Now, I understand that in the ideology of right wingers there is no such thing as mattress money, just as there is no such thing as any other slack resources. But to paraphrase Galileo, yet it is, despite our beliefs to the contrary. Just as Roman Catholic ideology was unprepared to admit reality, so is conservative ideology all too often. Your insistence that printing money is bad in *all* situations (rather than being bad only when it results in more money than there exists goods and services to buy with it) is no different from that of the Inquisitors when they insisted that all heavenly bodies move around the Sun — it is a notion which is, in fact, contradicted by all measures of observable reality. Yet you persist. Baffling.
I am beginning to understand why Paul Krugman appears so dour. The wonder is that he has not totally snapped and turned into a one-man Terminator army afflicting the stupid who repeat “conventional wisdom” despite the fact that “conventional wisdom” has as much to do with objective reality as the Inquisition’s insistence that the Sun moves around the Earth rather than vice-versa.
Ah yes, one last thing. The nations which score at the top of measures of educational quality are those nations with the highest percentage of students attending public schools. Those nations which score at the bottom of measures of educational quality are those nations (like the U.K. and USA) with the highest percentage of students attending private schools. That is once again actual observable objective reality, which I realize contradicts your ideology that private is always better than public, yet it is what it is, despite the rantings of the Flat Earth Society that objective reality is overrated.
– Badtux the Schooling Penguin
]]>In any event, it gets discouraging attempting to teach people basic economics when they want to instead believe the magical thinking and wishful imagination that is “conventional wisdom”, but so it goes. The observation that inflation happens when there is more money than goods and services to purchase with that money is not my observation. That is an observation by that loony liberal lefty Milton Friedman back in 1948 (the same Milton Friedman who spent his lifetime trying to get rid of public schooling as “socialism”, yes, that “loony lefty”). This is not new knowledge, it is not untested nor unproven, yet for some reason people still prefer to believe conventional wisdom, which holds that printing money is bad in *all* situations, not just in the situation where it results in more money being printed than there are goods and services in the economy to buy with said economy. Milton Friedman was quite clear that printing money while the economy was in deflation was a quite valid thing indeed to do — in fact, he even coined the term “helicopter drops” to describe the process.
In other words, this isn’t loony Keynesianism, even, it’s just plain old monetarism, about as controversial in the economics field as soda biscuits. It is as if I am in a convention of the Flat Earth Society, trying to convince them that the Earth is round as they resolutely insist that the photographs by our astronauts in orbit were faked. What can one do in such circumstances, if they refuse to accept evidence that the world is, in fact, round, other than derisively call them ignorant morons?
– Badtux the Schooling Penguin
]]>We have measures for inflation to determine when too much money is being printed, and on every single one of those measures, the problem they show is that not *enough* money is being printed — i.e., that we are in active *deflation*. Too much money has disappeared under (virtual) mattresses as “reserves” — into the Federal Reserve’s (virtual) vaults, into the Bank of London’s (virtual) vaults, and so forth, where it is no longer in the economy available to purchase goods and services.
Those are the facts, Mr. Duff. I realize that you object to facts that do not agree with your ideology, but reality simply *is*, and laughs at our puny limited human ideologies.
— Badtux the Schooling Penguin
]]>With what you get for a CD these days, I would grab a T-bill tomorrow if I had that kind of cash. At around 3% they are the best things going. The banks sure aren’t interested in attracting money.
No matter how often the policies fail, the Village keeps trying them. It’s almost as if they want a depression.
]]>But for some reason Americans still continue to insist that they can get the benefits of government — safe streets, honest cops, working courts, regulation of oil rigs that results in oil rigs *not* exploding into oil volcanos :wicked: — without paying for them. It is to laugh…
]]>I think we can agree that the 95% tax rate above £ 10,000 that the Beatles referenced in Tax Man was definitely counter-productive, and highly unlikely to see serious consideration again, but 15% for “hedgehogs” making millions is absurd.
]]>BTW, the Laffer Curve is, in fact, real. It is simply that it is shaped like a line that goes from 0 to a place near the top of the tax rates where the line suddenly turns downward. The hump at which tax revenues cease rising with tax hikes and start declining is anywhere from 75% to 90% real tax rates (as vs. nominal tax rates, which typically are higher than real tax rates due to tax deductions), real tax rates which are far higher than any real tax rate that has existed in the United States since the Presidency of Dwight D. Eisenhower. Above that “knee”, a tax cut increases revenue. Below that “knee”, a tax cut has exactly the effect you would think — it reduces revenue. In any event, U.S. real tax rates on the U.S. population are 24% (that is, 24% of U.S. GDP is collected as taxes by government *at all levels*) and the highest tax bracket’s actual effective tax rates are around 31%, so the magical Laffer Fairy is, indeed, quite mythical at current U.S. tax rates… (Note: Tax numbers are from the right-wing organization The Tax Foundation, just in case Mr. Duff wishes to whine about “liberal numbers”, while the estimates of where the hump lies in the Laffer curve are based upon historical data from the Eisenhower/Kennedy administrations, past British administrations, and past Scandinavian tax policies, none of which say for certain where it lies but it does appear somewhere *way* at the top of effective tax rates).
