    Comment by Cas — July 1, 2011 @ 12:02 am - July 1, 2011

  100. Cas is like a child that asks “why” no matter what your answer may be. She supports economic failure, and no matter how fancily she may put it or how many bullshit charts she links to, she won’t get it.

    You can polish a turd, Cas, but it’s still a turd. You have no idea what you’re talking about and you don’t really give a shit. All you care about is popping of with more of your “I hate the rich!” propaganda. It just can’t be put any more simpler than that. If ILC told you “Farmer Brown had two apples and bought two more, how many would he have?”, You’d call him a rich SOB who needs to spread the wealth with those unwilling to even get out of bed.

    Long story short, cram it sideways Cas. Your “comments” are tedious.

    Comment by TGC — July 1, 2011 @ 1:37 am - July 1, 2011

  101. #95 – Still makes no sense, Cas. If you have a question (that you want me to notice / answer), say it in a clean way.

    incomes are down–what allows firms to start producing again?

    Already answered. Obama makes War on Business: Production, trade and employment go down. Obama’s War on Business rolled back: Encourages and allows the working American people to send production, trade and employment back up. It’s been tried and has worked out like that, time and again. I don’t know how to make it any simpler for you. If the light still truly isn’t cracking in on you, then I feel sorry for you.

    Since people cannot afford to buy their goods

    Sure they can. When you produce stuff people need or want (consumer-driven free markets), and when you do it efficiently/economically (because you are capable and you know what you’re doing – freedom of opportunity for the competent, no bailouts for the incompetent), then by definition, people will be able to afford it. Assuming they also produce something halfway valuable. It’s called specialization of labor. Charlie trading his hut-building services for some of Able’s fat production of fish. Under stable money, efficient production manifests as lower prices. “Deflation is bad” is another piece of demented Keynesian propaganda. Deflation is falling prices and falling prices are how real living standards rise in response to ever more efficient production, i.e., a good thing.

    ”government gets out of the way, income increases.” Really? How?

    When government stops people from doing a thing – like producing, trading or helping themselves – they do less of of it. When government “stops stopping” people from doing it, then they do more. I don’t know how to make it any simpler for you, Cas. If the light still truly isn’t breaking then I feel sorry for you.

    in fact I helped point out to you that in your model, real wages would have to fall to get equilibrium

    No Cas, you didn’t point out jack. For one thing, your statement as written is not right. Real wage *costs* have to fall to get *full employment*. (You can have an equilibrium, of high structural unemployment.) Presently, wage costs are out of whack (or at an equilibrium of high unemployment) because government has boosted the costs (Obama’s war on business, Obama’s war on employment). If government would cut it out, then real wage costs would fall to Bush-era equilibrium, and employment would rise. For most people, that would not mean a fall in real take-home wages. Or else have people’s real take-home wages risen, under Obama? No they haven’t. The employer’s difficulty / cost of employing people, is what has gone up. It’s called, government burdening employment… and getting a different (bad) result. Government cutting it out… and going back to an earlier (better) result.

    “in the Depression they taxed job creators at rates over 90%. ” I would point out that no one is talking about 90% here.

    Doesn’t matter. It’s a continuum between 2 poles. When you move toward one pole, you make things worse by that amount – even if you don’t make things as bad as they were when we had the pole extreme. When you don’t move toward that pole, then you don’t make things worse.

    I get the idea Cas and his ilk (the entire left-wing) would rather live under an economy that was stagnant or declining but where what was left more “equally” distributed, than an economy that was growing, where everyone was getting more, but some were getting more than others.

    V, exactly. Or as Thatcher put it: http://www.youtube.com/watch?v=okHGCz6xxiw “Mr. Speaker, all levels of income are better off [1990, nearing the end of her tenure] than they were in 1979 [when she started]. What the honorable member [socialist who called for redistribution] is saying, is that he would rather the poor were poorer, provided the rich were less rich.”

    All lefties say that. But they have a great deal of trouble admitting it.

    Comment by ILoveCapitalism — July 1, 2011 @ 2:58 am - July 1, 2011

  102. “You have no idea what you’re talking about and you don’t really give a shit. ”
    Well TGC, we will just have to agree to disagree on that.

    Comment by Cas — July 1, 2011 @ 3:12 am - July 1, 2011

  103. (continued) Obama said, before he was elected, exactly what he wanted to do. There is video of him saying that his policies would send people’s energy bills sky high, and he was basically OK with that. (It’s the Green wet dream – punishing people for what the Greens view as extravagant or excessive energy use.) There is video of him saying he liked the idea of a single payer health system, i.e. socialized medicine. Sending health care costs ever higher, and making it harder for employers to afford, is part of the Left’s plan to destroy the current system and thus ultimately force single-payer. There is video of Bernanke saying how a weak dollar is good for exports and the stock market.

    BUT – when you send employment costs up, you get less employment. When you send the dollar down, you raise import costs. When you send energy costs up, you raise the cost of living, which is to say that you lower real living standards. So here we have much lower employment (employment that just won’t recover from the last recession), lower real living standards, a higher cost of living, all PRODUCED INTENTIONALLY BY OBAMA POLICY – and we have Cas to pretend there is no connection to his policies, the obvious solution (of un-doing his bad policies) is not obvious, the only solution is to keep following more of Obama’s policies and make things even worse, blah, blah, blah, blah, blah.

    Comment by ILoveCapitalism — July 1, 2011 @ 3:14 am - July 1, 2011

  104. I’m sorry ILC, but, “Already answered…” is nothing more than “hand-waving.” By which I mean, you just say, as a matter of faith, that things will get better, but offer no causal explanation as to how this will be so–in your mind, it is so obvious, that it needs no further explanation. Repeating a version of Say’s Law does not mean that it holds in this particular case–“we produce stuff, that has to be traded, so markets clear–by definition.” I have raised serious objections concerning the efficacy of your model, and you repeat, without engagement, your mantra that the market will provide–by definition. You may not like my argument, but at least it is a causally based argument.

    As for your real wage story, I also have difficulty with that as well (no surprise there!). But enough; time for sleep.

    Comment by Cas — July 1, 2011 @ 3:35 am - July 1, 2011

  105. “Already answered…” is nothing more than “hand-waving.”

    Nope. It’s you not understanding… you pretending nothing has been said… you wasting my time.

    Comment by ILoveCapitalism — July 1, 2011 @ 4:05 am - July 1, 2011

  106. But Congress has also contributed [ed. to teen unemployment] by passing one of the most ill-timed minimum wage increases in history. One of the first acts of the gone-but-not-forgotten Nancy Pelosi ascendancy was to raise the minimum wage in stages to $7.25 an hour in 2009 from $5.15 in 2007. Even liberals ought to understand that raising the cost of hiring the young and unskilled while employers are slashing payrolls is loopy economics.

    The U.S. has long had a labor market flexible enough that when the economy grows, the jobless rate falls smartly. This time has been different, and the great danger is that Obamanomics has moved the U.S. to a permanently higher jobless rate as in so much of Europe. For America’s teenagers this summer, that reality is already here.

    Or maybe not. The Center for American Progress, often called the think tank for the Obama White House, recently recommended another increase to $8.25 an hour. Though the U.S. unemployment rate is 9.1%, the thinkers assert that a rising wage would “stimulate economic growth to the tune of 50,000 new jobs.” So if the government orders employers to pay more to hire workers when they’re already not hiring, they’ll somehow hire more workers. By this logic, if we raised the minimum wage to $25 an hour we’d have full employment.

    The Jobless Summer
    Why only one in four teens is employed.

    http://tinyurl.com/5wc6c68

    Why do Cas and Chairman Obama hate teenagers, especially black teens?

    Comment by TGC — July 1, 2011 @ 5:07 am - July 1, 2011

  107. But hey, demanding salary increases worked for Hoover and FDR. Oh, wait…

    Comment by TGC — July 1, 2011 @ 5:09 am - July 1, 2011

  108. You may not like my argument, but at least it is a causally based argument.

    How is your argument “causally based”, when the causes you base it on ignore the real world? If I advance an argument based on witches and unicorns, is it causal? No.

    As for Say’s Law – Keynesians love to put up distorted versions of it, as a straw man. You just did. Again, the agenda is to hide the essential truths – for example that so-called “effective demand” only comes from production i.e. from having something worth trading, and that real value (something worth trading) can’t just be printed off the Fed’s printing press, and that so-called “liquidity traps” are actually conditions where government has tyrannized over producers and so discouraged them – hiding those truths so as to justify Big Government, i.e., tyranny and parasitism.

    there doesn’t seem to be a real point to having currency in your model, apart from its use as a means of keeping account

    Sure there is. Once the economy is more than a few people, direct barter gets too cumbersome. Money has no meaning as a unit of account, if it isn’t a medium of exchange first.

    But neither complexity nor the use of a medium of exchange alter the basic principle: someone must produce, before anyone can consume. Real income is only “what your money can buy” from suppliers/production. Aggregate demand (which is infinite – humans always need more) only becomes “effective” when people have things they can trade/sell – i.e., when somebody, somewhere has produced first. Thus, aggregate demand is an artifact of aggregate production. Specific or non-aggregated demand is still meaningful, as it operates through the price mechanism to signal what specifically should be produced. But that an aggregate “something” or a general “more” should be produced, is a burning and ever-present fact under all age and income levels, systems and conditions; trying to “stimulate” it is moronic, at best only accidentally or coincidentally helpful, and often harmful. The real economy is what happens in production and trade. When people produce usefully, income follows. To get out of a hole, first stop digging. To get out of the economic hole caused by excessive spending, excessive debt and low production growth, first stop spending and stop throwing up governmental barriers to production and trade. Then remove barriers. History shows that it works, and Keynesianism doesn’t. Cause and effect accounts for it. It isn’t rocket science.

    Comment by ILoveCapitalism — July 1, 2011 @ 5:15 am - July 1, 2011

  109. All I will say with regards to your speculation regarding myself

    You don’t have to claim anything about yourself, your comments make your position perfectly clear: shared misery > general but unequal prosperity.

    Comment by V the K — July 1, 2011 @ 9:29 am - July 1, 2011

  110. Cas @ #104:

    I have raised serious objections concerning the efficacy of your model, and you repeat, without engagement, your mantra that the market will provide–by definition. You may not like my argument, but at least it is a causally based argument.

    Again @ #104:

    By which I mean, you just say, as a matter of faith, that things will get better, but offer no causal explanation as to how this will be so–in your mind, it is so obvious, that it needs no further explanation.

    Cas @ #99:

    Since NDT feels the need to step in on your behalf to stop you from falling into my devilish rational argument trap, I’ll refrain from conversation, to avoid the additional ire of the increasingly lathered NDT being.

