What does a "small government" look like?

Acually, the Fed offers to purchase bonds from banks who hold them. Treasury gets nothing out of it. It's just an asset exchange between the Fed and the banks who agree to the deal.

Google the equation of exchange. MV=PQ. It's an identity. It is always true. If one variable shifts, one or more of the other three will adjust in order to maintain the truth of the identity. When excess human and other capital is present in an economy, Q will move before P because that causes profits to increase. When excess capacity is very low, those real constraints immobilize Q and cause P to move first instead.

Stagflation is meanhile nothing more than a measure of differential rates of response in an economy when a massive external shock has occurred. The only examples of stagflation have appeared in years immediately after major oil price shocks. Dorkish suggestions of other means for producing stagflation have been proposed but none of them are taken seriously by anyone. Stagflation is a special case, not a disproof of the Phillips curve.

 

if you are sitting on a pile of worthless currency, you are effectively bankrupt

I was responding to the other poster, who said the dollar was so valuable. The EU is not artificially inflating the Euro, where the hell did you get that from? did you always just make crap up? If the US$ falls to $4 per Euro, that means we are so non competitive and government finances are so bad that our economy is probably in ruins, not to mention the price of losing status of world reserve currency.

 

when the treasury sold those bonds to the dealer they got nothing? they sold them for 0$? lol

MV=PQ is trivial rearrangement of the definition of money velocity, of course it's always true, it's a definition. Like all other macro concepts, it is only as useful as the assumptions behind the variables, no holy grail or anything, just economists pretending they are doing science.

 

The size of government, of itself, is meaningless.

Some may get aroused by the notion of a teeny weeny state apparatus, but one must assess bottom-line results and ask how effective it is in achieving the welfare of its people.

Norway, Australia, New Zealand, the United States, and Ireland all have considerably "bigger" governments than does Zimbabwe.

If you have a knee-jerk affinity for diminutiveness, you extol Zimbabwe.

I have cited six nations, one of which has a considerably smaller government than the others. If the ideological miniaturists have any other real-world examples of puny public sector sovereignties they envy and tout in preference to those with the best quality of life, they are welcome to list them, of course.

 

The nonsensical claims of propagandists and bird-brained TEA Party types do not make for any sort of actual failure. Except of course on the part of the propagandists and bird-brained TEA Party types. The country is quite capable of of dealing with the drivelish, trained-seal barking of whiny, disinformed bloviators.

LOL! Scotland is part of a constitutional monarchy. The monarch is Queen Elizabeth. The Prime Minister is David Cameron. The real world is and long has been moving away from what you think you see.

 

More that these people just don't understand what QE is, why it's used, or how it works.

The Fed would like to see inflation at 3%, but right-wingers scream about "printing money" and hyperinflation in just the same completely delirious fashion that they scream about being taxed-enough-already when taxes are the lowest they've been since the 1950's.

 

It's not only the tea party, all politics is getting more divisive. It is clear that one side wants more government and one side wants less, and we'll never agree.

not very well read are you?

http://www.nytimes.com/2012/02/27/opinion/independence-for-scotland.html?pagewanted=all&_r=0

 

My view of small government.

First the federal government.

Limit overall federal spending to around $1.2 trillion (7% of GDP).

Annual Defense spending would be $425 billion (2.5% of GDP) That’s 47% reduction from 2014

About $170 billion (1% of GDP) per year would go toward paying down the Obama debt.

Allow $340 billion (2% of GDP) for infrastructure – mostly transportation. That’s slightly higher than 2014 outlay.

Allow the remaining 1.5% of GDP for everything else.

Obviously the federal government gets completely out of the pension, health care and redistribution of income business. The size of existing entitlements indicates it may take 20 years to taper down the entitlements by continually raising the eligibility bar.

Cutting military spending by nearly half will require a neo-isolationist foreign policy. Strong navy, strong air/space force, a small but very ready Marine Corps and a cadre Army.

The federal regulatory apparatus will have to be reduced by at least 95%.

As for the states, I can guarantee there will be fifty different amounts of government. Some states, like New York and California will try to be everything to everybody and will tax the bejeebers out of their citizens to pay for it. The regulatory load shed by the feds will be picked up by the state according to their needs. Southern California has meteorological anomalies that collect air pollution so we might expect CARB and SCAQMD to be strong. But windy Nebraska has no need of such regulations and won’t have such an organization.

Education becomes the exclusive purview of the states and their local governments.

For most of its history the US got along quite nicely with this arrangement. It can certainly do so again.

 

They were not any sort of bankrupt at all. The fact that people (apparently including yourself) have no idea what that word means but shoot their fool mouths off about it anyway doesn't change things. Zimbabwe was never bankrupt. Period.

