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Old 11-30-2012, 02:22 PM   #1
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Post The "Fiscal Cliff" exposes myths, misunderstandings and misdirections

I like alliteration.

Some commonly held beliefs (many of them GOP-driven) continue to be upended or exposed as false as we move through the aftermath of the Global Financial Crisis of 2007-2009.

Deficits are always bad. It seems that most everyone now recognizes that cutting spending and raising taxes would (A) reduce the deficit significantly right up until (B) it tipped the economy from slow growth to negative growth. That negative growth would kick in all kinds of automatic stabilizers like reduced tax receipts and increased spending on unemployment insurance and social aid that would just increase the deficit again.

Markets are efficient. On November 16, some politicians claimed there was "constructive" progress on a deal to avoid the "Fiscal Cliff." The Dow Jones Industrial Average jumped 128 points shortly after - despite there being absolutely nothing concrete agreed to or laid out.

The Bond Vigilantes will keep Congressional spending in check. The Bond Vigilantes "now have become the Bigfoots of the U.S. economic debate — much talked about but without any proof of existence."

Cutting government spending is always a good thing. The same people that call for balanced budgets are railing against government spending cuts that could end up costing thousands of private sector jobs that sell goods and services to the government or to government contractors.
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Old 11-30-2012, 02:43 PM   #2
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Obeezy campaigned on increasing spending by 4%. Too bad Romneybot lost, he was going to spend .5% less. America will die (of AIDS).
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Old 11-30-2012, 05:00 PM   #3
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I made a few revisions.

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Originally Posted by Scrappy Jack View Post
Deficits are always bad.
In the long-term, continuous deficit spending tends to destabilize governments.


Markets are efficient.
There are many different kinds of markets. Securities and commodities markets tend to be highly speculative in nature.


The Bond Vigilantes will keep Congressional spending in check.
I heard someone use the term "Bond Vigilantes," and even though it's extremely vague, it sounds cool.


Cutting government spending is always a good thing.
Decreasing government spending in order to reduce deficits is a compromise, which aims to improve the stability of the economy in the long-term.
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Old 12-01-2012, 11:02 AM   #4
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Do MMT'ers/Chartalists in general, like Keynesians, believe that having bureaucrats and politicians direct where productivity and money taken by force (i.e. taxation), is better than leaving said money in the hands of individuals, who will each decide where to spend or invest said money for bettering their own lives, or to make a return?

If one were to look at gov't spending as a % of GDP (or, put another way, percentage of gov't control over total productivity)... do MMT'ers/Chartalists believe that more control over economic output is better? What do they posit is a "good" number? 10%? 20%? 50%? 100%?
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Old 12-01-2012, 11:40 AM   #5
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Originally Posted by JasonC SBB View Post
Do MMT'ers/Chartalists in general, like Keynesians, believe that having bureaucrats and politicians direct where productivity and money taken by force (i.e. taxation), is better than leaving said money in the hands of individuals, who will each decide where to spend or invest said money for bettering their own lives, or to make a return?

If one were to look at gov't spending as a % of GDP (or, put another way, percentage of gov't control over total productivity)... do MMT'ers/Chartalists believe that more control over economic output is better? What do they posit is a "good" number? 10%? 20%? 50%? 100%?
1) Sure - the truth is, we need your money to convert the US to the metric system.

2) Let's ask Nate Silver, I'm sure he could round it to 3 decimal places too.
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Old 12-01-2012, 07:35 PM   #6
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Originally Posted by JasonC SBB View Post
Do MMT'ers/Chartalists in general, like Keynesians, believe that having bureaucrats and politicians direct where productivity and money taken by force (i.e. taxation), is better than leaving said money in the hands of individuals, who will each decide where to spend or invest said money for bettering their own lives, or to make a return?
I don't really even know the best way to answer this. I think the short answer is, that depends on which one you ask. Warren Mosler has been a big proponent of additional tax cuts (such as a complete FICA holiday) and more funds directed to the state level vs others who likely argue for more Federal-directed spending such as larger-scale improvement of infrastructure.


