Gyroscopic Investing

Libertarian666 wrote:

moda0306 wrote:

Libertarian666 wrote: I have an even simpler plan.

Eliminate all Federal taxes and let the Fed print whatever money the Federal government wants to spend.

Since the US is a "currency issuer" and therefore doesn't have to worry about hyperinflation, this is the simplest and most effective tax reform plan possible!

Nobody says they don't have to worry about hyperinflation.  In-fact, even with a system like that, the problem WOULD be inflation if you spent a bunch of money into the economy without taking some out.  But anyway...


Re-fajiggering our entire monetary system wasn't really in the scope of my plan.  It was simply how to reform the tax code to those three mentioned metrics.



Considering that limited scope, what are your thoughts?  Remember, we have to maintain revenue neutrality, so you can't eliminate the tax.

My other plan is to cut the Federal government back to doing only what is explicitly authorized in the Constitution, which is approximately 1% of what they do today.

Then you could eliminate income taxes and FICA and still have plenty of money left over.

Libertarian666 wrote:

moda0306 wrote:

Libertarian666 wrote: I have an even simpler plan.

Eliminate all Federal taxes and let the Fed print whatever money the Federal government wants to spend.

Since the US is a "currency issuer" and therefore doesn't have to worry about hyperinflation, this is the simplest and most effective tax reform plan possible!

Nobody says they don't have to worry about hyperinflation.  In-fact, even with a system like that, the problem WOULD be inflation if you spent a bunch of money into the economy without taking some out.  But anyway...


Re-fajiggering our entire monetary system wasn't really in the scope of my plan.  It was simply how to reform the tax code to those three mentioned metrics.



Considering that limited scope, what are your thoughts?  Remember, we have to maintain revenue neutrality, so you can't eliminate the tax.

My other plan is to cut the Federal government back to doing only what is explicitly authorized in the Constitution, which is approximately 1% of what they do today.

Then you could eliminate income taxes and FICA and still have plenty of money left over.

MediumTex wrote:

jafs wrote: I understand very well how SS works.

Really?  Then why are you talking about the sustainability of the program?

And, I'd help out the poorest folks in a lot of different ways.

Right, but most of what I've heard from you seems to involve telling businesses how much to pay their employees, regardless of the employees' worth to the organization.  IMHO, that approach won't solve any of the problems you have identified. 

I have identified three different alternative approaches (i.e., payroll tax cut, improved negotiation and enforcement process on trade deals, and expanded government employment for otherwise unemployable workers) that could get us to the place you say you want to go , and you have poo pooed all three of them. 

I'm trying to work with you here, but it's starting to seem a little troll-ish the way you don't want to explore creative solutions to the problem you have identified.  You just want to say that CEOs are overpaid, the minimum wage is too low, and you feel unwelcome and unsafe, even though you've got the smartest people here working with you to try to crack the nut you have brought to us.

But cutting revenue just increases sustainability issues if no other changes are made.

Well, many would say that if you increased employment at the bottom of the wage scale, almost every dollar in new wages would be spent, which would stimulate the economy.  A stimulated economy expands, which has a tendency to increase tax revenue. 

You're also using that "sustainability" word again.  If nothing else, I would like to see you loose up your thinking about this issue.  There are no "sustainability" issues when it comes to the U.S. government and its spending levels.  A world reserve currency issuer MUST run large budget deficits and maintain a large national debt in order to provide a bond market with enough liquidity to handle the largest international transactions.  That's a hard pill to swallow, but it's true.  The U.S. government's constraints are mostly political and cultural--they aren't financial.

Overall, revenue has to be equal to or greater than spending to balance the budget and/or create a surplus.  I know a lot of you don't care about that, and don't think it's any sort of real problem.

It has nothing to do with what I or anyone else here care about or think is a problem.  What you are doing is the equivalent of saying that when it thunders it means God got drunk and fell down in Heaven, and what I am saying is NO, there is a much better explanation for the thunder than that.

Sorry if that seems a little harsh, but in order to have a meaningful discussion about these issues, you've got to open your eyes to how our system actually works.  It's worth the effort, trust me.  Put you ego aside for a moment and look at things without preconceptions.  It's shocking what you will find has been right under your nose all of this time.  Most of the people here have had one or more of these "aha" moments.  It's worth the effort.

