You Pay whatever your Taxes are Regardless of how much the Government Spends

Utopian universe? Dude, there are way too many variables, some of which are every person in the world, so that's 7 billion variables right off the bat. The real utopian idea is that the central bank can know exactly how much money there should be in the economy, and know the exact psychology of every single person in the world at every singular point in time and that it will control that money supply without taking advantage of that insane amount of power.

There is no "limit", the money supply would be controlled by the law of supply and demand. Under a sound money, free market system, if the economic output of goods and services is increasing with no relative increase in the money supply, prices would fall and the value of the dollar would increase. That would cause the demand for gold to go up, and thus more people would go mine gold since it would be valuable enough to turn over a rewardable profit. That inflow of gold into the system would cause prices to stabilize or possibly start to rise, at which point demand for gold would go down and demand for other goods and services would go up. And the market would reach an equilibrium point where prices would remain stable.

Having a central bank creating money has destabilized our pricing structure and destabilized the economy because it ignores the fundamental law of supply and demand.

This statement has nothing to do with anything I said. Besides, you're wrong. The central bank inflates the money supply by lowering interest rates, so that the velocity of money will increase.

Our problems woudln't make history laugh, because they are a complete repeat of the failures of every major civilization that ever lived. Coin clipping, inflation, whatever you want to call it. The fact is that debasement of currency has been the downfall of many major civilizations, particularly the Byzantine and Roman Empires. I find it offensive that you think that having a high standard of living is being "spoiled". Everybody in the world could enjoy such a thing if we adpoted free market principles and sound money, and if they followed suit. You're basically saying that it's OK to be poor and that everyone should be poor - spoken like a true collectivist.

 

I speak in a macro sense primarily. The fact is we lost a quarter of our nation's wealth in the span of a year. That doesn't just revert back over night. This is a balance sheet recession. Individuals (micro), whatever you want to call it, are simply poorer than they thought.

When a person perceives they have $1 million but they really have $500k, a lot of stuff changes in that persons life. Especially saving money to pay off debt, and trying to make up the difference between the "loss" of $500k.

 

How does Govt spending effect anything of what you just said?

How would reducing Govt spending change rising necessity expenses?

How would reducing Govt spending make businesses hire more people?

You are living in the world of logical fallacies and partisan drivel. Govt spending does not have an effect on the business community. Lack of demand has an effect on the business community.

 

Therefore, we should be examining the PPC's and our opportunity costs when considering policy, and not have a "do it all" mentality. It all boils down to these two BASIC principles of macro-economics.

 

The free market has absolutely no control on money creation. We have no control over how much money is created for us to use to purchase goods and services. Our world is dependent on things outside of the private sector. We are driven by the Govt and the banking system when it comes to money.

And yes, we can understand things based on math. If people stop spending money, we can understand that more money is needed in order to accomplish the economic growth we want. It is all about meeting a target rate of growth. And that can be done through math, through the system, and through manipulation. This old free market dictates everything went out with the dodo bird.

You can't have a supply and demand for a medium of exchange. I can't go out and buy money. The supply and demand comes from productivity. If I'm willing to work and someone is willing to produce, yet the only thing missing is the medium of exchange which is provided to us by the Govt... then why the ef would you not want us to be more productive?? It makes no sense. You guys focus way too much on money and not on productivity or what gives money it's value.

The Central Bank does not create our money. That is a fallacy. And there is no supply and demand for a medium of exchange in which no one can create except for the Govt.

But why do you think they do this? Why do you think they lower interest rates when the economy goes in to a recession? It all comes down to mathematics. A recession is simply people saving more money then before. When people save money the economy comes to a halt. That is why the Fed's do what they do and the Govt does what it does to counteract this process of deflation. I don't get why people think just letting the free market work itself out makes life any easier.

These are just words. If you use actual facts we are the most robust and productive economy in the history of the world. Money has nothing to do with it. Productivity is what makes or breaks an economy. The reason we need more money is because we can produce much more than we are. There is no reason to make the country suffer because there isn't enough of a medium of exchange around.

