Capital in the 21st Century by Thomas Piketty

Your post is not an answer, and is not even on topic.

 

Sounds like you cannot respond. The military sector is an obvious example of how government interventionism is required to aid technical progress. Indeed, in terms of defence economics, its used to explain why the military burden can have positive growth effects (despite crowding out effects).

As I said, your position is based on utopianism over how the market works.

 

You mean bailouts? Yes, see 2008 and the housing bubble for what happens when the government promotes risk-taking behavior. Hardly something that is beneficial to society.

 

Nope, the distinction between actual self-employed and desired self employed. Welfare state safety nets increase risk taking behaviour

 

Yes, to the detriment of society. Bailouts are just one example.

 

The idea that firm creation, thereby supporting individual choice, is detrimental to society is not credible.

 

The idea is not firm creation, but the intervention in society to increase risk taking behavior. The housing bubble is an example of this and it shows that it is detrimental to society. Reality trumps your ideology.

 

Doesn't sound like you're much of a friend of libertarianism as you're demanding less economic choice

The comparison with the housing market is of course bogus. With housing we get inflated demand because of poverty risk and the need to self-insure. With firm creation we get insufficient activity because of risk aversity. Entrepreneurial knowledge is essentially wasted

 

This is a false dichotomy.

Private firms were let free to pursue risk taking behavior prior to intervention. Derivatives were not some government regulation the markets were obliged to speculate in.

 

Thomas Piketty was on The Colbert Report.
It was my introduction to r > g

Bobov tells me Pik's economics and figures have been disproven.

r > g is elegant, simple and obviously true.
If r < g, who would loan money ?
And over the decades, a larger and larger percent of circulating money is "r"-ed, not clean.
And that "r" is like a mafia skim on those monies spent.
It isn't even all by "big money". Think of the increase over decades of those making payments on credit cards, charged interest -"r" .
And with capitol gains tax being like less than real income - money flows to them that can "r" it.

Part of the solution is people rejecting credit except for the classic home mortgage. Save & spend.

A true and proper Progessive Income Tax ala 21st Century Eisenhower Income Tax.

Enforced laws on Wall St. / Banks financial games. No too big to fail / prosecute.
Such a threat to the national economy should be forced out of America or divested.
Remember GermanBank and illegal foreclosures.


Moi

r > g

No ​

 

Piketty hasn't been conclusively disproven. The Financial Times of London reviewed his data and found that it didn't support his conclusions. As is typical of academic debates, Piketty published a rejoinder. Now scholars will be back and forthing about it for years. It comes down to politics, not science. People will believe what they want. Moi likes Piketty because his work adds intellectual gloss to what Moi has been saying for years anyway.

r>g is elegant, simple, and obviously untrue. For those unfamiliar, r is interest rates and g is growth rate. r>g means that interest rates are higher than the growth rate of the GDP. Well, last quarter the GDP shrank (so much for Obama's "recovery"), so any interest would be higher, but it grew 2.9% in 4Q13 and economists are forecasting about 4% growth for 2Q14. According to the Bureau of Economic Analysis, the trend for US GDP in constant dollars is 2.33% growth. (See http://www.multpl.com/us-real-gdp-growth-rate) Meanwhile, the benchmark US interest rate is 0.25%, where it's been since mid-2008. (See http://www.tradingeconomics.com/united-states/interest-rate) So r<g, not the other way around.

Moi misunderstands what interest is. A loan is a real service of real value to the person or business borrowing. People want to buy things, either for consumption or to fund operations of a business. Without loans, both consumption and production would be terribly constrained, back to the levels they were in the says Moi is nostalgic for, when America was much poorer than it is now. See this chart of GDP in constant dollars (http://www.multpl.com/gdp-deflator/) Back in the "good old days" of the 1950s, when there were no credit cards and even most businesses had little access to credit, GDP was a tenth to a fifth of what it is now. The explosive growth that created what we now call the middle class resulted in large part from the growth of credit.

Interest is simply the fee paid for the use of credit. It's no different from the fees we pay barbers or waiters. We want credit, and interest is the price of credit. There are people and businesses who opt to save these fees by not borrowing. I'm one. But that requires access to other sources of funds, which many people and businesses do not have. If Moi's suggestion of credit avoidance was widely followed, our entire consumer economy, the source of jobs and goods for the middle class, would collapse. That policy would sink people and businesses that were not already rich.

The funny thing is that Moi is sympathetic to the early 20th century Populists and Progressives. What he seems not to recognize is that when William Jennings Bryan made the "Cross of Gold" speech, he was calling for access to credit and for increased coinage of money, two policies Moi now rejects.

 

Is GDP a "fair" measure of "g" ?
Or is it one of those number games you peoples play like unemployment lessening without regard for job quality or giving up looking.
That being the whole basis of your upload on the "g" side then, ist kaputt.

William Jennings Bryan favored bimetalism as a means to have more cash in circulation.
I believe in bimetalism more than what the RepubloCrats have done - leap frogging over gold to "paper" as a means to increase cash in circulation. And how that new paper based currency is introduced into the market allowing lots of "r" private profits is also, problematic.

( )0( ) bobov
This thread is about r > g
which is obviously true.
If it were r < g, why would anyone loan money?
Strong "g" or weak "g", "r" will always be > "g".


Moi

r > g
Yes It Is !

No ​

 

The government. If rates are held below growth, the government can monetize its debt. That is essentially what we are doing right now by refinancing long-term government bonds with a series of short-term bonds that will save us money in the short-term but also hold down the growth trend on debt predictions to hide the long term reality of what happens when we can no longer move those bonds except by buying them ourselves thereby losing control of inflation.