Personally, I have some ideas about how to improve/change SS and Medicare, but they involve serious changes to the program that will never be considered.

Me too.  How about Medicare for everyone and only pay SS to people with W-2 income under $1 million a year?

And, I'm not "supposed" to be anybody, I'm just who I am.

It sounds like who you are is who you are supposed to be.  That's all I was saying.  I was just depending on you to be you. 

MediumTex wrote:

Libertarian666 wrote:

moda0306 wrote: Nobody says they don't have to worry about hyperinflation.  In-fact, even with a system like that, the problem WOULD be inflation if you spent a bunch of money into the economy without taking some out.  But anyway...


Re-fajiggering our entire monetary system wasn't really in the scope of my plan.  It was simply how to reform the tax code to those three mentioned metrics.



Considering that limited scope, what are your thoughts?  Remember, we have to maintain revenue neutrality, so you can't eliminate the tax.

My other plan is to cut the Federal government back to doing only what is explicitly authorized in the Constitution, which is approximately 1% of what they do today.

Then you could eliminate income taxes and FICA and still have plenty of money left over.

As I recall, the only tax authorized by the Constitution was in the form of tariffs on trade.

moda0306 wrote: Sorry if that all seems complicated.  When you try to talk about the flaws of our current tax-code and the benefits of one going forward, you essentially need to say WHY the current complications need to go rather than talking about "a few brackets" and getting rid of "some deductions."

jafs wrote: As far as the rest, I'm not going to get into that whole thing again - I understand that you have a very strong view of how the monetary system works and think I'm dead wrong that deficits/national debts matter.

Pointedstick wrote:

jafs wrote: As far as the rest, I'm not going to get into that whole thing again - I understand that you have a very strong view of how the monetary system works and think I'm dead wrong that deficits/national debts matter.

If you're not willing to consider alternative points of view, what's the point in discussing these kinds of matters in the first place? Serious question. Why bother?

jafs wrote: As far as the rest, I'm not going to get into that whole thing again - I understand that you have a very strong view of how the monetary system works and think I'm dead wrong that deficits/national debts matter.

[...]

Feel free to ignore my comments about fiscal sustainability if they upset you too much - I won't be offended 

jafs wrote:

Pointedstick wrote:

jafs wrote: As far as the rest, I'm not going to get into that whole thing again - I understand that you have a very strong view of how the monetary system works and think I'm dead wrong that deficits/national debts matter.

If you're not willing to consider alternative points of view, what's the point in discussing these kinds of matters in the first place? Serious question. Why bother?

I'm not sure I understand your question.  I was discussing possible changes to the tax structure based on moda's post, and MT jumped in with a diatribe about how I'm wrong about the whole monetary system and the way it works.

Should every conversation that has money in the subject matter in any way turn into that one?

There are a lot of other interesting conversations to be had about money/government in my understanding, without turning them all into that one.

If you all are right, then I'm wrong - why isn't that enough?  It seems a bit like religion and the desire for believers to "convert" non-believers.

jafs wrote: I'm not sure I understand your question.  I was discussing possible changes to the tax structure based on moda's post, and MT jumped in with a diatribe about how I'm wrong about the whole monetary system and the way it works.

Should every conversation that has money in the subject matter in any way turn into that one?

There are a lot of other interesting conversations to be had about money/government in my understanding, without turning them all into that one.

If you all are right, then I'm wrong - why isn't that enough?

MWKXJ wrote:

moda0306 wrote: Sorry if that all seems complicated.  When you try to talk about the flaws of our current tax-code and the benefits of one going forward, you essentially need to say WHY the current complications need to go rather than talking about "a few brackets" and getting rid of "some deductions."

Nice, detailed analysis of Trump's plan, Moda.  Enjoyed reading it.

Regarding your proposal for a replacement tax code:  Personally, I'd opt for a taxing scheme which adhears to a "creative destruction" philosophy: a flat, transparent, consumption tax.  In other words, when one pays for something one sees a line marked "Federal 25%" right below any state and local sales taxes.  Would I enjoy paying it?  Hell no! ...but neither would millions of other Americans, and it's precisely that anger which might---finally---result in fiscal prudence at the national level.

