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Spending Cuts in Name Only?

Posted by B. Daniel Blatt at 2:03 pm - August 4, 2011.
Filed under: Big Government Follies,Debt Crisis

Kudos to Yahoo! for this headline on their homepage yesterday:

More than anything this exposes the emptiness of the Democratic and left-wing bellyaching about the deal and reminds those of us who wish to reduce the size and scope of the federal government that we still have our work cut out to us.

But, at least Yahoo!’s Chris Moody is acknowledging that in Washington-ese a spending cut is not a reduction in the current level of spending, but a reduction of projected future spending:

Much of the problem has to do with the language of Washington, which, you might have noticed, is different from the speech you hear almost every other place on Earth. When most politicians talk of “cutting” spending, they don’t always literally mean that they intend to reduce current spending levels. Instead, under this version of fiscal discipline, Congress merely agrees not to spend as much money as it initially had planned. Once that deal is struck lawmakers then turn around to sell their proposals as “cuts.”

Take the “debt ceiling deal” President Obama signed on Tuesday. Let’s say that the federal government, when all is said and done, actually slows the growth of spending by $2 trillion over a decade–the minimum amount promised. After 10 years’ time, if all $2 trillion is not spent, there will actually be an increase of about $1.8 trillion.

Read the whole thing, especially for the video on the minuscule nature of the cuts in the recent deal.

In the coverage of the Reagan budget “cuts” in the 1980s, we only saw such candor in the conservative media.

SOMEWHAT RELATED: Paul Ryan asks, Where’s Your Budget, Mr. President? Via Instapundit.

UPDATE:  So, the “public backlash” the president is enduring from his liberal base over the deal is anger that spending increases aren’t going to be as large as forecast?

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84 Comments

  1. Rush made the point a few days ago, that if spending were frozen for the next ten years at today’s levels (which are high – including the end of Porkulus), our Congresscritters would have called it a $9 trillion cut under the process they were using. What they called a $2.4 trillion “cut”, is a $6.6 trillion further spending increase.

    So congrats, lefties! Your crocodile tears notwithstanding, you got what you wanted! Somewhere, George Orwell is proud of you.

    The markets have reacted badly to The Deal – because the disaster is that it passed. U.S. debt is now officially over 100% of GDP. Thanks, Obama! “Bankrupt America? Yes We Can!”

    Comment by ILoveCapitalism — August 4, 2011 @ 2:19 pm - August 4, 2011

  2. Cato at Liberty has of course been all over this, but even the NYT has admitted as such (and quoted Rand Paul’s “going over the fiscal cliff” analogy).

    Comment by The Heterodox Homosexual — August 4, 2011 @ 4:23 pm - August 4, 2011

  3. A few more thoughts on the debt ceiling “crisis”, and The Deal that has ended it.

    The markets have clearly been unsettled, since The Deal passed and the Treasury started borrowing again. That’s funny, because one of the lefty talking points making the rounds was that Obama’s recovery has been so lame only because business owners have been stressed out, wondering if the evil, terrorist Tea Party would torpedo the Dear Leader’s sweet and earnest desire for a balanced, harmonious deal. Now that a deal has passed, we were promised, all would be well again under the Dear Leader’s wise guidance.

    So, why aren’t the markets showing their joy? First, the U.S. never was in a serious danger of default. The “crisis” was ginned-up, and the smart money knew it. Each month, the U.S. Treasury takes in several times the tax revenue needed to service the national debt. Reportedly, Geithner reassured the banks that fears of default were absurd. The U.S. was merely reaching a point where it would have to cut spending in other areas: that is what Congress, Obama and the MSM considered to be a crisis.

    But second, an economic disaster did happen. The disaster is that The Deal passed; that the debt ceiling was raised. The U.S. borrows forty cents of every dollar it spends; that means it over-spends (spends beyond its means) by a whopping 66%! Obama has already taken the U.S. national debt from the $9 trillion range, to the $14 trillion range. The Deal looks at all that and says, in effect: keep going!

    Thanks to the anti-job policies of Obama and the anti-dollar policies of Bernanke, the U.S. has not recovered from the last recession. Now our problems are mounting. Growth in the first two quarters of this year has turned out to be almost nothing. The economy might be tipping into a new (officially measured) recession. The markets look at that and say: Yikes! The stock market figures it needs to come down. The bond market rises, in anticipation of “safe haven” buying. The gold market rises (with some bumps – gold declined to $1650 today) in anticipation that the Fed will further trash the dollar.

    Here is one difference from the Panic of 2008: Even if gold declined back to $1650 today, it’s still an amazingly high number. In the 2008 Panic, gold was in the 700s (spike low of $680/oz.). Everybody thought the U.S. dollar and U.S. Treasury bonds meant “safety”, and rushed into them. Clearly, some people still think that. But those in the gold market call them “suckers”.

    The point is that Obama’s debt ceiling “crisis” accomplished at least one important harm: It got people to think about how bad U.S. finances really are. The average person may not understand all the pieces, or how they fit. But, courtesy of Obama and Reid and the MSM, they heard that the U.S. was about to default. Then they heard about a wonderful Deal to save the day – one that actually makes the U.S. financial position worse, by promising trillions more in additional borrowing – in consequence of which, the U.S. is now as indebted (possibly insolvent) as Italy.

    Obama will be the ultimate loser here. By staging / prolonging a debt ceiling crisis (remember, Obama reportedly torpedoed at least one deal with Boehner – one with more taxes in it), Obama got masses of people to discuss the awfulness of U.S. finances. That’s a discussion which Obama should never want anybody to have.

    Now – even though The Deal has passed, crisis resolved, nothing to see here folks – the Chinese, the Russians, and many others understand that the U.S. is financially screwed. China’s DaGong rating agency has already downgraded U.S. debt. U.S. finances are terrible, and The Deal makes them worse. Obama’s hand-waving can’t change the awful facts. I believe that the markets are showing they understand that.

    Comment by ILoveCapitalism — August 4, 2011 @ 4:59 pm - August 4, 2011

  4. It’s a bad sign when major hedge-funds are shifting out of gold and T-bonds and buying high-quality agricultural land for “safety”.

    Just returned from visiting the relatives in the Upper Midwest, and high-quality rural farmland that produces 130-160 bushels of corn per crop has risen from $2000/ac. to over $7000/acre. Not that long-ago you could buy quality land at auction for $800/acre there.

    Comment by Ted B. (Charging Rhino) — August 4, 2011 @ 5:14 pm - August 4, 2011

  5. Yes Ted, I am afraid I missed the boat on that one. If you are not a farmer or a hedge fund and don’t live in the Midwest, you probably had no idea how to access that market. I didn’t.

    Comment by ILoveCapitalism — August 4, 2011 @ 5:17 pm - August 4, 2011

  6. Hi Dan,
    I think it is interesting to see the different views of things. It is clear that the consensus in these parts will shape up as: Markets are going south, because the Debt Deal wasn’t strong enough–and that the problem of debt looms largest in market participant minds. In my view, the markets are going south because they are factoring in the likelihood of a double dip recession based on the lack of aggregate demand we have and will continue to have. The Repubs have shifted the debate to deficit reduction in pretty spectacular fashion, and I don’t see–and neither do the markets–how we get policies that actually pivot to increasing that demand. It is a given that ILC and I disagree about how to interpret what we see in the marketplace, but it makes absolute sense from a Keynesian perspective. True, much of the cuts are back-loaded (so as to minimize impacts on the economy right now), but what I think markets are factoring in–are expectations that demand will slacken as there is a complete lack of political will to resort to fiscal stimulus, even as the economy slows…

    Comment by Cas — August 4, 2011 @ 5:21 pm - August 4, 2011

  7. the markets are going south because they are factoring in the likelihood of a double dip recession

    You had me…

    based on the lack of aggregate demand

    Then you gave me a good laugh :-) You’re back on your “demand” kick – the idea that economies fail, or go sluggish, because people somehow don’t want things enough. “Lack of demand”? That’s nuts – once you see how nuts it is. Because people always want more of things.

    You could be talking about a lack of spending power; but that turns out to be a lack of *real income* – i.e., a lack of *physical production and trade* – brought about by Obama’s many anti-job and anti-production policies. Including, yes, Obama’s insane spending and deficits, which redirect resources from (relatively efficient) private uses to (relatively inefficient) government uses – in addition to their threatening to bring down the financial system, as I touched on in earlier comments.

    there is a complete lack of political will to resort to fiscal stimulus

    If deficits at 10% of GDP aren’t enough “stimulus”, whatever would be? If adding so much to the U.S. national debt that it makes us Italy in short order (debt at over 100% of GDP) isn’t enough “stimulus”, what would be?

    The problem with socialism Keynesianism, Cas, is just what Margaret Thatcher said: Eventually, you run out of other people’s money. That time is now. Obama effectively has bankrupted the United States. “Stimulus” bankrupts. The bankruptcy, among other things, becomes in itself a gigantic obstacle to recovery. That’s the end of the road, for Keynesianism. Newsflash: We’ve arrived there.

    Comment by ILoveCapitalism — August 4, 2011 @ 5:36 pm - August 4, 2011

  8. (P.S. Of course the moment of literal bankruptcy – of literal default on the national debt – is yet to come, and will probably never come because the Fed will just print currency to avoid it, creating a hyperinflation. Quantitative Easing, or money-printing, is bankruptcy by another name.)

    Comment by ILoveCapitalism — August 4, 2011 @ 5:40 pm - August 4, 2011

  9. For others: The conventional (Keynesian) “GDP = C + I + G + (E – I)” type of models are so wrong. To begin with, GDP is a misnomer: it does not measure the nation’s *product*; only its nominal spending (what money was spent on, in a given calendar period). The famous equation is but a tautology: it says that spending equals spending. If you take it seriously, you think that spending drives the economy, and your sole concern is to raise nominal spending, and you don’t care how much you have to BORROW to do it – as Cas gives proof. But borrowing matters. Balance sheets matter. A lot. The real economy is production and trade, which take capital. Real deficits consume real capital, i.e. drain the country of wealth. Moreover, deficits which reach, or exceed, the economy’s long-term / structural growth rate (about 3% annually for the U.S.) bankrupt the country and, as such, lower the economy’s structural growth rate. The more excessive the deficit and debt, the worse the anti-growth effect.

    Comment by ILoveCapitalism — August 4, 2011 @ 6:07 pm - August 4, 2011

  10. Balance sheets matter. China’s central bank governor warns U.S. on debt management: http://www.usatoday.com/money/world/2011-08-03-china-wanrs-us-on-debt_n.htm

    Analysts, investors and even ratings agencies question whether the deal reached by lawmakers is aggressive enough to begin to clean up the nation’s debt-laden balance sheet and improve its financial condition… “Concerns about the growth and the health of the U.S. economy are overshadowing the (debt) deal,” says Katrina Ell, a Sydney-based associate economist for Moody’s Analytics. A raft of weak economic news is fueling those concerns…

    Already, Dagong Global Credit Rating, a Chinese ratings firm, downgraded the U.S.’ rating Wednesday, noting that the nation’s debt is growing faster [ed: much!] than its economy…

    The two – the excessive debt, and the weak economic news – go together, as not only does a weak economy lower tax receipts and increase the deficit/debt (sort of an auto-”stimulus”), but also, an increased deficit/debt/”stimulus” weakens the economy.

