The hypocritical cliff

[Benko]

In the end, nobody wants to go over the cliff.

Obama clearly wants very much to go over the cliff since 1.  the subsequent tax cuts for the middle class will then "have his name on them" and he can take credit for them and 2. he has already stated how he will blame the republicans during I think he said state of the union.

[Bean]

If they go over the cliff they are basically saying "fuck you, 99% of America.  We're bought and paid for by the 1%."

I hate this argument. Both parties are bought and paid for by interests groups. (And they all have big bucks) If you mean all politicians by "they" then I completely agree with you

Also, why do we punish success, it confuses the bejesus out of me.

[Storm]

If they go over the cliff they are basically saying "fuck you, 99% of America.  We're bought and paid for by the 1%."

I hate this argument. Both parties are bought and paid for by interests groups. (And they all have big bucks) If you mean all politicians by "they" then I completely agree with you

Also, why do we punish success, it confuses the bejesus out of me.

Let's be honest though...  Which party wants to give benefits to the majority of Americans and which party wants to prevent penalties to an increasingly smaller minority of Americans?

[Pointedstick]

Let's be honest though...  Which party wants to give benefits to the majority of Americans and which party wants to prevent penalties to an increasingly smaller minority of Americans?

It seems to me that neither of them really want to preserve benefits for the majority of Americans or else they'd have passed a bill that does so. You're right that one could easily say that the Republicans want to keep taxes on the rich low more than they want to keep everyone else'e taxes low… but on the other hand, one could just as easily say that Democrats want to raise taxes on the rich more than they want to keep everyone else's taxes low. Either side could give a bit and preserve the majority tax cuts they both want preserved. Actions speak louder than words, and all the actions I've seen indicate both the Ds and the Rs would prefer to have nothing if they can't have everything… and in that case, we all lose.

[Benko]

Let's be honest though...  Which party wants to give benefits to the majority of Americans and which party wants to prevent penalties to an increasingly smaller minority of Americans?

Let's be honest about the results of what Obama wants.  How is more gov't spending and taxing whoever more going to help economic growth?  It will make you and others feel good (if taxing "the rich" floats your boat) but will it lower the unemployment rate or help our economy grow?  Obama the congresscritter warned about the dangers of raising taxes in situations such as now.

[Storm]

Let's be honest though...  Which party wants to give benefits to the majority of Americans and which party wants to prevent penalties to an increasingly smaller minority of Americans?

Let's be honest about the results of what Obama wants.  How is more gov't spending and taxing whoever more going to help economic growth?  It will make you and others feel good (if taxing "the rich" floats your boat) but will it lower the unemployment rate or help our economy grow?  Obama the congresscritter warned about the dangers of raising taxes in situations such as now.

To be honest, increasing taxes or decreasing spending at all is bad right now, but if I had to choose, I'd prefer that taxes only go up on 1-2% of us rather than 100% of us.

[Storm]

[Pointedstick]

The big problem, Benko, is that Obama, the Democrats, and the Republicans are so terrified of the size of the debt that they're willing to throw people under the bus for even the tiniest cut in the deficit. None of those dopes seem to realize that the debt is the least of their problems, especially at a time like this. The inmates are running the asylum.

[Benko]

Please provide any evidence that Obama is afraid of anything/anyone or cares about anything aside from the usual suspects: spend more, tax the rich, gay rights/illegal immigrant rights, gun control; the usual democratic idols.

"To be honest, increasing taxes or decreasing spending at all is bad right now" 
I agree on taxes and suspect you are correct on spending.  But Obama is not that "intelligent".  As I said, President Obama is less wise that senator Obama.  Why is that?  Taxing the rich is a goal in itself.  He does not care how much it helps or if there are more helpful ways to generate the same results.  Care to comment?

[Pointedstick]

Please provide any evidence that Obama is afraid of anything/anyone or cares about anything aside from the usual suspects: spend more, tax the rich, gay rights/illegal immigrant rights, gun control; the usual democratic idols.