Moreover, the "Federal 25%" rate would be set to whatever percentage is necessary to *honestly* begin paying down the nation's debt in the span of say, a single congressional or presidential election cycle.  Consequently, the rate could be far higher than 25%.  If and when the debt is ever paid down the rate would be---possibly---lowered in keeping with the fiscal year's adopted budget.  Of course, if the Federal government continues to overspend, the rate will never be reduced and the public ire will only increase.

I can't think of any other tax plan which is both more brutally honest to the taxpayer, and, more effective at curbing government excess.

jafs wrote: If it really doesn't matter at all, why not just stop collecting taxes at all, keep spending huge amounts of money, and just borrow it all?

jafs wrote: And yet, with the fiscal cliff nonsense, credit rating agencies downgraded our debt ratings,

jafs wrote: which makes them less attractive to borrowers

jafs wrote: and/or means we need to pay higher interest rates.

jafs wrote: If it really doesn't matter at all, why not just stop collecting taxes at all, keep spending huge amounts of money, and just borrow it all?

I looked up monetary realism, and read some things about it, and I've followed the discussions on here about it for a while back now.  Some of it makes complete sense and seems obvious, like the fact that banks don't lend their reserves and so having more reserves doesn't create inflation.

Other parts of it are less convincing - for example, they comment that the government controls interest rates for their bonds.  This is only true if they can find borrowers who are willing to borrow at those rates.

Still other parts are oriented towards debunking ideas that I've never held nor ever would hold, such as their comment that "not all government spending is bad".  Or that we have to pay all of the national debt off completely.

They also use Japan as an example, but Japan is usually not thought of as having a desirable economy.

I like the idea of understanding how things actually work - it's a good place to start from.  But I also find that most things aren't completely captured by one ideological system - it's why I hold a mix of different ideas from liberal, conservative and libertarian philosophy.

jafs wrote: And yet, with the fiscal cliff nonsense, credit rating agencies downgraded our debt ratings, which makes them less attractive to borrowers and/or means we need to pay higher interest rates.

jafs wrote: We've also wielded a lot of power around the world for a while now, but that may be changing too - all empires eventually fall.

MediumTex wrote:

jafs wrote: And yet, with the fiscal cliff nonsense, credit rating agencies downgraded our debt ratings, which makes them less attractive to borrowers and/or means we need to pay higher interest rates.

False.

When U.S. treasurys were downgraded a few years back, interest rates on U.S. debt fell.  When idiots like Cruz were making noise about defaulting on our debt, interest rate fell.

Search "I did it for doodle" in this forum for a realtime discussion of how all this looked as it was happening from our perspective here.  Once you have the right lens, seeing through all of the noise is pretty easy.

Desert wrote: I think the MR truth is just a tiny bit overplayed though.  While I agree with the basic concepts, I think we also need to be clear that there are limits ... we just don't know where those limits are.  Granted, the nation's finances are completely different than a household budget, but that doesn't mean that "deficits don't matter"  (Cheney).  It just means something like "Deficits haven't mattered much yet.  They probably will at some level of debt and interest rates, but we don't know what those levels are, so we're really kinda just rolling the dice and hoping things continue on without blowing up."

jafs wrote:

Desert wrote: I think the MR truth is just a tiny bit overplayed though.  While I agree with the basic concepts, I think we also need to be clear that there are limits ... we just don't know where those limits are.  Granted, the nation's finances are completely different than a household budget, but that doesn't mean that "deficits don't matter"  (Cheney).  It just means something like "Deficits haven't mattered much yet.  They probably will at some level of debt and interest rates, but we don't know what those levels are, so we're really kinda just rolling the dice and hoping things continue on without blowing up."

Thanks - that's sort of what I think as well.

jafs wrote: I had to go and look up what happened in 2011-on.  Possibly in response to the credit downgrade, which was linked to a lack of reasonable plan for decreasing deficits, the government passed the budget control act of 2011, which set in place a plan for deficit reduction.  Then, from 2011 onwards, the deficit steadily decreased.

So it seems more reasonable that what happened was that the government dealt with the underlying issue that prompted the credit downgrade, and deficits decreased, creating more confidence in Treasuries, which is why demand was still good and rates fell.