The Emperor is Naked: David Stockman

[Gumby]

How does MMR reconcile the fact that the economy was great under Clinton and is currently great in Australia, despite budget surpluses?

The Clinton surplus issues are clearly explained in Mosler's Seven Deadly Innocent Frauds of Economic Policy (see Pages 45 to 49 — starting with the section titled "Al Gore"). A government budget surplus (when a government takes in more than it spends) takes away savings from the non-government sectors. This causes the private sector to take on unsustainable levels of private debt to sustain growth. If you remember, the economy crashed soon after the surpluses began to happen.

I really know very little about Australia. One comment I saw somewhere said: "Australia has a significant trade surplus so it is foreigners who are borrowing and funding the net savings of the Australian private sector and helped fund prior government surpluses."

For a much better explanation, go to Professor Bill Mitchell's blog — Mitchell was one of the developers of MMT economics, who happens to be Australian:

http://bilbo.economicoutlook.net/blog/

EDIT: Here is one of Mitchell's relevant posts on the subject:

Bill Mitchell: Time to end the deficits are bad/surpluses are good narrative

"Each time the budget went into surplus, a recession followed soon after. The long period of budget surpluses between 1996 and 2007 was made possible because households and firms maintained their spending by increasingly indebting themselves – which was also abnormal in historical terms and clearly unsustainable. The [Global Financial Crisis] is evidence that a growth strategy built on that sort of spending is not capable of underpinning prosperity."

Source:Bill Mitchell: Time to end the deficits are bad/surpluses are good narrative

People must think that a big celebration happens when a currency issuer runs a surplus. Or maybe they think everyone gets a cookie and a hug from their neighbors. No. Nothing special happens. Instead you get people grabbing more and more risky forms of private credit, to sustain private sector growth, and then you get a recession when all that risky private credit implodes on itself.

[Gumby]

By the way, Stockman's logic is laughable — completely flawed. My favorite line is:

"Savers are being crushed when we desperately need savings. The federal government is borrowing when it is broke"

As Warren Mosler explains, in his book, Seven Deadly Innocent Frauds of Economic Policy, this is a ridiculous statement:

Clearly, the mainstream doesn’t yet realize that deficits add to savings...So watch this year as the federal deficit goes up and savings, too, goes up. Again, the only source of “net $U.S. monetary savings”? (financial assets) for the non-government sectors combined (both residents and non-residents) is U.S. government deficit spending.

But watch how the very people who want us to save more, at the same time want to “balance the budget”? by taking away our savings, either through spending cuts or tax increases. They are all talking out of both sides of their mouths. They are part of the problem, not part of the solution.

Source: http://moslereconomics.com/wp-content/p ... s/7DIF.pdf (Page 47)

[cvn74n2]

As a career public servant (25+ years in the military) those wishing for limited government better be careful for what they wish for.  As I have seen in various places across the US, downsized government means choosing between public education and fire department service (San Diego) or local infrastructure improvements like roads and and police (Virginia Beach).  Traveling across the globe has shown me deep poverty (Kenya, India) and restricted freedoms (Middle East and North Africa) that causes a huge amount of resentment that foments strife and revolution.  Be thankful you live in a country that generally allows the hard-working to become successful while trying to provide a basic level of care for all.  Today's conversations are little different from the those at the beginning of the country (Federalist papers and Presidential campaigns) but the technology allows greater travel to the extreme voices.  I believe all persons are created equal and the government is of, by, and for the people to provide for Life, Liberty, and the Pursuit of Happiness.  May peace be with you and remember those who paid the ultimate price this Memorial Day.  Deployed in the Persian Gulf.

[Xan]

Thank you greatly for your service, and even more so to those who made the ultimate sacrifice.

I agree with you, except to point out that a country providing a basic level of care for all is not, by definition, the same as a country's government providing that.  It's one thing for a generous people to come together in the form of charities, communities, churches, etc, and quite another for a government (quite unconstitutionally, certainly at the federal level) to point guns at people and force them to give money to other people.

[MediumTex]

It's one thing for a generous people to come together in the form of charities, communities, churches, etc, and quite another for a government (quite unconstitutionally, certainly at the federal level) to point guns at people and force them to give money to other people.

Bingo!

The fact that a party may use stolen property for a laudable purpose is not relevant to the question of whether it is right to steal someone else's property.

One of the most annoying frauds perpetrated by the government is the idea that people can somehow get more back from the government than they pay in taxes.  Obviously, if the government must pay for a massive bureaucracy to support its various efforts at improving society, it won't be possible to return to society more than a fraction of what has been confiscated through taxation.