Hmmm. Forex Space Cadet talk. I think I know how this will turn out. Here's a clue. Markets go up and down. That's their nature. It's what they do. But the hard cold facts remain that all currencies are backed by the GDP of the economy that issued them. It is hence further the case that all US currency and debt represent claims on the output of real good and services produced within the US economy. That's what currency and debt are, and nothing from any of your whackjob websites will change a single iota of that. The US meanwhile produces about 22% of everything that is produced anywhere in the world each year. Combined with our long and significant commitment to trade, this makes our currency and debt the most valued and trusted in the world.

Rational people have been tired of TEA Party types ever since the propagandists first programmed them. But no one is keeping you here. You can leave any time. You just can't take anything with you beyond that bagful of really dumb ideas.

 

of course they weren't but any idiot knows that they may as well have been

hmmmm nobody that really knows anything waves their hand and talks like you do. A depreciating currency means it is less valued, not more. I can think of many currencies people wanted more than the dollar in 2013 like the Swiss Franc and Kuwaiti Dinar. At least there exists reason and websites to support my claim, all you have is your own sense of self importance and perhaps a coloring book or two.

you are rational? that's funny

 

Well we/they advocate for a smaller government. It's government that looks smaller. Er!

 

That is incorrect.

The U.S. Dollar is the reserve currency.. it was used in ~62% of all global transactions in 2012. No other currency's demand is anywhere close.

You can artificially inflate the "value" of your currency by simply reducing the amount in circulation.

 

So by your logic the Euro and Pound Sterling mean Europe and UK have stronger economies than the US?

 

Although I disagree with your stances, I very much appreciate the first honest, detailed answer of a small government reform. This is what I was looking for, thanks.

What about EPA for water regulations? FDA for food and drugs?

The US wasn't a superpower for most of its history. The US had many problems for most of its history. Only in the last 50 years have we "figured it out" (coincidentally, when our government became "too large").

 

We already tax land according to assessed value, and each state does it on its own--the Feds don't intervene.

 

Taxcutter says:
The states cover that.


"The US had many problems for most of its history. Only in the last 50 years have we "figured it out"..."

Taxcutter asks:
"Figured it out" or simply swapped one set of problems for another?

 

With the government DUH.

What's your point? You believe in the Bush doctrine?

Most of our current enemies are CREATED by our foreign affairs policies.......

Say what? Obsolete because it doesn't transfer enough of others' earnings to you?

That's like the craziest thing I ever heard of........ The private sector can create wealth without ANY government spending..... We need to get rid of all these idiots that think the economy HAS to be centered on government debt creation and get back to SOUND economic principles. Perpetual Keynesian economics........

 

Then federal is easily eliminated.

/yawn

So why are they part of the federal government?

Through payroll taxes DUH.

Did you see that 454 billion paid on INTEREST ALONE?????? It's the second largest expense behind social security.......

Think about what we COULD spend on if we didn't have a half trillion weight around our necks.

The government should NEVER be allowed to spend more than it takes in on an annual basis. Deficits throughout the year are expected. THIS is the biggest reason why banks and corporations dominate Washington D.C. instead of YOUR interests.

Behind every big government supporter is a big bank/corporation supporter.

 

....a whopping 3% of GDP.

If there is no national debt, the whole system crashes.

What you THINK should be policy and what ACTUALLY is policy are two different things. Let's stick to the facts.

Irrelevant.

 

So Texas will be a health nightmare and blue states will continue to be significantly healthier than red states?

Look I understand states should have some right to run things in the most beneficial way to them. However, in practice this does nothing but widen the gap between blue states and red states in income, poverty, and education. Conservatism consistently FAILS in running state governments.

 

correcting your ass is a full time job, first of all where did I even mention the British pound?

 

A whopping second largest expense on your list only behind social security.

Spoken like a true big banking water carrier.

The facts are federal government debt creation is why banks and corporations own Washington D.C. DUH.

Not really. You've identified yourself as banking/corporate friendly. Let's make sure you never open your mouth against banks or corporatism.

 

No I'm correct, the price charts do not lie. The fact is you have no idea what you are talking about, being a reserve currency does not make it most valued to investors.

 

Why is it used in nearly 2/3 of all global transactions then? That is a fact you cannot dispute. Reserve currency, nearly 3 times as common as the next most common currency (Euro), and the primary currency of many non-US factions.

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Your argument is that currency strength is a direct indicator of economy, which is a fallacy. Both the European Union and United Kingdom have SIGNIFICANTLY stronger currencies than the US, yet have economies that are reeling.

 

3% of GDP is manageable for our economy in its present state. We have no issues servicing our debt.

The modern banking system has made even the common man in this country richer.

It isn't exclusive to Washington. All fiat currencies work this way.

I am not arrogant enough to anoint myself as being more correct than the current economic system and all the macroeconomists.