15-03-2004 20:31									#151
	Put an end to popups!

quote: As for Bush "mending the deficit by budget cuts", well I just don't see how that could possibly work if he maintains his tax cut. It would require (at the very least) massive cuts in military spending, which does not seem likely.

(1) Bracket creep raises income taxes naturally during good economic times.

(2) The big military spending increases are over after this year. For the other stuff, just reducing the amount of spending increases will eventually bring the budget into balance.

As it all settles in, I would like to see the federal government spend 18% or so of the economy, down from the current ~ 21%. This is achievable.

	15-03-2004 21:07									#152
	Enter the AD-FREE zone

quote: Originally posted by Lawrence of Arabia but utility changes depending on circumstances. if you had enough water and were homeless, then you'd want to get a house, which is worth more to you. so how does this get factored in?

If you have enough water then any additional water would provide much less utility. That is the law of diminishing returns. After your immediate needs are met rational people move to less immediate needs like shelter. After all of your needs are met you move into your desires.

Then you get into irrational people. Homeless people who could be in a shelter, but are crazy, and soccer moms with shopping addictions. Those screw everything up.

	15-03-2004 22:12									#153
	Support Apolyton buy from Amazon

quote: Originally posted by DanS I didn't reference those conditions, but they impact my thinking on the subject. Once the labor market starts picking up (any month now ), the recession in all of its forms will have ended and the reason for the deficits will have vanished. If Bush wins reelection, he has 5.5 years of unencumbered policy-making in front of him. This seems to me to be more than enough time to mend the budget back to something close to balance by budget cuts.

Better. But what bothers me is that there are many politicians and many economists (or should I call them, Imraniacs) who never discuss the economic effects of deficits and surpluses and simply assume that a balanced budget is always good all the time, and a surplus is better -- something to be proud of and trumpeted as did Clinton during his SOTU speech in 1999.

What is clear is that surpluses drain disposable income and really put the brakes on an economy. Under certain circumstances, this may be good, but it is hard to imagine them. What we did see is that the economy slowed in 1999 and tanked in 2000-2001 when we went into a surplus.

I think we can learn lessons from the events of 1999-2001 and from the Reagan boom. The lesson is that fiscal policy is paramount in controlling the business cycle while monetary policy is best used to control inflation.

	15-03-2004 22:33									#154
	Get a bigger avatar today!

quote: Better. But what bothers me is that there are many politicians and many economists (or should I call them, Imraniacs) who never discuss the economic effects of deficits and surpluses and simply assume that a balanced budget is always good all the time, and a surplus is better -- something to be proud of and trumpeted as did Clinton during his SOTU speech in 1999.

Well, I would say that balanced budgets are always good most of the time.

quote: I think we can learn lessons from the events of 1999-2001 and from the Reagan boom. The lesson is that fiscal policy is paramount in controlling the business cycle while monetary policy is best used to control inflation.

I think that's false. Fiscal policy is a very blunt instrument. Bush 43 and Reagan used it about as effectively as politicians can. But Bush 41 was unable. Clinton, Carter, and Ford would have been unable.

quote: What is clear is that surpluses drain disposable income and really put the brakes on an economy. Under certain circumstances, this may be good, but it is hard to imagine them. What we did see is that the economy slowed in 1999 and tanked in 2000-2001 when we went into a surplus.

I'm no fan of big surpluses and think we should err on the side of deficits. That said, I don't think the latest recession had much, if anything, to do with the surpluses.

	15-03-2004 23:01									#155
	Support Apolyton, buy Galactic Civilizations

All the deficits would have vanished if there had not been a tax cut in the first place.

But then the economy would not have grown as nearly as strong these days.

It's probably a good idea to revoke the tax cuts once unemployment rate starts dropping significantly.

	15-03-2004 23:37									#156
	Tired of ads?

While manufacturing represents only a modest portion of the economy, the last two months of manufacturing output have shown increases of .8% and .7%, respectively. The manufacturers are going to have to start adding employees in a fairly big way one of these months.