    Analysts fear that (now well-deserved) downgrades of U.S. debt will weaken the dollar even more: http://old.news.yahoo.com/s/nm/20110803/bs_nm/us_markets_forex_downgrade

    That it took so much drama to produce such a limited round of cuts has disappointed investors who had grown weary of fiscal weakness during budget crises in the euro zone countries. “A debt ceiling raised plus downgrade equals weak dollar,” said Jonathan Lewis, founding principal of Samson Capital Advisors in New York, which manages assets of $7 billion.

    Deficits mean debt. Debt means the opposite of wealth, a bankrupted country – especially as the debt gets to 100% of GDP and more (thanks, Obama!). Government spending, deficit and debt use resources inefficiently, consume capital directly, and destroy incentives and confidence alike with a threat of inflation and/or future taxes.

    Comment by ILoveCapitalism — August 4, 2011 @ 6:54 pm - August 4, 2011

  11. I know a few people who took money out of their 401k earlier in the week and put it in bonds. The only trouble is after “the Bernanke” gets done with QE3 the dollar will be worth about .03 anyway.

    Comment by Richard Bell — August 4, 2011 @ 6:54 pm - August 4, 2011

  12. Richard, exactly. Bonds are still riding high… but when government creates enough of them (i.e. too many), they become “certficates of guaranteed confiscation.”

    Bonds are the new bubble. The bubble will burst, sooner or later. When it does, commodities/gold will be what Soros called “the ultimate bubble” – i.e., the final bubble, the one that causes us to finally reform our financial system.

    Comment by ILoveCapitalism — August 4, 2011 @ 7:01 pm - August 4, 2011

  13. Hi ILC,

    The famous equation is but a tautology: it says that spending equals spending.

    The equation is AD = C + I + G +X = Y = C + S + T + M
    So Demand = Income; its an accounting identity, and the basis of the national accounts; so, the idea of it being spending = spending is a bit off the mark, I think.

    “Lack of demand”? That’s nuts – once you see how nuts it is. Because people always want more of things.

    True, but then that is why economists distinguish “effective demand” from “demand.” So, let me amend my claim to be clear we are talking about effective demand–being willing AND able to pay for what we “want.”

    As for the stimulus, and what amount would be needed, we know it wasn’t enough when Congress enacted it, and given the revisions to GDP from that time, we know that the economy had fallen off more of a cliff then we actually realized at the time:

    Two days after that, Americans received grim news about the economy: in the fourth quarter of 2008, GDP contracted at a 3.8% annual pace—the worst quarterly performance since the deep recession of 1982. More bad news hit on February 6th, when the BLS released new labour market figures. It reported an employment decline of 598,000 in January, following on revised drops in employment of 577,000 in December and 597,000 in November—a three-month drop of 1.8m jobs. On February 10th, the Senate passed its version of the stimulus, worth $838 billion. In conference committee, the bill shrank to $787. On February 17th, Mr Obama signed the bill into law.

    In the months and years that followed, Washington provided additional support to the economy, perhaps ultimately contributing approximately $1 trillion in total stimulus. But that first bill was the big bite at the apple. The White House looked at the economic situation, sized up Congress, and took its shot. Unfortunately, the situation was far more dire than anyone in the administration or in Congress supposed.

    Output in the third and fourth quarters fell by 3.7% and 8.9%, respectively, not at 0.5% and 3.8% as believed at the time. Employment was also falling much faster than estimated. Some 820,000 jobs were lost in January, rather than the 598,000 then reported. In the three months prior to the passage of stimulus, the economy cut loose 2.2m workers, not 1.8m. In January, total employment was already 1m workers below the level shown in the official data.

    We were in a much bigger hole than we realized at the time.

    Comment by Cas — August 4, 2011 @ 7:03 pm - August 4, 2011

  14. being willing AND able to pay for what we “want.

    As I said. And which BEGINS with PRODUCTION and TRADE. Not spending.

    Spending is just numbers. Spending is a convenience, so that we can transact in ways more complicated than a barter economy. The value of money – or of what is being spent – is determined anew by buyer and seller, in each transaction.

    we know it wasn’t enough when Congress enacted it

    No: We know that it was too much, when Congress enacted it. Because it made things worse, not better.

    You have not answered the question: If, in your world, deficits at 10% of GDP are not enough “stimulus”, then whatever would be? If adding so much to the U.S. national debt that it makes us Italy in short order (debt at over 100% of GDP) isn’t enough “stimulus”, what would be?

    Further, what happens when there is no more money (e.g., savings from people in Japan or China) for us to borrow? My point about China’s warnings on us is: that point is closer than you think.

    You think that deficits at 10% aren’t enough. Fine – do we increase the “stimulus” to 15% of GDP? (Note: any tax increases would, **if they collected higher revenues** which I doubt, tend to reduce the stimulative effect on “demand”.)

    You apparently think that debt at 100% of GDP is no problem. Then why is it a problem for the PIIGS countries? And what happens when we get to 200% of GDP? (Note: Don’t try to cite Japan, because they’re a special case, a nation of producers, net exporters and savers who lent it to themselves – and as well, who in 2 decades of “stimulus” policies have gotten nothing for it, a zombie economy just as I would predict.)

    Comment by ILoveCapitalism — August 4, 2011 @ 7:18 pm - August 4, 2011

  15. (i.e., who have gotten little new growth for it)

    Comment by ILoveCapitalism — August 4, 2011 @ 7:23 pm - August 4, 2011

  16. Hi Cas seems to be unfamiliar with Einstein’s definition of insanity.

    We know what has been historically proven to create economic growth; low taxes, minimal regulation, and stable public policy. I would say it is a mystery why the left stubbornly refuses to embrace economic policies that have proven to work, but I don’t think it is. The left is intellectually incapable of acknowledging that socialism doesn’t work. They would rather keep failing at it than give capitalism a chance to succeed.

    Comment by V the K — August 4, 2011 @ 7:41 pm - August 4, 2011

  17. Cas, ILC: a question (a real question ’cause I don’t know):

    Given the trillions injected by the central banks (stimulus), where has the money gone?

    It’s as if it’s been sucked into a black hole.

    Comment by SoCalRobert — August 4, 2011 @ 8:28 pm - August 4, 2011

  18. The basic problem of the Cas left is this.

    To Cas, a drunk spending $100 in a liquor store has identical economic impact and value to a small business owner spending $100 to buy new computer software.

    To Cas, it is so important that said drunk spend $100 in a liquor store that Cas will take $100 from the small business owner to give to the drunk.

    And Cas rejoices, because it has “redistributed” $100 from the small business owner, who Cas rationalizes can “afford” the additional expense, to the drunk, which in Cas’s belief system creates “demand”.

    In short, Cas sees no difference between the drunk’s vomit and the effect of new computer software for the small business owner.

    Comment by North Dallas Thirty — August 4, 2011 @ 8:31 pm - August 4, 2011

  19. No, NDT, there is a difference to Cas. The drunk is going to vote Democrat.

    Comment by V the K — August 4, 2011 @ 8:40 pm - August 4, 2011

  20. Hi NDT,

    In short, Cas sees no difference between the drunk’s vomit and the effect of new computer software for the small business owner.
    Classy image NDT. Out of curiosity, NDT, would you make a distinction between these two items–with one being consumption (liquor) and and the other being possible investment (computer software)? Here “investment” means increasing productive capacity, not the “speculative investment” that ILC refers to (and that mainstream economists would call savings).

    Comment by Cas — August 4, 2011 @ 9:03 pm - August 4, 2011

  21. Hi ILC,

    You have not answered the question: If, in your world, deficits at 10% of GDP are not enough “stimulus”, then whatever would be?

    As long as we are clear that you don’t always answer my questions, ILC. I’ll wait for another thread on that. In any case, the question assumes that all deficit spending is equal. It isn’t, We have already discussed that not all debt is the same, either. So, if deficit spending is a consequence of tax breaks that are economically inefficient, or tax rates that favour the wealthy, then I do agree, we should change the mix. I have made no secret of the fact that I think tax rates are TOO LOW, especially on the wealthy, given increasing income disparities, the burden of FICA taxes on working stiffs, the overwhelming nature of how tax breaks favour the wealthy etc. One way to cut the deficit, is to have higher tax rates. But you know this already, ILC, about my position, so why ask again? Add in two wasteful wars that are not paid for, and a nice deficit to start with BEFORE the collapse of the US economy in 2008, then, I do not see 10% deficits as a horrific number, given where we are now.

    Comment by Cas — August 4, 2011 @ 9:18 pm - August 4, 2011

  22. Out of curiosity, NDT, would you make a distinction between these two items–with one being consumption (liquor) and and the other being possible investment (computer software)?

    Ah, but you see, Cas, here’s the funny part: YOU term giving the money to the drunk “investment”. That’s what your Barack Obama says — he says the government needs to fund more “investment” in welfare. You yourself have demanded more “investment” via welfare giveaways to the unemployed and the like to drive “consumption” and “demand”.

    Your narcissistic and socialist worldview is almost comical to behold. If you don’t have money, you assume that is because someone else is wrongfully holding it. It certainly couldn’t be because you were wrong or because your business and life plans weren’t correct; it is because someone else stole it from you.

    Comment by North Dallas Thirty — August 4, 2011 @ 9:19 pm - August 4, 2011

  23. Oh, this is beyond hilarious.

    So, if deficit spending is a consequence of tax breaks that are economically inefficient, or tax rates that favour the wealthy, then I do agree, we should change the mix.

    Notice how Cas is in complete and total denial of the problem in any way, shape, or form being related to government spending.

    That is because one has to see Cas’s philosophy to realize exactly what it is:

    Thus, I like a bigger government than you do–one that takes seriously the notion of entitlements and the redistribution of income through taxation.

    Notice that there is no place in Cas’s world for actually EARNING money, or keeping the money you earn. You are “entitled” to a certain amount whether you work or not, and if you do work, your wealth and your earnings will be “redistributed”.

    Any guesses on which end of that Cas lives? Any guesses on whether or not Cas wants to work and have income taken away from it, or whether it just wants to be “entitled” and benefit off the work of others?

    Parasite.

    Comment by North Dallas Thirty — August 4, 2011 @ 9:30 pm - August 4, 2011

  24. Ah NDT,
    Glad to see that you have no sensible or coherent answer to my question. So, let me spell it out for you. One is consumption (the drinking) and the other is possibly investment. So, run along, and go play.

    Comment by Cas — August 4, 2011 @ 9:35 pm - August 4, 2011

  25. Hi ILC,

    Then why is it a problem for the PIIGS countries? And what happens when we get to 200% of GDP?

    One major difference is that they are tied to the Euro, so that this important avenue to increase aggregate demand is not available to them. It is to us. As our dollar falls, exports are cheaper, imports more expensive. We get a cut in our standard of living–in terms of what we can afford to but from others. Another difference is that the US dollar is used nearly universally as a means to settle international trade ion a number of goods. So, we have rights of seigneur-age that other countries don’t have. So, these are all reasons that separate us from PIGS, etc.

