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Old 12-13-2012, 12:00 PM   #21
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but if they keep doing it until enough jobs are eventually created, they can say they were the ones who created those jobs.
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Old 12-13-2012, 12:03 PM   #22
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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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Old 12-13-2012, 12:05 PM   #23
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except he's wrong:

Obama hires 101 new federal employees a day

he's creating a small of amount of highly paid jobs
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Old 12-13-2012, 12:05 PM   #24
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Ya'll fiscal conservatives postin in a lib thread.
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Old 12-13-2012, 12:06 PM   #25
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Are any of them white male?
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Old 12-13-2012, 12:08 PM   #26
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Ya'll fiscal conservatives postin in a lib thread.
I can post wherever I want. FREEEEEEEEEEEEEEEEEEDUMB!!!!!!!!!!
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Old 12-13-2012, 12:34 PM   #27
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My GF would debate crush on all points above which remain. She is definitely a fiscal conservative, lol.
PM me your phone number and we can do a conference call. Your girlfriend may be a fiscal conservative and she may be smarter than me, but she is not smarter/more educated in this arena/more exposed to the mechanics than Jan Hatzius, Warren Mosler, Cullen Roche, Edward Harrison, et al.


"...every dollar of government deficits has to be offset with private sector surpluses purely from an accounting standpoint, because one sector’s income is another sector’s spending, so it all has to add up to zero. That’s the starting point. It’s a truism, basically. Where it goes from being a truism and an accounting identity to an economic relationship is once you recognize that cyclical impulses to the economy depend on desired changes in these sector's financial balances."

I will bet you $20 that your girlfriend has not been exposed to sectoral balances in whatever business school she is attending. I am confident, because she is being taught the same crap almost every other economist or biz student (including myself once upon a time) was taught: money multiplier, loanable funds theory, etc.

It's why most people have been wrong on inflation expectations, why they don't understand that quantitative easing is primarily an asset swap (Fed takes $100 worth of your bond and gives you $100 worth of cash, leaving you with $100 in assets), why they don't understand the relationship of the Fed, Treasury and Primary Dealers, etc.

That's why those that do understand post-Keynesian/post-Monetarist economcs correctly called things like:
  • the recession of the early 2000s as a result of the "Clinton surplus"
  • the issues of the European Monetary Union and that a banking crisis would expose the weakness in having countries give up their currency sovereignty
  • the bust of the subprime over-leveraging
  • that QE and fiscal stimulus would not cause high, massive or hyper-inflation
  • basically every major macro call of the past 25 years

At some point, being right should count for something and being wrong because of outdated ideas held on to like religion should have consequences.

I swear, talking to "fiscal conservatives" is like talking to religious nuts. The cognizant dissonance is infuriating.

"We are going to see hyperinflation because of all the money printing!"
translation: we have an unlimited supply of US dollars

"We're bankrupt!"
translation: we cannot pay our bills

"We should just voluntarily default on our debt!"
translation: we can pay our bills, but we shouldn't in order to teach people (like China and my grandmother) a lesson for buying US Treasury bonds

"We should refuse to raise the debt ceiling!"
translation: we are going to refuse to pay the invoice on spending we approved 8 months ago




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Old 12-13-2012, 12:39 PM   #28
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Last edited by hustler; 12-13-2012 at 12:57 PM.
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Old 12-13-2012, 12:40 PM   #29
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why are you linking images from my local underground?
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Old 12-13-2012, 12:51 PM   #30
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Originally Posted by Scrappy Jack View Post
I swear, talking to "fiscal conservatives" is like talking to religious nuts. The cognizant dissonance is infuriating.

"We are going to see hyperinflation because of all the money printing!"
translation: we have an unlimited supply of US dollars

"We're bankrupt!"
translation: we cannot pay our bills

"We should just voluntarily default on our debt!"
translation: we can pay our bills, but we shouldn't in order to teach people (like China and my grandmother) a lesson for buying US Treasury bonds

"We should refuse to raise the debt ceiling!"
translation: we are going to refuse to pay the invoice on spending we approved 8 months ago
I don't disagree with any of these points. However, just because hyper inflation is not occuring does not mean there is not some inflation and that this inflation is not more harmful than the benefits derived from the govt. spending that created it.

If the govt. wants to spend massive amounts of money it should try investing heavily in infrastucture upgrades, military technology, and research grants that create jobs in the private sector where the funds will be spent much more efficiently. Right now the money is being spent on bullshit that isn't very effective.
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Old 12-13-2012, 12:54 PM   #31
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but if it wasnt for the horrible poilcies of the fed, to help get our economy is such mess, we couldnt have horrible programs to keep thouse we ruined in control:

Obama's America Will Become Detroit | CNS News
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Old 12-13-2012, 12:58 PM   #32
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why are you linking images from my local underground?
I wanted to see a window into a bastion of progressive liberalism.
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Old 12-13-2012, 03:12 PM   #33
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I don't disagree with any of these points. However, just because hyper inflation is not occuring does not mean there is not some inflation and that this inflation is not more harmful than the benefits derived from the govt. spending that created it.
Yes, there is some inflation. The absence of inflation is typically deflation and that's what happens when economies contract or shrink. You may or may not recall that we just had some deflation a few years ago - along with one of the worst recessions in about 70 years.

To be more accurate, we have had less inflation over the past 4 years (1.6% average) than we did for the past 10 or 20 years (2.5% for both time frames). All three time frames are lower than the average going back to the late 1940s (farthest back the CPIAUCSL goes back in present trime). Since 1947, the average annual rate of change has been 3.7%.

