The people truly believe in the Trump "beautiful" economy

Discussion in 'Political Opinions & Beliefs' started by Quantum Nerd, Feb 25, 2017.

  1. Quantum Nerd

    Quantum Nerd Well-Known Member

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    We went out for dinner with the family last night and every place we tried was jam packed, with a minimum of 45 minutes wait. And that's with two large chain restaurants just recently opening in the area, increasing supply. I have never seen anything like it before.

    My interpretation: The people truly believe that a booming economy is coming. The fundamentals have not changed, they still have low-paying jobs, they still have too much debt, but they don't care. They have been obviously fooled by the Trump/GOP carrot of measly tax cuts, believing that they, too, can feel wealthy again - and spend like drunken sailors.

    Of course, all this spending won't come from increased purchasing power, it will come from additional private debt. So, we are to repeat the debt-driven bubble that signified the GWB years and that led to the great recession, when reality set in and people realized that borrowing against their house to enable consumption and spending is not sustainable.

    So, maybe it is time to put more money into the stock market and ride it on the wave of irrational exuberance to the eventual mega crash.
     
  2. katzgar

    katzgar Banned

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    you want to buy stock in tunneling equipment makers
     
  3. undertheice

    undertheice Well-Known Member

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    do you remember the optimism of eight years ago, right after obama was elected? we had people jumping for joy. "he's gonna pay my rent", "he's gonna pay off my car", "we're gonna get a kinds of free stuff"... this was the hope in hope and change. so they all sat around and waited and waited and waited... well, they got some free stuff. they got obama-phones and medical insurance they couldn't afford to use and a lot of pretty speeches, but not much else. while all the drones were sitting around and waiting for all that change to fundamentally transform american, the underlying problems were left to fester. the corruption and indolence were rewarded, success and effort were further vilified by increased regulation the fancy rhetoric of hate and division. what we ended up with was an economy more fragile than before, fewer people than ever even trying to earn their own way, an infrastructure still in tattlers and a federal government more concerned with normalizing aberrant behavior than with strengthening the nation. the drones are still waiting. they're still sitting around grousing and hoping that someone else will make them as great as they believe themselves to be.

    the celebration this time is of an entirely different sort. though there is still some waiting, it isn't for free stuff to come rolling down the pike. the waiting now is for the chance to become productive again. while the drones bemoan the loss of their free ride and the snowflakes cast about for any opportunity to feel slighted, there are a lot of folks who are anxious to get down to business. they recognize that the proper application of a little carrot and a little stick can lure industry back and put them back to work.
     
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  4. Quantum Nerd

    Quantum Nerd Well-Known Member

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    How is it different this time from the GWB tax cuts? Tax cuts give "free" money, which of course isn't free, since they just increase the deficit (the GOP never pays for their tax cuts, they leave it to the next Democrat to clean up after their flash in the pan economy crashes). The responsible thing to do would be to keep taxes constant, so the economy doesn't experience this constant whiplash every 4-8 years.
     
  5. undertheice

    undertheice Well-Known Member

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    y'all like to compare apples to oranges. while i was no great fan of bush, his half-measures were hampered by the never ending stream of increased spending and the progressive nonsense of the nanny-state and regulatory strangulation. little was done to actually make this an enticing place to do business and everything was done to keep profitability down. on top of this was a continued stream of cheap, unskilled foreign labor flooding in from the south. this isn't "free money" we're talking about here. this is money earned that is not being stolen and wasted by the government. yes, we're going to run into trouble if we give out these tax cuts to businesses that insist on shipping american jobs overseas, utilizing non-american labor and refusing to cut the waste of a bloated federal budget. no, american citizens are not going to find their jobs coming back if industry is not rewarded for staying here and punished for leaving or using illegal immigrant labor and putting our citizens back to work is precisely what's needed. it's about both the carrot and the stick, but y'all keep whining whenever either is applied in any rational manner. you want high taxes on the productive, you want americans to continue to live their high-on-the-hog consumer lifestyle, you want us to give a helping hand to everyone from every corner of the world, you want all of these heavy regulation, you want you want you want.... if you want something, you have to give a little something too. you have to give industry a reason to be here.

    the democrats haven't been cleaning up anything. they've been living off the fat of the land and giving nothing back. they've been writing bad checks to fund their feel-good programs and expecting the success of the few to cover their asses. well the few have been leaving or haven't you noticed? in a global marketplace, you go where the profits are best and that certainly isn't here. a plan to ease regulation, ease the tax burden and punish those who abandon us is what we need to entice industry. we're not going to do it with our winning smile.
     