    Comment by Cas — August 4, 2011 @ 9:39 pm - August 4, 2011

  26. Glad to see that you have no sensible or coherent answer to my question. So, let me spell it out for you. One is consumption (the drinking) and the other is possibly investment. So, run along, and go play.

    That’s OK, Cas; we understand that you are humiliated by my pointing out how you misuse “investment” and “consumption”, and need to deflect and dodge to avoid having to deal with it. Perhaps one of these days you will have the intellectual honesty to stick to a common definition, rather than having to twist words to defend your Barack Obama and the failure of your socialist worldview.

    Comment by North Dallas Thirty — August 4, 2011 @ 9:48 pm - August 4, 2011

  27. Hi SCR,
    Given the trillions injected by the central banks (stimulus), where has the money gone?

    It’s as if it’s been sucked into a black hole.
    Good question!

    I am sure ILC will have his own take, but for me, Quantitative Easing et al ended up largely fattening bank reserves. This graph shows you non-borrowed reserves of depository institutions.that banks are currently holding. I hope this helps.

    Comment by Cas — August 4, 2011 @ 9:57 pm - August 4, 2011

  28. And which BEGINS with PRODUCTION and TRADE. Not spending.

    A great power is a mercantile or manufacturing power. As others overtake it in this, it loses its great power status. Sadly America’s place in the world as a mercantile or manufacturing power doesn’t look good when this sort of thing is happening.

    Comment by perturbed — August 4, 2011 @ 10:20 pm - August 4, 2011

  29. From your comment at #22:

    Out of curiosity, NDT, would you make a distinction between these two items–with one being consumption (liquor) and and the other being possible investment (computer software)?

    Ah, but you see, Cas, here’s the funny part: YOU term giving the money to the drunk “investment”.

    I can’t help myself, but point out to you, NDT, that you mis-state what I said, within one sentence of quoting me. First Sweden, now this. Are you OK?

    Comment by Cas — August 4, 2011 @ 10:21 pm - August 4, 2011

  30. Correction, Cas. You are spinning and dodging why you and your Barack Obama refer to welfare payments to drunks as “investment”. ChIldish, but typical of your lack of intellect and critical thinking skills.

    Comment by North Dallas Thirty — August 4, 2011 @ 10:54 pm - August 4, 2011

  31. Also, Cas, I can’t help but notice your avoidance of this quotation from you:

    Thus, I like a bigger government than you do–one that takes seriously the notion of entitlements and the redistribution of income through taxation.

    I mean, why are you not proudly proclaiming that your belief is that the government should focus solely on redistributing wealth and that entitlements, not productivity or goods or services, should be the primary factor determining who is paid what?

    Come on, Cas. You believe that the government’s primary function is to redistribute income — that is, to take from those who work and produce and provide goods and services to pay those like you who do not. You have stated that government’s primary economic concern should not be helping and supporting business and productive enterprise, but making welfare and entitlement payments.

    Why don’t you want to discuss that fact?

    Comment by North Dallas Thirty — August 4, 2011 @ 11:15 pm - August 4, 2011

  32. Back, and I wanted to say more about the “stimulus” policy of borrow-and-spend. Or, “why balance sheets matter.”

    Spending borrowed money is just that: spending borrowed money. It needn’t be, and in America’s case it usually isn’t, for anything really productive. The “GDP” statistic is ridiculous for including it.

    Imagine if I spend borrowed money. I go to V and say, “I need 50,000 dollars.” He says, “What for?” I screech “Racist!” and whine, “I neeeeed it!” He gives in, though he says “Next time, I’ll be worried about your income. I want to see some income figures.” I sign a promissory note (think of it as a bond) and he gives me the $50,000.

    What happens next? I spend the $50,000 on consumption: clothes, drugs, rent, a medical procedure, maybe a car. (That’s what government spending, the G in “C + I + G”, is: another form of consumption. Because it isn’t I, Investment, no matter what Obama says.)

    And in totalling my personal income for the year – in trying to prove to V what a good risk I am – I include the $50,000 that I spent! I add the $50,000 that V loaned me, and which I then proceeded to blow, to the income I show him to prove how productive I am!

    THAT IS HOW GDP WORKS.

    I will let economist John Mauldin, quoting economist Rob Arnott of Research Affiliates, say the rest:

    real GDP without government spending or deficits has been flat for 15 years (which, as a sidebar, also explains why real wages for private individuals are flat as well, but that’s a topic for another letter). Now, here is what to pay attention to. For the last several years, the real growth in GDP has come from the U.S. government borrowing money. Without that growth in debt, we would be in what most would characterize as a depression.

    This is why Paul Krugman and his fellow neo-Keynesians argue that we need larger deficits, not smaller ones. For them the issue is final aggregate consumer demand, and they believe you can stimulate that by giving people money to spend and letting future generations pay for that spending. And sin[c]e WW2 they have been right, kind of. When the U.S. has gone into a recession, the government has embarked on deficit spending and the economy has recovered. The Keynesians see cause and effect. And thus they argue we now need more “hair of the dog” to prompt the recovery, which is clearly starting to lag behind what they think of as normal growth.

    But others (and I am in this camp) argue that business-cycle recessions are normal and that recoveries would come anyway, and are not caused by increased government debt and spending but by businesses adjusting and entrepreneurs creating new companies. Correlation is not causation. Just because recoveries happened when the government ran deficits does not mean that they were the result of government spending. This is not to argue that the government should not step in with a safety net for the unemployed – again, a subject for another letter.

    Let’s see what Rob Arnott says about this conundrum:

    “GDP is consumer spending, plus government outlays, plus gross investments, plus exports, minus imports. With the exception of exports, GDP measures spending. The problem is, GDP makes no distinction between debt-financed spending and spending that we can cover out of current income.

    “Consumption is not prosperity. The credit-addicted family measures its success by how much it is able to spend, applauding any new source of credit, regardless of the family income or ability to repay. The credit-addicted family enjoys a rising “family GDP” – consumption – as long as they can find new lenders, and suffers a family “recession” when they prudently cut up their credit cards.

    “In much the same way, the current definition of GDP causes us to ignore the fact that we are mortgaging our future to feed current consumption. Worse, like the credit-addicted family, we can consciously game our GDP and GDP growth rates – our consumption and consumption growth – at any levels our creditors will permit!

    “Consider a simple thought experiment. Let’s suppose the government wants to dazzle us with 5% growth next quarter (equivalent to 20% annualized growth!). If they borrow an additional 5% of GDP in new additional debt and spend it immediately, this magnificent GDP growthis achieved! We would all see it as phony growth, sabotaging our national balance sheet – right? Maybe not. We are already borrowing and spending 2% to 3% each quarter, equivalent to 10% to 12% of GDP, and yet few observers have decried this as artificial GDP growth because we’re not accustomed to looking at the underlying GDP before deficit spending!

    “From this perspective, real GDP seems unreal, at best. **GDP that stems from new debt – mainly deficit spending – is phony: it is debt-financed consumption, not prosperity. Isn’t GDP after excluding net new debt obligations a more relevant measure?** Deficit spending is supposed to trigger growth in the remainder of the economy, net of deficit-financed spending, which we can call our “Structural GDP.” If Structural GDP fails to grow as a consequence of our deficits, then deficit spending has failed in its sole and singular purpose…

    **Bold** added.

    And that is where Cas and the other Keynesians go wrong. GDP only measures spending. It is a crap statistic. If we must measure real growth / real prosperity from that statistical base somehow, then we should at least quote, and seek to increase, **GDP net of new debt**. And when you do that, you see immediately why deficits/debt are a drain on aggregate wealth and a source of penury, not prosperity.

    Comment by ILoveCapitalism — August 4, 2011 @ 11:19 pm - August 4, 2011

  33. Hi NDT,

    focus solely

    Its this kind of hyperbolic silliness that makes having a conversation with you so difficult. If you avoided it, we could have an interesting conversation, but you don’t appear able to argue in good faith. Sorry.

    Comment by Cas — August 4, 2011 @ 11:34 pm - August 4, 2011

  34. And P.S., note that, as much of a crap statistic “GDP” is: Obama and the Keynesians have hardly even managed to increase that.

    Again, it’s not the recession – it’s not the “hole we were in” that is the problem – it’s the **lack of natural economic recovery**, despite (or I say, because of) the ginormous “stimulus” that has added so much to our debt.

    Given the trillions injected by the central banks (stimulus), where has the money gone?

    It’s as if it’s been sucked into a black hole.

    SCR, one commentator says it’s been going offshore, as part of a new dollar-based “carry trade” and/or to backstop Europe in all their crises: http://seekingalpha.com/article/276909-federal-reserve-money-continues-to-go-offshore

    I also know that it’s been hitting the financial markets via the primary bond dealers, propping up both stocks and commodities. The correlation between stock trends and the presence / absence of the Fed’s Quantitative Easing is a thing to behold: http://seekingalpha.com/article/284229-qe-and-the-damage-done-to-the-market

    Finally, I’ve seen charts showing that a decent chunk of it has gone to government spending, via bank purchases of government bonds (banks having bought several hundreds of billions of bonds in the last 3 years). In other words: Obama sucked it up, and spent it. Just like Cas wants. Only it didn’t do any good. Once in consumers’ hands, it further propped up consumer prices and thus commodity prices.

    Comment by ILoveCapitalism — August 4, 2011 @ 11:35 pm - August 4, 2011

  35. (continued) And high commodity prices, both nominal and real, are another one of the pieces in “why the economy can’t recover under Obama.”

    Comment by ILoveCapitalism — August 4, 2011 @ 11:43 pm - August 4, 2011

  36. Finally, it is of course true that banks are holding what the Fed calls “excess reserves”. They are actually loan loss reserves: reserves that the banks need, in order to deal with the aftermath of all the bad loans that the government ordered them to make, during what we now call ‘the housing bubble’. But the Fed calls them ‘excess’. Fine, whatever.

    Note that the QE money does not necesssarily go to the banks directly. In QE2, the Fed literally purchased government bonds. Thus, government – and other bond sellers – get the money first. But as I indicated, the banks are net buyers (not net sellers) of government bonds. In QE1, the Fed bought mainly mortgage-backed securities, i.e. toxic housing-bubble junk from the banks, and so the QE1 money often went to banks directly. The majority of their growth in excess reserves, happened then.

    Comment by ILoveCapitalism — August 5, 2011 @ 12:00 am - August 5, 2011

  37. Hi ILC,
    Well, you know I don’t agree with your claim re deficit spending. I accept, unlike you (and Mr? Arnott) that G can include I (government investment). I also offer that government spending is not all included in GDP (a point Mr? Maudlin offers elliptically in passing). In sum, Rob Arnott isn’t shooting at the same target I am.

    The interesting thing is that I agree with you that there is a lot wrong with the notion of GDP as a statistic. It doesn’t measure all of the productive work in the economy (housework for example) and what it sometimes measures as production, common sense would say is anything but (clean-up in the Gulf of Mexico was added to GDP). So, I agree with you. However, please note, that knowing it is a “crap statistic” as you put it, doesn’t stop either you or I from using it. SO, let us keep our awareness of that in the fore-front of our minds.