In the U.S. we have a relatively benign government compared to other parts of the world.  Things could certainly be a lot worse, but that's not the point.  The point is that a true "land of the free" would necessarily mean that the arbitrary confiscation of private property through state coercion would not be present.  Without the protection from confiscation of the fruit of one's labor, what kind of freedom does one really have?

If slavery is essentially the confiscation of one's labor by a third party, isn't the confiscation of the fruit of one's labor by a third party just a more subtle form of slavery?  Think about it.

[Greg]

In the U.S. we have a relatively benign government compared to other parts of the world.  Things could certainly be a lot worse, but that's not the point.  The point is that a true "land of the free" would necessarily mean that the arbitrary confiscation of private property through state coercion would not be present.  Without the protection from confiscation of the fruit of one's labor, what kind of freedom does one really have?

If slavery is essentially the confiscation of one's labor by a third party, isn't the confiscation of the fruit of one's labor by a third party just a more subtle form of slavery?  Think about it.

I very much agree with this but sadly to quote TripleB and George Carlin "the system is rigged". I say that mainly just because of human psychology and our two party system and just little motivation/knowledge on the voting public's part. I feel with the two party system that people might want to choose another party for their vote but they might feel as though they are throwing their vote away so they vote for the "lesser of the two evils". In this sense, there would only be very slow change to the political system over time as we only ever choose the lesser of two evils versus a different way of thinking.

I also feel as though people are normally misinformed or just don't care enough about politics to really delve into their true reasonings for what they feel is right for government to do and what the role of government should be for people's lives. Because of this in my mind, is the reason why government always runs as "business as usual" and seems to never change (or worse, grows larger over time).

I always liked the quote from Grover Norquist as saying: "I'm not in favor of abolishing the government. I just want to shrink it down to the size where we can drown it in the bathtub." I rather like the idea of less government intervention but not sure what the "ideal" form of government is for us.

[MediumTex]

I rather like the idea of less government intervention but not sure what the "ideal" form of government is for us.

What is the ideal level of theft in a society that purports to protect property rights?

In "How I Found Freedom in an Unfree World", Harry Browne offered some good strategies for living a relatively free life in the midst of a society populated with statist thugs, thieves and wide-eyed world changers.  He suggested that you essentially work around these elements in society to the greatest extent possible, sort of like the way you might drive around an especially bad neighborhood to maintain your personal safety.

[Greg]

I rather like the idea of less government intervention but not sure what the "ideal" form of government is for us.

What is the ideal level of theft in a society that purports to protect property rights?

When I was saying intervention I was probably using it in the wrong sense. I'm for as little theft as possible from society and as much for property right as possible. I'm more in the camp of certain things are more difficult to run if we lived anacho-capitalistly (even though that's not a word). I look at U.S. DoD or an Army as a means for protection at least as difficult if it were to solely rely on voluntary contributions. Maybe this could work but I have no idea.

In "How I Found Freedom in an Unfree World", Harry Browne offered some good strategies for living a relatively free life in the midst of a society populated with statist thugs, thieves and wide-eyed world changers.  He suggested that you essentially work around these elements in society to the greatest extent possible, sort of like the way you might drive around an especially bad neighborhood to maintain your personal safety.

I'll have to look into that book. Ever since I've joined this forum it looks like my reading list keeps getting longer and longer...

[Pointedstick]

I very much agree with this but sadly to quote TripleB and George Carlin "the system is rigged". I say that mainly just because of human psychology and our two party system and just little motivation/knowledge on the voting public's part. I feel with the two party system that people might want to choose another party for their vote but they might feel as though they are throwing their vote away so they vote for the "lesser of the two evils". In this sense, there would only be very slow change to the political system over time as we only ever choose the lesser of two evils versus a different way of thinking.

What it seems like we basically have today is a parliamentary system where the party in power does whatever it wants and feels it can get away with, and members of the minority party vote against it on principle, no matter what it is. Some recent examples that spring to mind are zero Republicans voting for Obama's health care law and zero Democrats voting for Rand Paul's law to disarm FDA bureaucrats. The thing is, we don't have the institutions of a parliamentary system, we have those of a republic (first-past-the-post winner-takes-all elections, small number of inclusive parties, etc), and those institutions require some level of compromize and cooperation between lawmakers of opposing parties for the system to function. With this level of polarization, I don't have any great hope for our system of government surviving unless we adopt the parliamentary institutions that support and permit our lawmakers current behavior toward one another.

Not that would really cheer that on, of course. A part of me takes pleasure in watching the whole edifice of government stumble and fail at every turn. It makes people more cynical about government's ability to improve things, which is IMHO long overdue.