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  6. PapaGeek

    PapaGeek Member

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    The real situation is that the tax cuts are going to encourage businesses to create jobs in this country. We have already seen that happening. Wages are low because there are too many people looking for too few jobs. As the government taxes and regulates the businesses they slow down and reverse the job creation process. More workers, less jobs means lower wages, the businesses do not have to compete with other employers to get the workers.

    Once this new economy kicks off, and it is already starting, there will be more available jobs than people looking for those jobs and the business will have to start competing with each other to get qualified employees. That competition will take the form of better wages and more benefits.

    The economy is seeing the reversal of the tax and regulate the lifeblood out of our businesses situation created by Obama.
     
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  7. ButterBalls

    ButterBalls Well-Known Member

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    The same goal exists under Trump as it did under Obarry. If the economy and good job opportunity don't dominate it will simply be another long four or eight years, four realistically as I doubt we conservatives will give our guy eight years of unfettered ass banging!

    The left and the right can spin the current state of the nation anyway they like but reality is a clear as the nose on our faces! Anytime you have to allow a child to stay on mom and dad health insurance until 27, well that should pretty much sum it all up for you, if your honest with yourself ;)
     
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  8. mitchscove

    mitchscove Well-Known Member Donor

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    That debt-ridden GWB period was artificial --- created mostly by too much government interference. Cuomo told Fannie & Freddie to buy millions of loans to put people who couldn't afford the payments into houses. The trap was the Adjustable Rate Mortgages that were affordable until they reset.

    July 29, 1999

    CUOMO ANNOUNCES ACTION TO PROVIDE $2.4 TRILLION IN MORTGAGES FOR AFFORDABLE HOUSING FOR 28.1 MILLION FAMILIES

    See full chart of higher goals by metropolitan area

    WASHINGTON - Housing and Urban Development Secretary Andrew Cuomo today announced a policy to require the nation's two largest housing finance companies to buy $2.4 trillion in mortgages over the next 10 years to provide affordable housing for about 28.1 million low- and moderate-income families.
    https://archives.hud.gov/news/1999/pr99-131.html

    Reasonably regulated markets are self-correcting.
     
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  9. Papastox

    Papastox Well-Known Member

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    So you're rooting AGAINST a good economy? How liberal of you....
     
  10. lemmiwinx

    lemmiwinx Well-Known Member Past Donor

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    The stock market ups and downs have always been politically influenced. Why do you think the Federal Reserve kept interest rates at effectively zero for Obama's entire two terms? And still the economy was lackluster.
     
  11. Quantum Nerd

    Quantum Nerd Well-Known Member

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    I am not rooting against a good economy. I am rooting against the artificial sugar high created by tax cuts, followed by the inevitable hypoglycemia, making you feel really bad. The idea should be rather steady conditions for the economy, instead of the constant tax cuts and raises, which just provide positive feedback to exaggerate both highs and lows.

    - - - Updated - - -

    The FED didn't keep the interest low. They were forced to do so by the free market, with too much capital looking for safe return, but too few borrowers. Bernanke himself said that the FED can only deviate from market interest rates for a short time.
     
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  12. Quantum Nerd

    Quantum Nerd Well-Known Member

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    Yes, demand for labor is low, depressing wages. However, the reason for this is low demand, not high taxes or regulations for employers. Trump's plans do nothing to address low aggregate demand, unless someone thinks that giving tax cuts to the rich will make them hire people for making more products that nobody can afford to buy.

    Instead, the current boom in confidence is rather built on the illusion of future prosperity. Behavioral economics is an interesting field.
     
  13. Zorro

    Zorro Well-Known Member

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    I wouldn't. We are ready to excel again, but I think this is a false dawn. I think we will see one more big step backward. That's part of why I voted for Trump, I am much more comfortable with him leadings us through it that I was with the drunken kleptocrat who was dumb enough to let State Department emails end up on the computer of a pervert who sends pictures of his dork to 13 year old girls.

    Pentagon Says OBAMA Was Wrong: It’s NOT ISIL, IT’S ISIS!

    Pentagon Officially Designates The Proper Name To The Enemy During a Friday briefing, Capt. Jeff Davis, a Pentagon spokesman, said ..