    Cas @ #97:

    It is sad that you cannot mount a positive argument, NDT; continuously misread arguments; and, are incapable of addressing the points that I raise. So what else is new? I’ll just live, sigh, with the disappointment… sigh…

    Cas @ #94:

    Woe is me! I feel into the “providing evidence for HT, after he asked me to” trap! Now all is lost. No. It is not the first time you pulled that stunt, and, it is clear that you just don’t like people actually giving you what you request when it doesn’t accord with the pre-determined HT heavens. Sorry to disappoint you. That dog won’t hunt with me, HT. You just come off as game-playing, not as intellectually rigourous, in my opinion.

    There you have it.

    Cas strolls in with a “casual” “conversation” raising “serious objections concerning the efficacy of (ILC’s) model” in “a casually based argument”. Then Cas charges ILC with offering no casual explanation of how his mind works.

    Cas tells NDT that Cas has a devilish rational argument trap set, but Cas will refrain from conversation to sooth the savage NDT beast. Furthermore, Cas bemoans NDT’s continually misreading of Cas’ arguments, NDT’s incapacity to address the points raised by Cas and NDT’s inability to mount a positive argument.

    Cas dismissed Heliotrope as being a game-player who is not intellectually rigorous mainly because Cas walked into a devilish rational argument trap set by Heliotrope.

    Folks, this Cas person is just a nit-picker and goal shifter. All this casual, chipper conversation is pure bull. When Cas is moderately wounded, Cas comes back with “serious objections concerning the efficacy of your model.”

    When Cas goes circular and obtuse in all of the “casual conversation,” it is others who become dense, inarticulate, incapable of understanding the Cas “casual conversation.”

    I made no effort whatsoever to engage Cas at the typical Cas games. I ridiculed the Hauser’s Law ploy by Cas @ #12:

    Hydrant’s Law is that pedigreed dogs pee on the left side while Hydrant’s Conjecture imagines that untethered dogs prefer trees. In light of this, what do you think the odds are of Salmon swimming downstream to spawn in odd numbered years? (The wind is below 5mph and no clarinet player is using a plastic reed.)

    My point was: here we go again with Cas and it’s games.

    I came back @ #76 to comment on how Cas plays the game:

    But Cas has a talent/technique for putting the emphaSIS on the wrong syllABle and then arguing the fine points of diction.

    You address Cas at your own peril. All the Hi! Chirp, Tweet, Tweet, Twitter should be your first clue. This is a neopseudointellectualwannabe who has just enough education to provoke confusion.

    ILC has a credible understanding of the mechanisms of capitalism and the free market economy. At some point, economists get beyond the fundamentals and start projecting and predicting based on this hypothesis, that theory, somebody’s conjecture and pure gut instinct. When you spend time in those weeds, you are apt to forget that regular people build small empires without the benefit of a scratch of all this arcane blather and strutting.

    Cas really needs a cathartic enema on some economy nerd site where number crunchers go to have orgasms. This is not such a place.

    The “enlightenment” Cas brings is in the eye of the messenger. If Cas were to have salient, rational, general knowledge based arguments that were not based in constant shifting of the terms, I believe Cas could have a worthwhile “casual conversation” here. Tweet, Tweet, Twitter, Twitter.

    Comment by Heliotrope — July 1, 2011 @ 10:28 am - July 1, 2011

  111. Heliotrope, seriously. I mean, I sketch out some mechanics that could not be more directly CAUSAL, and Cas is so determined not to see it that she simply asserts (in contravention of all evidence) that I have not done so.

    I’m wondering if I’ve ever seen a more clear-cut cause of the psychological phenomenon known as “denial”. Cas’ economics does not work. And it never has. Adopting it **caused** (that word valid and chosen deliberately) the Great Depression. Adopting it again has **caused** Obama’s non-recovery. Cas does not want to believe it. Her strategy is to flatly refuse to process the information, and if I explain it **causally** (i.e. point out what the causal chain is), to flatly deny that I have made any such attempt, and perhaps nitpick an imprecision or two in what I said. Same with others. Sad.

    Comment by ILoveCapitalism — July 1, 2011 @ 10:48 am - July 1, 2011

  112. You don’t have to claim anything about yourself, your comments make your position perfectly clear: shared misery > general but unequal prosperity.

    Half right, V the K.

    There’s nothing “shared” about the misery here. Cas is demanding that money be taken from other people and given to him. He is not going to lose money or have what he’s earned taken away from him; he benefits from income redistribution.

    The fundamental thing to realize here is that liberal economics like Cas is hilariously spouting are based on one simple principle: Cas doesn’t like the way the market has assessed value and worth, and wants to use governmental power to undo it.

    Cas and his ilk fundamentally cannot understand why anyone should make more money than they do. Their constant ranting about “income inequality” is less about a sense of fairness than it is of jealousy that someone else is doing better financially than they are. Their thinking is similar to their Soviet forbears that there should be no difference between those who work and those who won’t, and those who are educated versus those who aren’t.

    It is impossible for Cas and his ilk to acknowledge consequences. They whine and blabber and scream that it is “wrong” that a 7-11 clerk makes less than an accountant. They cannot differentiate in value for work in the abstract because doing so would open the possibility that their own inferior position is justified. That’s why they love unions, fixed wages, and price supports — all things that take any variability based on performance out of the equation and ensure that the laziest and least qualified make the same amount as the most qualified and hardest-working.

    Comment by North Dallas Thirty — July 1, 2011 @ 10:59 am - July 1, 2011

  113. Heliotrope, P.S. And get this: Cas and the other Keynesians, like 18th-century believers in witches and phlogiston, are worried about a mythical economic occurrence called a Liquidity Trap. Know what that is? Let’s start with Wiki’s definition:

    The liquidity trap, in Keynesian economics, is a situation where monetary policy is unable to stimulate an economy, either through lowering interest rates or increasing the money supply. Liquidity traps typically occur when expectations of adverse events (e.g., deflation, insufficient aggregate demand, or civil or international war) make persons with liquid assets unwilling to invest.

    Several things wrong with that, making it essentially mythical.

    First, monetary policy is never able to stimulate the real economy; the part where viable, efficient production and trade take place. It’s only capable of stimulating the phony economy; the part deriving from excessive borrowing-and-spending, asset bubbles and general malinvestments. When the central bank “lowers interest rates”, either it is only following market rates (in which case, why does it exist?), or it is leading i.e. forcing below-market rates. And when the central bank forces below-market rates, by definition it stimulates loans to the undeserving, i.e., loans that the market would otherwise choose not to make.

    Also, it’s impossible for “persons with liquid assets [to be] unwilling to invest” because it’s impossible for them not to invest. If you hold U.S. dollar cash instead of (say) stocks or bonds or real estate or foreign currency or gold or a business, you are still invested – in U.S. dollar cash. That’s Financial Planning 101. Also, it doesn’t apply to where we are now: in fact, people have been investing in non-cash assets so much that the Dow, for example, has gone up from the 6000 range in March 2009 to the 12000 range today.

    Finally, insofar as the term Liquidity Trap is an attempt to grapple with a real phenomenon (however badly)… the phenomenon that it grapples with (very badly) is a Tyranny Trap, a situation where government has -scared businesses off- from expanding and hiring. That’s where we are today, and what we had in the 1930s. The Tyranny Trap. A trap because the proffered solution is always, of course, still more government.

    So for all those reasons and more, Liquidity Trap theory is about as good as phlogiston theory, or maybe Lysenkoism. But let’s take it at its word, for a moment. The stipulated problem is that “persons with liquid assets [are] unwilling to invest.” In other words: Too much liquidity. A state where putting more liquidity in the economy, “either through lowering interest rates or increasing the money supply”, just won’t help. So what is the Keynesians’ solution? As Cas has shown us, part of it is to have government simply expropriate assets. (Which she calls taxation, tweaking the income distribution, etc.) Yeah, that’ll make people feel better about getting invested. And another part is Quantitave Easing… in other words… more – liquidity! (!!) (!!!1!11!!)

    Comment by ILoveCapitalism — July 1, 2011 @ 11:22 am - July 1, 2011

  114. So maybe I should deal with my “addiction trap” by increasing my heroin intake, or my “overweight trap” by having daily extra ice cream and pie.

    Comment by ILoveCapitalism — July 1, 2011 @ 11:33 am - July 1, 2011

  115. I thought the liquidity trap was where you stored aether or that it was what the fell into.

    Comment by The_Livewire — July 1, 2011 @ 11:44 am - July 1, 2011

  116. Thanks for the comments, ILC.

    Have you read Reckless Endangerment? It is a spectacularly even-handed report of the Fannie induced crash of 2008. Don’t let the NYT author and the Moyers blurb distract you. It lays out causes and names names.

    So much of the blame for 2008 is caught up in incrementalism and unintended and unconsidered consequences. In other words it was a typical SNAFU and all the “laws” and “conjectures” of smart economists would not have prevented it. What happened really was “excessive exuberance” and Greenspan was right there cheering it on.

    We always need to ask and answer the simple questions first. For example: how does google make money? What did Eron have to sell?

    I posit that if the janitor at a company does not understand basically what the company does to earn money, the company is suspect.

    The Cas visits always end up the same. Long threads with Cas playing coy and very little to latch onto. Yet, in the end, Cas points a finger and spray blames the responders.

    One of the problems with being a person who is willing to enter discussions is encountering the dilettante who is just out to vanity post. Cas creates the topic and judges the answers without committing acts of comprehension. How nice. Perhaps Cas summed it up best when replying to TGC @ #102:

    You have no idea what you’re talking about and you don’t really give a shit. ”
    Well TGC, we will just have to agree to disagree on that.

    Comment by Cas — July 1, 2011 @ 3:12 am – July 1, 2011

    Comment by Heliotrope — July 1, 2011 @ 12:27 pm - July 1, 2011

  117. Haven’t read RE. Haha, yes the blurbs distracted me, but since you warned, I will take a second look.

    So in the meantime… Let’s solve the “liquidity trap” – which again, per Wiki, is “expectations of adverse events… mak[ing] persons with liquid assets unwilling to invest” – in the Keynesian fashion, by killing their ability to invest: by expropriating their money and giving it to bureaucrats, who might eventually give a little of it to poor people for spending on consumption.

    After all, those “persons with liquid assets” deserve the punishment for daring to not properly stimulate the Dear Leader’s economy. Let’s flog ’em, until morale improves!

    Comment by ILoveCapitalism — July 1, 2011 @ 3:37 pm - July 1, 2011

  118. They whine and blabber and scream that it is “wrong” that a 7-11 clerk makes less than an accountant.

    And insist that the Accountant is responsible for paying for the 7-11 clerk’s health care.

    Comment by V the K — July 1, 2011 @ 3:45 pm - July 1, 2011

  119. First chance all day to comment–my… a lot of stuff written.
    First,
    HT,
    “Then Cas charges ILC with offering no casual explanation of how his mind works.”
    No, I asked how his model of the economy works–specifically to offer a causal account that didn’t rely on description (e.g., “When people produce usefully, income follows”…which is a possible restatement of Say’s Law, not a causal explanation, but a definitional assertion), but outlined the manner in which the economy, as he sees it, moves to full employment equilibrium.

