Here's the formula for GDP: GDP = C + I + G + (X - M) If G were to decrease, GDP could still go up if the sum of C, I, and (X - M) were to increase by a larger amount
Oh, I see, you gave me the hypothetical answer rather than anything that comports with reality. Lowering G lowers C and I, which leaves only the sum of (X-M) which today is -$700 billion, thus you'd have to increase exports by $700 billion just to bring this number to zero. Then you'd have to increase it by more than the loss of G in order to increase GDP. Today we export dollars and import things of real value. You want to turn that around and sell other nations things of real value and trade them for dollars?
it was pretty constant until recently but with housing crisis everything changed which badly tricked most libertarian economists who waited for years and years for the inflation that never came.
I can answer that one. There are only two possible root sources of wealth (as in tangible wealth/the value which gives it its worth) 1. Raw Natural Resources (which predate humans) 2. Labor Additionally,...it can be said that labor would not be possible without the source of labor being able to utilize other forms of raw natural resources; land, space, food, materials, etc. so if you needed to narrow it down to just one root source of wealth, that would be raw natural resources. -Meta
Well said, sir. Just add one thing.....Land is the root of raw natural resources. Which of course leads to the inevitable conclusion that as wealth disparity increases (and it is), A smaller number of people increasingly owns the land and by extension the root of all wealth.
nonsense of course since the earth always had labor and resources, but no wealth. Wealth came with Republican capitalism. China now has wealth because it just switched to Republican capitalism.
So tell me, without land or access to it, how could he have made anything? Where did the computers come from that computed the code that became the first operating system, thin air? Where did the plastic come from that held billions of copies of Windows sold worldwide? Thin air? Without land, or access to it, society cannot create wealth.
so??? he needed air and water roads too. You get wealthy from invention not from owning land which is why Gates does not buy land but invents things
Government spends taxes that people could otherwise invest or consume, and deficit spending is just borrowing against future spending.
Who said you had to own it? I said access to it. You can rent land, the problem with land is that it is unique in that unlike most other things, there is a fixed quantity. As the demand rises, the price increases. As the price increases, it becomes something sought after, not for the creation of wealth but as an investment. This has to lead to recent bubbles and after the crash, the transfer of wealth in the form of land, increasingly into fewer hands.
the earth is land and people have always has access to it and they never were wealthy until Republican capitalism. <Rule 3>
yes and without access to water too but land and water have always been plentiful but did not produce wealthy. That came with Christian Republican capitalism
Um...lulwut!?.....You're joking, right? Tell me you're joking......I agree that capitalism, done right, can facilitate the creation of new wealth, but to say that capitalism is the root of all wealth or to suggest that wealth cannot exist without capitalism is wrong on its face. For instance, China only started switching to a more capitalistic system around 1978. Are you meaning to imply that China as a country did not have any wealth prior to that point? If so, then you must be using a different definition of what wealth means than the rest of us... Heh, thanks, that seemed obvious to me, but apparently to some its nonsense. But its good to know it was at least well-said nonsense. Well, land is the source of most of it, but not all. We've also got solar energy, and let us not forget the oceans to name a few. Furthermore, not all land is created equally (if you know what I mean). In fact, natural resources and wealth in general all differ as to how valuable they are, even when in equal amounts. Land itself may be more or less valuable than another, equally sized, piece of land, based on any number of factors. That should probably go without saying...but then...I used to think that saying land was a form of wealth should go without saying too........ I agree with where you're going with this (even if I nitpick on a few of the details), but regrettably I also think we may be getting ahead of ourselves on this...when there are still some who don't yet even agree that resources/labor are requirements for wealth creation, that land is a form of wealth, or that wealth can exist without capitalism... -Meta
No, the government does not "spend taxes" though I understand why it looks this way. The pattern is one that appears like a circle, but logically, take it back to the very beginning, how can people pay taxes if the government doesn't spend money into the economy first? Think about it, it's impossible. In Monopoly (the game), you can't spend money or pay taxes, fines or fees unless you are given money FIRST. If you think of the bank in the game as the government and imagine that each dollar given to the players is created out of thin air, then your closer to understanding how the government works. Furthermore, the government creates money via deficit spending. The game of political semantics that you and most other people learn is that the government is "borrowing", but that's just plain stupid. How can the government borrow money it creates? The sale of bonds, when sold to people in the private sector does not create a single dollar as the sale of bonds removes the exact same amount that the government spends right back into the same economy. Therefore, it is ONLY deficit spending that increases the number of dollars, exogenously. Do you remember when subways systems of major cities took tokens? Do you think the subway system had to collect the tokens from passengers in order to sell them to customers? No, they have to create and sell them in order to get them out in the world. I mean, if you had never seen a subway before and you were observing people buying tokens and then using them to get through a turnstile and later a man comes and empties the coins from the turnstile back into the token vending machine, It's easy to see what you might believe that spending tokens (into the turnstile) make the sale of tokens possible (Man takes spent tokens and refills to token machine), but that's because the observer missed the very first step, where the subway system created the tokens from nothing and filled up the token machine FIRST.
before Republican capitalism 60 million slowly starved to death in China today 60 million are getting rich every year and 500 million have joined the middle class. people slowly starving to death do not have wealth. Do you understand?
It's not the sale of bonds but the purchase of bonds by the fed-reserve that creates money. 1) Fed gov sells bonds to private buyers. 2) Fed buys bonds from private sector 3) Fed pays for its purchase with money created out of thin air. When the fed (i.e. the government) buys bonds, it creates money.
in a barter/gold economy there were taxes without govt first spending into system so govt spending is not necessary in that sense. You want to always minimize or eliminate govt spending since it is done by bureaucrats, monopolists, and politicians out of ignorance or bad intentions. Do you understand?
No. It credits the account of the primary dealer from whom it bought the bonds. It's an increase in M0.
The origin of the money is irrelevant, and whether or your Keynsian, Austrian, or somewhere in between, the value of what is produced by the private sector, including the taxes government removes from it, would not be counted in full if government spending wasn't accounted for. Hence why transfer payments such as social security aren't included. The same goes for deficit spending. I'd government can't run out of money then why are there taxes? It's no different than buying on credit, you making purchases against future income or productivity.
