Trump's desire to reduce the deficit. Can someone explain to me how this is a good thing?

Discussion in 'Latest US & World News' started by Econ4Every1, Mar 14, 2017.

  1. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male
    OK....... my apologies to the degree that I might perhaps be wasting your time......
    but I can think of some ways in which this could perhaps be done....... for example......

    IF..... AboveAlpha's analysis of the probable long term results of Climate Change is
    logical and basically accurate......
    then it sure seems like we must resort to some out of the box thinking on how
    to finance the transition over to a much greener economy......


    http://www.politicalforum.com/index...erm-effects-of-climate-change-logical.454306/

    Is this analysis of the probable long term effects of climate change logical?
     
  2. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male

    Econ4Every1.... I am so impressed with your reply on this that I copied and pasted this over to that other discussion.......
    you are soon going to have more fans and followers from Australia.........


    http://www.politicalforum.com/index...ions-with-china.398388/page-2#post-1067296093

    Is AA correct about his analysis of USA relations with China?


     
  3. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male
    Econ4Every1..... you are amazingly well informed.......
    you are very polite and capable of having a productive discussion with people all over the political spectrum.

    May I begin a poll over on the "Elections and Campaigns" forum here dedicated to me, DennisTate,
    attempting to the best of my ability to set you up for a run at the office of POTUS?

    Here are two discussions that will give you a good idea of how I tend to go at a problem like this:

    http://www.politicalforum.com/index...tial-leaders-for-the-democratic-party.489935/

    Nominations for potential leaders for the Democratic Party.
    ....

    http://www.politicalforum.com/index...-the-office-of-potus-as-early-as-2016.397835/

    Should AboveAlpha allow us to set him up for the office of POTUS as early as 2016?
     
  4. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male
    Why? Explain the cost that offset deficit spending. Give me examples.

    Thanks for being a good sport, look forward to your reply.[/QUOTE]

    Econ4Every1... I want to introduce you to a good friend of mine from here in Nova Scotia.

    I just sent him a link to this discussion and he replied......

    Stephen Chafe-Green
    yes... Real Estate is the new gold....

    "I will add to that and say this is why controls need to be placed on foreign ownership now, because clearly international investors have wised to the value of owning assets in the Canadian economy. It seems foreign money has realized the game of currencies is soon going to end with a big reboot, and they are all in a race to acquire real assets before that happens. These are people with a lot of cash that know North America is the best investment to hide their wealth, even if that wealth value loses cash value due to a crash." (Stephen Chafe - Green)
     
    Last edited: Apr 4, 2017
  5. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,402
    Likes Received:
    302
    Trophy Points:
    83
    Not that I mind moving on to a new topic, I just find it curious that you wouldn't address the subject which was your accusation that, "Somebody is shilling for the FED shareholders i'm afraid." That someone being me of course. I'll assume that you concede the point and realize the mistake you made when you made that claim.

    In your follow-up, you address the bailout by the Treasury and Fed which I agree should have never happened. However, I should remind you that the Fed didn't create the problem. At best you could argue that the Fed was a participant in what became the G.F.C. The scope of the problem extends far beyond that to our Congress and the wealthy people that corrupt it.

    Now, I would also remind you that that banks that were bailed out didn't do so unscathed. When people ask, why didn't we let the banks fail? I remind them, by any reasonable definition, banks did fail. Their shareholders and capital investors lost, as a group, trillions of dollars of wealth. Remember that Bank of America isn't a person. Forcing that bank to close punishes the 99% of employees who had no active hand in the G.F.C. and it seems silly and punitive to punish thousands of employees and 10's of million of people on Main St. for the failures of the few at the top. Which is of course what you're asking when you say that the banks should have been allowed to fail (given your resentment over the bailouts).

    [​IMG]

    See the large dips in the household income of the top quintile (blue line) and the losses in income of the top 1%.

    Some estimates put the losses of the G.F.C. at $22 trillion, and while I believe the effect of those losses affected the bottom 80% more in real terms, in nominal terms those with the most income and wealth lost the most. Of course, they used the wealth they had to replace what they lost and more, but that is another issue entirely.

    Why didn't people go to jail for their part? I suspect that the failures of the G.F.C. ran across multiple large companies and their powerful interests as well as members of lawmaking bodies across multiple countries. Does that make it ok? No, of course not. I'm not defending the lack of accountability, but in the end, it is the money in our politics that made it impossible for our legislating bodies to hold people accountable for what happened. If you want to be able to hold people accountable after the next G.F.C. you have to set the people that enforce the laws, free from the influence of the money that corrupts them.
     