 

No offense, but I just don't care if you get it or not...carry on.

 

Spoken like a true conservative!

 

So what are you trying to say? These words don't mean anything unless you can tell me with facts what policy would work and why.

 

I've tried conversing with you before.....I won't make that mistake again....as attempting dialogue with willful ignorance is utterly pointless.

/ignore bin

 

Lol, oh darn... I'm so sad now!

 

I love how when conservatives are presented with facts they immediately hit the ignore button and simply do not care. It is amazing!!

 

This statement is a suggestion on how we should determine economic policy that can work and why it will work. Utilizing PPC's to analyze economic indicators and variables to determine our various economic opportunity costs is from my perspective the proper approach to accomplish this. I hope you are aware that a PPC, or production possibilities curve helps determine economic efficiency and its variables, opportunity costs in varying forms, and economic growth. Utilizing these models to make positive economic predictions can help determine normative economic policy. Variables include supply and demand, trade balance, consumer prices, worker's wages, GDP, GDP per capita, and other broad and specific variables.

 

I don't have you on ignore. In fact, I don't have anyone on ignore.

 

This is scary thinking...what happens after a few years of not collecting enough money to pay those bills? What happens in your household?

 

"You have a tax rate and you pay that regardless of how much the Government spends." Akphidelt

If you don't understand that the tax rate is (should be) based upon the government expenditure, there is no hope. The spenders are clueless users of money that "grows on a tree" (i.e. is renewable from a Fed perspective). Accounting is apparently something that a Democrat is incapable of understanding. A civil war in the USA is inevitable from the logic that I see. America, you have seen what was just written by Akphidelt, there is no hope. Move to a rural location, stock up on canned food, obtain renewable water (i.e. distillation stills), install sustainable heat sources and get ready for Armageddon (i.e. guns, ammo). The timeline is 2 years if Obama is reelected and 4 years is he isn't.

In the real financial world, capital is earned and not printed. A lesson that will soon be learned. If it is not, keep the printing press rolling, I'm amazed that the USA has made it this far and I look forward to the shell game continuing as long as possible.

 

I'm a person who is revenue constrained... I'm not in control of the currency system of the United States of America. You should stop comparing your finances to a country's finances... they are no where near comparable.

 

Money is not capital. It's a medium of exchange. Once you guys realize that the private sector can't create money, then you will start understanding the Govt's role in our economy and how they try to create the maximum productivity we can. We have used this same process for the past 70 years and it amazes me how people still have not learned how the system works.

 

The only difference between the two is the existence of a money printing press by only one. If I had a press in my basement and could simply print the difference between what I have in revenue and what I want to spend, we would have an identical circumstance, and we would both be in deep financial trouble.

 

What are you talking about? You need to learn some more history. Money existed long before governments did. The government's only job is to ensure that the money we use is honest. It's not supposed to dictate the value of it by bureaucratic formula, because it is impossible. We are only driven by the govt and banking system because we are forced to by law. It is unnecessary.

I never once said we can't understand things based on math. Those are your words, not mine, so please don't put them in my mouth. I said that it is impossible to continuously calculate the most effective money supply at any point in time better than what the free market can do based on the natural laws of supply and demand. The fact that we are in the early stages of runaway inflation is proof of that, and also the tiny detail that every fiat currency in the history of mankind has inevitably reached the hyperinflation stage.

Oh really? Then why are the central bank and govt failing miserably at fixing the economy? You don't understand that the free market is made up of individuals who make the most rational economic decisions for themselves. Government cannot manage that effectively. The free market always wins out in the end, no matter how much squelching the central bank and govt tries to do of it. It can only be overriden for so long before disastrous consquences happen.