"To be honest, increasing taxes or decreasing spending at all is bad right now" 
I agree on taxes and suspect you are correct on spending.  But Obama is not that "intelligent".  As I said, President Obama is less wise that senator Obama.  Why is that?  Taxing the rich is a goal in itself.  He does not care how much it helps or if there are more helpful ways to generate the same results.  Care to comment?

http://gyroscopicinvesting.com/forum/ht ... 5#msg53715

[Benko]

Pointed I can only assume that means you wish me to stop posting about Obama.

I don't deny that the republicans (or at least the one with the power) are morons.  You made a statement and said it applied to both sides.  I was willing to give you that it applied to republicans but wanted to know why you thought it applied to Obama.  Which I didn't think was an unreasonable question.

[Pointedstick]

I wasn't trying to muzzle you, Benko, but you often seem fixated on Obama and the Democrats in particular. I'm a right-leaning person as well on many issues, but I think there's plenty of blame to go around and the current administration in no way has a monopoly on idiocy.

As for why Obama thinks the debt is important, he's made numerous erroneous public statements to the effect of "we're broke" or "we're borrowing everything from China" or wondering how the debt is going to be paid back. It goes beyond simply lying to the public because he knows they/we wouldn't understand MR; he simply doesn't have a clue himself.

Here, try to find everything wrong that he said in this clip: https://www.youtube.com/watch?v=1kuTG19Cu_Q

(hint: it's everything)


My point was that everyone in power—Obama included—is operating under the false assumption that something horrible is going to happen if we don't reduce the deficit RIGHT NOW, which is ludicrous, since only cutting the deficit still allows the debt itself to grow, and nobody's plan does anything more than nibble at the edges by cutting programs or tax cuts that are cherished by their opponents, deliberately trying to goad them into anger. I mean, the Republicans are going after NPR and Planned Parenthood, while the Democrats are trying to raise taxes a tiny smidgen on the top 3%. These are just symbolic gestures.

All the politicians are so scared of the nonexistent consequences to letting the debt grow that they're failing to do anything at all about it, and in the process they're hurting everyone by letting tax cuts expire, cutting spending in a weak economy, and unleashing terrible uncertainty that's paralyzing the economy—and for nothing. Nobody gains from this. Well, except for the news media, maybe.

I'm a pretty jaded person when it comes to politics but the fiscal cliff brinksmanship has just made me sick. The entire thing is based on a false premise, with false "solutions" that offer false compromises. It's like the worst theater performance you've ever seen, and where the surprise ending is that the audience gets set on fire after the last act.

[RuralEngineer]

PS,

I challenge your assertion that the Dems are afraid of the deficit.  The deal proposed by Obama doesn't really cut the deficit in a significant way.  His first tax increase proposal brings in negligible revenue and contains no real spending cuts.  If he doesn't increase revenue significantly, and doesn't cut significantly, and also wants another stimulus (about 1/3 the size of the first one)....where are you getting the idea that he is at all worried about the deficit?

I don't get the impression that any of the morons in Washington care about the debt or the deficit.  It's all just partisan games.  If the Repubs REALLY cared, they'd be going after the military spending in addition to entitlements.  If the Dems cared, they'd be proposing higher taxes on everyone as well as some actual spending cuts.  As it is their tax increases are purely ideological, much like the 75% tax on millionaires in France.  Tiny revenue, but makes them feel good about sticking it to the rich folks.

I'm less concerned about what kind of a deal we get because it's all so very small in scope.  The evils of any deal are outweighed by the uncertainty our economy is laboring under.  I can't remember which Dem it was, but one of them proposed taking the GOP and Obama's latest offers and splitting the difference.  The man deserves a reward.

[Pointedstick]

I don't get the impression that any of the morons in Washington care about the debt or the deficit.  It's all just partisan games.  If the Repubs REALLY cared, they'd be going after the military spending in addition to entitlements.  If the Dems cared, they'd be proposing higher taxes on everyone as well as some actual spending cuts.  As it is their tax increases are purely ideological, much like the 75% tax on millionaires in France.  Tiny revenue, but makes them feel good about sticking it to the rich folks.