    Last edited: Apr 4, 2017
  6. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,402
    Likes Received:
    302
    Trophy Points:
    83
    I know we've discussed this before.

    What problem are you trying to solve that we can't solve with the system that is in place already?

    It's not the monetary system that is to blame, it's the complete lack of understanding of it. Replacing one system with another won't solve that problem. I suspect it would make things worse. People support really bad ideas when it comes to money. If the system is rebuilt as the average everyday person wants it, it is doomed to utter failure because people, in general, believe that national economies should operate like households. If the money system you advocate doesn't operate like a household, people will reject it.

    We can see this already with the Euro. It is the only large-scale currency in the world that operates across national and political boundaries and I predict that it is doomed to fail because people can't step outside the bubble they live in and see a bigger picture.

    For example, Germany is a net exporter, it relies on the other nations that use the Euro to purchase its goods. But if nations like Spain and Greece are told to enact austerity measures they cannot purchase Germany's output. Every day Germans don't want financial help going to these countries even though that help might put everyday greeks in a better place to purchase Germanies output.

    The Volunteerism dollar just attaches productivity to the currency in a more intuitive way, but I don't think it differs very much from the dollars that we work for today. I mean I work, voluntarily, for my employer. He pays me a currency and I use it to buy goods and services from other people and countries.

    I just can't see the problem being solved with the experiment you keep telling us about.
     
    DennisTate likes this.
  7. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,402
    Likes Received:
    302
    Trophy Points:
    83
    You need to be a chum and highlight what specifically you are asking about or pull it out and quote it because I'm not sure what you are asking about.

    Econ4Every1... I want to introduce you to a good friend of mine from here in Nova Scotia.

    I just sent him a link to this discussion and he replied......

    Stephen Chafe-Green

    yes... Real Estate is the new gold....

    "I will add to that and say this is why controls need to be placed on foreign ownership now because clearly international investors have wised to the value of owning assets in the Canadian economy. It seems foreign money has realized the game of currencies is soon going to end with a big reboot, and they are all in a race to acquire real assets before that happens. These are people with a lot of cash that know North America is the best investment to hide their wealth, even if that wealth value loses cash value due to a crash." (Stephen Chafe - Green)[/QUOTE]

    Without more specifics on exactly what we're discussing, I'd say his assent appears to have merit. To some extent, this is what I argue over, and over, and over. We aren't bound in fiscal terms but in terms of real resources. If the government wanted to create a high-speed passenger train network that connected the nation's 50 largest cities over the next 50 years, could we do it? Some people might claim we don't have the money. RUBBISH, money isn't what limits us, it's real resources. Mr. Green is absolutely right that things of real value are what matter. Do we have the people, the skills, the raw materials, if yes, then there is no reason why we can't build these things.

    Here is a chart that shows the nation's capacity for production and where we are today (top chart). Everything highlighted in yellow is lost productivity. It represents real productive resources that exist that aren't being used. The reason they aren't being used is because people lack the fiscal resources to create the demand to use them.

    The irony is that by creating a high-speed train between the nations 50 largest cities would consume more of those productive resources because the government created the currency to utilize them. Inflation is not simply a monetary phenomenon. It is something that happens, in a nation like the US where rule of law is enforced and political stability exists when labor and real resources aren't available in adequate amounts to meet the demands of consumers. Our failure to utilize these resources is a political choice. One driven by Congresspeople elected by people who don't understand the real limits of the monetary system they live in.

    Since 2008 we've lost $5 trillion dollars worth of potential productivity. Think about what we could have made for $5 trillion dollars. Think of all the jobs that would have created. Healthcare...Pffffttt...No problem. Donald's ridiculous wall? Chump change. We choose not to utilize these resources because we still believe we exist in the gold standard era.

    [​IMG]

    To take Mr. Green's comments to the next level. If you want to know which is the strongest nation on earth, do this thought experiment. Try to Imagine tomorrow when you wake up that all currency and records of it have vanished all over the world. Now, which nation would fair best in light of this change?

    Would it be the US, China, Europe.....? Whoever it was, is the strongest nation on earth.

    The only things with value are real things. The more real things your nation has, the better off it will be.

    Now, having said all of that, it's important to remember that there will always be a difference between productive capacity and utilization. It's almost impossible to have everyone with the right skills in the right places to fill every last job. Today we are at about 75% of our productive capacity. During WWII it was at 92%, at a time when almost everyone was working, so I think WWII represents the real measure of our highest possible capacity utilization, however, given the events of the time, it's unrealistic to expect the nation would get back to 92%. When you look back to 1970, the 47-year high is 85% and the average is 80%.