    Yes, the government can borrow money, or tax its citizens, and spend. And its contribution is added to GDP, but not in the fashion that you have outlined. Remember, the equation we both used is a static one–a snapshot in time, and does not capture the impact of the multiplier effect of subsequent government expenditure on aggregate demand and income. So, that needs to be factored in–GDP is ONE side of the equation. In this regard, there is no difference between changes in G and I on the economy. I will grant that in so far as G is spent on jet fighters, etc, it will have little lasting positive impact on the economy, unlike increases in I. However, to the extent that G is made up of “investment” items (bridges, rail, roads, etc), is the extent that it does have a lasting positive impact on the economy, just like I.

    I want to point out also that G is not just Government buying party favours etc and that it doesn’t all count towards GDP. Not all of government spending is counted as part of GDP:

    Government spending on goods and services averages about 20 percent, or one fifth, of total GDP. The government takes in an amount equal to more than one fifth of GDP in taxes, but a portion of that money, equal to about 10 percent of GDP, goes to transfer payments rather than expenditures on goods and services. Transfer payments include Social Security, Medicare, unemployment insurance, welfare programs, and subsidies. These are not included in GDP because they are not payments for goods or services, but rather means of allocating money to achieve social ends.

    Comment by Cas — August 5, 2011 @ 12:22 am - August 5, 2011

  38. Hi ILC,

    Finally, I’ve seen charts showing that a decent chunk of it has gone to government spending, via bank purchases of government bonds (banks having bought several hundreds of billions of bonds in the last 3 years). In other words: Obama sucked it up, and spent it.

    Could you pass on a link or two for that–I don’t quite follow the logic of it, so I would like to see what the charts say with regards to causality, if you could be so kind.

    Comment by Cas — August 5, 2011 @ 12:24 am - August 5, 2011

  39. In the wake of the debt deal, liberal economists are now complaining that the downward pressure on spending violates the Keynesian commandment to flood a faltering economy with government outlays.

    We’ve done that. From the first months of the Obama Presidency, billions of stimulus have been injected into the economy, budgeted federal spending has grown toward 25% of GDP and the Federal Reserve has poured oceans of cash into the markets.

    The Keynesians have fired all their ammo, and here we are, going south. Maybe now President Obama should consider everything he’s done to revive the American economy—and do the opposite.

    http://online.wsj.com/article/SB10001424053111903454504576488520057638188.html?mod=WSJ_Opinion_LEADTop

    Comment by TGC — August 5, 2011 @ 2:27 am - August 5, 2011

  40. Its this kind of hyperbolic silliness that makes having a conversation with you so difficult.

    Correction; it’s the fact that I actually hold you accountable for your words and statements, and you can’t handle that.

    Hey – no problem. We understand that you don’t want to consider any facts or thoughts that cause you to be uncomfortable and question why your economic theories don’t work. Perhaps some day you will develop the intellectual honesty and capability to evaluate why your talking points don’t reflect economic reality.

    Comment by North Dallas Thirty — August 5, 2011 @ 2:38 am - August 5, 2011

  41. Well, you know I don’t agree with your claim re deficit spending. I accept, unlike you (and Mr? Arnott) that G can include I (government investment).

    Of course, one must keep in mind that both Barack Obama and his puppet Cas say that handing out welfare checks to drunks equals government “investment”.

    Next up:

    Remember, the equation we both used is a static one–a snapshot in time, and does not capture the impact of the multiplier effect of subsequent government expenditure on aggregate demand and income.

    Yes. For example, Cas says that the “investment” of the government taking money to give to drunks to buy alcohol has exactly the same value as a small business owner buying new computer software for their business. According to Cas, welfare checks have a bigger “multiplier” than would new software or other things that business owners and productive individuals would buy; that’s why it’s essential that government redistribute income from businesses and productive individuals so that it can be handed out as entitlements and welfare checks for drunks — sorry, “investment”, according to Cas and Barack Obama.

    This is what is really funny. When you corner redistributionists like Cas, they start screaming “bridges, roads, rails” — as if they actually built such things. But if you look at what the vast majority of what the government spends money on, a tiny fraction of it is that — and the vast majority of it is welfare payments to people like Cas who do nothing, provide no goods, provide no services, and just live parasitically off others.

    Cas is a parasite who is trying to justify its parasitic existence. When Cas actually gets off its ass and builds a road, a bridge, or rails, then Cas can justify receiving tax dollars. Until then, Cas is a net drag and an expense on the economy who is freeloading.

    Comment by North Dallas Thirty — August 5, 2011 @ 2:51 am - August 5, 2011

  42. I received this the other day and it clearly explains the stimulus program.

    It is a slow day in the small town of Pumphandle and the streets are deserted. Times are tough, everybody is in debt, and everybody is living on credit. A tourist visiting the area drives through town, stops at the motel, and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs to pick one for the night. As soon as he walks upstairs, the motel owner grabs the bill and runs next door to pay his debt to the butcher.

    (Stay with this….and pay attention)

    The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.

    The pig farmer takes the $100 and heads off to pay his bill to his supplier, the Co-op.

    The guy at the Co-op takes the $100 and runs to pay his debt to the local hooker, who has also been facing hard times and has had to offer her “services” on credit.

    The hooker rushes to the hotel and pays off her room bill with the hotel owner.

    (Almost done…keep reading)

    The hotel proprietor then places the $100 back on the counter so the traveler will not suspect anything.

    At that moment the traveler comes down the stairs, states that the rooms are not satisfactory, picks up the $100 bill and leaves.

    No one produced anything. No one earned anything. However, the whole town now thinks that they are now out of debt and there is a false atmosphere of optimism and glee.!

    Comment by Heliotrope — August 5, 2011 @ 10:54 am - August 5, 2011

  43. Heliotrope, I don’t quite get it. Maybe I’m taking it too literally, but the story would suggest (and I believe) that deleveraging is a good thing. “Stimulus” is its opposite, an effort to negate deleveraging and re-start credit inflation. It would be “stimulus” if the stranger took $100 from the hotel owner by force, then gave it to the hooker who spent it on clothes and drugs. The town and especially its responsible people (the hotel owner) would be deeper in the hole, with nothing good to show for it.

    A great power is a mercantile or manufacturing power

    Well, a great power is structured so that its people are encouraged to produce more than they consume. A poor people consume, or try to consume, more than they produce.

    Comment by ILoveCapitalism — August 5, 2011 @ 11:50 am - August 5, 2011

  44. Wait, I get the story now. What I described, is redistribution via taxes. “Stimulus” is dirtier than that. It would be “stimulus” if the stranger borrowed $200 from the bank under false pretenses and counterfeited another $200, then went around spending which made people feel good, but then when people went to spend themselves, they found that the price of goods had increased (because of everyone spending) and they were no better off.

    Comment by ILoveCapitalism — August 5, 2011 @ 11:55 am - August 5, 2011

  45. you don’t always answer my questions, ILC

    Not when you post them days late to a thread that has dropped off the blog’s front page, no.

    Also not when they reflect your disinterest in comprehending my comments. Also not when they are buried in pages of your nit-picking which characteristically evades the main issue. Deal with it.

    if deficit spending is a consequence of tax breaks that are economically inefficient, or tax rates that favour the wealthy, then I do agree, we should change the mix,

    That doesn’t even make sense grammatically. Deficit spending is always and only a result of one thing, Cas: SPENDING. You know… that word which appears directly in the phrase, “deficit spending”.

    If you want to RAISE TAXES (which is what closing “tax breaks” is), fine, take that position – it’s a free country. But call it what it is. And don’t expect your audience to be unaware that tax increases simply make the government feel free to spend more almost always ending, after a few years, in yet more spending and deficits.

    One way to cut the deficit, is to have higher tax rates.

    In today’s environment, that is highly doubtful.

    As I have said before, if the tax increases were paired with a repeal of Obama’s other job-destroying measures, then we might at least hope that your tax increases could have a neutral (as opposed to damaging) impact. Otherwise, it is likely that your tax increases would be the “last straw” that breaks the economy’s back altogether.

    why ask again?

    Because you still have not answered the question: If, in your world, deficits at 10% of GDP are not enough “stimulus”, then whatever would be? Do we increase the “stimulus” to 15% of GDP?

    Further, what happens when there is no more money (e.g., savings from people in Japan or China) for us to borrow? You apparently think that debt at 100% of GDP is no problem. Then why is it a problem for the PIIGS countries? The following comment of yours is either a non-answer, or a far more revealing answer than you perhaps intended:

    One major difference is that [the PIIGS] are tied to the Euro, so that this important avenue to increase aggregate demand

    What could you be talking about there? What “important avenue” is not available to them? Any Euro country can, in practice, run all the deficit “stimulus” it wants to. The one and only “important avenue to increase AD” that is not available to them, is: MONEY PRINTING. So that must be what you are talking about. You seriously think money printing is a good idea. You seriously think that it somehow adds to that mythical “aggregate demand” (which somehow needs adding to) in anything more than a purely nominal (i.e. inflationary) sense. You seriously think that it is acceptable for a country to just print gobs of money, when it can’t pay its debts. That is what you’re implying.

    In short, the issue is: Where does the “stimulus” money – or more accurately, the “stimulus” purchasing power – come from? If it comes from higher taxes, then even by your own terms (trying to boost AD), it won’t be “stimulus”. If it comes from borrowing, what happens when the U.S. is insolvent (as Italy is getting to be) and no foreigner ought to buy our bonds? If from money printing, the ‘solution’ you apparently have in mind, what happens when the inflation sets in and people’s savings are destroyed? Money is not purchasing power, only an ephemeral representation of it. Where does the purchasing power come from, Cas? Where? One more question: Have you ever read _Fiat Money Inflation in France: How It Came, What It Brought, and How It Ended_ by Andrew Dickson White? I dare guess that you haven’t.

    Add in two wasteful wars that are not paid for

    Domestic spending increases have been FAR more than the cost of the wars, which your side tends to exaggerate greatly. And if we’re going to talk about wars that truly are unnecessary and wasteful, it only needs one word: Libya.

    I do not see 10% deficits as a horrific number

    Then Cas, you are beyond short-sighted: you are blind.

    As our dollar falls, exports are cheaper

    Only at first. Most of our “exports” today, are actually made with imported components.

    Another difference is that the US dollar is used nearly universally as a means to settle international trade

    Not for much longer. Not with your policies at the helm!

    We get [i.e., the evolution and consequences of "stimulus" leads us to] a cut in our standard of living

    OH. MY. GOD. I *never* expected to see you acknowledge that so openly. Because it’s a disgrace!

    A cut in our standard of living means: PEOPLE ARE POORER. I’ve been saying, this whole time, that your (and Obama’s and Krugman’s and Bernanke’s) policies are bad and wrong, because they make the country poorer. Now you openly acknowledge it – as if it’s a feature, not a bug! **UNBELIEVABLE**

    Comment by ILoveCapitalism — August 5, 2011 @ 1:08 pm - August 5, 2011

  46. For the sane people: Shouldn’t economic policy strive to make the country richer? Isn’t the point of having an economy to raise living standards?

    Not to spend and borrow and print and spend and print and borrow, until the country’s position is so far ruined that “We get a cut in our standard of living.”

