Quote: Original post by Zahlman

Quote: Original post by Dreddnafious Maelstrom
More on the Obama subject than Steele, but the concept of paying people to dig holes one day then fill them the next is a decent analogue to Obama's stimulus plan.

I suppose the US could go on destroying and rebuilding Iraq instead...

Huge tangent here, but I remember not too long after we toppled Saddam, the true believer Republicans were tossing around some huge number as the amount we had spent rebuilding Iraq (in order to demonstrate our benevolence), when it turned out that the number they quoted was actually how much we had spent in total so far on the Iraq fiasco, the majority of which actually went into the destruction of Iraq.

Quote: Wishing someone had never undertaken a course of action is not the same as hoping they are unsuccessful in that action. Considering someone a failure by one's own standards is not the same as wishing failure upon the person by that person's standards.

Thank Crom, someone gets it.

Quote: Original post by Dreddnafious Maelstrom
I'm going to answer frankly even though from a debate standpoint it will put me in a much weaker position

Not in my eyes, for what it's worth. Dancing around questions is for weasels.

Quote: If the government were capable of delivering a stable and prosperous means of living with a respectable lifespan in exchange for absolute control in all meaningful expressions of social, civil, and economic freedom then no, I'd rather hack it out the hard way.

When you put it that way, you're going to have to look hard to find disagreement. At this point, I think we're going to devolve into not-so-meaningful semantics (I would reply with something about agenda vs policy and what the meaning of a "successful" policy is), so I'm done. Thanks for the directness.

Quote: Original post by Silvermyst

Quote: Original post by BerwynIrish
I mean, you never heard me wishing for Iraq to become a spectacular failure, as much as I knew it to be inevitable. Given such a choice, I would have said "Let Sean be horribly wrong and let Iraq turn out super."

"Since Iraq turned out so super, let's do Iran next."

That's a slippery slope. If I knew that we would have definitely turned Iraq into a stable democracy in a relatively short time with an absolute minimum of bloodshed and that the Iraqis would be overwhelmingly grateful for our intervention (which is what I would call a "super" outcome), then I would not have opposed it on the grounds that it might lead to more such endeavors.

Furthermore, the whole point of the examples I provided was to demonstrate a choice between my world-view being unconditionally fucked-up vs a better world. If the U.S. military under George Bush *was* capable of such miracles, as impossible as it seems, then who am I to continue to oppose the miracle machine when I didn't believe in it the first time it worked? That is what is at the heart of Limbaugh's remarks: If Obama's policies succeed, then the world-view that Limbaugh peddles is a lie. (Not that any Democrat isn't much better than Republican Lite, but I'm talking in terms of Rush's audience). Given the choice, I'd choose a successful America over a successful ego. Including me having always been wrong about the use of the military and Bush's agenda in Iraq. Limbaugh makes the opposite choice.

Quote: If one believes the effects of short-term success to be long-term failure, should one feel bad about not wishing for that short-term success?

I know I posed the question in general, so forgive me if I misled you into thinking I was no longer concerned about the question in the context of Limbaugh's remarks. That said...
This is a valid point, but I would personally consider such a policy a net failure, and not count it as a success at all. (e.g. The policies that led to the housing boom and bust? Failure.) But what does Limbaugh have to say about short term vs long term? Limbaugh has put much effort into defending his remarks, and I have not heard him make this distinction. If anybody has heard him say this, please let me know, and then the question becomes: Does he also hope for long-term failure?

Quote: Original post by capn_midnight
The efforts of Congress and the Executive to create "stimulus" plans out of magic and pixie dust in an expectation of saving the country from a massive depression are fairy tale fantasies. Mark my words, the country is going into a depression and the efforts of the government will do nothing to stop it. The only question that remains is how long the depression will last.

It's not magic, it's economics.

Quote: Original post by capn_midnight
These stimulus plans are paradoxes on their very face. A stimulus is by definition an external influence having an effect on the system. You can't just double the number of dollars in circulation from inside and call that a stimulus plan. You might as well have told everyone to cut their dollars in half and call each piece whole. It doesn't change anything, it just destroys the savings of the people who actually acted responsibly during this whole mess.