The US is turning the corner from the recession i.e. experiencing some sector growth like in real estate, but Europe and the non-China parts of Asia are not doing so well.

 

I hope you don't mean the RepubloCratic policies of making money available at lower interest rates so some may profit "r" by loaning out this newly available low interest money.
Thus wealth keeps flowing uphill as "r" = skim !
If the government made that money available without the intervening private profiteering, the scheme might have a chance.
With TARP + Bernanke Dollars approaching $10,000 per American, per bobov
"we" have hardly gotten out money's worth from the costs of this recovery and the 1% continue to harvest unconscionable wealth via the banking system & government conglomerate recovery service, ( r > g ) at $10K costs, each. Y'see.

Or did you mean some other low interest monies available ?


Moi

r > g

No ​

 

"g" is the growth rate of the GDP. Take it up with Piketty if you don't like that. Piketty is one of "you peoples." Unemployment isn't part of GDP, so it's irrelevant to Piketty's argument, or ours.

"Bimetalism" simply means using both gold and silver money. Bryan and the "Free Silver" movement wanted unlimited coinage of silver money as way of growing the money supply, something Bernanke and Yellen accomplish by computer. The point was that more coinage meant easier credit and funding for development of new businesses. The "sound money" policy of J.P. Morgan and his circle meant there was little money to lend to start-ups, especially on the western frontier. So, to repeat, when you complain about "r>g" you're opposing the same policies you praise when spoken by Bryan.

Paper money unbacked by gold or silver is a problem because there's no limit on how much is made. If money supply grows faster than GDP, inflation results. Politicians, eager to win votes by "doing things" for constituents, can't resist the spending money they don't have by just printing more of it. That got us where we are.

I showed you that r < g since 2008. You ask why anyone would loan money. Half the answer is that bankers agree with you, so they're not lending much. It's been hard to get loans since the 2008 credit crisis.

The other half of the answer is that bankers are in the business of lending money, just like barbers cut hair, and mechanics repair cars. Times my be tough for them, but they provide an essential service and earn money for doing so. Your question assumes that bankers might decide to divert their capital into growing businesses rather than loan at interest. In theory, that's prudent, but bankers don't know how to build snowmobiles or tractors or running shoes or oscilloscopes. They do what they know how to do, which is bank.

 

That which you refer to as "private profiteering" is mostly inflation that will result in large losses at some point down the road, particularly in stock values. 40:1 P/E are fool's gold investments.

Would you rather the federal government had paid out $50T-$100T in the loans its backs to these profiteers instead when everybody defaulted in a collapsing economy that would have made the great depression look like a bump in the road?

 

I would rather Wall Streeters, individuals, pay for their " crimes ". Them not the Inc.
I would rather recovery money be given or loaned directly from the government to the beneficiary bypassing the bankers' skim
I would rather some of that money spent in "our" name that has only rewarded the 1%
have been used in old fashioned public works projects.
Repair What we have.
Establish a national fresh water management system able to store and move fresh water in quantities to support regional agriculture & residents faced with drought.
Three Rail System, light, high speed and freight.
At least such monies spent leave a hard product behind. Not paper.

And if GM, Ford, "da banks", are gonna fail - "Let them fail", Ron Paul, M.D.

The Clinton / Bush / Obama economies have all damaged the economic standing of working people while someones are getting wealthier. Via <ta - da> r > g ! The RepubloCratic way.


Moi
Distrustful of GDP = "g"

r > g

No ​

 

Wish in one hand and poot in the other and see which one gets full faster.

Yes, we need 25,000 more government employees for every loan program

It was. Do yo think Bob's Driveways in Peoria paves our highways.

Tear down what we have instead.

Move agriculture to where the water is. All you want to do in effect is to make it even cheaper for agribusiness to screw us.

Wasted money. Again, those railroad tracks are private property owned by the evil 1% and you want them to have more government money.

It does.

Okay. I have been wanting China to make cars here in the US anyway.

To an extent, but most of it is blown out of proportion. The whole world is in economic flux.

 

Similar to bobov we disagree on some fundamentals.
Like what is "g".
Some "g" number might look good but, it doesn't account for the maldistribution of that "g".
And each difference is deserving of its' own thread.

The Whole World is run by Multi Nationals Inc.s and their subservient corporationist governments. The flux is one of their creation. NOT the real, honest, competitive market capitalist economy they espouse. Call it an oopsy of hot, self igniting paper.
But, that would be its' own thread too.

Moi


r > g

No ​

 

I thought g was global growth. What do you think g is?

 

The problem is designing a number that represents real "g" and not "paper g".
Also the effect of that "g" reaching everyone or just the 1% .
It seems whenever "they" espouse a wonderful "g" lately, "we" the people do not feel it.
I hope that makes a little sense.

BTW I just heard of a poll saying Hungarians miss their old Sovietsky economy. What "g" ?


Moi


r > g

No ​

 

That is because your part of the G is going to China as capital money follows the best return on investment

 

Higher tax rates on the top incomes and wealthy.
Spending more on infrastructure to keep us ahead of other nations, as it creates more opportunities for wealth creation.
Investing in better education, for the same reasons as immediately above.
Allowing people to freely associate into unions, with fewer restrictions on them.
Strengthening safety nets for those displaced by layoffs.
Strengthening labor laws.

 

It turns out that if you use math, Piketty's numbers do add up.
http://equitablegrowth.org/2014/05/30/daily-piketty-may-30-2014/

The WSJ should hold a math class for its writers/contributors/reporters/pundits.

 

You're completely wrong.

http://www.factandmyth.com/taxes/tax-decreases-do-not-increase-revenue