    Comment by ILoveCapitalism — August 5, 2011 @ 1:16 pm - August 5, 2011

  47. OH. MY. GOD. I *never* expected to see you acknowledge that so openly. Because it’s a disgrace!

    A cut in our standard of living means: PEOPLE ARE POORER. I’ve been saying, this whole time, that your (and Obama’s and Krugman’s and Bernanke’s) policies are bad and wrong, because they make the country poorer. Now you openly acknowledge it – as if it’s a feature, not a bug! **UNBELIEVABLE**

    Actually, ILC, it’s completely understandable when you consider what Cas is.

    Cas is at a supreme disadvantage in a capitalist society. Cas has no useful skills and no inclination to work. Therefore, Cas is dependent on welfare and handouts.

    Under Cas’s policy, Cas is not the one who will get poorer. Cas in fact will get richer, both a) directly, because Cas will get more welfare, and b) by comparison, because the other people with skills and a work ethic that are valued in a capitalist society will get poorer as government redistributes their income to Cas.

    Again, the perspective is 180 degrees opposite yours. You see value in unequal distribution of wealth and that being tied to productivity and performance. Cas sees no value whatsoever to wealth distribution being tied to productivity and performance — and in fact sees the role of government to be correcting that so that everyone gets the same “entitlement”, regardless of what they do.

    Liberalism and “progressivism” are about one thing and one thing only: decoupling rewards from responsibility and productivity.

    Comment by North Dallas Thirty — August 5, 2011 @ 2:01 pm - August 5, 2011

  48. Sorry to re-visit this, but I still couldn’t believe my eyes. I came to double-check the context of Cas’ quote; to make sure I got the context right. I did. With interpolations of mine for added context, here it is again:

    [the PIIGS] are tied to the Euro, so that this important avenue to increase aggregate demand [i.e., continual borrowing and money-printing] is not available to them. It is to us. As our dollar falls [due to the borrowing and money-printing], exports are cheaper, imports more expensive. We get a cut in our standard of living–in terms of what we can afford to bu[y] from others.

    A cut in our standard of living. As a known consequence of policy: a feature, not a bug. Given the existence of alternatives – of policies that would raise our standard of living – I infer that it is a *desired* consequence: that Cas has just admitted, probably without meaning to, that she not only knows her policies will lead us to penury, she intends them to.

    As Margaret Thatcher said of her socialist opponents: “They would rather the poor were poorer, provided the rich were less rich.”

    Comment by ILoveCapitalism — August 5, 2011 @ 2:03 pm - August 5, 2011

  49. Liberalism and “progressivism” are about one thing and one thing only: decoupling rewards from responsibility and productivity

    NDT, I think you’re right.

    Comment by ILoveCapitalism — August 5, 2011 @ 2:06 pm - August 5, 2011

  50. #42 Isn’t that a variation of the broken window story?

    Comment by TGC — August 5, 2011 @ 2:28 pm - August 5, 2011

  51. TGC, not quite: the broken window story involves destruction of wealth (the window), and the loss to other actors in the community despite the fact that the window-maker got some new business which was then added to GDP (another reason the GDP statistic is crap).

    On tax hikes… FTR, the Bush cuts increased revenues. That is prima facie evidence of what part of the Laffer Curve we’re on: namely, the wrong part for tax hikes to increase revenue (beyond their first several months of operation). As Byron York puts it:

    Revenues fell in Bush’s first two years because of a combination of the tech bust [ed: the Clinton recession, that Bush inherited] and the start of the tax cuts. But then things took off. After taking in $1.782 trillion in tax revenues in 2003, the government collected $1.88 trillion in 2004; $2.153 trillion in 2005; $2.406 trillion in 2006; and $2.567 trillion in 2007, according to figures compiled by the Office of Management and Budget. That’s a 44 percent increase from 2003 to 2007. (Revenues slid downward a bit in 2008, and a lot in 2009, when the financial crisis sent the economy into a tailspin.) “Everybody talks about how much the Bush tax cuts ‘cost,’” says one GOP strategist. “We’re saying, no, they led to a huge increase in revenue.”

    And deficits shrank. After beginning with a Clinton-era surplus in 2001 [ed: but again, also a Clinton recession], the Bush administration ran up deficits of $158 billion in 2002; $378 billion in 2003; and $413 billion in 2004. Then, with revenues pouring in, the deficits began to fall: $318 billion in 2005; $248 billion in 2006; and $161 billion in 2007. That 2007 deficit, with the tax cuts in effect, was one-tenth of today’s $1.6 trillion deficit.

    Deficits went up in 2008 with the beginning of the economic downturn — and, not coincidentally, with the first full year of a Democratic House and Senate [ed: who, even then, were jacking up spending].

    Comment by ILoveCapitalism — August 5, 2011 @ 5:01 pm - August 5, 2011

  52. Hi ILC,

    Deficit spending is always and only a result of one thing, Cas: SPENDING.

    Sorry, ILC, but you appear to ignore that a deficit is made up of two parts, so it just isn’t “spending.”
    Deficit = Government Spending – Taxation.
    It is inaccurate to talk about “deficit spending”, because you assume the very thing you are trying to claim. A deficit can be caused by a couple of things, one of which you ignore–namely, too low levels of taxation, and/or too high levels of spending. Given the fixation that many folks here have with the desirability of low levels of taxation, this lacunae is understandable.

    What could you be talking about there? What “important avenue” is not available to them? Any Euro country can, in practice, run all the deficit “stimulus” it wants to.

    You miss the point. Depreciating an exchange rates is the mechanism that I discussed. To ignore it, seems cock-eyed, to say the least. As to your query, they can do so (run deficits) but whether they can is beyond their control in a crisis. They do not have the ability to print money to finance this deficit (as a last resort)–which is part of this deal. They can issue bonds, but in a crisis, the interest on them can be ruinous–if, they can get people to buy them. They have the Euro as their currency, and this is a downside for these governments. As long as others are willing to lend them the Euros, they can deficit finance. If they stop lending, they are SOL. That is the downside of being tied to the Euro, and one reason that Greece (and others) may leave the Euro. So, they can print their own currency and depreciate their currency. After all, that is one way the Swedish miracle of the 1990s occurred–right? They depreciated their currency. And they increased aggregate demand and exported their way out of difficulties. I had assumed that you knew that, given your admiration for Swedish economic performance of the later 1990s, but maybe not?

    A cut in our standard of living. As a known consequence of policy: a feature, not a bug. Given the existence of alternatives – of policies that would raise our standard of living – I infer that it is a *desired* consequence: that Cas has just admitted, probably without meaning to, that she not only knows her policies will lead us to penury, she intends them to.

    I’m sorry–I didn’t realize that my comment would give you and perhaps others, an attack of the vapours.

    I do not believe that the policies that you offer are going to do anything more than send us back into recession (i.e., cut our overall average standard of living). So, what about that lower standard of living that I state? After all, what do you think we have now, ILC, in this country? The difference is that currently, those bearing the brunt of the cut in the standard of living are those who are un- or under-employed; or those who are seeing their wages going backwards in nominal terms. At least, with exchange rate depreciation, that sacrifice would be shared equally by all including the wealthy (who would pay more for their imported luxury items), with the added benefit of increased overall domestic employment (Remember your poster child, Sweden!)

    Finally, as for this:

    Not when you post them days late to a thread that has dropped off the blog’s front page, no.

    I would simply point out that:
    August 2, 2011 @ 3:57 pm – August 2, 2011 Your last entry
    August 2, 2011 @ 4:01 pm – August 2, 2011 My reply

    Wow, a whole 4 minutes later. Pretty slow of me, I know. Then, I followed up a day later because you hadn’t replied. Its all good, ILC. I am sure the Sweden issue will pop up again, and I will still ask you to explain the apparent surface incoherency of your claims.

    Comment by Cas — August 5, 2011 @ 7:46 pm - August 5, 2011

  53. A deficit can be caused by a couple of things, one of which you ignore–namely, too low levels of taxation, and/or too high levels of spending. Given the fixation that many folks here have with the desirability of low levels of taxation, this lacunae is understandable.

    Ah, the power of positive thinking and compromise. Every dollar increase in deficit spending should be offset by: a) a dollar in tax increase; b) 50 cents in tax increase and 50 cents cut in spending; c) a dollar cut in spending.

    But, Hi Cas! you do not address the fact that the budget base line increases by 6% and more per year even when the Democrats don’t even present and pass a budget.

    Shall we drop the budget back to the zero base, or is that too Draconian for your brand of economics?

    Comment by Heliotrope — August 5, 2011 @ 11:59 pm - August 5, 2011

  54. After all, that is one way the Swedish miracle of the 1990s occurred–right? They depreciated their currency. And they increased aggregate demand and exported their way out of difficulties.

    I do so love when the childish and incoherent Cas gets cornered.

    You see, Cas, you have insisted repeatedly that cutting government spending and lowering taxes DECREASES “aggregate demand”.

    Yet when you cite Sweden, you are citing a country where MASSIVE cuts to government spending and taxation were made — and you admit that “aggregate demand” INCREASED.

    Furthermore, Cas, you are epically stupid. Did you forget something that you mentioned above?

    Another difference is that the US dollar is used nearly universally as a means to settle international trade ion a number of goods.

    Number one: OIL.

    And thanks to you and your Barack Obama, the US is overwhelmingly dependent on imported oil – to the tune of nearly $350 billion dollars, or over 16% of our total imports.

    So what’s the moronic Cas’s recipe for success? Let’s devalue our currency and drive up the price of our number-one import, one on which our economy rests in innumerable ways, to stratospheric levels.

    And even better, since stupid Cas and Cas’s Obama Party adamantly oppose ANY domestic oil and gas production, we CAN’T make more of it, nor can we export it.

    If you had even bothered to research this in the least, Cas, you would realize that what you’re advocating is economic suicide. But of course, you didn’t research, you didn’t think, and you certainly didn’t bother to investigate; you just spouted class-warfare parasite talking points.

    And now you look like a complete and total idiot.

    Comment by North Dallas Thirty — August 6, 2011 @ 12:08 am - August 6, 2011

  55. If you had even bothered to research this in the least, Cas, you would realize that what you’re advocating is economic suicide.

    NDT, that’s where I disagree. Cas confessed earlier, and in effect (perhaps not fully realizing her confession), that she does realize that she’s advocating economic suicide, i.e. that her policies make nations poorer. And she was fine with it. She would “rather the poor were poorer, provided the rich were less rich” (Thatcher).

    Wow, a whole 4 minutes later.

    I’m not even going to bother verifying that. I mean, so what? Perhaps I had things to do and left for some hours, not noticing your comments until today. And still not caring, the more so as it is (in fact) days-old, well off the front page.

    too low levels of taxation

    Seriously? You seriously think that Americans aren’t taxed enough? That well over $2 trillion in revenue isn’t enough to run a large country’s government? That the government America had under Bill Clinton, which was in fact far smaller than the one we have now, wasn’t already pretty darn big, and already pretty well engaged in the kind of coercive redistribution that you lust to impose?

    You miss the point. Depreciating an exchange rates is the mechanism that I discussed.

