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Old 09-28-2011, 02:12 PM   #41
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this thread does not get me pumped up anymore.

scrappy is a buzz kill.
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Old 09-28-2011, 02:19 PM   #42
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Originally Posted by jacob300zx View Post
The government doesn't create wealth.
Exactly. The government creates new money. The government should exist as an entity created "by the people, for the people" (i.e. the private sector). Money ≠ wealth. Government deficit spending credits the private sector and taxation debits the private sector.

This is NOT to say that the government should just spend ad infinitum. Too much spending with too little taxation causes malinvestment (e.g. bubbles) and inflation.

Note that 90 - 99% of what I am discussing is politically and ideologically agnostic. It is descriptive of the current monetary system in which the USA operates (along with other sovereign monopoly issuers of free-float currency).
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Old 09-28-2011, 02:25 PM   #43
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Originally Posted by Scrappy Jack View Post
Government deficit spending credits the private sector and taxation debits the private sector.
Any inflationary spending is taxation. A 2% inflation target is actually a 2% tax on every dollar in your wallet and bank account (actually, it's higher than 2%, since in the absence of government-created credit bubbles and inflation targets, we'd likely have some deflation). Moreover, it's actually a regressive tax that targets the poor disproportionately.
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Old 09-28-2011, 02:55 PM   #44
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Originally Posted by mgeoffriau View Post
Which brings us right back to the issue of an unbalanced budget and deficit spending: either the debt obligations are not met, or we inflate the currency in order to do so.
It does bring us back to deficit spending and inflation, along with the "bond vigilantes" who have been sleeping on the USA the past few years (and Japan for the past 20).

We will face consistent high inflation (I know I will get lots of pushback on ShadowStats, hedonics and the problems with calculations and use of core CPI) once we start operating closer to productive capacity - think: closer to full employment.

For reference, because it's all I had time to calculate using BLS.gov stats, here is average annual CPI-U change for the past three decades:
1980 - 1989 = 5.55%
1990 - 1999 = 3.01%
2000 - 2010 = 2.47%
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Originally Posted by Braineack View Post
this thread does not get me pumped up anymore.

scrappy is a buzz kill.
People would still disagree on the prescriptive elements, but I really believe that a better understanding of the operational realities of today's monetary system would make for better discourse.

Arguing that the USA is on the "verge of bankruptcy" is like arguing that your new BMW 5-series is going to run poorly in cold weather unless you tune the carbs.
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Old 09-28-2011, 04:52 PM   #45
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DOE announced a $737 million loan guarantee to help finance construction of the Crescent Dunes Solar Energy Project, a 110-megawatt solar-power-generating facility in Nye County, Nev. The project is sponsored by Tonopah Solar, a subsidiary of California-based SolarReserve.

The Energy Department said the project will result in 600 construction jobs and 45 permanent jobs.
You guys want to make a quick 1.1 million dollars? oh wait that's not how it works is it?
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Old 09-29-2011, 12:13 PM   #46
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thank god for gov't

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Today’s news came as no surprise to me. Apparently, the Small Business Lending Fund (SBLF), which was created as part of the “Small Business Jobs Act of 2010″, has just closed. It distributed only $4 billion of the $30 billion authorized. The only thing that did actually surprise me was that the government did not actually spend all the money it was authorized to. This is considered, in some circles, a miracle.

On the other hand, the one place where this money should have been fully distributed was within this very program, once again lending credence to the theory that government can always be relied upon to do the exact opposite of what needs to be done.



The Fund was supposed to provide capital to small community banks that would then lend to small businesses. However, 40% of applicants did not meet minimum requirements. Now, think about this. The government would not lend to these banks because they didn’t meet requirements, which include paying dividends back to the SBLF.

But the government didn’t think twice about guaranteeing a $570 million loan to Solyndra, despite repeated internal warnings that the business was in trouble.
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Old 09-29-2011, 02:37 PM   #47
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Originally Posted by Braineack View Post
thank god for gov't
This reminds me of comments made by a recent bank executive: "We have one hand of the government saying that we need to lend more while we have another hand telling us we need to tighten standards."

If the SBLF had distributed 100% of the authorized amount using relaxed standards and then had a bunch of failures - people would complain that the government was in the business of making risky loans.

Because the SBLF maintained tighter lending standards with small-town community banks, people complain that the government didn't spend enough money.


The more I think about it, the more I think this should only be seen as a "victory" or a good thing for the smaller government crowd.
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Old 09-29-2011, 03:02 PM   #48
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yeah but of all the "1 and 0s" wasted by congress, this would have been one of the better wastes.
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Old 10-05-2011, 03:15 PM   #49
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Scrappy.

Did you catch me on Wall Street?