    The point is, we are 5% below the 47-year average, we're 10% below the 47-year high and 17% below the all-time high. My guess, and it's just a guess is that we should be able to achice between 85-90% capacity utilization as a nation.
     
    Last edited: Apr 4, 2017
    DennisTate likes this.
  8. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,402
    Likes Received:
    302
    Trophy Points:
    83
    The argument is that I believe that the US can spend money indefinitely without repercussions.

    Again, I'm not making that argument. My argument is that its real resources and labor that are the limit, not dollars.
     
    DennisTate likes this.
  9. squidward

    squidward Well-Known Member

    Joined:
    Jan 23, 2009
    Messages:
    37,112
    Likes Received:
    9,515
    Trophy Points:
    113
    It is well known that the regional banks own the shares.

    They just facilitated the massive run up in credit and allowed the large wall street banks to leverage up several hundred trillion in swaps, a large portion if which were interest rate swaps, creating a synthetic bond market.
    It was the highly leveraged pile of swaps that began to collapse, with no counterparty able to pay the "insurance" claim.

    Then they should have been confiscated from the owners



    without the FED those banks would have died a just death, with no ability to buy politicians.
     
    Last edited: Apr 4, 2017
  10. Treebeard

    Treebeard Member

    Joined:
    Dec 28, 2016
    Messages:
    52
    Likes Received:
    11
    Trophy Points:
    8
    First, thanks for taking the time to respond. I enjoy the conversation, even if we disagree.

    Second, that's an incredibly long-winded way of saying I'm right, but that you've decided that my being right doesn't matter.

    Wealth is not finite, and trade is not a zero-sum game. Whether you're trading with your neighbor across the street or someone from halfway around the world, what matters is not trade deficit or surplus, but wealth creation, and whether any given trade is helpful or harmful for either or both parties depends on how it affects wealth creation for each party, both in the short and long term.

    The fact is that accounting practices are incapable of breaking down trade into what parts of it increase or decrease wealth and to what extent, which makes accounting practices pretty worthless in determining whether trade and/or budget deficits are bad, much less why.

    Personally, I really like the "deficits" that occur because the Chinese and other "export at all costs" countries are selling us stuff at far below the prices we could make it for ourselves, in many cases with a 20% to 30% subsidy tacked onto it. It gives american consumers far greater choice at far better prices than they would otherwise get, while providing many american businesses with far cheaper inputs at the same time. Huge amount of built-in wealth creation for the US in those "deficits", because where prosperity is concerned, it's not just how much wealth you end up with, it's also what you can purchase with it.

    IMO, most exporting countries are paying through the nose for the right to aid US wealth creation.
     
    DennisTate likes this.
  11. Treebeard

    Treebeard Member

    Joined:
    Dec 28, 2016
    Messages:
    52
    Likes Received:
    11
    Trophy Points:
    8
    You're right; that's absolutely impossible.

    Sincerely, the Weimar Republic
     
    DennisTate likes this.
  12. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male
    America's English language film industry is, in my opinion, the best in the world
    in every genre that I can think of.........
    Three hundred and twenty million Americans in a sense......
    already have a starring role in a series that is in my head that
    would be set primarily in the nation of Israel.

    The fact that President Trump has chosen a team who is perhaps the most
    pro-Israel in five decades........ is good news for the USA film industry........

    I may be naive... but I do feel that a
    pro-Israel Hollywood could drive Wall Street to new highs.......

    The following concept for a nine meter tunnel from near Tel Aviv to somewhere in the
    area of the Dead Sea... could be regarded as a stage.........
    or a reality film series concept......
    and it could alter the Israeli, Jordanian and USA economy.......

    http://www.politicalforum.com/index...or-israel-jordan-and-the-palestinians.451496/

    Sigmund Ivarsson's Petra Project for Israel, Jordan and The Palestinians.
     
  13. Ddyad

    Ddyad Well-Known Member

    Joined:
    Nov 17, 2015
    Messages:
    53,268
    Likes Received:
    25,271
    Trophy Points:
    113
    Whenever Republicans talk about reducing the deficit, balancing the budget etc. think shuck and jive and tax hikes.
     
    DennisTate likes this.
  14. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male
    Good comment but the exact situation in Germany after WWI was
    very different than what is going on in the USA right now........

    The USA dollar is backed up by the productivity of Americans.... and
    Americans are more productive now than ever before in history........

    I believe that America is poised for a Real Estate Boom in rural areas.....
    but this does not mean a decrease in real estate prices in cities.........