    ISIL includes Israel. The Overrated Clown apparently thought it was clever to include Israel in the caliphate.
     
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  14. lemmiwinx

    lemmiwinx Well-Known Member Past Donor

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    I see so you think it was too many dollars chasing too few politicians that kept interest rate low? That's why both sides of entrenched DC elites equally wish Trump had never been born. He understands how the economy works and he shares it with his supporters on twitter in his daily briefings to the people.
     
  15. frodly

    frodly Well-Known Member

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    We have been deregulating quite a lot since about 1970, but really accelerating between 1981 and 2006. I wonder how long we need to keep this deregulation thing up before we can say for sure it doesn't work. The period in American history where we had the highest wages and lowest levels of unemployment, also coincided with a period where we had the highest levels of taxes and the most restrictive regulations on finance. I am not claiming the relationship is causal and the high taxes and regulation caused those things (that is debatable), but what can be said with a lot of confidence based on that fact, is that they clearly don't prohibit prosperity.
     
  16. toddwv

    toddwv Well-Known Member Past Donor

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    Probably had nothing to do with the unseasonably warm weather, right?
     
  17. Taxpayer

    Taxpayer Well-Known Member Past Donor

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    Wages are low because what people are offering to do, is not what people need or want done. You can't reverse time and make turning a mill stone the valuable and essential contribution it once was by cutting taxes.

    You want your neighbor to pay you more, do more or do better. Solve today's problems, the hard ones that few people are solving, and you will get higher compensation for that greater value.

    If instead, you stand blankly until someone "creates a job" by assigning you a simple task or errand... you will get the same low wages we have always paid for errands.




     
  18. Map4

    Map4 Well-Known Member

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    Or, maybe a lot of people simply decided to go out to eat on the same night?
     
  19. FAW

    FAW Well-Known Member Past Donor

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    If a particular tax cut creates economic growth, why is that an "artificial sugar high" ? Why is it inevitable to be followed by "glycemia" ? A higher tax rate does not always mean higher government revenues. You do know that an economy is cyclical and there will always be highs and lows. I am not sure that its fair minded to attribute that inevitable low to being glycemia caused by a previous tax cut.
     
  20. Reality Land

    Reality Land New Member

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    Wow, you claim GWB went on a debt spree but failed to mention the biggest debt maker in the history of these US! Amazing how partisan some people can be... Hope you can take your blinders off long enough tonread this post. Lol
     
  21. Quantum Nerd

    Quantum Nerd Well-Known Member

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    The Solow model of economic growth is based on three factors: 1) Population growth. 2) Technological progress (increased productivity per capita) and 3) The savings rate (assuming that savings will be invested into productive capacity).

    Tax cuts are not in it. Why? Because tax cuts can only cause a temporary increase in economic activity, if they even do that at all. Even if we assume that tax cuts increase economic activity, that effect will wear itself out after the economy has reached a higher output and the effect of the tax cut will cease.

    In addition, tax cuts are merely redistribution. If offset by reduced government spending, the beneficial effect of the tax cuts is offset by reduced stimulation of the economy by government spending. Thus, the only net effect comes from the idea that spending by the private sector is more efficient than government spending. This may be true, but the net effect is most likely small.

    For the usual GOP tax cuts, however, they are not offset by cuts in government spending. Thus, they have a temporary stimulatory effect, at the expense of increased federal debt. This is just future spending brought to the present, but the price will have to be paid later when tax increases (or eventual cuts in government spending) will reduce economic activist and result in a crash. That's the HYOPglycemia (low blood sugar) tat I have been mentioning in my analogy, which in the past has ALWAYS followed the borrow and spend tax cuts by the GOP. There is no reason to assume that this time will be different.

    - - - Updated - - -

    Read my post again. I claimed that tax cut policies by GWB resulted in a PRIVATE debt spending spree, which eventually resulted in overindebtedness of the consumer and, thus, the great recession.
     