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Old 10-07-2011, 05:47 AM   #50
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Rank State Private sector employment (000s)
State & local government employment (000s)
Medicaid enrollment (000s)
Combined ratio1(%)


1 New Mexico 623 160 407 97.5
2 Mississippi 858 223 531 94.3
3 New York 7,118 1,386 4,140 82.5
4 Louisiana 1,550 327 860 81.9
5 California 11,790 2,148 6,524 78.1
6 West Virginia 596 120 307 76.7
7 Tennessee 2,231 373 1,237 76.3
8 Arkansas 965 187 488 74.8
9 Alabama 1,521 322 698 72.3
10 Kentucky 1,462 272 699 71.0
11 Arizona 1,989 352 969 70.8
12 Vermont 244 39 123 70.4
13 Oklahoma 1,227 271 522 70.1
14 Maine 516 76 254 67.6
15 Michigan 3,241 528 1,526 67.5
16 South Carolina 1,520 296 643 66.7
17 Hawaii 469 86 192 64.0
18 Georgia 3,192 576 1,267 62.3
19 North Carolina 3,238 618 1,238 62.1
20 Washington 2,340 445 886 61.6
21 Alaska 263 63 83 61.4
22 Illinois 4,860 729 2,043 60.8
23 Idaho 511 98 175 58.3
24 Ohio 4,367 670 1,653 57.0
25 Texas 8,566 1,553 2,883 56.3
26 Wyoming 228 58 56 56.3
27 Florida 6,199 993 2,152 54.7
28 Pennsylvania 4,895 591 1,926 54.4
29 Delaware 357 51 129 54.0
30 Rhode Island 405 47 159 53.7
31 Indiana 2,391 376 806 53.4
32 Massachusetts 2,796 342 1,046 52.7
33 Missouri 2,282 358 751 52.5
34 Wisconsin 2,378 364 755 50.9
36 Connecticut 1,389 211 431 50.1
35 South Dakota 337 63 91 50.1
37 Oregon 1,339 249 356 49.9
38 Iowa 1,235 214 335 48.8
39 Kansas 1,082 214 254 48.1
40 District Of Columbia 461 53 153 47.7
41 Minnesota 2,270 357 602 46.2
42 Nebraska 785 146 177 45.8
43 Maryland 2,072 339 520 45.6
44 Montana 363 70 78 45.5
45 New Jersey 3,329 545 781 44.0
46 Virginia 2,973 504 666 43.6
47 Colorado 1,884 320 407 42.9
48 North Dakota 296 59 52 42.3
49 Utah 992 167 203 41.5
50 New Hampshire 548 77 114 38.3
51 Nevada 1,025 131 189 34.5
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Old 10-07-2011, 07:59 AM   #51
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Quote:
Originally Posted by jacob300zx View Post
Rank State Private sector employment (000s)
State & local government employment (000s)
Medicaid enrollment (000s)
Combined ratio1(%)


1 New Mexico 623 160 407 97.5
[...]
51 Nevada 1,025 131 189 34.5
Help me understand what I am looking at and what the significance is. The first three numbers are pretty self-explanatory but I am not seeing what the "combined ratio" consists of.

[Edit: Nevermind; I found the source link from Forbes.] I'll review the article and comment later.
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Old 10-11-2011, 04:29 PM   #52
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Originally Posted by Scrappy Jack View Post
[Edit: Nevermind; I found the source link from Forbes.] I'll review the article and comment later.
I actually decided the following was more appropriate/on-point for this thread:
http://www.nfib.com/Portals/0/PDF/sbet/sbet201110.pdf

Some highlights
  • On inflation: "Seasonally adjusted, a net 14 percent plan price hikes, down 2 points."
  • On earnings and wages: "[...] a seasonally adjusted net 8 percent reporting higher worker compensation, a 1 point decline. A net seasonally adjusted 7 percent plan to raise compensation in the coming months, unchanged from August."
  • On credit markets: "Three percent reported financing as their #1 business problem. So, for the overwhelming majority, “credit supply” is not a problem. Ninety-two (92) percent reported that all their credit needs were met or that they were not interested in borrowing."
  • Number one reason for lower earnings: Sales volume
  • Single Most Important Problem: Poor Sales (28%) vs Govt Reqs and Red Tape (18%) vs Taxes (16%)

[Emphasis mine]

I think much of that information, for what it's worth, can be interpreted as confirming the position that demand is ultimately the primary issue in a balance sheet recession rather than credit supply, government regulation or taxation.

That is not to say that the other elements are not important or that they do not have effects but starting from a position other than lack of demand (due to private sector deleveraging) seems to me to be a recipe for continued misguided monetary and fiscal policy.