– Badtux the Schooling Penguin
]]>Second, the problems of Greece and a couple of others is that they bought into the promise of the Euro, which means they can’t control their own money, a situation that has nothing to do with the US or the UK.
Third, the Chinese hold too many dollars for their own good. Unless they want to commit financial suicide, they aren’t going to radically affect the US. The damage they are doing to the rest of the world is caused by their refusal to allow their currency to float.
Fourth, any market is based on “supply and demand”, and you ignore the demand side at your own peril. All of this belt tightening may make certain people feel virtuous, but if it significantly reduces demand by raising unemployment, the economies will tank. There is no reason to invest in business if there is no demand for what you supply.
Fifth, the current problems were caused by greed and an over-abundance of investment capital. There is still a huge supply of capital looking for a home, and at the moment the safest places to put the capital are US and UK bonds. The other option is to buy gold or gemstones, but then you have to build someplace to put them.
Since World War II the US budget has been balanced by two Presidents – Lyndon Baines Johnson and William Jefferson Clinton, both Democrats. If he had been re-elected, James Earl Carter would have been the third, based on the data. The liberals keep getting elected to clean up the messes the conservatives caused. Since conservative thinking got us into these messes, it isn’t reasonable to assume that conservative policies will get us out.
]]>Plus, there is this new invention that you may have heard of. I know you conservatives disdain new things, but this new invention exists anyhow. It was invented in the mid 1400’s, and is called the PRINTING PRESS. You may have heard of it at some point in time, though clearly you feel that it is a dubious innovation because if God had intended anybody other than monks to write books out in longhand on parchment, He would have sent down the printing press along with His holy son. But in any event, as long as British bonds are denominated in pounds sterling, the chances of default on British bonds are effectively ZERO (since the Bank of London could always simply print the money to repay the bonds if necessary), and they are attractive to investors accordingly, which is why Britain is paying effectively 0% interest on sovereign debt when it sells bonds at auction.
And lest you then start saying, “WEIMAR REPUBLIC! INFLATION! BLAH BLAH BLAH!”, first: The problem with the Weimar Republic was that their reparations were denominated in GOLD. So they were printing money in order to buy gold from the British and French, then send that gold to the British and French. That is an entirely different scenario from printing money to pay off sovereign bonds denominated in the local currency. Secondly, we are currently in a deflationary environment — every single asset value other than oil is going *down*. Printing money during deflation is a quite valid and appropriate activity, and until interest rates and asset values start going up to show the start of real inflation, there’s no need to worry about it. And, finally, capitalism requires a small amount of inflation in order to work properly, otherwise money turns into lumpy bed stuffing rather than residing in banks where it can be leveraged via lending into the capital investments that produce future output and thus allow capitalism to be the most nimble means of adjusting supply to demand of any economic system ever devised, and the terror of a modest amount of inflation (2-4%) that afflicts so many people who purport to be capitalist is ridiculous.
Okay, so I used a few large words here, Mr. Duff, and I’m sure they went straight above your head, since conservatives typically speak in terms of “conventional wisdom” that sounds suspiciously like the grunts and howls of chimpanzees and certainly don’t require any words of greater than one syllable. But in any event, that’s economics, as vs. “conventional wisdom”, which is just superstitious magical thinking that has no (zero) relation to any reality — such as your notion that the Magic Bond Fairy would quit buying British sovereign bonds if Britain continued running deficits, a notion which is patently absurd on its face given the fact that British sovereign bonds are 100% likely to be paid back since they are denominated in pounds sterling and the printing press does, in fact, exist. Name any other investment other than U.S. Treasuries that is 100% likely to be paid back. I dare you. You won’t find it. That’s why your notion of the Magic Bond Fairy is just that — a ridiculous exercise in magical thinking utterly deranged and detached from any observable objective reality. Have a nice day, Mr. Duff.
– Badtux the Educating Penguin
]]>There is a time for reducing government budgets, but this isn’t it. As unemployment climbs and businesses fail from a lack of demand, people will notice the problem with the austerity program, especially as the deflation sets in. It happens every time, but people forget.
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