    No, I didn’t miss the point. You did. And, “as usual”. I knew exactly what you were talking about: spend, borrow, print, spend, print, borrow until depreciation is accomplished, and the world is forced to recognize it. At which point, and as you put with such charm, “We get a cut in our standard of living” – yay! Feel the hope, people! the CHANGE!

    That was my point, which you missed: Currency destruction, and the poverty that goes with it, is (among sane people) something to be avoided or prevented by economic policy. Not viewed as a perfectly acceptable result of normal (and indeed desirable) policy.

    [the PIIGS] do not have the ability to print money to finance th[eir] deficit

    Which shall ultimately prove a blessing to them. Because of the austerity measures they are taking, in five years (or less) their economies will be stronger than ours.

    one way the Swedish miracle of the 1990s occurred–right? They depreciated their currency.

    No, actually. Repeated depreciations did not solve Sweden’s problems. They were a recognition of reality: that Sweden had, in fact, undertaken 3 decades of terrible fiscal and monetary policies (you know, the ones you advocate) which gutted its currency and, as you put it with such charm, gave them “a cut in their standard of living.”

    Depreciation is the economic equivalent of getting an F. It is a recognition of the reality that you have messed up. It contributes to recovery, only in the back-handed (if not warped) sense that admitting the facts about your giant alcohol problem is a first step in your alcohol recovery. It’s a recognition of a negative set of facts; not a positive accomplishment. When you take steps to actually reform your economy (or yourself), *then* you have an accomplishment, and cause your recovery.

    I do not believe that the policies that you offer are going to do anything more than send us back into recession (i.e., cut our overall average standard of living). So, what about that lower standard of living that I state?

    And now, the Cas red herrings come out.

    I truly believe – indeed, I know – that the policies I advocate will cause, within a few years or perhaps less, an explosion of prosperity. You can disagree with me; but I take the position that economic policy is supposed to produce prosperity, and I advocate policies accordingly.

    You don’t. You admit that your policies lead a nation to the poor house or, as you put it with such charm, “it gets a cut in its standard of living.” Moreover, you seem fine with it. That is the opposite attitude of sane economic policy. Even if you prove to be right on one small point or another, no one should ever listen to you.

    Comment by ILoveCapitalism — August 6, 2011 @ 1:50 am - August 6, 2011

  56. Hi NDT,
    Talking to you is like swimming in a cesspool. Why you cannot even pretend to maintain a civil tongue in your head and in your typing fingers is almost beyond me.

    The one thing I do notice–the more “threatened” and less able to defend your point of view that you feel given what I say, the more likely you are to resort to insults. I guess that means that you feel you are unable to carry an argument by reason alone, and feel the need to insult people. I never felt like I intimidate people, but clearly, that appears to be the case with you. So, in dealing with your insults, I take comfort from the fact that you feel rattled by what I have been saying. Cool.

    My answers to you–sans your “epically stupid childish manner in which you speak” rhetoric are as follows:

    Oil prices are not tied in a one to one relationship with US currency depreciation, as we have talked about before. I would further point out that Sweden during the 1990s was (and still is) a net oil importer. So, even so, it still improved its economic position, something that shouldn’t happen, if oil is the be all and end all of imports. It is sizeable for the US, I grant. But notice–all imports will go up in price–so by your logic, why pick on oil alone, as the cause of skyrocketing import costs? As the US dollar falls, all imports will be more expensive. Oil is not special in this regard. So, how did things improve for Sweden? You focus on imports to the exclusion of exports, and I find that strange. Why do you do that? The effect on aggregate demand of the trade sector is the change in X – M, not just M, alone. So why do you expect exports to remain stagnant or fall (as you appear to be suggesting)? Would it give you pause to realize that Swedish EXPORTS rose from approx 27% of GDP in the early 90s to almost 50% of GDP in 2000?

    Yet when you cite Sweden, you are citing a country where MASSIVE cuts to government spending and taxation were made — and you admit that “aggregate demand” INCREASED.

    So, you agree that it increased its money supply AND that its currency depreciated–two moves of which you do not approve. And which, according to your model of how economies work should have helped sink the Swedish economy. Further, even granting your claim that Sweden cut expenditures and taxes, though a net loss on aggregate demand, it was more than made up for by increased exports and easier money supply conditions (and lower interest rates in the second half of the 1990s; e.g., the Central Bank’s discount rate fell) conditions.

    And that still leaves us with the question I left you with on the last thread, namely, even granting your points (which do not prove what you think they do), you champion an economy that is doing better then the US–Sweden–and whose current levels of government spending and taxation are way above what we have in the US; levels that you would find an abomination if they were reproduced here in the US. I find it endearing and quite peculiar for you to be defending what is still, in many ways, a Swedish socialist paradise, and–something that the model you have in your head cannot apparently explain. How do you explain that, NDT?

    Comment by Cas — August 6, 2011 @ 3:21 am - August 6, 2011

  57. Hi ILC,
    What interests me, in all of this is that you still cannot bring yourself to answer the question I left you with on the last thread–and one that I conveniently laid out for NDT above. Your model cannot explain why Sweden is doing well now, given its much higher levels of taxation and government spending. After all, these should have put Sweden in the poop hole, according to the model and rhetoric you have previously used. So, explain that result, if you can.

    Second, just because you want to chat about three decades of mismanagement, you have to actually look at what Sweden did–it abandoned is peg, and allowed its exchange rate to float, and it immediately depreciated. And that, together with a deliberately loose monetary policy helped lead it out of its crisis. That is what history says. Knock it all you want, but that is the bottom line.

    Finally, I notice how astutely you avoid engaging what I said US standards of living falling, whilst again having a case of the vapours concerning my view of what is plainly obvious to anyone with eyes. You can feign outrage all you want, but I made my stance clear–you want the lower standard of living that we inherited from this economic mess (and it has to be lower because we ain’t producing anywhere near what we should be) to fall on a particular segment of the population, rather than the population as a whole. Well, good for you! But being silent about it doesn’t change the fact that that is what you think will work best for the country. I happen to disagree, and the fact you won’t own your own particular preferences is very telling.

    Comment by Cas — August 6, 2011 @ 3:32 am - August 6, 2011

  58. Actually, Cas, what we notice is how, when you are humiliated and exposed as a fraud, your response is to throw a tantrum, whining and screaming and repeating your inanities over and over again. Your imbecilic belief that we should destroy the US economy by jacking up the price of our major import and destroying our currency’s value demonstrates how little you know about economic policy and how wedded you are to simple class warfare and envy. You would destroy the country’s whole economy to punish those who are wealthier than you are. That is sick.

    Sweden proves you are a fraud. Their economy nearly collapsed when they put in place what you demand – complete redistribution of wealth and total state control of the economy. It is only by REVERSING everything that you demand that they have managed to survive. Their near-collapse proves that your policies are failures, and you hilariously try to insist that their success is due to your policies — not because they were intelligent enough to STOP listening to you.

    Moreover, Cas, ILC has you correctly cornered. You admit that your policies do not create wealth; they destroy it. Your goal is to make the United States poorer. You admit it. Since you are too lazy and incompetent to raise yourself out of the cesspool in which you wallow, your goal is to make everyone as poverty-stricken, welfare-dependent, and helpless as you are.

    Comment by North Dallas Thirty — August 6, 2011 @ 4:15 am - August 6, 2011

  59. Hi NDT,
    As I said, all we see is you insulting me and searching about to assign hyperbolic opinions that I do not hold, as well as to avoid answering the OBVIOUS question I earlier raised. And, again, I feel disappointed by the fact that you cannot mount a rational argument and engage the issues you yourself raised earlier and which I answered. I am sorry that you feel cornered by the case I have presented, but if you could get over your attack of the vapours, and realize that I am not attacking you but questioning your ideological framework, we could have a respectful conversation that could be mutually beneficial.

    Comment by Cas — August 6, 2011 @ 12:42 pm - August 6, 2011

  60. And now we move to phase two; Cas’s tantrums didn’t work, so now it tries its usual passive-aggressive lies as it squirms and tries to get away after its imbecilic beliefs are publicly called out.

    You made yourself abundantly clear, Cas. The only thing you care about is perpetuating your parasitic existence and destroying the wealth of anyone who has more than you do. You WANT living standards cut. Your only concern is punishing the rich. And your shortsightedness is such that you are openly advocating destroying the US currency and massively driving up the price of oil out of some insane desire to hurt the “wealthy”.

    Comment by North Dallas Thirty — August 6, 2011 @ 3:39 pm - August 6, 2011

  61. Hi NDT,
    Nope. Just pointing out what is plainly obvious. When you feel up to actually putting forth a rational argument, let me know.

    Comment by Cas — August 6, 2011 @ 3:59 pm - August 6, 2011

  62. Hi Cas is all atwitter over how Sweden has hit the magic formula. As passing strange as it may seem, KOS has been pumping the same nonsense:

    The Scandinavian nanny state is the fastest growing economy in the Western world amidst a global crisis. Funny how that won’t be reported in the US media. Instead it’s all about Greece and other ineffective/sclerotic southern European economies.

    5,7% GDP growth in 2010 and continuing at the same pace in 2011. 7% unemployment rate and sinking fast. 30% total deficit projected to become 20% in two years (US deficit is almost 100%). That’s liberalism/socialism in practice folks.

    I’m not writing this diary to brag about Sweden, although I am a Swede. I am not proud of Sweden or its culture per se, I am proud of the Swedish welfare state and its liberal/socialist policies. I wish to give US progressives more ammunition to use in their fight against conservatism for the soul of America.

    Usually, when the success of the Swedish economy is brought up US conservatives (and sometimes also liberals) claim that it is a special case of a small, homogenous country which is very different from the US. Funny how conservatives – according to this logic – thinks that socialism works, but only in small countries. I find this reply inadequate. Yes, there are many differences between the US and Sweden but there are certain economic laws and tendencies which remain constant. High taxes do not kill jobs, quite the contrary (if wisely designed). I am no expert but it seems to me that the US would be better off implementing some of the policies which have led to Sweden’s success. Also, Sweden is not very homogenous anymore. We have had a massive wave of immigration the past 20 years, especially from Muslim countries. The picture of a country of blond, blue-eyed persons is no longer true (if it ever was). I would argue that it is not because of its small size or cultural homogenity that Sweden is successful, but because of its liberal/socialist policies and because of a political culture where economical issues are seen as fundamental, not bogus issues pushed by right wing fundies. To be sure, sometimes Swedish politics can go too far in the direction of soulless technocratic pragmatism but I prefer that to the Tea Party insanity.

    And yes, we have a center-right government right now, but they are far to the left of the US Democratic Party so labels are misleading.

    Anyway, my 2 cents. Hopefully some of you progressives will find this diary informative, helpful or inspiring in your fight for America. I am with you in spirit from the other side of the ocean.

    I won’t tear up additional space over this, but those interested in the opposing point of view might click on this link:

    http://www.paoracle.com/SocialismWORKS!/index.php?sw=Sweden

    Comment by Heliotrope — August 6, 2011 @ 7:33 pm - August 6, 2011

  63. Just pointing out what is plainly obvious

    LOL – Cas, what is “plainly obvious” is that you couldn’t hope to argue your way out of a pile of leaves.

    you still cannot bring yourself to answer the question I left you with on the last thread

    As of this moment – as I type these words, having not yet read further into your comment – I still don’t know what the question is. As I’ve already explained to you – on more than one occasion, both current and previous – I don’t value your comments so much that I dig back into days-old threads long after they have dropped off the main page.