    “Cas tells NDT that Cas has a devilish rational argument trap set, but Cas will refrain from conversation to sooth the savage NDT beast. Furthermore, Cas bemoans NDT’s continually misreading of Cas’ arguments, NDT’s incapacity to address the points raised by Cas and NDT’s inability to mount a positive argument.”
    No. I told VK that, not NDT. It was in reply to NDT advising VK not to provide the evidence for his claim. Because clearly, well, it wasn’t really clear… A perfectly reasonable request is treated with paranoia. Great, so one injects a little humour to leven a ludicrous situation. As for NDT’s continuous misreading, sorry HT, but what else does one call it–NDT reads arguments and makes wild statements or “inferences.” What else is one to make of such claims as: I “lied to American business” at #26. Or other more silly claims? By all means defend such nonsense (maybe, NDT points to deeper truths that he can see…), but it isn’t the first time that NDT has done this, and I have seen many non-conservative commentators be on the receiving end this style of ” rhetoric” from NDT (hello, Pat?). Or have you not noticed?

    “Cas dismissed Heliotrope as being a game-player who is not intellectually rigorous mainly because Cas walked into a devilish rational argument trap set by Heliotrope.”
    No, I dismissed your game-playing. And it wasn’t the “rational argument trap” HT. It was the: “providing evidence for HT, after he asked me to” trap! It wasn’t the first time you have done such as this, and I called you on it. It is clear that you dislike me doing that. Really clear. You came off–in that instance (sorry for not making that implication clear–but I thought the context was clear)–as game-playing. Does it mean you will do it in future–I have no idea. My hope is that in future, you will only ask for evidence if you are sincerely interested in reviewing it. You have shown–in the past–that you do not always act in this way. I do not dismiss you, HT but criticize a gamey rhetorical approach that you used.

    “Folks, this Cas person is just a nit-picker and goal shifter. All this casual, chipper conversation is pure bull. When Cas is moderately wounded, Cas comes back with “serious objections concerning the efficacy of your model.””
    Oh please. I have been having a quite extended conversation with ILC, and I raised queries AND objections over at least three threads. So, please, don’t make it seem like all of a sudden, now I change my approach. I have already referred to one previous thread as part of our current discussion, so, by all means check it out, but I have no expectation that you will do that, HT. I raised objections in a number of areas–for example, the argument I raised on why I don’t agree with ILC about the efficacy of FDIC insurance. Also, I would point out, apart from being asked to consider some anatomically difficult actions (thanks TGC), a near continuous stream of “imbeciles,” and the like from a lathering (sorry, I like that word…can’t help it) NDT, and HT’s superior, all-knowing tone, this has been a tame thread, compared to some I have been part of here. For the most part, ILC has been quite civil in our conversations, over the three threads, and I appreciate that a great deal. So, I don’t see the thread in the same way you do, HT.

    As for “casual”. OK, where do I use that word to describe my conversations, in this thread? I haven’t had the sense of casualness from the get go. But one can certainly be playful, and try to keep a sense of humour, when one is being rhetorically engaged in a rough-house manner. One can be rigourous, but one can also be reasonably polite and have fun. Can it be a little unruly. Yes. But that is the GP way. Perhaps that is what you mean, by “casual..” It could also be that you mistake “causal” for “casual,” I am unsure. I mean we can we have a “causal” conversation…? 🙂

    “ILC has a credible understanding of the mechanisms of capitalism and the free market economy.” Well, HT, what I am trying to do is get clarity about that. It is good that you feel the need to stand by ILC’s side in this conversation, and it makes sense, I know–after all, you appear to hold the same/similar views as he does. I would expect you to hold that viewpoint. I think there are apparent contradictions in the Austrian paradigm that you and others subscribe to. We can talk about those, but it might not happen … I appreciate that it is not something you wish to do, and I do not begruge you that. But if ILC wishes to engage, then off we go. I get the tribal nature of things, here. NDT comes to VK’s aid or even your aid, asked for or not–you have each other’s backs. I get it. It is cool–it is clear that NDT idolizes you, HT. But I don’t.

    “This is a neopseudointellectualwannabe who has just enough education to provoke confusion.”
    Cool. Thank you for sharing your opinion of my academic attainments. 🙂

    “The “enlightenment” Cas brings is in the eye of the messenger.” I have to admit that comment is a little “too mystical and kungfooey” for me.

    And finally, “Long threads with Cas playing coy and very little to latch onto.”
    If we just swap out “Cas” and put in “HT” then this describes HT’s recent contribution on Hauser’s “Law” on this thread to a tee–in my opinion.

    Anyhow, I have to go on a bike ride. Continue the thread later.

    Comment by Cas — July 1, 2011 @ 9:07 pm - July 1, 2011

  120. z-z-z-z-z-z

    Comment by Heliotrope — July 1, 2011 @ 9:15 pm - July 1, 2011

  121. “z-z-z-z-z-z”
    Your very welcome 🙂

    Comment by Cas — July 1, 2011 @ 10:53 pm - July 1, 2011

  122. As usual, Heliotrope, amazingly prescient.

    Yet, in the end, Cas points a finger and spray blames the responders.

    One of the problems with being a person who is willing to enter discussions is encountering the dilettante who is just out to vanity post. Cas creates the topic and judges the answers without committing acts of comprehension.

    And that’s what we see; Cas has lost any semblance of rationality or intelligence and is now just vanity-spamming the thread.

    Comment by North Dallas Thirty — July 1, 2011 @ 10:53 pm - July 1, 2011

  123. “And that’s what we see; Cas has lost any semblance of rationality or intelligence and is now just vanity-spamming the thread.”
    Well ***, NDT, we will just have to agree to disagree on that. 🙂

    Comment by Cas — July 2, 2011 @ 12:36 am - July 2, 2011

  124. Hi ILC,
    So, I have questions about your take on liquidity traps, at #113.

    The first claim: Your argument is:
    “When the central bank “lowers interest rates”, either it is only following market rates (in which case, why does it exist?), or it is leading i.e. forcing below-market rates. And when the central bank forces below-market rates, by definition it stimulates loans to the undeserving, i.e., loans that the market would otherwise choose not to make.”
    You appear to me to assume that interest rates only measure inter-temporal preferences. If we had no central bank and lived in the institutional world that you wish we could, would it also be true that you would see no logical purpose for a speculative demand for money that is sensitive to interest rate changes? Is that right?

    In the absence of a central bank, what happens to interest rates (and why) in your model, when there is a business slump?

    Second claim: (Non-Austrian) Economists (those that many people here think are too enamoured with math models and the like) do not usually call what you name “investment” in point two, “investment.” Investment in their thinking, and as defined in the National Accounts stats that we all rely on, are expenditures on plant, factories, etc–you know, productive assets that provide a stream of future income. Why do you include “stocks or bonds or foreign currency or gold” as “investments”? I took out “or real estate” because I can see that being something that leads to future goods and services. As for real estate–is that really equivalent to “US dollar cash”? I ask because one of the features of “cash” is its liquidity. We consider things more and more money instruments depending on their increasing degree of liquidity, with cash being most liquid. Why do you think real estate is akin to cash when it is not a very liquid asset–just check out the length of time it takes to sell a house these days. In other words–could the author of the piece you quoted be confused about what “investment” means; or, did you confuse what the author said about “investment” as being about “savings”?

    Comment by Cas — July 2, 2011 @ 2:16 pm - July 2, 2011

  125. Investment in their thinking, and as defined in the National Accounts stats that we all rely on, are expenditures on plant, factories, etc–you know, productive assets that provide a stream of future income. Why do you include “stocks or bonds or foreign currency or gold” as “investments”?

    And the vanity-spamming has now reached spectacular levels, with Cas insisting that no “correct” economist such as itself considers stocks, bonds, foreign currencies, or gold to be investments.

    Trust me, Cas, no economist is joining you in your imbecility. But intelligent people who have looked at this thread have told you you were wrong, and you simply can’t accept that. Hey — it’s OK. We understand that you don’t want to discuss your failures and thus tear off on alternate topics. Perhaps someday when you actually want to have a discussion and engage intelligently, you’ll feel comfortable in doing so.

    Comment by North Dallas Thirty — July 2, 2011 @ 11:42 pm - July 2, 2011

  126. NDT,
    “Trust me, Cas, no economist is joining you in your imbecility. But intelligent people who have looked at this thread have told you you were wrong, and you simply can’t accept that.”

    You do not seem to realize that these are legitimate questions. Intelligent people, even you, can be wrong. Feel free to say whatever you want, but the fact that you can’t actually address the issue I raised, says more about your apparent unpreparedness, then anything else you have said to me on this thread, insults included. If you are up for it, you can go check out what the difference is between “savings” and “investment” in a basic economics textbook, or, look it up on-line together with “National Accounts” and “Definition” and examples of each therein, NDT. You can then check to see how ILC uses the term “investment” in #113, and compare the usage with economic definitions in the National Accounts. But I am pretty certain, from past experience dealing with you, that you won’t, for all kinds of “reasons.” That is what I expect from you NDT.

    Perhaps ILC will reply to my queries, or perhaps not, but I ask because he may have something in mind that is not clear to me from the post he made (perhaps Austrian economics define things differently or have a different conceptual framework, I have no idea). In any case, I don’t feel the need to behave like you when engaging with this issue.

    Thank you for your reply.

    Comment by Cas — July 3, 2011 @ 1:15 am - July 3, 2011

  127. I asked [ILC] how… the economy, as he sees it, moves to full employment equilibrium.

    I’ve told you in many comments… you apparently have never let it register.

    I have been having a quite extended conversation with ILC

    I am sorry, but I have not had that experience with you. When someone keeps insisting that I must explain my viewpoint after I have done so repeatedly and with as much clarity, directness and simplicity as I can muster, I do not consider it a conversation.

    If we had no central bank… would it also be true that you would see no logical purpose for a speculative demand for money that is sensitive to interest rate changes?

    As we employ terms in different ways, I can’t be sure what you’re asking about.

    Interest rates will vary with the supply of stored purchasing power for lending (i.e. people’s aggregate desire to save) and with the demand to borrow same. The market, i.e. *the People* in aggregate, should work it out. Government planners should not attempt to force interest rates (the price of borrowed money) in any direction.

    In my terminology, the phrase “speculative demand for money” would imply a future in which either currency or savings (stored purchasing power) becomes increasingly scarce, such that speculators should want to reserve the supply now, holding it off-market for future use at higher prices. Is that what you’re asking about? It implies a mistake that destroys either currency or stored purchasing power. For example, a perishable currency; a fiat currency plus a central bank that is determined to force deflation; a fiat currency plus a central bank that is determined to force inflation (increasing the supply of currency BUT destroying the purchasing power it represents); a sudden mania against savings such as a mass belief in the end of the world; etc. I don’t think such mistakes can be made by a free-market banking system.

    what happens to interest rates (and why) in your model, when there is a business slump?