It seems to me that the savings of the people who acted responsibly during this whole mess was destroyed by the whole mess.

Quote: Original post by capn_midnight
The current "stimulus" plans are not executions of Keynesian economics because Keynesian economics is confiscation of savings through taxation to enact direct investment in the economy. TARP and the Auto Bailout are are expansions of the monetary base to give funds to 3rd parties with the hope that they will use the funds to invest in the economy, i.e. indirect investment. The reason the name "Keynesian" is tacked on to this plan comes from the popular understanding that Keynesian economics is the "right" system for recession economics. However, even Keynes himself admitted that it was best suited for totalitarian states and did not work very well for democratic systems with too much personal freedom.

TARP and the auto-bailout weren't about stimulating the economy but preventing it from collapsing. They aren't part of the current plans, which include direct investment in the economy. But don't despair just yet, the banks may still be nationalized.

Quote: Original post by capn_midnight
Keynes' fundamental flaw was failing to remember that wealth and the health of the economy are based in capital creation, i.e. savings, the very thing he was hell-bent on confiscating. We can give everyone a million dollars and it won't mean a lick if nobody has any real goods with real value to show for it. He thought that the savings of the rich were wasted moneys, which is a ridiculous concept in even the pre-Fed banking system. Keynesian economics is forcefully taking the value out of investments to put try to put into investments. Would anyone please try to explain to me how that is supposed to make any sense?

To frame things using a biological metaphor, a heart that hoards blood soon stops pumping it.

Quote: Original post by capn_midnight
Without savings, there are no funds to loan, period. We have a liquidity crisis because savings are at an all time low. That spike at the end there is from TARP funds being held in reserve by the banks that received them, instead of being used to make loans. People don't have enough money to put in the bank, and their houses are being appraised at lower and lower values due to market saturation (1, 2, 3). There's nothing propping up the deck of cards anymore. In order to maintain the flow of money, the Fed had to reduce the reserve limits to completely irresponsible levels to make sure the money supply was available and then slash interest rates to entice people into racking up debt so that the money supply would get used.

First you say there are no funds to loan, then you say that the banks are hoarding the money the government gave them to loan.

Quote: Original post by capn_midnight
The only way to get out of this problem is to correct the root cause, lack of savings.

In that case, the root cause was crumbling wages. People didn't save because they had nothing left over to save because their wages had been falling for thirty years.

Quote: Original post by capn_midnight
1.) We have to let interest rates be set by market forces, allow the feedback in the system to do its work. This will probably make base interest rates jump to 15-20%. At those rates, nobody is going to want to take a loan and everyone is going to want to be putting money into savings accounts.

You think we should drink more market fundamentalist kool-aid? Really? If everyone puts their money in the bank, the economy will collapse. Seriously. It seems to me that you're tracing the economic policy of the Hoover administration.

Quote: Original post by capn_midnight
2.) We need to increase the reserve requirements, being able to loan out $3000 for every $100 you take in is ludicrous and is exactly how fluctuations in one portion of the market end up getting spread to the rest of the market.

Regulations? Really? Now you're sounding like me.

Quote: Original post by capn_midnight
3.) We have to stop the government spending money like a Beverly Hills Suburban Queen and get back to fiscally responsible activities (which neither party has done for the last 20 years), like closing a Department of Education that has allowed 50% of the population to be so illiterate that they earn below the poverty level and removing the military occupation of literally the majority of countries in the entire world.

Actually, the fiscal irresponsibility began with Ronald Reagan. It began to turn around with Bush 41, but he "lied" about taxes and lost favor with his party. Clinton picked up the ball to institute "Pay-Go" and managed at least to balance the budget on paper. Then Bush 43 took over and ran the country into a ditch. Closing the Dept of Education is a terrible approach to improving literacy rates, but don't let that get in the way of promoting your ideological agenda.

Quote: Original post by capn_midnight
Finally admitting that Social Security is a giant Ponzi scheme that was never meant for the general populace anyway would help, too. (">link)

If you want to see what a giant Ponzi scheme looks like, check out Bernie Madoff, who made off with $50 billion. And don't kid yourself, Social Security was always about the general populace.