    I guess you just can’t accept that. And as well, I guess it’s time to add “lying”, Cas, to the list of your other faults (since in fact I probably could bring myself to answer your question, if only I knew what it was).

    Moving on, wondering if next you will actually state what that question is…

    and one that I conveniently laid out for NDT above

    No, still not yet. Oops. I don’t always read, and in this particular instance I didn’t read, your comment(s) addressed to NDT. But maybe, now that you’ve satisfied your own self-importance by imagining several times that I would or should hang on your every comment, maybe now, you will finally get to whatever the question is. Maybe it’s next.

    Your model cannot explain why Sweden is doing well now, given its much higher levels of taxation and government spending.

    [rolling eyes] Is that it? Is that the famous question? Because first of all, it’s in the form of an assertion, not a question. But more important, again I guess it’s time to add “lying”, Cas, to the list of your other faults. Because I did already explain it. To you. At length.

    Because I’m refuting a lie at this point, I will finally dig into the old thread for a link or a quote. See here: http://www.gaypatriot.net/2011/07/30/seems-the-media-cover-isnt-working/#comment-642181
    And here: http://www.gaypatriot.net/2011/07/30/seems-the-media-cover-isnt-working/#comment-642228
    And here: http://www.gaypatriot.net/2011/07/30/seems-the-media-cover-isnt-working/#comment-642230
    And here: http://www.gaypatriot.net/2011/07/30/seems-the-media-cover-isnt-working/#comment-642345
    And here: http://www.gaypatriot.net/2011/07/30/seems-the-media-cover-isnt-working/#comment-642353
    And here: http://www.gaypatriot.net/2011/07/30/seems-the-media-cover-isnt-working/#comment-642355
    And here: http://www.gaypatriot.net/2011/07/30/seems-the-media-cover-isnt-working/#comment-642361

    Heck, I’ll even quote it for you so you don’t have to go there:

    But Sweden has been headed in the right direction – toward greater economic freedom – for some years now. Just as the U.S. has been heading in the wrong direction.

    Comment by ILoveCapitalism — August 1, 2011 @ 6:53 pm

    Sweden also has lower public deficits and debt than the U.S., having cut back on spending significantly from where they used to be in the 1990s.

    I put that under the general heading of “heading in the right direction – toward greater economic freedom”, since public spending and debt are essentially threats of future taxation and/or inflation: the greater the debt, the greater the threat. But it is worth mentioning in its own right.

    You see, deficits don’t work. “Stimulus” doesn’t work, particularly in high-debt countries. Expanding your government spending, “stimulus” and debt is a way to take your economy down. Getting responsible and contracting them is a way to get your economy growing again. Even bogged-down, over-socialized ol’ Sweden has found that to be true.

    All the more reason why it is amazing, Cas, that you (or Obama or Krugman or anyone) could seriously believe that the U.S. should have even greater spending, “stimulus”, deficit and debt. Clearly, evidence is not something that moves you.

    Comment by ILoveCapitalism — August 1, 2011 @ 7:08 pm

    Economics 101: Learning from Sweden’s Free Market Renaissance: http://www.youtube.com/watch?v=mvtxT0qPJoQ

    Narrated by a Swede:

    … How did we become rich [in the period 1870-1970]? Sweden had robust and secure property rights and the Rule of Law… Sweden also had a relatively small government for most of that period, with taxes and spending about the same level as the United States [i.e., significantly under 30% of GDP].

    But in the 1970s, things began to go wrong, and the Swedish economy began to lag… The government gave subsidies to industries in trouble, instead of letting inefficient companies fail… Taxes were sharply increased… the marginal tax rate was over 100% for some people… new regulations on the labor market…

    And that was the time when government’s share of GDP grew to over 50%. In other words: Big Government equals malaise.

    … the krona was devalued several times… until the country plunged into a crisis in the beginning of the 90s… [But in the last 12 years, Sweden] has privatized many State-owned firms, liberalized the credit market, deregulated [the currency], and lowered the marginal income tax rate. Also, unemployment and sickness compensation payments have been reduced. We have reformed the school and health care system [with] private incentives.

    Sweden is more of a market economy today, with fewer unpredictable government interventions. There is still much to do… but we are moving in the right direction.

    Lessons Learned:
    1) Smaller Government Boosts Growth
    2) Economic Tinkering Hurts Rather than Helps
    3) Free Trade is Good for Prosperity
    4) Policies that Supposedly Help Workers Actually Cause Unemployment

    … trying to smooth out booms and busts in the economy often leads to the opposite…

    Really Cas: You make this too easy. You should never, ever, ever have thought that Sweden was a good example for your side or that you could mention it around me with safety (for your viewpoint).

    Comment by ILoveCapitalism — August 1, 2011

    Sweden is going in the right direction >50% government spending as % of GDP; an individual average tax rate of >57% in 2010; universal health care; with levels of entitlements that would be jaw dropping amazing here.

    Finally, a clean statement of your true agenda.

    But no, Cas: Sweden has been going in the right direction the last 12 years, to the extent it has been rolling those things back: reducing taxes, reducing spending, trimming entitlements, etc.. That is reality. Again, you appear to be not driven by it.

    you want Sweden as your model for America–really?

    As a model for malaise and crisis? (1970s/80s/90s Sweden). No.

    As a model for waking up from the Cas-left-liberal nightmare and moving in a free market direction? Sure.

    I already made that clear in my comments. Seriously Cas, are you dumb? Or is your lack of comprehension of my comments a choice?

    Comment by ILoveCapitalism — August 2, 2011

    Sweden is an economy that RIGHT NOW you would find totally abhorrent, if replicated here

    Not so. First, as much as the U.S. is headed in the wrong direction, the “full Sweden” would still be a step down from what we have here: i.e., from where we are, further in the wrong direction and a creator of yet more unemployment and malaise and crisis in the U.S. Second, as already stated, Sweden has begun to reform its society with market-oriented incentives including a reduction in unemployment and sickness compensation, school vouchers and more. The U.S. is bad enough off now (thank you, Obama and Cas) that yes, we could actually learn a thing or two from a Sweden that is in the process of reforming itself.

    Really Cas, are you dumb? Or is your lack of comprehension of my comments a choice?

    Comment by ILoveCapitalism — August 2, 2011

    To make this absolutely clear (though I shouldn’t have to):

    1) An economy can be a mixture of good and bad policies. That is called, a “MIXED ECONOMY”. The U.S. is an example of one such economy. Sweden is another.

    2) Whatever an economy’s policy mix is, it ends up at a certain equilibrium in terms of living standards, growth and employment (or lack thereof).

    3) When a society adjusts its policies in the Good direction, its equilibrium “target” (the equilibrium which is feasible for that economy, and toward which that economy finds itself being driven) gets better. This is true even if the resulting economy still isn’t perfect, or is still less-good than some other economies out there. It’s the direction, the movement, the progress, the improvement that creates new results.

    4) Conversely, when a society adjusts its policies in the Bad direction, its equilibrium “target” gets worse – even if the resulting economy still isn’t the worst conceivable economy, or is still better than some other economies out there. And it suffers lower living standards, less growth and more unemployment. It’s the direction, the movement, the progress, the degradation that creates new results.

    5) The histories of Sweden, the U.S., and many many other countries illustrate the above points.

    Comment by ILoveCapitalism — August 2, 2011

    … including the fact that the Good Direction is:
    - effective rights to life, liberty and property
    - Small Government / less of a government burden on the economy
    - more economic freedom
    - fiscal responsibility i.e. fiscal conservatism

    while the Bad Direction is:
    - ineffective rights to life, liberty and/or property
    - Big Government / more of a government burden on society
    - less economic freedom
    - fiscal irresponsibility i.e. fiscal liberalism

    Comment by ILoveCapitalism — August 2, 2011

    And that, Cas, is a more-than-sufficient answer to your “question”. You simply choose, as usual, not to comprehend. But that isn’t my problem. It’s your problem.

    That’s all I have time for. I mean, that right there, even though much of it was copying, took 20 minutes of my valuable life. You really don’t deserve any more, Cas.

    So, whatever the rest of your comment was – and I expect it was probably as much nonsense as anything you post – I haven’t read it, and I probably won’t get around to it. Sorry about that; but really, you are the one with the problem here. You need to do several things here, if you want more from me (or even this much, in the future):

    1) Most of all, spew a lot less ridiculous garbage.
    2) Be briefer.
    3) Don’t expect me to hang on your every word. You may think yourself that important, but it’s just not realistic.
    4) Start choosing to comprehend my comments.
    5) Stop choosing to lie about me.

    Peace :-)

    Comment by ILoveCapitalism — August 6, 2011 @ 7:55 pm - August 6, 2011

  64. spamfilter

    Comment by ILoveCapitalism — August 6, 2011 @ 7:56 pm - August 6, 2011

  65. (i.e., stay tuned for a long comment of mine that should appear after Heliotrope’s, once Dan gets to it)

    And now we move to phase two; Cas’s tantrums didn’t work, so now it tries its usual passive-aggressive lies as it squirms and tries to get away after its imbecilic beliefs are publicly called out.

    You made yourself abundantly clear, Cas… You WANT living standards cut. Your only concern is punishing the rich. And your shortsightedness is such that you are openly advocating destroying the US currency and massively driving up the price of oil out of some insane desire to hurt the “wealthy”.

    NDT, ain’t that the truth!

    Comment by ILoveCapitalism — August 6, 2011 @ 8:07 pm - August 6, 2011

  66. P.S. “Start choosing to comprehend my comments”, *if* you are going to respond to them and then expect my further responses.

    I should have put in the ‘if’, as another alternative exists: don’t read or respond to my comments to begin with, as I with some of yours.

    Comment by ILoveCapitalism — August 6, 2011 @ 10:16 pm - August 6, 2011

  67. Hi ILC,
    “1) Most of all, spew a lot less ridiculous garbage.
    2) Be briefer.
    3) Don’t expect me to hang on your every word. You may think yourself that important, but it’s just not realistic.
    4) Start choosing to comprehend my comments.
    5) Stop choosing to lie about me.”

    Follow your own advice, ILC.

    Comment by Cas — August 6, 2011 @ 10:59 pm - August 6, 2011

  68. Already do, Cas. No problem.

    Now how about you? Again, you are the one with the problem here. You need to do several things here, if you want more from me (or even this much, in the future):

    1) Most of all, spew a lot less ridiculous garbage.
    2) Be briefer.
    3) Don’t expect me to hang on your every word. You may think yourself that important, but it’s just not realistic.
    4) Start choosing to actually comprehend my comments, if you are going to respond to them and then expect my further responses.
    5) Stop choosing to lie about me.

    Peace :-)

    Comment by ILoveCapitalism — August 6, 2011 @ 11:01 pm - August 6, 2011

  69. And HT,
    I wasn’t the one who ORIGINALLY touted Sweden as being an exemplar of right wing talking points, ILC was. He made it clear that I couldn’t claim Sweden in the “this makes no sense from ILC’s model’s perspective” because ILC argued that Sweden’s success was an example of ILC’s brand of economic medicine. Don’t believe me, go back and look at the original thread.