    Again: Supply of savings, vs. demand to borrow savings. That’s the whole answer. Who knows what might happen in any specific slump? Chances are, the slump is caused because it is time to liquidate accumulated malinvestments. In that environment, banks may be cautious about lending, tending to higher interest rates. Or people may be cautious about borrowing, tending to lower rates. Whatever. After a due period of consolidation, people and banks alike will become more willing to take risk.

    I believe your question tends to the following notion: That an economy can’t recover under high interest rates. History shows that it can. Reagan’s recovery took place under high interest rates. They were declining, but from a base that was VERY HIGH both in nominal and real terms. Remember, not all investment is good investment. Not all loans that could be made, should be made. Not all borrowers (or potential borrowers) are competent, trustworthy and capable of repaying. High-ish interest rates can be good as they reward savers, while encouraging discipline in the use of capital. In a free banking system, if rates do ever get “too high”, then they self-correct as a greater supply of savings comes online. Likewise if they get “too low”, they self-correct (and should be allowed to!) as the supply of savings declines in response. Supply and Demand 101. Trust the price mechanism.

    Investment in their thinking, and as defined in the National Accounts stats that we all rely on, are expenditures on plant, factories, etc

    That is another definition of “investment”. But it is, evidently, not the definition Wiki used in its opening sentence on Liquidity Trap, which referred to the investments of “persons with liquid assets” (emphasis added). I started with the most commonly-used Internet source for definitions and explanations. It is not one I stand by; I just picked the most commonly-used one as a starting point. If you think Wiki’s article is wrong and you want to improve it, get a Wiki account and do so.

    Comment by ILoveCapitalism — July 3, 2011 @ 3:42 am - July 3, 2011

  128. P.S. The root flaws in Liquidity Trap theory might be these:

    1) The beginning premise that it is the role of government i.e. CENTRAL PLANNERS to “stimulate” the economy. Believing or supporting that notion is flattering to the planners, and justifies their jobs. But it is wrong. A free society has a government that concentrates on impartially protecting individual rights to life, liberty and property and nothing more. Voluntary, i.e. market-price, mechanisms should be allowed to co-ordinate all other matters. History shows that production and trade suffer because of government interference. For example, centrally-planned “stimulus” causes crazy booms – which must be paid for inevitably, at some point, by a comparable bust for the liquidation of the excessive malinvestments. Whereupon the question is whether the economy i.e. the People will be allowed to recover from the bust; and again history shows that heavy government interference in the economy blocks (not stimulates) natural recovery.

    2) And, as discussed above, the companion and equally misguided premise that low interest rates are necessarily good (or that low-er interest rates are necessarily better), that all “investment” spending is created equal so that more of it is always good, that everyone “deserves a chance” when it comes to borrowing money for alleged “investment”, etc.

    Comment by ILoveCapitalism — July 3, 2011 @ 4:05 am - July 3, 2011

  129. Darn, ILC, you are a tenacious gentleman; we who learn from your reasoned responses are the lucky ones.

    I marvel at how dedicated Cas is to sticking with the eyelashes and toes nails rather than to examine the framework that is the skeleton. It is sort of like chasing dust bunnies around with a hair dryer instead to watch them twist and turn rather than actually having a purpose.

    Comment by Heliotrope — July 3, 2011 @ 9:55 am - July 3, 2011

  130. (continued) So LT theory leads its practitioners directly to the wrong answers. “Let’s have a central bank!” – mistake 1. “Let’s force interest rates down, to stimulate!” – Mistake 2. “Oh, we can’t? It won’t work anymore? Well let’s think of some other way to play with money then, to stimulate. How about QE?” – mistake 3. And mistake 4, all along they never ask the question they should be asking, “What has government done to make people/businesses so afraid to invest, that we might un-do?”

    Comment by ILoveCapitalism — July 3, 2011 @ 10:04 am - July 3, 2011

  131. thanks HT 😉

    Comment by ILoveCapitalism — July 3, 2011 @ 10:09 am - July 3, 2011

  132. Hi ILC,
    Thank you for your reply.

    “That is another definition of “investment”. But it is, evidently, not the definition Wiki used in its opening sentence on Liquidity Trap, which referred to the investments of “persons with liquid assets” (emphasis added). I started with the most commonly-used Internet source for definitions and explanations. It is not one I stand by; I just picked the most commonly-used one as a starting point.”

    This would appear to suggest that you agree that it is wrong. Is that correct? Because if it is, I am unclear why you then used that definition, if you “don’t stand by [it]” to argue that a liquidity trap makes no sense conceptually. If it isn’t what you think the Wiki article says it is, why use it as an essential underpinning for your second argument? Wouldn’t it have made more sense to just point out that Wiki got it wrong and then used your own correct version of what the liquidity trap is, rather than one you know is wrong. What is the point of doing that?

    One thing that did come to me, just now–the wiki might be saying that “persons” refers to those who run companies or businesses, because people do that, and they are the ones who make “investment decisions.” Corporations are “persons” according to the Supreme Court. Though I resist the later interpretation (as you know), these are both points that you forcefully support. I went back and looked at the Wiki article (thank you for letting me know where you got the information from, by the way).

    The link on the word, “invest” takes us to http://en.wikipedia.org/wiki/Investment. It has a nice discussion of how economists use the term “investment.”

    It looks to me as though the point on “investment” in #113 and in #128 underpin different arguments. #113 uses an admittedly dubious definition of “investment” to argue that a liquidity trap is impossible because people are still willing to save in a variety of assets. The second argument uses the term “investment” to say that there is a “misguided premise that …all investment is created equal so that more of it is always good.” Investment appears to be used in the sense of capital spending for future production and streams of income, is that right? I do not mind that change. Unlike some here, I think that arguments can alter and grow over time as new information comes to light. It doesn’t have to be a case of “moving the goal-posts.”

    By the way–what is your definition of “investment” as you have been using it through this thread? Can we agree that bonds et al are not “investment,” but actually forms of “saving” for our purposes here?

    I will get back in a while.

    Comment by Cas — July 3, 2011 @ 11:34 am - July 3, 2011

  133. If you are up for it, you can go check out what the difference is between “savings” and “investment” in a basic economics textbook, or, look it up on-line together with “National Accounts” and “Definition” and examples of each therein, NDT. You can then check to see how ILC uses the term “investment” in #113, and compare the usage with economic definitions in the National Accounts. But I am pretty certain, from past experience dealing with you, that you won’t, for all kinds of “reasons.”

    And here’s one now:

    Can we agree that bonds et al are not “investment,” but actually forms of “saving” for our purposes here?

    And here’s another one:

    Unlike some here, I think that arguments can alter and grow over time as new information comes to light. It doesn’t have to be a case of “moving the goal-posts.”

    You don’t follow your own definitions and you ignore your own sources. Then, hilariously, you try to argue that others are inconsistent in the application of theirs.

    Yours is a simple problem, Cas; you start from the conclusion and try to work backwards into the facts. That’s not unusual; it is typical of liberals and others who are dependent on magical thinking to make arguments.

    But, as we see, it just leads you to vanity-spam comments.

    Comment by North Dallas Thirty — July 3, 2011 @ 12:11 pm - July 3, 2011

  134. NDT,
    If you can’t be bothered to actually follow the conversation, why bother posting at all?

    Comment by Cas — July 3, 2011 @ 1:54 pm - July 3, 2011

  135. Oh, but I have been, Cas.

    That’s why I make my observations, such as when you went from obsessively proclaiming how “percentage of income” was so important to vanishing and ignoring it when I pointed how you were thus stating that someone who spent five times the amount of another person was worse for the economy.

    Or when you cited two sources to “prove” your claim that the rich only buy imports — neither of which says anything about domestic or imported goods purchases on the basis of income.

    Or when you claimed that the CBO report claimed that tax cuts were the sole cause of any projected deficits — only to run away when the portions specifically outlining that spending, not tax cuts, was responsible was quoted to you.

    You’re not used to being held accountable for and challenged on your assertions, are you? That’s ok — we understand that it’s uncomfortable for you to acknowledge facts that are contrary to your predetermined conclusions and that you weren’t prepared or hadn’t done enough research.

    Comment by North Dallas Thirty — July 3, 2011 @ 2:29 pm - July 3, 2011

  136. Here is a current dilemma.

    Betsy has accumulated $100,000 in US currency, currently kept in a dresser drawer. Betsy has not been up front with the tax codes in amassing this sum. She has sold Sam-Wows for cash at flea markets and bought her stock with cash from floating suppliers. Her paper trail is thin, at worst.

    Betsy wants to “save” this cash from inflation erosion and keep it competitive with other currencies in the world monetary system. She would also be happy enough to have it grow in value.

    But Betsy also considers this cash to be a buffer against hard times. She will give it up to keep help keep her head above water in rough financial times that clearly may lie ahead. The rough times mean selling Sham-Wows in flea markets is history as people clamp down on all their nickels and dimes.

    The conundrum here is how does Besty secure her cash assets? The cash is an “investment” in currency. Gold is hard to use as a medium of exchange, because you have to convert it. Besty could stock up on survival food kits, ammunition, water purification equipment, cooking fuel, space blankets, reading materials and extra clothes and try to work her way through a turbulent decade. No matter what choice Betsy makes, she has to choose her “sunk cost.” Therefore, she is trapped into “investing” her nest egg.

    Now this may not be so eloquent as ILC would tell the story, but Betsy is everywoman who has capital at stake.

    The hand to mouth dwellers are pure victims of how the government divides the spoils system. Come the collapse, they become foragers. That is why Betsy might stock pile ammunition.

    Flash mobs may clean out the beer at the 7-11, but not often or for long. Once you “burn, baby, burn” the neighborhood you are left in the ruins.

    Meanwhile, Cas wants to argue about what the meaning of “is” is.

    The national economy depends on the confidence of the consumers. Consumers are not much interested in the fine points of economic theory. They understand jobs, income, expenses and good times and bad times.

    When streets die one store at a time the area is basically left with business carcasses where employment is history. That is why the formerly maligned burger flipper job at McDonald’s is now one of Obama’s claims to great achievement. And it is why those jobs will disappear and take additional thousands with them when Obama’s waiver for Obamacare is withdrawn this August.

    Oh, what a tangled web we weave when we practice to deceive. I am sure Cas can quibble over which economic term best applies to this and how a chart can be drawn to show that unemployment is actually stimulating the economy.

    Comment by Heliotrope — July 3, 2011 @ 3:32 pm - July 3, 2011

  137. Oh, Cas has already done that, Helio; like Pelosi, Cas states that the unemployed are better for the economy because they spend a higher percentage of their income.

    Comment by North Dallas Thirty — July 3, 2011 @ 3:59 pm - July 3, 2011

  138. NDT,
    By all means interpret as you will.
    It won’t matter if I answer you, because it won’t gel with your beliefs anyway. But, I’ll try again. I will note that you should practice what you complain about–namely answering questions that are put to you.