Quote: Original post by capn_midnight
4.) Finally, we have to cut the income tax drastically (preferably completely as it was an unconstitutional enactment that was promised to end after WWII), so that everyone has more money, real money, to save. Income taxes are taxes on the poor and middle class anyway, the rich can easily use investment vehicles to skirt it. We would be operating at 55% of 2007's income, which wouldn't be too bad if we get around to reigning in spending.

Pour on the kool-aid! When all you've got in your tool kit is tax cuts, every problem calls for more tax cuts!! And where did you come up with that half baked notion that income tax promised to end after WWII? You're right that income taxes are taxes on the poor and middle class. They're part of the mechanism for redistributing wealth upwards to those that don't need it.

Quote: Original post by capn_midnight
It is going to hurt, but hopefully it will only hurt for a few years while the system heals from the steroids its been on for the last 15 to 20 years. If the government continues to enact policies that destroy savings they are only going to prolong the problem.

Your plans would wreck the country and the globe for that matter.

capn_midnight argument is flawed due to being underpinned by the notion that "We have a liquidity crisis because savings are at an all time low". This would be accurate if banks actually only loaned money they had.

But banks create money out of thin air, thanks to extremely lenient modern fractional reserve requirements, banks can lend vast sums of money they dont have. So called investment banks exacerbated it further by inventing incomprehensible financial instruments which allowed the creation of imaginary money to accelerate unchecked. Any such inflationary boom must be followed by a deflationary spiral as the bubble pops and credit suddenly contracts inducing illiquidity due to runs, insolvency and the very fact that the money supply in use was in excess of the real total money available.

Indeed it is the current nature of credit fueled economic expansion that makes deflation a bigger deal than inflation. As the real value of money increases so does the value of debt, making everyone who is in debt a lot poorer. With western governments and citizens such an occurrence would be disastrous, with closures and cuts and losses as one after the other defaulted leading to the decimation of the entire economy's productive capacity.

The fundemental flaw is in fractional reserve banking and its inflationary boom-bust nature, the so called business cycle.

I wonder though, loose money supply fueled by easy credit also means greater social mobility and greater profit and gains played on risk. If money was a lot harder to come by, then class structures would arguable be even more rigid. So its a tough choice.

Quote: Original post by Daerax
capn_midnight argument is flawed due to being underpinned by the notion that "We have a liquidity crisis because savings are at an all time low". This would be accurate if banks actually only loaned money they had.

But banks create money out of thin air, thanks to extremely lenient modern fractional reserve requirements, banks can lend vast sums of money they dont have. So called investment banks exacerbated it further by inventing incomprehensible financial instruments which allowed the creation of imaginary money to accelerate unchecked. Any such inflationary boom must be followed by a deflationary spiral as the bubble pops and credit suddenly contracts inducing illiquidity due to runs, insolvency and the very fact that the money supply in use was in excess of the real total money available. Indeed it is the current nature of credit fueled economic expansion that makes deflation a bigger deal than inflation. As the real value of money increases so does the value of debt, making everyone who is in debt a lot poorer. With western governments and citizens such an occurrence would be disastrous, with closures and cuts and losses as one after the other defaulted leading to the decimation of the entire economy's productive capacity.

The fundemental flaw is in fractional reserve banking and its inflationary boom-bust nature, the so called business cycle.

I wonder though, loose money supplied fueled by credit also means greater social mobility and greater profit and gains played on risk. If money was a lot harder to come by, then class structures would arguable be even more rigid. So its a tough choice.

There's nothing inherently wrong with fractional reserve banking. The money supply ought to be able to accommodate productivity (which is what lending is supposed to finance.) When the debt is repaid, everything works out nice and neatly. The current financial crisis is not a normal bust cycle, it's the unraveling of an unsustainable economic model and lifestyle fueled by cheap credit. America's economy has been taking on the savings of other nations but rather than producing wealth, we've been speculating on stocks and trading houses back and forth.