That's exactly my point, in fact! Both parties both make noise about the debt, and some on either side seem really genuinely bothered by it (more Rs and Ds, I think), but none of them want to cut anything in any significant quantity that would actually make a difference; instead, each side just wants to accuse the other of doing an even worse job of coming up with bad ideas and failing to pass them into law than they are. All the Republican "solutions" barely cut the deficit either.

I'm with you on the uncertainty. I had several large financial decisions to make a week or so ago and I was tearing my hair out trying to decide what to in the midst of my income and capital gains tax rates potentially rising next year. I'm just operating on the assumption right now that all the taxes will rise and a minor recession is in the cards. That way I'll be happily surprised if some miracle occurs and we manage to get out of this mess without higher taxes and a wrecked economy.

[MachineGhost]

If they go over the cliff they are basically saying "fuck you, 99% of America.  We're bought and paid for by the 1%."

It's easier for Republicans to vote for a tax decrease built into the cake than a tax increase.  Why they are so concerned with integrity all of a sudden is a rather interesting turn of events.  For far too long, the problem with politics has been compromising being the root of all evil.

[Gumby]

The biggest myth perpetuated by politicians and pundits is convincing people that our grandchildren will inherit our national debt. Nothing could be further from the truth.

Consider the following...

But look now at the words of a leading spokesman of the party of Lincoln, New Gingrich: "For the children trapped in poverty, for the children whose futures are trapped by a government debt they're going to have to pay, we have an obligation tonight to talk about the legacy we're leaving our children and grandchildren." At least as far as the national debt is concerned, Mr. Ginrich's Contract with America appears to be nothing more than new voices spouting old myths.

By the reckoning of Washington, Jefferson, Eisenhower, Regan, Clinton — and perhaps all presidents except Lincoln — and many other notables such as Ross Perot, Peter Peterson, and Newt Gingrich, we apparently have never paid for World War II.

The Federal debt at the of the war was approximately $270 billion, which was about equal to total defense spending in the four fiscal years 1942-1945. World War II was financed largely by debt (deficit spending) rather than by taxes. The debt was commonly viewed by politicians as a staggering legacy of the war. So it should not be be surprising that after the war there was intense political debate about the future burden of the war debt, even though economists generally recognized that the cost of the war could not be shifted to the future.

The economic burden of World War II, in terms of debt or otherwise, was borne by the Americans who made the sacrifices at the time: no new cars from 1942 through 1945, a ration of a few gallons of gas a week for pleasure driving, and scarcities of housing and consumer goods across the board. Americans could not consume the tanks and guns they produced in the war effort. Instead, they increased their savings, which became a source of funds for the government's war debt. In addition to the stepped-up sales of Treasury marketable securities, the government conducted massive campaigns of patriotic appeals to small savers to help finance the war effort by buying U.S. savings bonds (then caled war bonds and defense bonds). The war was thus paid for at the time, and future generations benefited, not burdened, by the national security they achieved.

The greatest cost of World War II, of course, was borne by those who paid the ultimate price . . . and by the loved ones left behind.

[...]

We never paid off the war debt — $270 billion plus interest — and today's federal debt is roughly equal to it. At an annual interest rate of 6 percent (the Treasury's approximate average annual borrowing cost since 1946), $270 billion would grow in fifty years to be approximately $5 trillion, which happens to be only slightly less than the $5.2 trillion estimated federal debt at the end of fiscal year 1996. This, had we paid off the debt from World War II (including interest) we might have little or no federal debt today (albeit based on the very questionable assumption of "all other things being equal").

What does that mean? That the cost, or debt burden, of World War II has been shifted to this generation? Or that, if we go another fifty years without paying off the debt (with accrued interest continuing at 6 percent), we will shift the World War II debt burden — then $96 trillion — to our grandchildren in the year 2046, one hundred years after the end of the war? No. Whatever the size of the federal debt in 2046, the people alive at that time will not owe it to us or to the World War II generation. They will owe it to one another. They will inherit both the Treasury security assets and the public debt payment liabilities.