  22. FAW

    FAW Well-Known Member Past Donor

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    I am trying to follow your logic here..... So you are claiming that because the "Solow" model of economic growth only uses population growth, productivity per capita, and the savings rate, therefore any growth resulting from a tax cut is akin to a sugar high and must therefore result in hypoglycemia ? I don't see the logic in that correlation even a little. Can you elaborate on what you are trying to say ? I notice that the "Solow" model also doesn't take into account international competition on the domestic economy, should we therefore conclude that China's rise on the international scene is therefore just an artificial Chinese Sugar high, and that in reality their rise is only a mirage ? I don't see how the fact that the "Solow" economic model fails to mention tax cuts or international competition, somehow equates to those factors being irrelevant. I don't see the correlation in that logic even remotely.

    Taxes are redistribution. I suppose you could therefore turn that around and state that tax cuts are also redistribution. I hadn't said one thing about offsetting a tax cut by reduced government spending, so I am not sure why you are now arguing a point about reduced government spending. You had acknowledged the stimulative effects of a tax cut by calling them a sugar high, and I responded solely to that notion. A reduction in spending does not necessarily go hand in hand with a tax cut. A tax cut is really all about the Laffer curve and the maximization of government revenue. The Laffer curve undeniably exists, the only question is what is the optimal tax rate. If you had a zero percent income tax rate, government revenues would be Zero. If you had a 100% income tax rate, government revenues would ALSO be zero because people are not going to work for free. Somewhere in between those two extremes lies the optimal rate that is going to optimize government revenues by being high enough to generate revenue, and low enough to not stifle economic growth. Just to make things simple lets say that our current overall rate is 25%. You cannot credibly say that 25% is THE optimal rate. Maybe it is, maybe it isn't. That calculation is infinitely complex. Maybe 28% is the optimal rate, but then again, maybe that rate is 22%. It is an opinion, and not one that can be proven.

    You seem to be going off the assumption that an increase in that rate means more government revenue, and that a decrease means less, but that analysis wholly ignores the potential for stimulative effects from a lowering of the tax rate. We have seen a marked increase in government revenues following tax cuts by Reagan and even the Clinton 1997 taxpayer relief act, so you cannot claim unequivocally that you have data that says otherwise. I realize there are a million variables involved and am not stating unequivocally that the tax cuts created that growth, by the same token, you cannot point to a tax increase followed by increasing government revenue, and state unequivocally that it was the tax hike that created that increase in revenue.

    What were are left with are opinions. It is impossible to sift through all the variables to come up with clear evidence that tax cuts increase or decrease government revenue. Personally, I support the growth model, which would clearly favor tax cuts. I believe that growth helps our economy, and I also believe in a small government. I want government to be a smaller percentage of our GDP, so a tax cut is a win win to me. Being that you are against tax cuts, I can only assume that you are willing to forego growth in favor of a larger government, and that you prefer that the government is a larger percentage of our GDP.
     
  23. Quantum Nerd

    Quantum Nerd Well-Known Member

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    1) I agree that the Solow model of economic growth is an oversimplifaction.

    2) China, however, fits this model well, because reinvested personal savings (not only by the rich) and innovation drive economic growth. Of course, there is speculation too, in the real estate sector, and that part of the growth is not real and bubble-like.

    3) I am fully aware of the Laffer curve. All the arguments about tax rates are over where on the Laffer curve we are. The GWB idea that tax cuts will increase revenue assume that we are on the right (descending) side of the curve. I believe there is little evidence for this.

    4) I'd be fully for studies on what actually the optimal tax rate is. Yet, there is little interest in this. Most actually are ideologically married to either more or less taxes, no matter if that will help or husrt not only revenue but the economy in general.

    5) I am not against tax cuts per se. I am rather FOR keeping tax rates steady, resulting in a predictable environment for businesses and consumers, all of who hate uncertainty. The constant dangling of the low taxes carrot in front of the economy, as well as the threat of higher taxes by the other side, both add to uncertainty. I'd rather we decide on a reasonable tax rate and stick with it, or make changes slowly.

    6) Overall, I believe that the current tax rate has been established in an evolutionary way that is probably not too far off from the optimum value. You can see that by comparing international tax rates. There are actually no successful countries that have 0 tax rates. Yet, the "tax cuts are always good" ideology would bring us to exactly that -- 0 taxes.
     