    1. “you went from obsessively proclaiming how “percentage of income” was so important to vanishing and ignoring it when I pointed how you were thus stating that someone who spent five times the amount of another person was worse for the economy.”
    Take $1,000,000. If a rich person has it, at a marg prop con (MPC) of .8 (for illustrative purposes), they spend $800,000 in the first round of spending, with an eventual total impact on the economy of $5,000,000. If poor (or as I said “less wealthy”) people have that same initial $1,000,000 and a MPC of .9, then they spend $900,000 initially with an overall impact on the economy of $10,000,000. It isn’t the fact that wealthy people have more money that they spend, its that they spend a smaller proportion of it. If you would like me to go into more explanation, I’d love to, but–and I know this is hard for you–you will have to play nicely–as in asking politely (and this is an example, so there are many ways of saying such things) “Could you explain your reasoning on this, please.”

    2. Sorry, you asked me to “prove” and I provided “support” for my claim, with respect to the MPC. Sorry I didn’t do so on imports, because as I made clear at the time, I was making an intellectual argument. Your reply was to lambaste me for making it without empirical verification. I would point out that there is a dearth of empirical work on this issue. Your approach could be nicely reversed, by the way, with me demanding that you show me the evidence for your implicit claim that the marginal propensity to import of wealthy and less wealthy are the same/similar (or maybe that the poor import more, who knows?). I don’t ask you that, because a. I don’t see any studies that address it–do you?, and b., this is an intellectual argument. By all means complain, but you come across as a bit whiny, I think. In any case, here is some suggestive evidence: “In short, marginal propensity to consume is high and marginal propensity to import low in many large agricultural rural populations in Asia as in China, India and Indonesia.” The poor spend their income on what is local. It is not enough evidence, I agree, but it is suggestive. http://www.un.org/esa/socdev/social/papers/paper_low.pdf

    By all means show me your research supporting your own views, if you like.

    “CBO report claimed that tax cuts were the sole cause of any projected deficits — only to run away when the portions specifically outlining that spending, not tax cuts, was responsible was quoted to you.”
    If, by “running away” you mean, I dropped the conversation after the way you acted as a “human shield” for VK, to advise him not to explain what tables he had in mind to back his claim. “V, let me head off this one; you will provide the growth rates, then Cas will make some sort of whine about Paul Ryan’s budget and its growth projections, and off we go. Simply consider this as an admittance on Cas’s part that it lied…”
    I see, I have to provide evidence, but you advise VK not to do so in return. I have no idea where the information is that VK is pointing to. Perhaps it is a stunning repudiation of what I said, or perhaps he got it completely arse backwards–how would I know? What I do know is that the conversation was stuck dead in its tracks.

    “You’re not used to being held accountable for and challenged on your assertions, are you?”
    I don’t know what planet you have been on since I started commenting on GP, but I have had to put up, pretty much continuously since I got here, so I think I am used to the sort of thing you and some others do! 🙂 But you might want to look in the mirror and throw the same challenges at yourself, that you have thrown at me, NDT.

    I am interested in your reply: Given what you said at #133, when you buy a “bond” is it “savings” or “investment”?

    Comment by Cas — July 3, 2011 @ 4:32 pm - July 3, 2011

  139. HT,
    “Cas can quibble over which economic term best applies to this and how a chart can be drawn to show that unemployment is actually stimulating the economy.”
    Quibbling? OK. I remember a time when HT strode GP lecturing folks (namely, me) to be “precise” in the meaning of their words. That definitions matter and that terms needed to be used with care; and, that “vagueness” and “equivocation” were unacceptable things. All to have a meaningful conversation.

    Just so we are on the same page–what Betsy is doing is “savings” if we are understanding that term as mainstream economists use it (I am willing to accept that Austrian economists don’t follow definitions as stated in the National Accounts. If so, could you please suggest a good link that would allow me to understand the way you use these terms).

    What do you gain by saying: “The cash is an “investment” in currency,” apart from repeating a common mistake (as economists understand it). Wouldn’t it be easier to just say that she is saving her money, and her options are not great? By the way, I didn’t remember seeing the “” quotes around “investment” in ILC’s post, did you?

    If she invests her savings in a machine that makes her Sham-wows (or even Whoop-de-doos) less expensively, that is “investment.” Are we agreed on that? That she is “trapped” into keeping her “savings” in the form of gold is not the issue–the issue is that she is not productively (i.e., making a capital investment) using her “cash.”.

    Comment by Cas — July 3, 2011 @ 6:14 pm - July 3, 2011

  140. I have to shoot through for a while, so I am leaving this last thought till I get back. Basically, it appears to me, at bottom, that ILC apparently (my one query–does Austrian economics treat these interchangeably? And if so, why?) conflated a couple of terms (saving and investment) in making his argument, invalidating one of the claims he made in #113. The fact we can’t all agree on that is just sad. We find instead, folks bending over backwards to minimize definitions, misdirect, and be insulting, to draw away from this pretty obvious fact. It should be a passing thing, but here, it becomes a high stakes competition not to be seen as having made–gasp!–a mistake. Lord knows I make them–as NDT is ever so kind to point out–and I own that, and move on. I have noticed that no one commenting here, ever acknowledges making a “mistake” at least in dealing with the other side of the conversation (if you have, please let me know, I just haven’t seem one). Hence my occasional admonishment to NDT that he never ever makes a mistake or believes something that turns out to be wrong or contradictory. It is all very dramatic, but it gets in the way of a good conversation. Be willing “to go to the mat” for claims that are central to your position, by all means. But on little stuff like this, it undermines credibility not to acknowledge a small mistake. If you think I have made a mistake, and after conversation, I still don’t agree with you, you can obviously think that I am just “delusional” or an “idiot.” Alternatively, you can consider that there is more than an Austrian framework out there that is intellectually rigourous, and at least explore where common ground may be. As it is, you end up with a big echo chamber where the only opinions you are willing to really listen to are the ones that sound like your own. That path leads to intellectual boredom and stagnation, in my opinion.

    Comment by Cas — July 3, 2011 @ 6:31 pm - July 3, 2011

  141. It isn’t the fact that wealthy people have more money that they spend, its that they spend a smaller proportion of it.

    So what you’re trying to assert, Cas, is that, the more money people have, the less of it they spend.

    Therefore, you’re going to take it away from them and raise other peoples’ income instead — which, by the very definition of marginal propensity to consume that you’re quoting, will then decrease the proportion of money those people spend, since, as you yourself stated, MPC falls with income.

    Or, put differently, you quote a dynamic metric that you yourself acknowledge changes as income increases — and then make an extrapolation that is solely dependent on that metric NOT changing as income increases.

    You thus completely contradict your argument. But of course, that’s because you’re making the assertion — rich people must have their wealth confiscated by the poor — and are only concerned with rationalizing your robbery. You don’t have the first clue about what MPC actually means or how it works; you simply saw it in some liberal talkingpoints screed somewhere and decided to quote it.

    That’s why you are an imbecile — or, as Heliotrope more elegantly put it, “a neopseudointellectualwannabe who has just enough education to provoke confusion”.

    Furthermore, Cas, what you are acknowledging is that your Keynesian “model” depends on constant runaway consumption. You oppose savings, you oppose investment, and you oppose anything that is not immediately producing consumption. Indeed, you actively WANT more wealth to be taken away from businesses.

    Classic example: your demand that taxes be raised from 14% of GDP to 18% of GDP. Why? So that you can “redistribute” the wealth from companies and give it to people to spend at casinos.

    This is where your stupidity and mendacity comes fully to the fore, Cas. You whine and scream about “investment” — even as you demand that more and more money that companies COULD use for investment be siphoned away so that you can withdraw taxpayer cash at casinos.

    Tell us, Cas; do you think it is good for an economy to sacrifice investment by business in favor of spending money at casinos? Why do you consider welfare recipients spending money at casinos to be “investments”, Cas, since you insist that all tax revenue given to the government represents “investment”?

    Comment by North Dallas Thirty — July 3, 2011 @ 6:53 pm - July 3, 2011

  142. Basically, it appears to me, at bottom, that ILC apparently (my one query–does Austrian economics treat these interchangeably? And if so, why?) conflated a couple of terms (saving and investment) in making his argument, invalidating one of the claims he made in #113. The fact we can’t all agree on that is just sad.

    You mean, the fact that we don’t agree with you means that we are automatically wrong.

    Which makes the rest of your post an incredibly-hilarious exercise in vanity spamming, narcissistic self-unawareness, and mental masturbation as you desperately try to convince yourself that we are all wrong and that you are always right.

    Poor Cas. You really aren’t used to intellectual exercise, are you? You’re used to commenting with and working with liberals, all of whom agree everything that you do, so that’s why you cite so many ridiculous and contradictory things. We understand why commenting here is so confusing for you and why you consider it a “hostile” environment; you’ve been raised to believe that anyone who ever disagrees with you is wrong, and with that certainty in place, you simply aren’t capable of understanding or viewing others’ perspectives as anything other than an attack.

    Comment by North Dallas Thirty — July 3, 2011 @ 6:59 pm - July 3, 2011

  143. Cas,

    I reject your child-like attachment to ” if we are understanding that term as mainstream economists use it” and “(as economists understand it)” as meaningful in any way to a common sense conversation about our economic condition.

    When a person, like Betsy, has money left over at the end of the bills, it is potential. When hyper-inflation looms or unemployment is sniffing at the door or the US dollar is in danger of being devalued on the international money exchange, you can not escape the fact that Betsy’s left over money is subject to shrinkage.

    In the world I live in, cash on hand is an asset. If the cash is subject to shrinkage in value, it is a crappy place to park an asset. Any sentient human being is motivated by at least preserving capital. I don’t care what they dream up in Austria, us natives with bones in our noses know the game.

    I choose not to argue your terms, because you deal in shoveling smoke. If you can not lay out your points in everyday terms that common sense grasps, what is useful in your “conversation?”

    Words do have meaning. But specific discipline jargon that creates a regimen of mystique is mainly the game of protecting the mystique. When you argue over what constitutes savings and constitutes investment with the average dairy farmer, you are making a horse’s ass of yourself. Unquestionably, the dairy farmer knows more about saving and investment than you will ever know or understand.

    Comment by Heliotrope — July 3, 2011 @ 8:44 pm - July 3, 2011

  144. You make an excellent point, Heliotrope.

    Why is it that economic geniuses like Cas are dependent on government welfare and redistribution of other peoples’ wealth to make a living?

    Given that Cas is so much smarter and better at economics than everyone else, why does everyone else make so much more money than Cas does?

    Cas is another Austan Goolsbee wannabe, someone who will spend their entire life pontificating about private industry without ever once stepping outside the tax-subsidized, performance-free walls of academia.

    Comment by North Dallas Thirty — July 3, 2011 @ 9:20 pm - July 3, 2011

  145. I am unclear why you then used that [Wiki’s] definition [of Liquidity Trap]

    I told you the reason. I guess that, once more, you didn’t want to believe I had told you.

    Wouldn’t it have made more sense to just point out that Wiki got it wrong and then used your own correct version

    No, because Liquidity Trap theory has much bigger problems – is much more wrong – than that aspect of Wiki’s presentation.