    Something like this could help to make a rural area real estate boom happen:


    http://www.politicalforum.com/index...ons-should-print-their-own-currencies.381946/
     
  15. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male


    I personally am worried about several economically powerful nations attempting to
    take the world away from the USA Petro Dollar.......
    but I do totally agree with your idea that the USA government cannot go bankrupt.....

    ... the dollar could be devalued but there are ways to insure and back up its
    real purchasing value........

    http://www.politicalforum.com/index...utah-state-dollar-save-the-usa-dollar.349935/

    Could a Utah State Dollar save the USA Dollar?

    ....

    George Soros is an opponent that USA political leaders should not under estimate.
     
  16. squidward

    squidward Well-Known Member

    Joined:
    Jan 23, 2009
    Messages:
    37,112
    Likes Received:
    9,515
    Trophy Points:
    113
    It's magic, print whatever you want, then kill people all over the globe, forcing them to accept it.
     
  17. Ddyad

    Ddyad Well-Known Member

    Joined:
    Nov 17, 2015
    Messages:
    53,268
    Likes Received:
    25,271
    Trophy Points:
    113
    The people of the world will accept the Yankee dollar as long is they can buy rum and Coca Cola with it.
     
  18. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,402
    Likes Received:
    302
    Trophy Points:
    83
    The Weimar defense?

    If I said that a person who was pushed from 6th-floor balcony died because they hit the ground. Would you blame the ground for their death or the person that pushed them?

    Clearly, the person would not have fallen off the balcony if they hadn't been pushed. So the precipitating cause was the push, the resulting cause was hitting the ground.

    No push, the person in question would not have died at that instant.

    In the same way, money creation, wasn't the precipitating cause of hyperinflation, it was the resulting cause. The precipitating cause was the loss of productivity due to the destruction of factories during the war combined with reparations and the massive foreign debt payable only in gold.
     
    DennisTate likes this.
  19. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,402
    Likes Received:
    302
    Trophy Points:
    83
    No, I clarified my position in light of the obscure context you defined.

    Give me an example.

    But that's just it. The trade deficit is a measure of real wealth traded for currency. Is it not? The deficit exists because we export our dollars and import things of real wealth, and they export things of real wealth and import dollars. I'd argue that the trade deficit is good as long as the dollars that are being exported out of the US private sector are replaced with new dollars until the dollars can be repatriated. We've exported trillions of dollars outside the US private sector. Today, $10 trillion of those dollars exist under the control of foreign governments and as a result we created new dollars to replace at least some of them. Part of the debt is due to dollars created that have not been reclaimed by the US government.

    Now you're making my argument.
     
  20. Econ4Every1

    Econ4Every1 Well-Known Member

    Joined:
    Jan 3, 2017
    Messages:
    1,402
    Likes Received:
    302
    Trophy Points:
    83
    Strawman.
     
    DennisTate likes this.
  21. squidward

    squidward Well-Known Member

    Joined:
    Jan 23, 2009
    Messages:
    37,112
    Likes Received:
    9,515
    Trophy Points:
    113
    Says you
     
  22. squidward

    squidward Well-Known Member

    Joined:
    Jan 23, 2009
    Messages:
    37,112
    Likes Received:
    9,515
    Trophy Points:
    113
    Depends on how many dollars they have to part with to buy one
     
  23. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male
    Exactly.........
    without available skilled labor and the necessary resources.......
    the productive capability of America is limited but.........
    ... I feel that I should argue that many Americans who are now earning
    sixty thousand dollars per year.........

    .... would be willing to move over to careers where they had a ten year
    contract for a hundred thousand dollars / year...... one million dollars for the
    ten years........

    I am one of the only people on earth using this particular phrase rather regularly..........

    So... may I begin a discussion along the line of Econ4Every1 for the office of National Leader of America's Democratic Party?
    http://www.politicalforum.com/index...f-modern-world-problems-even-possible.432571/
     
    Last edited: Apr 4, 2017
  24. DennisTate

    DennisTate Well-Known Member Past Donor

    Joined:
    Jul 7, 2012
    Messages:
    31,491
    Likes Received:
    2,601
    Trophy Points:
    113
    Gender:
    Male

    Yes......... you Sir.......
    are definitely Presidential material!!!!!!!!!!!!!

    I quote this reply in full here:

    http://www.politicalforum.com/index...tial-leaders-for-the-democratic-party.489935/

    Nominations for potential leaders for the Democratic Party.
     
    Last edited: Apr 4, 2017
  25. Ddyad

    Ddyad Well-Known Member

    Joined:
    Nov 17, 2015
    Messages:
    53,268
    Likes Received:
    25,271
    Trophy Points:
    113
    They don't mention that concern in the song. ;-)
     

Share This Page