What made all of this especially bad was the huge amount of leverage used to finance these investments. When it turned out that it was all just an overinflated bubble, everything came crashing down. America's entire way of life is being downsized, probably for good.

Quote: Original post by trzy

Quote: Original post by Daerax
The fundemental flaw is in fractional reserve banking and its inflationary boom-bust nature, the so called business cycle.

I wonder though, loose money supplied fueled by credit also means greater social mobility and greater profit and gains played on risk. If money was a lot harder to come by, then class structures would arguable be even more rigid. So its a tough choice.

There's nothing inherently wrong with fractional reserve banking. The money supply ought to be able to accommodate productivity (which is what lending is supposed to finance.) When the debt is repaid, everything works out nice and neatly.

That is an opinion I disagree with. If the two were evenly matched then inflation would not be a problem. It is no coincidence that inflation and the boom-bust cycle became an issue with the creation of FRB. As well, due to the fact that the total principal money in circulation is always less than intetest and principal it is impossible that every debt can be repaid at any given moment since due to the creation of new money more money is owed than actually exists. The mapping is not surjective.

The amount of money in use is inflated (non economics usage) and thus a demand that does not match the productive capacity of an economy is generated leading to inflation. Finally, FRB results in a system that is no longer closed nor is the money supply/movement conserved, hence in moments of busts money 'vanishes', liquidity problems arise with insolvency and defaulting the norm. However the money could not have vanished since it was never there in the first place.

However, I cannot think of much else better.

[Edited by - Daerax on February 3, 2009 12:25:46 AM]

Quote: Original post by Daerax

Quote: Original post by trzy

Quote: Original post by Daerax
The fundemental flaw is in fractional reserve banking and its inflationary boom-bust nature, the so called business cycle.

I wonder though, loose money supplied fueled by credit also means greater social mobility and greater profit and gains played on risk. If money was a lot harder to come by, then class structures would arguable be even more rigid. So its a tough choice.

There's nothing inherently wrong with fractional reserve banking. The money supply ought to be able to accommodate productivity (which is what lending is supposed to finance.) When the debt is repaid, everything works out nice and neatly.

That is an opinion I disagree with. If the two were evenly matched then inflation would not be a problem. It is no coincidence that inflation and the boom-bust cycle became an issue with the creation of FRB.

What about the all the panics prior to the establishment of the current reserve banking system? And does inflation really tell the whole story? Reserve banking has existed, I think, since before the US took the dollar off the gold standard. Most people point to the elimination of the gold standard as a major source of inflation but it seems silly to tie the monetary system down to a precious metal. In a full-reserve system pegged to a particular metal, how would you create money in order to meet the complex demands of the global economy?

Quote:
As well, due to the fact that the total principal money in circulation is always less than intetest and principal it is impossible that every debt can be repaid at any given moment since due to the creation of new money more money is owed than actually exists. The mapping is not surjective.

The amount of money in use is inflated (non economics usage) and thus a demand that does not match the productive capacity of an economy is generated leading to inflation. Finally, FRB results in a system that is no longer closed nor is the money supply/movement conserved, hence inflation and in moments of busts .

However, I cannot think of much else better.

Monetary theory is beyond my area of expertise (and I suspect that it is well beyond most people who want to argue about it.) I don't know many economists or bankers who support eliminating reserve banking or returning to a gold standard. It's a subject I would like to learn more about when I have the time to plunge into the nitty-gritty details.

Quote: Original post by trzy
What about the all the panics prior to the establishment of the current reserve banking system? And does inflation really tell the whole story? Reserve banking has existed, I think, since before the US took the dollar off the gold standard. Most people point to the elimination of the gold standard as a major source of inflation but it seems silly to tie the monetary system down to a precious metal.

Fractional reserve banking has existed since at least the renaissance, where counterfeiting by goldsmiths was essentially legalized. The only bubble that occured outside the existence of deposit banking based loans was tulip mania in netherlands? Central banks hit england i think around the late 18th century. Central Banks were set up due to the fact that they could support individual banks when people wised up periodically to bubbles (which are easier to create with credit) and the fact that holders of their money were lending out money which was not theirs and which they were supposed to be storing (this is before fractional, now they lend out money the dont have nor own based on what they are supposed to hold) there were runs.