You're also assuming that the Fed is honest and really does care about effectively controlling the money supply for the greater good of the greater number. In actuality, it inflates the money supply so that it can bail out its banking and corporate cronies, as well as finance the ever continual expansion of government. Keynesian theory looks good on paper but it neglects basic human instincts.

You obviously did not read my post about how gold as money stabilizes the pricing structure otherwise you wouldn't have even posted this paragraph.

Once again, money existed before governments did. The choices for mediums of exchange in the free market has consistently been gold and silver because their inherent properties make them suitable to be used as a medium of exchange. Mining gold and silver IS productivity, so their inherent value is equal to the amount of gold/silver in circulation relative to the goods/services they can purchase, which is always roughly equivalent to the cost of labor in mining and refining them BECUASE of the law of supply and demand.

Inflation doesn't make anybody more productive. Only productivity can make people more productive. You don't need government to provide the medium of exchange, the market would naturally use a medium of exchange which makes the most sense: gold and silver. They certainly wouldn't be using federal reserve notes in the absence of legal tender laws.

This statement is backwards. First of all, what exactly is it that gives fiat currency its value aside from legal tender laws? Secondly, why don't you grasp the concept that if you're going to use a medium of exchange, its value needs to be knowable? Using fiat currency is no different than trading coins which say they are 100% gold which are actually only 50% gold in content. It's dishonest and causes inflation because eventually people realize that the money is overvalued.

If the central bank doesn't create money, then where does it get the money that it uses to purchase treasury bonds on the open market?

Already debunked.

Becuase they're directed by the misguided Keynesian belief that the economy can be centrally managed. Also, because it's member banks can make more money if more people are taking loans out that they couldn't normally afford, so that when they default, the banks can get their MARBLES. Remember, the Federal Reserve Board works for the BANKS, not the American People. It's a cartel.

This is incorrect. Private capital formation does not cause a recession. A negative rate of economic output is what constitutes a recession.

This is also false. Under a gold standard, private capital formation would be occuring, so people would have to rely less on the banking system to afford things. Loans would become less commonplace. Why do you Keynesians think that saving money is a bad thing? It's far superior to have savings than it is to be in massive amounts of debt to be able to sustain your living expenses.

Deflation is not a bad thing. It needs to happen because the market was artificially inflated. That money has to go back into the void where it came from, that's what the market is calling for. Inflating the money supply is just setting us up for another boom that will have a bust far worse than what we saw in 08.

The free market needs to correct itself from the abuses of the central bank and the government. The reason we got into this mess in the first place is because of artificially low interest rates and excessive expansion of the money supply. Why do you Keynesians think that more of the exact same thing can get us out of the mess that was caused by the same policies? It doesn't make any sense at all. That's the definition of insanity.

Money has everything to do with it. Our empire is collapsing because our money is going bad. The fact that you don't understand this means that you do not understand the theory of money. I suggest you read FA Hayek's nobel prize winning work on this subject.

You just got done saying that money has nothing to do with our productivity, and in the same paragraph you're saying that we need money to increase our productivity. Which is it? People don't produce as much when the quality of money is bad. Sound money is the only way to sustaining continuous economic prosperity and stabilizing the pricing structure.

This is only true for fiat currencies. Under a gold standard, technically any amount of gold would work as a medium of exchange. If there was only one ounce of gold in the entire world, that ounce would be extremely valuable. One dollar could be considered 1 trillionth of an ounce of gold. But we would know exactly how much gold that we could redeem one dollar for. Prices would still remain stable. Of course that's only hypothetical, because if there was only one ounce of gold in the world, it would be far too valuable for the market to use as a medium of exchange. We'd use something that has more abundance, like silver.

 

Lol. I'm gonna go mine a half ounce of gold then exchange it for federal reserve notes. Then I'll be laughing at you when you tell me that the private sector can't create money.

Humans have been using money for thousands of years and it amazes me how people still have not learned how money works.

 

I have to agree. The OP doesn't even begin to make sense. But that is not usual for the akphidelt.

