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Old 03-06-2013, 12:49 PM   #3921
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Coolidge also cut spending when he lowered taxes. like a boss.


too bad the banks gave away too many loans to farmers who couldn't repay them...
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Old 03-06-2013, 01:42 PM   #3922
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Coolidge also cut spending when he lowered taxes. like a boss.


too bad the banks gave away too many loans to farmers who couldn't repay them...
Silent Cal = Bauce
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Old 03-06-2013, 02:29 PM   #3923
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The Laffer Curve: The most influential napkin event ever.



Literally a sketch on a bar napkin, not derived from any actual real world data set, to represent a theoretical model of human behavior. From which, only a linear relationship is ever derived or discussed. Nevermind that it's not a linear graphical representation of said theoretical model of human behavior.
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Old 03-06-2013, 02:44 PM   #3924
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Speaking of Laffer and his curve, guess who he named as one of the primary influences on his understanding of the theoretical principle? Not the Muslim, but the other more recent economist.

Here's a quote from the guy in question:
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.


Mind blown?
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Old 03-06-2013, 03:48 PM   #3925
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Quote:
Originally Posted by Scrappy Jack, quoting the other more recent economist View Post
(...) For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.
This seems to be a somewhat inappropriate analogy.

In general, we assume that manufacturers tend to operate in a competitive marketplace. The reason that sales decline after a price increase is that customers shift their purchasing towards a different manufacturer.

Contrast this with a true monopoly enterprise, such as the telephone system until the 1980s. In such an environment, customers cannot react to a price increase by opting to do business with an alternate supplier, since no alternative exists. Thus, to the degree that the demand for telephone service is not highly elastic, a reasonable positive correlation can be drawn between the price of telephone service and the revenue of the telephone company. It is for this reason that the State and Federal governments tend to regulate monopoly industries, by instituting rate controls on them.

The Federal government, as a whole, has a de-facto monopoly in the US on the job of being the Federal government. Likewise, the IRS and the Department of the Treasury also enjoy monopolies on collecting Federal taxes and being the Federal Treasury. As such, the market forces which affect the manufacturer's revenue in the competitive environment do not apply here at the level of the individual consumer. While it is technically true that an US citizen can say "**** this, I am moving to Mexico," there are certain practical disadvantages to doing so which have historically prevented mass-emigration. Therefore, the Federal government may increase the rate at which is taxes its subjects, and be reasonably assured that the revenues collected from personal income taxiation will increase accordingly.

Now, it is true that corporations enjoy a much greater latitude in electing to "move to Mexico" as it were. Strategic global re-positioning of one's business assets in order to minimize tax exposure is a common trend. No doubt some people consider this practice to constitute a "tax loophole" in the common sense. This is undoubtedly the subject of a much larger debate, however I would posit that the practical effects of such positioning pale in comparison to those which are visually difficult to distinguish but motivated instead by the desire to seek out less costly labor and materials, and to operate in an environment with fewer regulations on worker safety, hazardous materials disposal, etc. There are, for instance, relatively few industrial paint shops in the state of California. This has much less to do with California's tax code than with the fact that many high-VOC coating products are illegal here, but legal in most other states.
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Old 03-06-2013, 03:59 PM   #3926
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This seems to be a somewhat inappropriate analogy.
It is a more appropriate analogy when read in full. It's in the context of balancing the budget. I'll find you a more complete text if you are interested.
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Old 03-06-2013, 07:51 PM   #3927
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Quote:
Originally Posted by Scrappy Jack View Post
It is a more appropriate analogy when read in full. It's in the context of balancing the budget. I'll find you a more complete text if you are interested.
I'd be curious to see how the author justifies the comparison. I personally cannot see how the dots can be connected.



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Old 03-06-2013, 08:44 PM   #3928
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Go Rand.

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Old 03-06-2013, 09:15 PM   #3929
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Filibustering, as a political tactic, annoys me as an emblem of all that is Bad and Wrong about consensus-based representative democracy.

On the other hand, I am truly in awe of the oratory skills of a truly competent filibusterer.
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Old 03-07-2013, 12:00 AM   #3930
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Quote:
Originally Posted by Joe Perez View Post
Filibustering, as a political tactic, annoys me as an emblem of all that is Bad and Wrong about consensus-based representative democracy.

On the other hand, I am truly in awe of the oratory skills of a truly competent filibusterer.
These jack-holes haven't passed a budget in over four years. Rand Paul could go up and poop on the dias, and he'd have achieved more than Harry Reid has in his entire career.
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Old 03-07-2013, 12:03 AM   #3931
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Quote:
Originally Posted by Scrappy Jack View Post
Speaking of Laffer and his curve, guess who he named as one of the primary influences on his understanding of the theoretical principle? Not the Muslim, but the other more recent economist.

Here's a quote from the guy in question:
Nor should the argument seem strange that taxation may be so high as to defeat its object, and that, given sufficient time to gather the fruits, a reduction of taxation will run a better chance than an increase of balancing the budget. For to take the opposite view today is to resemble a manufacturer who, running at a loss, decides to raise his price, and when his declining sales increase the loss, wrapping himself in the rectitude of plain arithmetic, decides that prudence requires him to raise the price still more--and who, when at last his account is balanced with nought on both sides, is still found righteously declaring that it would have been the act of a gambler to reduce the price when you were already making a loss.