Had we borrowed from other countries to help finance World War II (which we did not), and had that borrowing resulted in a net foreign investment in the United States at the end of the war, then there would have been a shifting of costs to post-World War II Americans. Yet that would have been an international shift, not an intergenerational shift.

Source: The Truth About the National Debt: Five Myths and One Reality (1996)

The only thing our grandchildren will inherit is the ridiculous myth that their own grandchildren will be responsible for paying down the national debt.

[doodle]

Yep, thank goodness i was talked down off the ledge of Austrian Economic theory with regards to government debt by Mr Gumby here.

I read Moslers blog every once in a while now and he reposted this from LA Times... Why doesnt the president have the balls to come out and say this? Im tired of the dialogue being dumbed down. The ulterior motives behind this political debt psycho babble need to be exposed. Are any politicians that you are aware of standing up to this charade of nonsense?

Forget the ‘fiscal cliff’

By Stephanie Kelton

Dec 21 (LA Times) — Look, up in the sky! It’s a “fiscal cliff.”? It’s a slope. It’s an obstacle course.

The truth is, it doesn’t really matter what we call it. It only matters what it is: a lamebrained package of economic depressants bearing down on a lame-duck Congress.

This hastily concocted mix of across-the-board spending cuts and tax increases for all was supposed to force Congress to get serious about dealing with our nation’s debt and deficit. The question everyone’s asking is this: On whose backs should we balance the federal budget? One side wants higher taxes; the other wants spending cuts. And while that debate rages, the right question is being ignored: Why are we worried about balancing the federal budget at all?

You read that right. We may strive to balance our work and leisure time and to eat a balanced diet. Our Constitution enshrines the principle of balance among our three branches of government. And when it comes to our personal finances, we know that the family checkbook must balance.

So when we hear that the federal government hasn’t balanced its books in more than a decade, it seems sensible to demand a return to that kind of balance in Washington as well. But that would actually be a huge mistake.

History tells the tale. The federal government has achieved fiscal balance (even surpluses) in just seven periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, 1920-30 and 1998-2001. We have also experienced six depressions. They began in 1819, 1837, 1857, 1873, 1893 and 1929.

Do you see the correlation? The one exception to this pattern occurred in the late 1990s and early 2000s, when the dot-com and housing bubbles fueled a consumption binge that delayed the harmful effects of the Clinton surpluses until the Great Recession of 2007-09.

Why does something that sounds like good economics balancing the budget and paying down debt end up harming the economy? The answers may surprise you.

Spending is the lifeblood of our economy. Without it, there would be no sales, and without sales, no profits and no reason for any private firm to produce anything for the marketplace. We tend to forget that one person’s spending becomes another person’s income. At its most basic level, macroeconomics teaches that spending creates income, income creates sales and sales create jobs.

And creating jobs is what we need to do. Until the fiscal cliff distracted us, we all understood that. Today, we have roughly 3.4 people competing for every available job in America. The unemployment rate is like a macroeconomic thermometer when it registers a high rate, it’s an indication that the deficit is too small.

So in our current circumstance a growing but fragile economy policymakers are wrong to focus on the fact that there is a deficit. It’s just a symptom. Instituting tax increases and spending cuts will pull the rug out from under consumers, thereby disrupting the income-sales-jobs relationship. Slashing trillions from the deficit will only depress spending for year to come, worsening unemployment and setting back economic growth.

Conveying this is an uphill battle. The public has been badly misinformed. We do not have a debt crisis, and our deficit is not a national disgrace. We are not at the mercy of the Chinese, and we’re in no danger of becoming Greece. That’s because the U.S. government is not like a household, or a private business, or a municipality, or a country in the Eurozone. Those entities are all users of currency; the U.S. government is an issuer of currency. It can never run out of its own money or face the kinds of problems we face when our books don’t balance.

The effort to balance the books that’s at the heart of the fiscal cliff is simply misguided. Instead of butting heads over whose taxes to raise and which programs to cut, lawmakers should be haggling over how to use the tool of a federal deficit to boost incomes, employment and growth. That’s the balancing act we need.