    Tell you what, Cas. You believe in Liquidity Trap theory… so, you improve on Wiki’s definition of it.

    wiki might be saying that “persons” refers to… Corporations [which] are “persons” according to the Supreme Court. Though I resist the later interpretation…

    Then it doesn’t make a lot of sense for you to invoke it.

    It looks to me as though the point on “investment” in #113 and in #128 underpin different arguments.

    True, at #128 I shifted to the definition of “investment” you had brought up.

    #113 uses an admittedly dubious definition of “investment” to argue that a liquidity trap is impossible because people are still willing to save in a variety of assets.

    It was not the primary point, it was more of an adornment on the ridiculousness of LT, i.e., that not even its advocates (the Wiki author in this case) know what they’re talking about. For the primary problems of LT theory, see the immediately preceding and following paragraphs of #113, plus #128 and #130. I am afraid that I must cite your having spent that much time on a secondary point in #113 as another instance of your nit-picking over something secondary while ignoring what is primary.

    The second argument uses the term “investment” to say that there is a “misguided premise that …all investment is created equal so that more of it is always good.” Investment appears to be used in the sense of capital spending [there]

    Correct.

    what is your definition of “investment” as you have been using it through this thread? Can we agree that bonds et al are not “investment,” but actually forms of “saving” for our purposes here?

    No, in the sense that it is probably better just to specify or at least tailor the meaning that one intends for the term “investment” in each context. The term has many meanings, perhaps too many.

    In the broadest sense, “investment” is any spending in hopes of getting any kind of return. That sense encompasses speculation: for example, during the housing bubble, people referred to their speculative home purchases as “investment”. Obama also euphemizes his spending (which is probably closer to consumption) as “investment”.

    One could narrow the sense to refer to spending which is hoped to generate a regular income stream. That would tend to exclude speculative activities (which are more about making a gain on asset resale)and nebulous concerns, but it would still include income stream generators such as bonds.

    One could further narrow the sense to spending which is expected to increase human productivity, i.e. capacity expansions and capital equipment. But even that sense still encompasses malinvestment (i.e. *bad* capacity expansions and capital equipment spending), and in my mind, is problematic because it leaves unclear the status of venture/startup capital which could be viewed as either that, or as speculation.

    As for bonds specifically: the money (or the purchasing power represented by the money) comes from savings – but to buy a bond is actually to make a loan; a bond is a loan instrument, not a savings instrument.

    Perhaps the common element in all definitions of “investment” is that it is a *deployment* of savings, which in turn come from under-consumption. (If the money being invested comes from QE / money printing, it’s just a special case where government expropriated the purchasing power of people’s savings by means of QE / money printing.)

    Comment by ILoveCapitalism — July 4, 2011 @ 1:42 am - July 4, 2011

  146. NDT,
    “by the very definition of marginal propensity to consume that you’re quoting, will then decrease the proportion of money those people spend, since, as you yourself stated, MPC falls with income.”
    Of course, NDT, you cannot picture that such a redistribution will give a small amount to many. It adds up to a lot when totaled, true, but individually, it isn’t a big amount, so MPC doesn’t change that much–if at all, for the less wealthy individual. But this is the obvious reply to your claim, and one you must have known about, before writing your initial argument. I guess you just wanted the opportunity to insult me some more; either that, or you are not so good with thinking through your argument. So, I go with the former explanation. This was predictable.

    “You mean, the fact that we don’t agree with you means that we are automatically wrong.”
    No. But you might want to think that just because you all agree that you know the right answer, that it doesn’t necessarily mean it is the correct answer. Perhaps there are alternative viewpoints that might be considered? You might want to step out of your big echo chamber, NDT, and see if the other side has a point.

    “This is where your stupidity and mendacity comes fully to the fore, Cas. You whine and scream about “investment” — even as you demand that more and more money that companies COULD use for investment be siphoned away so that you can withdraw taxpayer cash at casinos.”
    So, if I can find, anecdotally, a wealthy person who cuts corners and does something illegal in business, I can then use the NDT (R) method of argument and say that rich people are predators who exhibit criminal behaviour. That would be a crappy argument similar in style to the argument you mount. Please, can you at least try to argue rationally?

    “Why do you consider welfare recipients spending money at casinos to be “investments”, Cas, since you insist that all tax revenue given to the government represents “investment”?”
    You have really gone off the rails here, NDT. You are not even pretending to argue rationally anymore. You act as if you do not understand the generally accepted definitions of what constitutes “investment” or “saving,” or, the issues I raised with ILC’s post.

    Finally, “You really aren’t used to intellectual exercise, are you? You’re used to commenting with and working with liberals, all of whom agree everything that you do, so that’s why you cite so many ridiculous and contradictory things. We understand why commenting here is so confusing for you and why you consider it a “hostile” environment; you’ve been raised to believe that anyone who ever disagrees with you is wrong, and with that certainty in place, you simply aren’t capable of understanding or viewing others’ perspectives as anything other than an attack.”

    I would point out that I am not the one screaming, insulting, or otherwise engaged in bizarre arguing techniques. I will also point out I answered your rational questions. Again, you can’t be bothered to answer any of the questions I raise–how sad, and predictable. If you just take out “Cas” and “liberal” and put in “NDT” and “conservative,” I think you get the real flavour of your post at #142, NDT.

    Comment by Cas — July 4, 2011 @ 2:10 am - July 4, 2011

  147. The conundrum here is how does Besty secure her cash assets? The cash is an “investment” in currency… No matter what choice Betsy makes, she… is trapped into “investing” her nest egg.

    Yes, my earlier side-point. In the personal-finance sense of the term “investment”, every form in which purchasing power may be stored is an investment of some kind (a deployment of savings).

    Take $1,000,000. If a rich person has it, at a marg prop con (MPC) of .8 (for illustrative purposes)…

    Again, the premise creeps in that spending is “the economy”. No no no, production and trade are. Real income is only “what your money can buy”. Spending is only possible because, first:
    (1) you had something to spend *on* – i.e., somebody else chose to get up in the morning and improve their own lot by producing: they grew a crop, dug an ore, sewed a knickknack, programmed an interweb, slung some auto parts on an assembly line, provided a massage or a tooth cleaning that didn’t exist before, and that wouldn’t exist without their initiative. And,
    (2) you had something to spend *with* – i.e., you chose to get up in the morning and improve your own lot by producing: you grew a crop, dug an ore, etc. repeated from above.

    Production leads to trade, money is the medium of trade, money can be stolen (or counterfeited) and spent, therefore money leads to the illusion of spending as the primary act. But it still isn’t. It’s only an illusion. Production and trade are the primary acts. Money’s value is always and only what production and trade make it.

    But many are trapped in the illusion. They dream of stealing others’ money – legally, by having the government do it. And they dream of counterfeiting money – legally, by getting loans they will never repay and then having a central bank engage in “quantitative easing” to cope with the losses. From the determined belief of such people we get the economics of the illusion: Keynesian economics.

    Comment by ILoveCapitalism — July 4, 2011 @ 2:14 am - July 4, 2011

  148. HT,
    When you say:
    “I reject your child-like attachment to ” if we are understanding that term as mainstream economists use it” and “(as economists understand it)” as meaningful in any way to a common sense conversation about our economic condition.”

    You also reject the National Accounts, statistics using GDP measurements, and that sort of thing that you all like to use, especially when you argue about Reagan’s wonderful years of economic growth, or measures of “investment” as “economists understand it. Since you use GDP, etc., quite happily in other contexts, I have to say that your claim makes no-sense to me at all.

    And, “Words do have meaning. But specific discipline jargon that creates a regimen of mystique is mainly the game of protecting the mystique.” Really. Then I suggest that you stop using economic statistics to make your case, because they are full of “mystical jargon.” They are also based on standard definitions. And, for consistency’s sake, stick with the gut-level experience you have of economic activity, and ditch the abstract theoretical understandings of the model you have.

    “I choose not to argue your terms, because you deal in shoveling smoke. If you can not lay out your points in everyday terms that common sense grasps, what is useful in your “conversation?””
    This is also a predictable part of your argument technique. Blow off what is not convenient as not worthy of your attention. Sorry, the definitions are standard. And one reason why, is that your common sense may not be someone else’s common sense. If “investment” just happens to be whatever you want it to be, on a given day, well, that can just as easily change, as common sense changes. Common sense said that humans couldn’t fly, or go to the moon. Wow, common sense can change–who would have thought?

    Comment by Cas — July 4, 2011 @ 2:25 am - July 4, 2011

  149. Of course, NDT, you cannot picture that such a redistribution will give a small amount to many. It adds up to a lot when totaled, true, but individually, it isn’t a big amount, so MPC doesn’t change that much–if at all, for the less wealthy individual.

    And, as expected, Cas spins and tries to back away from its conclusion, change the subject, do whatever it can to avoid having to actually apply its half-witted theories.

    So, if I can find, anecdotally, a wealthy person who cuts corners and does something illegal in business, I can then use the NDT (R) method of argument and say that rich people are predators who exhibit criminal behaviour.

    Which you do. You are forever citing Enron, for example, as indicative of all corporations. You are bashing rich people as only spending their money on diamonds and whatnot.

    You’re a hypocrite and a liar, Cas. Now you’ve just made it blatantly obvious. You always, always, always project blame onto corporations and to rich people. Now you’re being held accountable similarly, and you scream and cry and start throwing irrational tantrums and insults.

    Notice one other thing — you couldn’t even condemn the spending. You are so pathetic that you couldn’t even say that it is WRONG to take money from productive companies and businesses and hand it out for casino cash. It is beyond you to condemn or acknowledge wasteful government spending. Instead, you scream and cry and throw tantrums.

    What a fraud you are, Cas.

    You might want to step out of your big echo chamber, NDT, and see if the other side has a point.

    Pure hypocrisy, given Cas’s screaming insistence that Cas is always right and that everyone who disagrees with it is wrong.

    Comment by North Dallas Thirty — July 4, 2011 @ 2:41 am - July 4, 2011

  150. Cas is to sticking with the eyelashes and toes nails rather than to examine the framework that is the skeleton

    HT, I wish I could dispute that conclusion – but I can’t. I think it comes down to this: Austrian (and may I add, Objectivist) economics is a root-level critique of Keynesianism, a radical (root-level) alternative. Much more than, say, Monetarism. Milton Friedman, God bless him, was big on free markets and I like to quote his dictum that the true measure of government’s financial burden is the government’s level of spending, not its tax revenue. But monetarism still misses the point: perhaps it doesn’t treat spending as “the economy” quite the way Keynesians do, but it treats still money (and its velocity) as “the economy”. It’s not a very fundamental alternative. It fails to recognize money (and its velocity) as artifacts of production, which in turn is an artifact of individual responsibility and initiative. It blames the Great Depression on a declining money supply, while barely noticing the tremendous obstacles that Roosevelt put in the way of production and trade – i.e, of recovery. Now the world has a theory which does notice, an alternative which is more fundamental and therefore more dangerous to Keynesianism. And, I believe and dare say, Cas does not want it to be so. So she nips at the edges of what we present, not refuting the central tendency and often denying outright that we have presented it.