You continue to misunderstand that MMT is designed as a description.

You are so focused on the ideological or philosophical that you can't separate description (what is) from prescription (what we think we should do).

It's like asking a physicist or an engineer if he believes that gravity should have so much influence on mass outside of a vacuum.
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Old 12-12-2012, 05:39 PM   #7
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Excellent article today from Edward Harrison. I haven't watched the video at the bottom (and probably won't) but his summary notes are worth reading.
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Old 12-12-2012, 06:09 PM   #8
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taxes are a moral issue. gov't's job.
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Old 12-12-2012, 06:20 PM   #9
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I think clearly the solution is to continue raising taxes so we can waste more money on social programs. Obviously lazy people need MY money more than I do, it's not like I have my own bills to pay or anything.

****, why not continue spending our great great great great great great grandchildren's money? They can just keep blaming it all on Bush.
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Old 12-12-2012, 06:33 PM   #10
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Yeah, we need to kick those lazy bums off welfare.

I say we start with Kansas.



But please, continue. Don't let inconvenient things like facts get in your way there.

Full disclosure: PolitiFact | 'Red State Socialism' graphic says GOP-leaning states get lion's share of federal dollars
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The "Fiscal Cliff" exposes myths, misunderstandings and misdirections-red-state-socialism.jpg  
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Old 12-12-2012, 06:55 PM   #11
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Awesome chart, the publishers even admit the data is outdated and no longer accurate.
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Old 12-12-2012, 06:59 PM   #12
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Originally Posted by mgeoffriau View Post
Excellent article today from Edward Harrison. I haven't watched the video at the bottom (and probably won't) but his summary notes are worth reading.
Great summary and far more eloquent and succinct than I've been able to communicate. You will notice he also makes clear there is a descriptive and a prescriptive element at work.

Unfortunately, such objective and thoughtful work is lost on most people. See below:

Quote:
Originally Posted by elesjuan View Post
I think clearly the solution is to continue raising taxes so we can waste more money on social programs. Obviously lazy people need MY money more than I do, it's not like I have my own bills to pay or anything.

****, why not continue spending our great great great great great great grandchildren's money? They can just keep blaming it all on Bush.
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Old 12-12-2012, 07:17 PM   #13
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Originally Posted by RussellT94 View Post
Awesome chart, the publishers even admit the data is outdated and no longer accurate.
"The graphic’s data uses data from the 2004 election rather than 2008, and the figures on taxes and spending date back to 2005. There are fewer states that would be labeled Republican based on the 2008 election, and there’s a strong likelihood that tax and spending data would have changed as well. Because of this likelihood, we downgrade the accuracy of this generally accurate chart to Mostly True."

Another win for New Jersey. Number 50 out of 57 states.
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Old 12-13-2012, 10:35 AM   #14
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But please, continue. Don't let inconvenient things like facts get in your way there.

Full disclosure: PolitiFact | 'Red State Socialism' graphic says GOP-leaning states get lion's share of federal dollars
Lol. This is simply wealth redistribution. You can put decapitated kittens all over the charts and it still doesn't change the fact that all you're looking at is that people with higher incomes pay more taxes than they get back in government services; people with lower incomes get more back than they pay in. The more progressive the tax structure, the more pronounced the redistributive effects. Obama's proposed tax rates will make your chart look much "worse"

It's also shameful they always leave off DC and PR, who get back $5.55 and $6.xx back repsectively for every dollar put in.

Anyways, like always Blaen, you failed to make any point.

And still linking from Politifact I see. Did you see their "Lie of the Year?" It was this:

Quote:
"I saw a story today, that one of the great manufacturers in this state, Jeep, now owned by the Italians, is thinking of moving all production to China"
Yep, politifact gave that statement the "lie of the year award." Even though the statement is not a lie. Especially if you look at it objectively, since Romney probably read this story: http://chinaautoweb.com/2010/05/fiat...jeep-to-china/


If my friend got killed in a terrorist attack because of a "video" that only 2000 people saw, and it was later found it was a big complete lie and a cover up, I probably continue to use Politifact too.