  24. FAW

    FAW Well-Known Member Past Donor

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    Nobody credible is arguing for zero taxes, and it is unfair to say that because tax cut proponents are always asking for tax cuts, that somehow their ideology's ultimate endpoint would be to arrive at zero taxation. In the same mindset, it is unfair to say that people that are always pushing for smaller government will ultimately arrive at anarchy, or people that push for larger government will ultimately bring us to full blown socialism. Nothing is gained by these extreme exxagerations. Change in government comes in tiny increments, and a lifetime worth of tax cuts probably on the optimistic side could result in a 5% change in the effective tax rate ( at most). Nobody credible is pushing for zero taxation, and the same can be said for full out Socialism. It is unfair to marginalize people supporting tiny incremental change with the most extreme embodiment of the direction in which they are supporting.

    While business does indeed like predictability, I am not so sure that means they never want change. It is not as if tax rates change all that often. Undoubtedly, a reduction in tax rates spurs economic activity, and a raising of the tax rate stifles economic activity. Be it a business or an individual consumer, nobody ever claims that their economic position is going to be hurt because their tax rate lowered a little bit. The uncertainty they are trying to avoid is a downturn in their fortunes, NOT an uptick.

    You say there is little evidence that we are on the descending side of the curve, but at the same time there is little evidence that we are on the ascending side either. With that being the case, I opt for the pro growth side, which favors a lowering of the tax rate. I believe that government is too big, and while it will never shrink, I favor policies that inhibit its rate of growth, which is precisely what a tax cut does.

    To get back to our original discussion, I think it is unfair to characterize a rise in economic activity due to a tax cut as a "sugar high" with an inevitable "hypoglycemic" event to follow. Nothing in the slight lowering of an effective tax rate that results in higher economic activity is phony or temporary that will inevitably lead to a crash, which is what you seem to be saying. It is true that if a tax cut were to produce 3% growth when enacted, that does not mean that the new rate ensures 3% growth going forward in perpetuity, but that is the wrong way to read the situation. If I owned a company that sells 10 widgets a year and I routinely grow by one widget, that means I would expect to sell 11 next year. If something were to happen like a tax cut that enabled me to sell 13 next year, and then I returned to growing by one per year for the next 10 years, that does NOT mean that the tax cut only increased my sales by 2 widgets over that ten year period. I would have sold that additional two widgets in every one of those ten years. Obviously that is a gross oversimplification, but it is useful in explaining the value of growth today and how that growth from today effects overall volume in perpetuity.

    Because the economy inevitably has an up and down cycle, you can always take the down cycle and blame it on whatever you want to blame from your opponents ideology. Blaming a small effective tax cut on an economic downturn is about as wrong headed as it gets. Whenever a tax cut is passed, you can rest assured that the left is going to take the next economic downturn and blame it on the tax cut, even though from an economics standpoint there is no rationale for that logic. I believe that is precisely what you are doing when you call it a "hypoglycemic" reaction. I consider you to be one of the more fair minded knowledgeable leftists on this board, but even you have seemingly fallen prey to this left driven slight of hand.
     
  25. Quantum Nerd

    Quantum Nerd Well-Known Member

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    I have not fallen prey to leftist logic. I analyze economics and market cycles from a physical science point of view. Market cycles are caused by positive and negative feedback. Any engineer knows that those feedbacks can result in instability that can eventually destroy the system (think of a bridge collapsing in high winds).

    Sugar control of our body works on positive and negative feedback too. Once sugar is consumed, the blood sugar level will spike, but negative feedback (insulin release causing sugar uptake into cells) will prevent the sugar spike from getting out of control. Conversely, positive feedback when blood sugar is low (gluconeogenesis) prevents sugar from going even lower (hypoglycemia). This finely-tuned regulatory system keeps blood sugar somewhat level and prevents the highs and lows.

    Government taxation and spending can act as this type of regulatory system in the free market economy. This would, however, mean that government spending is increased/taxation reduced in a downturn, counterbalancing the contraction of the private sector. In contrast, government spending should be reduced/ taxation increased in a booming economy.

    Unfortunately, the conservative congress people mindset works exactly the opposite, they want reduced spending in a recession and reduce taxation in a growing economy (current situation), which provide positive feedback on the way up and negative feedback on the way down, exactly the opposite of what is needed. That's what I mean with my comparison with sugar highs and lows. Hope this makes it more clear.

    P.S.: I appreciate the discussion and realize that you are one of the few on the conservative side who is reasonable and who actually thinks without just regurgitating talk radio lines. You may see from my previous posts that I have a strong interest in economics and have actually read assays by von Mises and Hayek, who I find to be brilliant men, even though I may disagree with some of their conclusions. So, I take the other side into account.
     

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