Mind blown?
I truly wish Keynes was alive now. He'd tear Obama et al a new ******* for their idiotic monetary and tax policies. I truly believe that. Truly.
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Old 03-07-2013, 09:26 AM   #3932
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I got a raise this year, it doesn't cover the payroll tax increase. this is casuing me to a little bit more conscience over what I spend money on. This is not good in a govt-induced-drawn-out-recession.

im going to have mcdonalds for dinner tonight using a 2 for 1 coupon.
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Old 03-07-2013, 10:15 AM   #3933
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I truly wish Keynes was alive now. He'd tear Obama et al a new ******* for their idiotic monetary and tax policies. I truly believe that. Truly.
I'm impressed to hear you say that, as opposed to instantly associating him as an socialist pig. Keynes gets taken out of context a lot and his work can certainly be used to justify a lot of very different prescriptions.

Quote:
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I'd be curious to see how the author justifies the comparison. I personally cannot see how the dots can be connected.
Keynes is speaking in the context of an economic contraction, specifically a financially and/or politically derived one. He makes a distinction between that and poverty caused by "famine or earthquake or war." The latter being economic contraction wherein there is a lack of material goods and/or the ability and means to produce them.


Keynes in the quote we are discussing is talking about raising taxes during an economic contraction being counter-productive for exactly the reasons I reject blaen's discussion of a direct, single variable relationship between tax rates and revenues [edit: without other context].

That is, he is asserting that raising taxes in a time of economic malaise will [edit: likely] be counter-productive in that it removes money from the already struggling private sector which can take a slow or contracting economy backward, leading to less growth and economic activity and, less tax revenue. i.e. A bigger percentage of a smaller sum netting a reduction.

The quote is from the first chapter of The Means to Prosperity by John Maynard Keynes. Published c. 1932 or 1933. Unfortunately, the vernacular is a little dense by today's standards.

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Last edited by Scrappy Jack; 03-07-2013 at 10:27 AM. Reason: Added additional detail
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Old 03-07-2013, 12:43 PM   #3934
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Keynes would have used a stimulus as a temporary measure, and never when our debt & deficit was this overblown.
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Old 03-07-2013, 01:53 PM   #3935
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Graham, McCain blast Paul filibuster - Washington Times

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Mr. Graham said asking whether the president has the power to kill Americans here at home is a ludicrous question.

“I do not believe that question deserves an answer,” Mr. Graham said.
Nice try.
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Old 03-07-2013, 02:29 PM   #3936
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Quote:
Originally Posted by Scrappy Jack View Post
Keynes is speaking in the context of an economic contraction, specifically a financially and/or politically derived one.

(...)

That is, he is asserting that raising taxes in a time of economic malaise will [edit: likely] be counter-productive in that it removes money from the already struggling private sector which can take a slow or contracting economy backward, leading to less growth and economic activity and, less tax revenue.
I certainly can't argue against this.

On the other hand, no single economic theory exists in a vacuum.

The struggling manufacturer might indeed realize an increase in revenue from a reduction in cost. But if cutting their price also decreases their gross margin to a point which is insufficient to cover their costs, then they may well go bankrupt in a sea of revenue.

Likewise, we (the US) find ourselves in an interesting conundrum. On the one hand, allowing income taxes to rise back to a "normal" level might well have the effect of slightly depressing consumer spending. On the other hand, we already find ourselves in a situation wherein Federal spending exceeds revenue to the point in which the creditworthiness of the Treasury is being called into question and the Congress cannot seem to agree on which entitlement programs to decrease in order to compensate for this. While reducing income taxes even further might have the long-term effect of increasing the velocity of money, it might also have the short-term effect of bankrupting the treasury.


It's also important to recognize that, in gross terms, the velocity of money in the US (which is a valid barometer of the rate of all spending) is still at a level which is higher than its 50 year average. The spending bubble of the late 90s / early 00s has really distorted our perspective on such matters as "what is normal?"

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Old 03-07-2013, 02:46 PM   #3937
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Who is calling in to question the credit worthiness of the US Treasury? Are they worth paying any attention to?

In what ways could the US Treasury be forced in to bankruptcy? [Adj. (of a person or organization) Declared in law unable to pay outstanding debts.]


As for the M1V, the average (mean) from 1960-01-01 through 2012-10-01 (most recent data handy from FRED) was 6.675. The median for the same time frame was 6.796.

The value for 2012-10-01 was 6.547. Source: FRBSL FRED
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Old 03-07-2013, 03:05 PM   #3938
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Quote:
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Who is calling in to question the credit worthiness of the US Treasury?
Judging by present rates, the purchasers of Treasury Bonds.


Quote:
Are they worth paying any attention to?
Yes.


Quote:
In what ways could the US Treasury be forced in to bankruptcy? [Adj. (of a person or organization) Declared in law unable to pay outstanding debts.]
By finding itself in a position in which it is unable to raise sufficient funds from a combination of revenue activity (tax collection) and debt (the issuing of bonds) to pay for 100% of Federal spending.


Quote:
As for the M1V, the average (mean) from 1960-01-01 through 2012-10-01 (most recent data handy from FRED) was 6.675. (...) The value for 2012-10-01 was 6.547.
By that measure, we are almost precisely at the mean average value right now.

If you downwardly weight the value of the data from the period which contained the tech bubble and the housing bubble, then we are presently above the "nominal" value.
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Old 03-07-2013, 03:09 PM   #3939
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This is what Joe wrote:

Quote:
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By finding itself in a position in which it is unable to raise sufficient funds from a combination of revenue activity (tax collection) and debt (the issuing of bonds) to pay for 100% of Federal spending.
This is what Scrappy sees:

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Old 03-07-2013, 03:12 PM   #3940
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