Last edited by Braineack; 12-13-2012 at 10:54 AM.
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Old 12-13-2012, 11:10 AM   #15
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I love all these liberals with their Earth shattering, counter-intuitive rhetoric about the fiscal cliff, the second amendment, and Islamic diversity. Let me summarize it for you:
Fiscal Cliff:
Republicans don't understand that when there is no money left in your wallet, you should spend more. It's foolish to stop spending, ever, because debt is not real and we need your tax revenue to pay for a bunch of programs to reward the unemployed who don't have access to handguns.
2nd Amendment:
"The people" is an undefined subset specific only to the 2nd Amendment; or in 1776 "the people" were non-enlisted military and comprised the militia. That doesn't apply today because it shouldn't. "Shall not be infringed" needs to be changed because you can rest easy in statistics.
Islamic diversity:
You should all stop breathing because it's offensive to Muslims.

Well, that pretty much sums it up. Every now and then it's important to remind non-rabid-Democrats that it takes a wall of text correct your interpretation on 3 word phrases the "shall not infringe" and concepts like "there is no more money left". I recommend you all go out and get credit cards if you're out of money and give away all your guns to homeless blacks to embrace social justice.
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Old 12-13-2012, 11:12 AM   #16
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Yeah, I cant wrap it around my head that we need to raise revenue in order to pay for nine days of gov't spending.

taxes are a moral issue, nothing more.
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Old 12-13-2012, 11:41 AM   #17
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I love all these liberals with their Earth shattering, counter-intuitive rhetoric about the fiscal cliff, the second amendment, and Islamic diversity. Let me summarize it for you:

[...]

Well, that pretty much sums it up. Every now and then it's important to remind non-rabid-Democrats that it takes a wall of text correct your interpretation on 3 word phrases the "shall not infringe" and concepts like "there is no more money left". I recommend you all go out and get credit cards if you're out of money and give away all your guns to homeless blacks to embrace social justice.
Trey - Isn't your significant other studying economics? Granted, it's probably all rooted in gold-standard era neoliberal (Keynesian/Monetarist) but she can explain "pro-cyclicality" to you.

Cutting Federal government spending and raising taxes both do the same thing: take money out of the economy.

Increasing Federal government spending adds new money to the economy.

Cutting taxes adds new money to the economy.

Because of waste, cronyism and inefficiencies, I generally favor tax cuts. A healthy, developed economy grows at more than 3% net of inflation on a yearly basis ("real GDP growth"). 2012 will possibly be less than 2% and was probably closer to 1% in the Q4.


TL; DNR: Explain to me how "there is no more money left" at the US Treasury.
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Old 12-13-2012, 11:46 AM   #18
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TL; DNR: Explain to me how "there is no more money left" at the US Treasury.

We aren't: Federal Reserve announced on Wednesday that it will keep interest rates near zero and will purchase $85 billion in bonds every month until unemployment falls from its present 7.7% to 6.5%.

that's going to be a LOT of money, and it WONT run out.
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Old 12-13-2012, 11:58 AM   #19
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Quote:
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Trey - Isn't your significant other studying economics? Granted, it's probably all rooted in gold-standard era neoliberal (Keynesian/Monetarist) but she can explain "pro-cyclicality" to you.

Increasing Federal government spending adds new money to the economy.
My GF would debate crush on all points above which remain. She is definitely a fiscal conservative, lol.
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Old 12-13-2012, 11:58 AM   #20
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We aren't: Federal Reserve announced on Wednesday that it will keep interest rates near zero and will purchase $85 billion in bonds every month until unemployment falls from its present 7.7% to 6.5%.

that's going to be a LOT of money, and it WONT run out.
Oh inflation, how we love thee. The problem is not really the deficit itself but the rate at which it is growing and how the money being used is being spent. Currently the govt. is just pissing money away instead of using it to actually create jobs.
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