    Comment by ILoveCapitalism — July 4, 2011 @ 2:45 am - July 4, 2011

  151. Really. Then I suggest that you stop using economic statistics to make your case, because they are full of “mystical jargon.” They are also based on standard definitions. And, for consistency’s sake, stick with the gut-level experience you have of economic activity, and ditch the abstract theoretical understandings of the model you have.

    Oh, so sort of like your “gut level” assertion that wealthy US consumers only buy imports, and that the poor only buy domestic, Cas?

    What a surprise. Cas is losing the argument and making a fool of itself, so it starts screaming and whining and throwing temper tantrums about how other people are “inconsistent”, when Cas hasn’t made a consistent argument or followed a consistent set of principles anywhere in the thread.

    Childish and pathetic, Cas. But very typical of you, given your utter unfamiliarity with intelligent conversation, debates, or fact.

    Comment by North Dallas Thirty — July 4, 2011 @ 2:47 am - July 4, 2011

  152. Hi ILC,
    “Also, it’s impossible for “persons with liquid assets [to be] unwilling to invest” because it’s impossible for them not to invest. If you hold U.S. dollar cash instead of (say) stocks or bonds or real estate or foreign currency or gold or a business, you are still invested – in U.S. dollar cash. That’s Financial Planning 101. Also, it doesn’t apply to where we are now: in fact, people have been investing in non-cash assets so much that the Dow, for example, has gone up from the 6000 range in March 2009 to the 12000 range today.”

    When I read this, none of that careful delineation in #145 is present. I think you clearly conflate spending and investment. #145 is an interesting take. Question: What is the purpose of calling all of these activities “investment”? What conceptual advantage do you get from doing this, ILC? After all, how does a reader tell the difference between the uses of the word “investment” that you are using? For instance, if a company puts money in a CD, buys a bond, buys stock, buys some gold, or buys productive assets that create goods (that is the biggie, right there, right?) in the future, I have no way to decide what the following sentence means: “The firm invested $1,000,000 today in a bid to increase future income” To an economist, this has only one meaning–investing $1,000,000 in productive assets that will increase the production of goods (and hence income) in the future. Yet, under your description, each of these uses would make sense.The other uses of firm resources do not DIRECTLY do that, and would not be listed in the National Accounts in this fashion, as “investment.”

    “As for bonds specifically: the money (or the purchasing power represented by the money) comes from savings – but to buy a bond is actually to make a loan; a bond is a loan instrument, not a savings instrument.”
    Then you would also agree, according to this claim, that putting money in the bank, in the form of a deposit is not “savings” at all but “loaning” following your rationale. Yet, I think we can agree that it is both. Banks take the money consumers “loan,” and lend it. Alternatively, I could say that banks take the money consumers “save,” and lend it. If I buy a bond, for me it is a savings instrument. For the seller, it is an IOU, and thus a loan. The buyer can also think of it as loaning money as well. It is not either/or.

    I found this interesting: “unclear the status of venture/startup capital which could be viewed as either that, or as speculation. ”
    What is the difference between “investment” (narrowest sense of the para this quote came from) and “speculation”? You have a technical definition of “speculation” of which I am unaware, I think. It might be fun for us to explore this a bit.

    Comment by Cas — July 4, 2011 @ 2:55 am - July 4, 2011

  153. NDT,
    “You are forever citing Enron, for example”
    Can we please have, if even for one post, even a smidgen of an attempt at a rational argument, here? Can you actually back that claim up? I mean can you show us NDT–where I am “forever” citing Enron? Well, can you?

    Comment by Cas — July 4, 2011 @ 3:00 am - July 4, 2011

  154. When I read this, none of that careful delineation in #145 is present. I think you clearly conflate spending and investment.

    What a surprise. ILC spells out very carefully what he means, and Cas ignores it in order to change the subject.

    And notice how Cas runs away from ILC’s challenge about liquidity traps, and tries to go off in a different direction.

    You really can’t stick to a topic or provide an intelligent argument, can you, Cas? We understand. As a liberal, you can’t acknowledge that conservatives, especially people like myself, Helio, and ILC, know more about economics than you do.

    Comment by North Dallas Thirty — July 4, 2011 @ 3:01 am - July 4, 2011

  155. Can we please have, if even for one post, even a smidgen of an attempt at a rational argument, here? Can you actually back that claim up?

    Yup.

    And yup again.

    Now watch as the definition of “rational argument” changes again to allow Cas to wriggle and squirm and try to get out of being held accountable for its claims and actions.

    Comment by North Dallas Thirty — July 4, 2011 @ 3:08 am - July 4, 2011

  156. ILC,
    “And, I believe and dare say, Cas does not want it to be so. So she nips at the edges of what we present, not refuting the central tendency and often denying outright that we have presented it.”
    I don’t think I deny it, but I do have issues with the way you present your theory ILC. Your “central tendency”–I can wait to engage it; I am in no hurry, as I build my understanding of your paradigm. You may see my call for causal explanation as nit-picking (or “not listening to you”), or you could actually ask yourself, why I am making a big deal about it. I am raised in a different economic tradition to you, that is pretty rigourous about that sort of thing. I am trying to ascertain if you are willing to come outside your echo chamber, and take a risk. I am willing to come outside mine, even if others here, are being a pain in the butt. I can filter the condescension, superior winks, irrationality, and insults out, as needed. Constructive engagement requires two to tango.

    First thing: What is your economic “bible,” your go-to book (hopefully not a back-breaker in size…) or major rigourous links?

    Comment by Cas — July 4, 2011 @ 3:20 am - July 4, 2011

  157. #152 again: missing the main points. At #145, I even spelled out the purpose of the secondary point (which was to show “that not even its advocates (the Wiki author in this case) know what they’re talking about” in their presentation of Liquidity Trap theory) and where to find the more important points. It did no good.

    Question: What is the purpose of calling all of these activities “investment”? What conceptual advantage do you get from doing this, ILC?

    Alignment with reality. As already stated, investment is, at the most basic level, when a person deploys savings toward some goal.

    if a company puts money in a CD, buys a bond, buys stock, buys some gold, or buys productive assets that create goods (that is the biggie, right there, right?) in the future, I have no way to decide what the following sentence means: “The firm invested $1,000,000 today in a bid to increase future income”

    Correct. In contemporary business news reporting, the statement might be made to mean any of those things.

    putting money in the bank, in the form of a deposit is not “savings” at all but “loaning”

    Absolutely correct – not in “my rationale”, but in reality. People generally fail to understand that by depositing money with a bank, they are making a loan to the bank. The bank re-loans the money (or most of it) but the person’s deposit appears on the bank’s balance sheet as a liability, like money that the bank has borrowed, or accounts payable or any other money that the bank owes.

    You have a technical definition of “speculation” of which I am unaware

    It’s straightforward and I already indicated it, but here goes again. If “investment” is taken in the medium-narrow sense of deploying savings to get an income stream, then “speculation” is what remains: deploying savings to get an asset price gain (as distinct from / opposed to an income stream). When you speculate, you hope to sell later to someone else at a higher price. For example, in the housing bubble, people called their home purchases “investment” (using the broadest sense – any deployment of savings, whether your own or someone else’s, in hopes of a gain) but if we want want to use the medium-narrow sense of “investment” as looking for an income stream, then it would be accurate to say that people were speculating in their home purchases. The owner-occupied real estate bet is a money pit; it doesn’t pay you an income stream; but you hope to sell it to someone later, for a gain. Now, when you found a business or make an early investment in one (i.e. venture capital), well trust me, it is a lot like that.

    Comment by ILoveCapitalism — July 4, 2011 @ 3:21 am - July 4, 2011

  158. NDT,
    “Now watch as the definition of “rational argument” changes again to allow Cas to wriggle and squirm and try to get out of being held accountable for its claims and actions.”

    No, no wriggle–feel free to keep going. That is only two threads. Need more than that, NDT. If you are going to say “forever” by all means give me MORE!!!! 🙂

    Comment by Cas — July 4, 2011 @ 3:23 am - July 4, 2011

  159. You may see my call for causal explanation as nit-picking (or “not listening to you”), or you could actually ask yourself, why I am making a big deal about it.

    And we have, and the answer is that you are not listening.

    I am raised in a different economic tradition to you, that is pretty rigourous about that sort of thing.

    Which is why you are incapable of making a rigourous, intelligent, or coherent argument.

    What you were “raised in”, Cas, is an environment that fostered abject narcisissism and a belief that everyone else was less intelligent than you are as a substitute for evidence, facts, and logic. This is why Heliotrope regularly refers to you as a “sophomore”.

    Comment by North Dallas Thirty — July 4, 2011 @ 3:34 am - July 4, 2011

  160. ILC,
    “Alignment with reality. As already stated, investment is, at the most basic level, when a person deploys savings toward some goal.”
    “Correct. In contemporary business news reporting, the statement might be made to mean any of those things.”
    I am afraid this is not helpful to your point. What you appear to be saying is that you have no idea what any instance of “investment” might actually entail, apart from using savings to some purpose. That is pretty vague. Out of curiosity, do you think economic statistics are basically useless instruments?

    “Absolutely correct – not in “my rationale”, but in reality.”
    Can I take this to mean that you agree that it was inaccurate for you to say: “but to buy a bond is actually to make a loan; a bond is a loan instrument, not a savings instrument.” After all, the buyer sees it as a savings instrument, just as a depositor sees their deposit as savings. Both these can be seen as either loans or savings, depending on the view of the transaction.

    Comment by Cas — July 4, 2011 @ 3:36 am - July 4, 2011

  161. I am afraid this is not helpful to your point.

    Of course you would say that, because you lack the intelligence and rationality to comprehend the point. Hence, you must lie in order to save face and try to obfuscate.

    You really don’t comprehend even basic economics, do you, Cas?

    Comment by North Dallas Thirty — July 4, 2011 @ 3:40 am - July 4, 2011

  162. ILC,
    “deploying savings to get an asset price gain (as distinct from / opposed to an income stream).”
    What is the difference between “asset price gain” and “income stream”? In your view, is the distinction a difference in time horizon? Speculation requires an asset to be held for a limited time, whilst “investment” is carried out over a series of time periods?

    Comment by Cas — July 4, 2011 @ 3:41 am - July 4, 2011

  163. No, no wriggle–feel free to keep going. That is only two threads. Need more than that, NDT.

    Of course, because you have to change the definition. You failed, and now your hypocrisy and lies become even more obvious.

    Lie some more, Cas. You were humiliated by the references to Enron, weren’t you? You stated before that such arguments were “irrational”, and now you stand convicted by your own words.

    An intellectually-honest person would admit their mistake. Thus, as we can see, you are not intellectually honest and in fact are just making up lies and vanity-spamming.

    Comment by North Dallas Thirty — July 4, 2011 @ 3:44 am - July 4, 2011

  164. I am afraid this is not helpful to your point. What you appear to be saying is that you have no idea what any instance of “investment” might actually entail, apart from using savings to some purpose.