 

So what am I wrong about? As usual, you never show any proof or target the thread at hand. Oh well, keep living in la la land.

 

http://www.politicalforum.com/4351152-post40.html

 

We have a different economy than any time in history. And I'm not arguing about the system being the right system or not, I'm just telling people how the system works in a realistic and operational way.

What is your proof that we are in the early stages of runaway inflation? The Austrian's have been calling for runaway inflation for decades now, and it never happens. Maybe one day you'll be right and you can say... "We've been telling you this for 50 years"!!!

Your definition of failure isn't backed by any facts. You are just saying we are a failure in your attempt to blame the Govt. Unfortunately you don't have a single fact to back it up. And I'm sorry 9.2% unemployment is not the end of the world.

I don't delve in to the psychological instincts of people. I worry about the mathematical and operational side of the economy. You don't trust the Fed, I don't trust people... who wins?

The value of gold as a currency makes it's value from digging it out of the ground moot. Being reliant on stupid pieces of metal in the ground in order to spend money on productive purposes is the most ignorant plan around. Which is why no civilized developed country in the world does it. It would be impossible to explain this to you because you don't believe in math or logic. You believe in the mysterious magical universe of the laissez-faire Austrians. No matter how much proof someone throws in your face, you will not be wavered

Chicken and the egg theory... where did the money come from to purchase Govt debt in the first place? The Fed legally can not purchase Govt debt directly from the Treasury. Someone has to purchase it first before the Fed can purchase it on the secondary market. And the Fed does not give a single dollar to the private sector.

False, mathematically the only thing that causes a recession is less money changing hands. Aka... people saving more than before. That is how we determine a recession. They look at GDP which is simply all the exchanges that happen in an economy. When the exchanges go down, GDP goes down... and eventually we are in a "recession". But in all mathematical standards, all it means is money is not exchanging hands as much as before. simple as that.

It's not Keynesians who think this, it is all non-Austrian economists who understand that saving money halts economic growth. No one is saying saving is bad... they are saying saving more than before provides less economic growth. If you want the private market to dictate things, then we will just let the economy go in a deflationary spiral and not worry about targeting a specific growth. We have a much more complex economic system than you can possibly imagine. Just saying that Austrian bull crap about free markets with out being able to mathematically explain your position, is just showing that you are uneducated in real world economics.

Alright, so every economist in the past couple centuries outside of that pseudo-economics Austrian bull crap agrees that deflation is an economic killer is wrong? Can you explain why they are wrong and you are right?

It has nothing to do with private individuals taking loans out they couldn't afford and banks lending money to private individuals that couldn't afford it? So you are basically saying that it is not the people who actually performed the actions fault for destroying themselves, but it's the Govt for giving them the means to do so? Shouldn't Austrian's blame the idiots who made the decisions. What you are basically saying is we need more Govt regulation in order to prevent the free market from destroying themselves.

I've read enough of Hayek's work. I can say the same thing about Nobel Prize winning Paul Krugman's work.

I'm saying money has nothing to do with productivity as in you don't use money to build a house... you use wood, you use human labor, you use nails, etc. Money is simply the medium of exchange that connects the home buyer to the home builder. And since we can not create this medium of exchange... then we are reliant on the system to provide it for us. And if there are tons of people looking to produce and tons of people looking to consume... then all that is missing is this medium of exchange.

No one cares about gold as a currency. Only loony toon Ron Paul fans. Having gold as a currency does not make a country any more better off than having fiat.

 

Iriemon... we agree on 99% of what we say.

This is just one discrepancy.

And I already made a thread showing operationally and accounting-wise how taxes can in fact be used to pay down the national debt.

However, I still do not believe taxes were used to pay down the debt in the two periods of times that you list. And I showed you from the Treasury themselves that they even acknowledge why the National Debt decreases on occasion.

But if we can't get past this one point, then it is embarrassing. We obviously agree on just about everything else except the role of money creation in our economy.