Stephanie Kelton is an associate professor of economics at the University of Missouri-Kansas City and the founder and editor of New Economic Perspectives. @deficitowl

[Pointedstick]

I read Moslers blog every once in a while now and he reposted this from LA Times... Why doesnt the president have the balls to come out and say this?

I'm not convinced he understands it himself. I don't think almost anyone in Congress does, either.

[doodle]

PS,

Im sure plenty of people in government understand this...i just think they use this message of debt to hide a more unsavory game...

The repubs use debt fear to cut social spending

The dems use debt fear to raise taxes and redistribute wealth

[Pointedstick]

I think you're giving politicians too much credit. I'm sure there are a few who understand it, but I'm fairly certain that ignorance of this slice of monetary reality is rampant. I can't prove that they're stupid rather than liars, of course, but I just suspect it. 

[Gumby]

PS,

Im sure plenty of people in government understand this...i just think they use this message of debt to hide a more unsavory game...

The repubs use debt fear to cut social spending

The dems use debt fear to raise taxes and redistribute wealth

I believe both sides are just engaging in class warfare. However, I doubt more than a few politicians (if any) understand MR. From the people I've met who've worked in Washington, all I hear is that most politicians are generally clueless, but are very good at reading/conveying messages written by their own staff.

Even if a few staff members in Washington understand MR, they are going to be more focussed in keeping their politicians employed by conveying old myths that the media is willing to perpetuate.

[Storm]

I find it ridiculous the way both parties try to use the household checkbook analogy to explain the national debt.  It dumbs down the conversation to the point where anyone that disagrees with this analogy sounds like an idiot who can't balance his own checkbook.

I've tried to explain MMT/MMR to friends who think we have too much debt and the best way I can explain it is the British colonial explanation - hut taxes, military paid in pounds sterling, barter for pounds to pay hut taxes, etc.  But I lose people when I try to explain that every time the government pays salaries to the soldiers in debt they are increasing the bank accounts of the private sector.

The average person can't understand MMT/MMR, or fractional reserve banking.  The average politician is either equally clueless, or understands it perfectly but has to dumb down the conversation so that the idiots watching TV can understand it.

Then, we end up with the family checkbook analogy...  It's frustrating.  But then again, a presidential candidate that actually believed in MMT/MMR and explained it in honest language to the people would never be electable.  He would be thought of as dangerous, reckless, and too smart for his own good.  In America we like dumb bold presidents.  Preferably actors.  We don't like intelligent thoughtful presidents.  Those are the type of people that dumb bold presidents used to bully on the school playground...

[Pointedstick]

But then again, a presidential candidate that actually believed in MMT/MMR and explained it in honest language to the people would never be electable.  He would be thought of as dangerous, reckless, and too smart for his own good.  In America we like dumb bold presidents.  Preferably actors.  We don't like intelligent thoughtful presidents.  Those are the type of people that dumb bold presidents used to bully on the school playground...

I could never determine to my own satisfaction whether Romney was as clueless as most, or understood but knew he had to hide it in order to "speak the language" of the Republican party. I mean, he's a finance guy; how could he not understand? But if he did, I never saw even a crack in the facade. Then again, I suppose that was Romney for ya. 

[Storm]

I could never determine to my own satisfaction whether Romney was as clueless as most, or understood but knew he had to hide it in order to "speak the language" of the Republican party. I mean, he's a finance guy; how could he not understand? But if he did, I never saw even a crack in the facade. Then again, I suppose that was Romney for ya. 

Personally, I think both Obama and Romney are pretty smart, or at least talk to smart people, and know this.  I honestly think it's just an act, but they have to play along.  It's like the Emperor's New Clothes...

[Storm]

A deal has been reached...

http://www.latimes.com/news/politics/la ... 1540.story

I'll take my winnings in the form of cold hard cash... LOL

Seriously though, fuck you guys (congress).  My portfolio does not thank you for waiting until the last possible minute to pull yourselves off your ass and do your constitutionally mandated duty.  Fuck you, John Boehner, and fuck you Mitch McConnell.