    I honestly don’t think you know what my point is.

    “Absolutely correct – not in “my rationale”, but in reality.”
    Can I take this to mean that you agree that it was inaccurate for you to say: “but to buy a bond is actually to make a loan; a bond is a loan instrument, not a savings instrument.”

    In no way. The exact opposite. To view a deposit as a loan to the bank (which it is – ask any accountant) is the same philosophy as viewing a bond purchase as a loan to the bond issuer. Again, my doubt increases as to whether you have understood my points to begin with.

    Comment by ILoveCapitalism — July 4, 2011 @ 3:45 am - July 4, 2011

  165. What is the difference between “asset price gain” and “income stream”?

    A price gain on an asset is when I sell the asset, I get a higher price than I paid. For example, I buy Microsoft at $20 and I sell it at $30. An income stream is when the asset pays me money at regular intervals, without my having to sell it. For example, Microsoft may pay me a dividend. Come on Cas, this is basic.

    Comment by ILoveCapitalism — July 4, 2011 @ 3:48 am - July 4, 2011

  166. Hi NDT,
    I am off to bed; its late. Still. even with all your insults, etc, I appreciate your energy and passion. I look forward to renewing our conversations soon.
    Take care and have a great 4th of July. 🙂

    Comment by Cas — July 4, 2011 @ 3:50 am - July 4, 2011

  167. Speculation requires an asset to be held for a limited time, whilst “investment” is carried out over a series of time periods?

    No. As already indicated, speculation is when I buy in hopes of selling later – be it in 10 minutes or ten years – to someone else at a higher price. Investment (in this specific sense – the sense paired with, and contrasting to, “speculation”) is when I buy in hopes of getting a regular income stream, without ever having to sell if I don’t want to.

    Comment by ILoveCapitalism — July 4, 2011 @ 3:51 am - July 4, 2011

  168. ILC,
    Going to bed. Talk again later. Take care and have a great 4th of July. 🙂

    Comment by Cas — July 4, 2011 @ 3:52 am - July 4, 2011

  169. Going to bed.

    … without having answers to my major points; just picking around the edges.

    I am raised in a different economic tradition to you

    You don’t know that. I daresay that you haven’t been. I’m the one who who knows what my economics was, and how I changed and evolved my views later, as a response to reality.

    that is pretty rigourous about that sort of thing

    I haven’t seen much rigor in your thinking. You can toss the jargon around, for sure. But your analyses of underlying / real-world cause and effect is generally somewhere between “shallow” and “absent”. You are not, on any evidence I’ve seen in the last several months, a rigorous cause-and-effect thinker. I am.

    I am trying to ascertain if you are willing to come outside your echo chamber

    Cas, you are the one locked in the echo chamber. Like the person seeing shadows on the wall of Plato’s Cave, you can’t see it.

    Comment by ILoveCapitalism — July 4, 2011 @ 4:05 am - July 4, 2011

  170. Edit, meant “I’m the one who knows what my economics -education- was…”

    Comment by ILoveCapitalism — July 4, 2011 @ 4:07 am - July 4, 2011

  171. And P.S. just F.Y.I., as I have a busy day and as this thread is about to drop off the front page, don’t expect me back here.

    Comment by ILoveCapitalism — July 4, 2011 @ 4:08 am - July 4, 2011

  172. Whoops, there, it just did drop off.

    This is my 38th and final comment here. Cas, no one could doubt that I tried to answer your questions and give you a chance. And you’ve left serious doubt about whether you’ve even comprehended my points.

    Comment by ILoveCapitalism — July 4, 2011 @ 4:21 am - July 4, 2011

  173. Cas @ #148 charges me with this:

    Then I suggest that you stop using economic statistics to make your case, because they are full of “mystical jargon.” They are also based on standard definitions.

    and this…..

    And, for consistency’s sake, stick with the gut-level experience you have of economic activity, and ditch the abstract theoretical understandings of the model you have.

    Huh? Where have I gotten down in the weeds and started tossing laws and conjectures and models and such about? Where are the “economic statistics” I have posted “to make my case” and my use of “mystical jargon” to make my case?

    I invented Betsy and even suggested she is a tax cheat in the process (which Cas failed to highlight.) She was my “gut-level” example of how people express their confidence in relation to the general economic picture they sense and experience. There were no “abstract theoretical understandings” or any “model” presented.

    Sorry, Cas, you can’t handle common sense.

    For your consideration, I owned several hundred acres of prime citrus land in Florida for thirty years, established a citrus cooperative to manage the grove care, picking, marketing and distribution of product and to have meaningful presence in the market. Furthermore, beyond my day job as an educator, I have been a lecturer, consultant, writer, and researcher all of which has involved accumulating income, investing same and protecting same. I have served on corporate boards and charity boards. I have helped organize not-for-profit health clinics of varying natures. And there is more, but I make my point.

    You, Cas, can do the same. All you have to do is get off your theoretical bottom and roll up your sleeves. You will learn plenty from your economic failures and gradually, you will lose your conceit that you can do business by remote control and economic directives.

    I never engaged in dismantling a business for the profit that is obtained in scraping the meat from its bones. But the profit is there. That is why some people steal cars or run junk yards for the parts or pull wiring out of houses for the copper. They are not economic geniuses, they are entrepreneurs of a sort.

    I am not insulted by your foolishness that I operate at some “abstract theoretical level.” It is you that has that problem and for you to turn it on me is pathetically laughable.

    Comment by Heliotrope — July 4, 2011 @ 10:20 am - July 4, 2011

  174. Cas @ #148 directed at me:

    Common sense said that humans couldn’t fly, or go to the moon. Wow, common sense can change–who would have thought?

    Common sense still says that humans can’t fly.

    Neither the economy nor government built the hot air balloon, the rocket or the airplane. It was human ingenuity. We ride things that we have built in order to “fly” and we have imagined machines that have taken us to the moon and back.

    This sort cut concerning what it means to “fly” is why Cas is so hard to “converse” with.

    Also, “when pigs fly” is still an accurate admonition.

    Comment by Heliotrope — July 4, 2011 @ 10:29 am - July 4, 2011

  175. I believe ILC when he says he has made his last post on this thread.

    Bravo and well done! There is no way I would have or even could have taken Cas to school the way ILC did. It was a magnificent tour de force that cements ILC as the man with the clear understanding to back his assertions.

    Unfortunately, it would not surprise me in the least to find that Cas is an economics teacher somewhere. There are too many subject despots in classrooms across the country where their pets of theory reign over everything else.

    The role NDT played is also remarkable. A rattled perp is always likely to trip over his own words and NDT kept holding the mirror up to Cas.

    I don’t want to promote teaming up on Cas, but this long thread is more than an adequate demonstration of how liberals ooze their way around a serious topic by dazzling with jargon and attacking the gnats. Cas stayed in there, but most others skip off with an accusation and an insult.

    So, even Cas tried to exhibit “integrity” as a liberal understands the word.

    Comment by Heliotrope — July 4, 2011 @ 10:50 am - July 4, 2011

  176. “Bravo and well done! There is no way I would have or even could have taken Cas to school the way ILC did. It was a magnificent tour de force that cements ILC as the man with the clear understanding to back his assertions.”
    “The role NDT played is also remarkable. A rattled perp is always likely to trip over his own words and NDT kept holding the mirror up to Cas.”
    Thanks for the rhetoric, as empty as it is. As I said–it is an echo chamber. As for “economic statistics” just remember the next time you quote a GDP figure of anything else, these things are built on definitions. I will continue my conversation with ILC at another time, HT.

    “this long thread is more than an adequate demonstration of how liberals ooze their way around a serious topic by dazzling with jargon and attacking the gnats. Cas stayed in there, but most others skip off with an accusation and an insult. So, even Cas tried to exhibit “integrity” as a liberal understands the word.”
    Thanks for the back-handed compliment. 🙂 And this is where we differ–you see this thread as a “triumph” of the tribal grouping’s “sound understanding” over the liberal interloper. I see it as a sad demonstration of a viewpoint defensively closed to rational debate.

    I look forward to continuing this in another thread.

    Comment by Cas — July 4, 2011 @ 4:15 pm - July 4, 2011

  177. Cas,

    You can show me where I ever quoted a GDP figure, can’t you?

    Sorry, but I don’t do economic models, lingo or toss calculations around. You either did not read my comment @ #173 or you are ignoring it and lying like Obama does.

    Catch me, please, or zip your yammer about

    Then I suggest that you stop using economic statistics to make your case, because they are full of “mystical jargon.” They are also based on standard definitions. And, for consistency’s sake, stick with the gut-level experience you have of economic activity, and ditch the abstract theoretical understandings of the model you have.

    Figures don’t lie, but liars can figure. I mostly don’t trust figures unless I know who did the figuring. That is not to say that I mistrust the figures, I just have to know the integrity of the source.

    When all is said and done, you can not pass an integrity test. Your eely words and slippery methods are of no value to anyone. Whatever points you may think you have scored are useless to you.

    Comment by Heliotrope — July 4, 2011 @ 11:19 pm - July 4, 2011

  178. HT,
    You do not refer to GDP often, I grant that, and actually saying a 3% GDP growth rate–for example, I haven’t heard that (you are right about that, I think). But you do, occasionally, refer to GDP–as if it is a legitimate statistic–something that makes no sense if you think it is crap. Further, if ILC is using these very statistics, and you point approvingly at ILC (for besting the interloper–“providing economic lessons” with ILC’s “clear understanding”), that tends to suggest that you also support the use of ILC’s statistics in that process. Perhaps you don’t, but I don’t recall you saying to ILC–“Hey, don’t use those figures, ILC–they lack integrity…” Or maybe you did, and I missed that one…

    Finally, as regards models, you do not outline your own–I grant that. However, the obvious approval that you have for ILC’s prognostications, shows that you do approve of ILC’s model of how an economy works. Are we agreed that ILC has a model of how the economy works in mind? As far as I can tell, ILC’s model is heavily influenced by Austrian sources. So, you have an abstract model of how the economy works in your own head. You just don’t talk about it much. ILC does that for you. I am totally fine with that…

    Comment by Cas — July 5, 2011 @ 6:29 pm - July 5, 2011

  179. Cas,

    Thank you for apologizing for impugning my character and for creating an untrue characterization of how I comment.

    I have significant understanding of things relating to the economy, but I hold no advanced degrees in the field of economics. Therefore, I prefer to stay away from the battles that arise over understandings of esoteric terms and temporary fads in discussing the “dismal science.” That does not mean that I do not respect others who can cut their way through the briars and tall grass and bring reason and understanding to the skirmishes that arise.

    Having built and sold businesses and spent years consulting with scores of small business people on how to assess and control risk, I suppose that I acquired a certain amount of savvy in things economic. I should also add that I have been unsuccessful in some business ventures and some of my advice did not deliver positive results.

    Comment by Heliotrope — July 5, 2011 @ 7:05 pm - July 5, 2011

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