    In any case HT, from your lofty perch, please do explain then how Sweden could be doing so well, with all of the socialist claptrap you point to in your link, which ILC originally touted as being a success story for his economic thinking. I won’t hold my breath, though! :)

    Comment by Cas — August 6, 2011 @ 11:09 pm - August 6, 2011

  70. And ILC,

    Already do, Cas. No problem.

    Then if “Be briefer” is your mantra, you’ll have to explain the brevity of #63; or 45; or one of your patented multi-part answers–32,34-36. You get excited, you go on, passionate in your detail. So, please do not ask of others, what you find difficult to do, yourself.

    And that, Cas, is a more-than-sufficient answer to your “question”. You simply choose, as usual, not to comprehend. But that isn’t my problem. It’s your problem.

    Your answer consisted of lecturing me on the principles of “the right” and “wrong” directions in economic policy. You then ASSERT without proof or argument, that Sweden today (I assume, as it is unclear what “full Sweden” actually means) would be a “step backward” for the US, without explaining why Sweden is doing so well today, even with all those socialist policies in place. That you refuse to explain, I suspect because it doesn’t fit within your “implicit” model of how an economy works. Your beliefs (shared with us) suggest that what is happening in Sweden, right now is an impossible result. They are doing well in categories of economic statistics that they shouldn’t be. How can that possibly be the case? You have not offered an answer to that question. The questions I ask of you are variants of this.

    And please, stop confusing the fact that I disagree with you as meaning I do not comprehend what you are saying. I do. Assuming that disagreement can only be because I don’t understand the light you offer, is akin to a preacher rationalizing that one doesn’t believe in a particular divinity, because one doesn’t understand.

    In the spirit of brevity–I end there. I would be happy to continue on, if you desire.

    Comment by Cas — August 6, 2011 @ 11:31 pm - August 6, 2011

  71. Assuming that disagreement can only be because I don’t understand the light you offer, is akin to a preacher rationalizing that one doesn’t believe in a particular divinity, because one doesn’t understand.

    Which is what you do whenever anyone disagrees with you, Cas.

    For example, when you were caught lying about Texas having a state property tax and senior citizens being exempt from it, which is patently untrue, this is what you stated:

    Because what I am going to say has some subtlety, I am going to ask you to bear with me, rather than go for your knee-jerk response.

    There’s no subtlety. The tax flat-out does not exist, and senior citizens are not exempt from the local taxes that do. You lied, you got caught, and you argued that the reason someone presented facts that clearly contradicted what you were saying was that they didn’t understand.

    You are a total hypocrite, Cas. No wonder you’re a welfare dependent. And what’s really sick is that, rather than evaluating your own failures and making changes so that you can be successful, you actively try to manipulate both the government and the economy to destroy those who ARE successful and steal what they worked to build.

    Comment by North Dallas Thirty — August 7, 2011 @ 2:12 am - August 7, 2011

  72. NDT!
    Taxes in Texas. Are you doing this just to avoid answering simple but uncomfortable questions? I answered your questions earlier, yet you won’t even try answering mine. Funny.

    I should feel flattered that you appear to be feeling a bit desperate, I guess. But my aim isn’t to try and make you feel bad, NDT. But shifting the topic away from answering a simple question when evidence does not apparently accord with your world view, is pretty lame, and with the barrage of insults/personal attacks you offer, and the subject changing, further evidence that you do feel rather defensive about all of this. Give up the insult throwing NDT. We can have a rational conversation. You might like it. You never know until you try it, NDT.

    Comment by Cas — August 7, 2011 @ 3:30 am - August 7, 2011

  73. Taxes in Texas. Are you doing this just to avoid answering simple but uncomfortable questions?

    Projection. You would know about that, Cas; welfare addicts and failures like yourself inevitably blame everyone else for their problems. That’s why you support such vindictive policies, demand that government punish those who are successful, and insist that productivity is irrelevant and only “entitlements” matter.

    Why do you hate people who have more money than you do, Cas? What do you think gives you the right to steal their money? Why do you think other people should be forced to work to finance your lifestyle? Is your hatred of capitalism and work due to your failure in it? Is that why you insist that the government should redistribute all wealth and pay people based on “entitlement”, rather than on their productivity or contribution to society?

    Comment by North Dallas Thirty — August 7, 2011 @ 3:28 pm - August 7, 2011

  74. Hi NDT,
    Still notice that you can’t address the economic issues raised earlier in the thread. Its OK, we run out the clock on the thread, but, I just want you to know that you shouldn’t feel threatened by my style. I can be a bit blunt at times, but I am most interested in a good conversation. So sorry for hurting your feelings. It continues to be my hope that you will get over your need to try and insult and belittle when you feel threatened, and try just arguing your case on its merits. We would have a more enjoyable chat that way. Anyway, that continues to be my hope.

    Comment by Cas — August 7, 2011 @ 4:04 pm - August 7, 2011

  75. And out comes the passive-aggressive temper tantrum, as little Cas screams and whines and cries and stomps its feet with its little backhanded insults.

    Sorry, Cas, we are adults here. You have to take ownership for your statements and actions. We know you are threatened by that, because you’ve never had to do it before, but you are now accountable for your statements that the government’s only concern should be forcibly redistributing wealth, that the government should punish everyone who has more than you do, and that what a person has should be based, not on their productivity, experience, and skills, but on their “entitlement”.

    Comment by North Dallas Thirty — August 7, 2011 @ 4:24 pm - August 7, 2011

  76. Hi ILC,

    And out comes the passive-aggressive temper tantrum, as little Cas screams and whines and cries and stomps its feet with its little backhanded insults.

    I do not call you naughty names, like you do. I just ask for a rational conversation, something you cannot offer. And as for accountability–there is none here, NDT. Otherwise folks would have told you a long time ago to chill out and try being rational. But they don’t, so this “accountability” thing you talk about is so much “air.” Sorry–the accountability on this site is only in terms of people choosing to refrain from being rude or choosing to be rational. You choose not to argue rationally. So, why exactly is it you think I am having a tantrum again? I am not the one calling you rude names, or making hyperbolic statements! I know you don’t like it when I point out the obvious. As long as it works for you, keep going, I guess, but I find your approach not very conducive to rational discourse. Sorry, just my opinion. Again, I hold out hope for the possibility that you might try a different approach.

    Comment by Cas — August 7, 2011 @ 9:34 pm - August 7, 2011

  77. More passive-aggressive temper tantrums as the little child Cas screams and whines and cries as it is held accountable for its stupid and foolish statements that the government’s only concern should be forcibly redistributing wealth, that the government should punish everyone who has more than Cas does, and that what a person has should be based, not on their productivity, experience, and skills, but on their “entitlement”.

    And as is typical in the case of a tantrum, the child screams something completely irrational and contradictory to its previous statements.

    And as for accountability–there is none here, NDT. Otherwise folks would have told you a long time ago to chill out and try being rational.

    Which directly contradicts this statement:

    Assuming that disagreement can only be because I don’t understand the light you offer, is akin to a preacher rationalizing that one doesn’t believe in a particular divinity, because one doesn’t understand.

    You see, Cas, you’re a hypocrite. You constantly insist that anyone who disagrees with you is wrong. In this example now, you insist that there is “no accountability” because things aren’t happening the way you demand.

    And that really is the point of your childish tantrum throwing. You aren’t getting your way, and you are screaming and crying and throwing things until you do. Fortunately, I am more than willing to keep pointing out your tantrum throwing and humiliating you.

    Comment by North Dallas Thirty — August 7, 2011 @ 10:27 pm - August 7, 2011

  78. Hmm, NDT, so what exactly is hypocritical about the statement that you quoted? I make no secret of the fact that I suspect that ILC has an inherently non-falsifiable position. It is asking me (and anyone else) to take things he believes on faith. And faith is a religious concept. I am sorry that shocks you. I can’t tell if you have a similar position, because you refuse to engage, and rather spend your time attempting to insult and belittle, rather than answer simple questions (and I answer so many of yours–and not even an acknowledgement…sigh). And as to why I think you feel threatened, that is one reason why. Because if you really felt clear about what you believe and why, you would engage, and answer (even some) questions about your economic position when I ask them. But you do not. So, by all means think of me to be “having a tantrum” but your actions are consistent with being someone who is –would “worried” be the right word here?–and that I will not treat your views gently. After all, you do not treat other’s views gently when they offer them. So, I can guess that you worry that others will treat you the way they treat them. If you are open, I will do my best to gently engage you. But it is hard to do do, in your current state.

    Comment by Cas — August 7, 2011 @ 10:52 pm - August 7, 2011

  79. Cas, why don’t you chill out and try being rational?

    Comment by ILoveCapitalism — August 7, 2011 @ 11:17 pm - August 7, 2011

  80. Hi ILC,
    I don’t know, when others do the same, ahem… :)

    Comment by Cas — August 7, 2011 @ 11:20 pm - August 7, 2011

  81. … then you still won’t :-)

    Because you have established a long and sorry track record of not :-)

    Comment by ILoveCapitalism — August 8, 2011 @ 1:47 am - August 8, 2011

  82. Hi ILC,
    “Because you have established a long and sorry track record of not …”
    …being very religious in my beliefs. Yeah, I get it. :)

    Comment by Cas — August 8, 2011 @ 2:07 am - August 8, 2011

  83. Hmm, NDT, so what exactly is hypocritical about the statement that you quoted? I make no secret of the fact that I suspect that ILC has an inherently non-falsifiable position.

    Of course. Since he doesn’t agree with you, you state automatically that he is wrong. Then you accuse him of doing that.

    Therein lies the hypocrisy.

    The rest of what you’re doing is your usual passive-aggressive temper tantrum, typical childish behavior from a welfare-addicted leftist with no useful skills and a vendetta against “the rich”. You are a failure who is incapable of functioning in a capitalist system due to your lack of education, responsibility, and work ethic, so you set out to use government to bring low those who do work, those who do educate themselves, and those who are responsible.

    Very sick. But very typical of the welfare addict.

    Comment by North Dallas Thirty — August 8, 2011 @ 2:53 pm - August 8, 2011

  84. Hi NDT,

    Of course. Since he doesn’t agree with you, you state automatically that he is wrong. Then you accuse him of doing that.

    I see your confusion now. You think that diagreement with an interlocutor means that I think they are wrong. No. That is your MO, NDT. If I disagree with someone, it is because I present evidence that disagrees with someone’s contention. It is the next step that is important to keep an eye on. If someone makes a claim, then when shown evidence that contradicts that position, argues that actual results do not conform to theory because “lags are variable and asymmetric” or that “human activity” has uncertain time paths, I find that a problem. Why? Because such a position, if consistently applied, means that every event that happens fits nicely within the framework, and cannot be used to disprove the worldview under consideration. No event can be evidence that the world view is wrong. It isn’t falsifiable; it isn’t testable.

    In this case, I am not saying that ILC is wrong, anymore than I would say that those who believe in God are wrong. It just can’t be rationally proved, that is all. You believe or you don’t; and that is a question of faith, not reason.

    Comment by Cas — August 8, 2011 @ 3:09 pm - August 8, 2011

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