Quote:

Quote:
However, I cannot think of much else better.

In a full-reserve system pegged to a particular metal, how would you create money in order to meet the complex demands of the global economy?

I don't know many economists or bankers who support eliminating reserve banking or returning to a gold standard. It's a subject I would like to learn more about when I have the time to plunge into the nitty-gritty details.

I have already stated that I agree that in the current global economy we live in and the increased volatility in class such risks confer/allow, the option is better than all other foregone alternatives. Returning to a silver or gold standard is dumb to put it simply.

Speaking of the Federal Reserve, here's look at an alternative approach: David Korten: “Agenda for a New Economy: From Phantom Wealth to Real Wealth”

Quote:
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Now, the other piece that we need to deal with is the whole question of how we create money, which is not very much publicly discussed. But moving from the current system, where we essentially rely on banks to create money by lending it into existence, which creates all kinds of financial instability, and it also means that, in a sense, every economic transaction, we’re paying rent to the bank for the money, when it’s quite possible for government to spend the money into existence, as it is needed, to build a much more stable money supply. And that means that—you know, that lowers taxes.
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And here's more on debt and taxes and needed changes: Fiscal Therapy

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Debt payments—individual and governmental—now consume so much income that they are suffocating economic growth. Interest on the federal government's debt this year will eat up the equivalent of all the income taxes we pay from January until at least sometime in May. (Already, the financial system bailout has added more than $3 trillion to the national debt—see "$3.4 Trillion & Counting"—for an extra $170 billion in annual interest payments.) This keeps us from making productive use of our tax dollars—launching universal health care, rebuilding our crumbling infrastructure, or funding the research we need to transform our energy system. We've been sold on tax cuts as the best way to spur growth, but what we really got was weak job growth, a sinking economy, and a slew of tax deferrals that cause increasing revenue shortfalls and force the government to borrow even more—with all of us paying the interest.

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When the 16th Amendment establishing the federal income tax was being debated, advocates argued it would return some portion of "surplus incomes" to the commonwealth. The goal was to make those enriched by the new phenomenon of industrialization pay back the society that made their fortunes possible. Consequently the middle class paid very little; incomes of $3,000 (the equivalent of $66,000 today) were exempt from income tax, and in the lowest tax bracket you paid just 1 percent. Today a single person is taxed at 10 percent once she makes more than $8,950 (twice that for married couples). Social Security taxes start with the first dollar of wages and end at just more than $100,000.

Given the vast sums they have transferred to the superrich in the past 30 years, the 88 percent of taxpayers who make less than $100,000 a year deserve a break. Congress should lower their taxes with an eye toward restoring their capacity to save (thus, as a side benefit, generating fresh capital for investment), while at the same time studying how to create a high-wage economy that can generate more revenue.
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Returning to the OP, does it matter if the public face of the RNC changes if the policies it promotes stay the same?

Does Steele's election finally put to rest the GOP's "Southern Strategy"? Can Steele halt the country's disaffection with the GOP, illustrated by the latest Gallup poll of party identification? (State of the States: Political Party Affiliation - "only five states had solid or leaning Republican orientations in 2008, with Utah, Wyoming, Idaho, and Alaska in the former group, and Nebraska in the latter.")

Does electing Steele give the GOP "default race card insurance" as suggested in this essay: The New RNC Chairman -- Providing Full "Race Card" Default Insurance?

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And so the Republicans, needing to be able to "go after the President" without being silenced by charges of unfair racism in their attacks, chose to buy full life insurance protection rather than just term insurance as they chose to make the chief spokesperson for their side another African-American who they hope will be able to cash in the present value of that "default race card insurance" policy by neutralizing the race card charge if it comes up.

And of course, the chairman of both the RNC and the DNC are not only expected but traditionally required to be among the most vocal in their intense and partisan attacks on the president or leader of the opposite Party. Consequently, selecting Michael Steele as the new RNC Chairman is designed to help position the Republicans more advantageously in their effort to fight off charges of "using the race card" when their attacks on the president become really harsh and tough.
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