Last edited by Scrappy Jack; 10-18-2011 at 11:06 AM.
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Old 10-12-2011, 02:39 PM   #53
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Post Bill Clinton misunderstands the modern monetary system

Quote:
Bill Clinton: How to fix the economy
October 7 (CNN) — How to fix the economy and create jobs

First, Congress and President Obama can adopt strategies designed to unleash the massive amount of capital that is accumulated but not being invested. There’s some $2.2 trillion in cash in American banks that is not committed to loans. A couple hundred billion has to be held back for bad mortgages, but there’s about $2 trillion that could be used in cash reserves for up to $20 trillion in loans. So, in theory, that would take the world out of recession. And U.S. corporations have about $2 trillion more that they have decided not to invest.
This is a misunderstanding of (A) the way the current monetary system works (loans create deposits, not vice versa) and (B) the nature of a balance sheet recession (lack of demand for new loans cannot be overcome with additional excess reserves).

[Edit: I thought I put this chart up already, but I guess not.]
Attached Thumbnails
Peter Schiff schooling Congress-2010-usa-private-debt-gdp.jpg  
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Old 10-17-2011, 11:32 AM   #54
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More Govt Spending causes Higher Unemployment. This chart says so:


[Edit: I am being sarcastic here. ]
Attached Thumbnails
Peter Schiff schooling Congress-unemp_vs_spending.jpg  

Last edited by Scrappy Jack; 10-17-2011 at 05:16 PM. Reason: Felt that needed to be clarified as dry humor does not always work well in text.
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Old 10-17-2011, 03:19 PM   #55
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Originally Posted by Scrappy Jack View Post
(A) the way the current monetary system works (loans create deposits, not vice versa) and (B) the nature of a balance sheet recession (lack of demand for new loans cannot be overcome with additional excess reserves).
Agreed. Remember tho that the FedRes has tools to manipulate interest rates down, and coupled with expansion of the AMB, creates bubbles. The bubbles represent mal-investment - investment in things that have no real, matching consumer demand. The bubble pops, prices try to correct down, and you have empty houses (mal investment). The gov't/FedRes then tries to prop up the prices that want to correct down (housing) ... mostly because this would save the balance sheets of the over-leveraged banks.

Thing is, the effort to block the correction (lower prices), interferes with the recovery. The correction of prices to market-clearing levels (where demand matches supply), is the first step in recovery.
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Old 10-25-2011, 11:42 AM   #56
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Quote:
Originally Posted by Scrappy Jack View Post
I think much of that information, for what it's worth, can be interpreted as confirming the position that demand is ultimately the primary issue in a balance sheet recession rather than credit supply, government regulation or taxation.
An alternative view: Wells Fargo/Gallup Small Business Index poll

This poll asks the primary question of "What do you think is the most important problem facing small-business owners like you today?" Combined, you could argue that "regulations and taxes" accounted for 36% and "the consumer" accounted for 31%.


The first poll asks "What is the single most important problem facing your business today?”

When the Wells Fargo/Gallup poll asks the small business owner to think about their own business for 2012, the numbers (by my count) are ~25% "government" and ~42% "the consumer," not including the Improved housing market response.

Likewise, asked to think about their own business and hiring for 2012, what I would lump together as "increased demand" is 64% and "government" (via tax credits) is 7%.
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Old 11-17-2011, 10:39 PM   #57
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http://fetch.noxsolutions.com/schiff...ler_111711.mp3

Listen to this at least twice. The first time, you will miss something.
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Old 01-03-2012, 10:46 AM   #58
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Quote:
Originally Posted by CNBC Article
Foreign Central Banks Cut Treasury Holdings by Record
[...] The decline in foreign holdings of Treasurys in recent weeks has not resulted in higher yields and lower prices because other investors have sought the safety of US debt.

“Given where the 10-year Treasury is ending the year, it’s difficult to say the flows are a bearish move,” said Ian Lyngen, strategist at CRT Capital.

The yield on 10-year notes was set to end 2011 below 1.90 percent on Friday and the Barclays Capital index of long-dated Treasurys has rallied nearly 30 percent this year, its best annual performance since 1995.

“While other buyers have willingly taken up the torch up to this point, it seems clear that this [foreign official flows] source of demand has waned since Operation Twist took yields to these levels and this investor base has little interest in sub-2 percent 10-year yields,” said John Briggs, strategist at RBS Securities.[...]
Response from the guy in the above interview on Peter Schiff's show:

Quote:
Originally Posted by Warren Mosler
And Tsy yields at record lows!

Even with $trillion federal deficits!

Even with the S and P downgrade!

Even with large foreign holdings of US Treasury securities!

Who would have thought?



Happy New Year to all!!!
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