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If the govt. wants to spend massive amounts of money it should try investing heavily in infrastucture upgrades, military technology, and research grants that create jobs in the private sector where the funds will be spent much more efficiently. Right now the money is being spent on bullshit that isn't very effective.
I do not generally disagree.
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Old 12-13-2012, 03:18 PM   #34
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This is the image I need to keep in my head every time I hear some of the nonsense that so-called "fiscal conservatives" wring their hands over so that I remember there is no point in trying to have an intelligent conversation with them on the subject.


I feel like Copernicus' student and people like Hustler and Brain are members of the Vatican. Smart people chained by the equivalent of religious beliefs.

Alternatively, I feel like Joe Perez on Miata.net trying to explain why a turbo does not, in fact, "ruin" a Miata.
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Old 12-13-2012, 03:22 PM   #35
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I remember once you pm'd me, proud that I regurgitated something you said to me... you have made me sad today.

I feel like you are Confucius and I'm a little asain girl who is full of shame.
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Old 12-13-2012, 11:20 PM   #36
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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.
This seems to presuppose that "the economy" is a closed system, a zero-sum game.

The supply of money is essentially infinite, as the Fed has carte blanche authority to create it at varying levels simply by adjusting the speed of the printing presses.

Making adjustments (either positive or negative) to federal spending and/or tax rates affects three things, all of which interact:

1: The amount of "free" money in the economy, which can also be influenced by

2: The need to create new money, which along with the first has an effect on the side of

3: A largely fictitious variable which is most easily conceptualized as "the deficit."


It is entirely possible to increase spending while decreasing taxation. This has the effect of leaving more money in circulation while simultaneously decreasing the need for money creation (which raises the value of money), while at the same time increasing the amount of federal debt.

Raising taxes while increasing spending, or lowering taxes while decreasing spending, has virtually no effect on the amount of free money in the economy nor the need to create new money.

Raising taxes while decreasing spending removes money from circulation while also decreasing the amount of federal debt.


So, how do you assign relative valuations to the quantity of federal debt vs. printing money vs. the value of money vs. quantity of money in circulation?
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Old 12-14-2012, 07:45 AM   #37
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This seems to presuppose that "the economy" is a closed system, a zero-sum game.

The supply of money is essentially infinite, as the Fed has carte blanche authority to create it at varying levels simply by adjusting the speed of the printing presses.
I'll post more detail later, but I will argue this is not really accurate. The Federal Reserve does not add new net dollars to the economy. The US Treasury, upon direction of the Congress, does that.

Again, looking at quantitative easing as an example, if you hold $100 million in mortgage backed securities and I buy those for $100 million, I have only changed your liquidity - not the net value of your assets.
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Old 12-14-2012, 12:00 PM   #38
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A counterpoint for those willing to read:
The Upside-Down World of MMT - Robert P. Murphy - Mises Daily

The counter-example used uses, instead of math, a closed-system example - an island economy.
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Old 12-14-2012, 01:33 PM   #39
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A counterpoint for those willing to read:
The Upside-Down World of MMT - Robert P. Murphy - Mises Daily

The counter-example used uses, instead of math, a closed-system example - an island economy.
A Robinson Crusoe barter economy with no international trade, no banking, no contingent institutional approach, no differentiation between a sovereign currency issuer and non-sovereign currency user, etc.

Basically, a very helpful way to understand a system that does not exist in today's reality.


Also, he starts his post with a misrepresentation that students of the modern monetary system believe "deficits don't matter." They matter very much.
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Old 12-15-2012, 12:48 AM   #40
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I'll post more detail later, but I will argue this is not really accurate. The Federal Reserve does not add new net dollars to the economy. The US Treasury, upon direction of the Congress, does that.
I was using the term "The Fed" as a blanket term for the US Federal Government as a whole. The Treasury Secretary is a member of the Cabinet, and the Treasury, operating under the authority of the Congress, is essentially an agent of the Federal Government.


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Again, looking at quantitative easing as an example, if you hold $100 million in mortgage backed securities and I buy those for $100 million, I have only changed your liquidity - not the net value of your assets.
I don't really understand where you're going with this, insofar as how the creation and exchanging of securities is relevant to monetary policy.



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Originally Posted by Scrappy Jack View Post
A Robinson Crusoe barter economy with no international trade, no banking, no contingent institutional approach, no differentiation between a sovereign currency issuer and non-sovereign currency user, etc.

Basically, a very helpful way to understand a system that does not exist in today's reality.
I couldn't agree more.

Jason, this is part of the reason why I find these discussions to be tiring. You seem to have a tendency towards citing academic studies which are simply not applicable to a present-day global economy. This is not the first time.


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Originally Posted by Scrappy Jack View Post
Also, he starts his post with a misrepresentation that students of the modern monetary system believe "deficits don't matter." They matter very much.
As I hinted at earlier, this is a point on which many, myself included, are quite hazy.

On the one hand, it seems intuitively obvious that deficit spending is not endlessly sustainable. If I keep running up my credit card balance and only ever make the minimum required payments, then I will quickly hit my credit limit (at which point I can no longer make new purchases on the card) and sooner or later, they will wind up suing me.

On the other hand, there does not appear to be a practical, finite limit to the US Government's credit limit. For starters, there is no one single lender, just an aggregate of many different lenders, some of which are functionally the government itself. And historically, every time we have approached a debt limit, it has subsequently been increased.

With no actual credit limit, and no realistic threat of collections / forclosure / similar concept, what motivation is there to curb deficit spending? I mean, if my credit card company upped the limit on my card every time I approached it, and was toothless to ever actually act against me to collect, why wouldn't I use the card endlessly and irresponsibly?
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