	15-03-2004 23:48									#157
	Avatar Enlargement: We've got the solution

quote: Originally posted by DanS While manufacturing represents only a modest portion of the economy, the last two months of manufacturing output have shown increases of .8% and .7%, respectively. The manufacturers are going to have to start adding employees in a fairly big way one of these months.

Not necessarily. Is the increase due to higher productivity or higher demand. We already know that productivity has increased, and demand has increased some. If the increase is due primarily to higher productivity we will see just the opposite. I think we are seeing increase in productivity and demand at the same time, but I don't expect there to be any strong hiring.

	15-03-2004 23:56									#158
	Browse Apolyton AD-FREE

DanS, of course the surplus had an contributing effect on triggering the current recession. The 1999 article I quoted all but predicted it because of the surplus. http://www.levy.org/1/docs/pn/99-3.html

	16-03-2004 00:47									#159
	Support Apolyton, buy Galactic Civilizations

quote: Originally posted by Ned DanS, of course the surplus had an contributing effect on triggering the current recession. The 1999 article I quoted all but predicted it because of the surplus. http://www.levy.org/1/docs/pn/99-3.html

For God's sake Ned, when incomes increase some of that increase is taxed. That doesn't decrease disposable income.

They ****ed that article up. Get over it.

	16-03-2004 00:54									#160
	Put an end to popups!

quote: DanS, of course the surplus had an contributing effect on triggering the current recession.

Really, I don't think so. There was so much that was unsustainable in the economy, that it seems foolish to ignore those features in favor of the surplus-led-recession theory.

	16-03-2004 00:56									#161
	Increase Your PM Length

Lag post

Last edited by Vanguard on 16-03-2004 at 01:04

	16-03-2004 00:56									#162
	Support Apolyton, buy Civilization 2

DanS, "led?" I said, "Contribute."

	16-03-2004 01:02									#163
	Browse Apolyton AD-FREE

quote: 1) Bracket creep raises income taxes naturally during good economic times.

Only if you have brackets to creep over. A large percentage of income in the US is already at its maximum bracket, due to the flat capital gains tax and the lack of high end tax brackets.

quote: 2) The big military spending increases are over after this year. For the other stuff, just reducing the amount of spending increases will eventually bring the budget into balance.

Not in 5.5 years it won't. Not unless they are five years of really good growth.

quote: What is clear is that surpluses drain disposable income and really put the brakes on an economy

This is not clear. But if you repeat it over and over, I'm sure people will start to believe it.

	16-03-2004 01:07									#164
	Full PM-box? Change here!

DanS, "led?" I said, "Contribute."

	16-03-2004 01:30									#165
	Got spare money?

Ned: But then you link to an article and say that it predicts the recession based upon the surplus. That seems a little more than contributing.

In any event, I'm guessing that the impact of the surplus was proportionally minimal.

	16-03-2004 02:14									#166
	Lose 30 kilos (of popups)

Okay, I finally finished parsing that stupid Wray article. His "error" is obvious really. He completely ignores the effects of macroeconomic policy during recessions.

During the postwar era it has been standard policy to increase Federal deficit spending during recessions ("Keynesian economics"). So obviously recessions are going to follow periods of reduced deficits. Because as soon as we know we are in a recession, we immediately increase deficit spending until we are out of it. Then we reduce our deficits------- until the next recession.

So reduced deficits did not cause recessions. Instead the recessions caused increased deficits. Which subsequently had to be reduced. The recessions only "follow" the reduced deficits because time moves forward.

Stupid really, but if you read Wray's conclusions he is very careful to never make any policy recomendations. His conclusions hinge on purely semantic arguments. Weasel.

	16-03-2004 02:29									#167
	Increase the size of your Attachments

quote: If you have enough water then any additional water would provide much less utility. That is the law of diminishing returns. After your immediate needs are met rational people move to less immediate needs like shelter. After all of your needs are met you move into your desires.

yea, but then how do you calculate what each person needs? how much water, how much housing, how much toilet paper.

	16-03-2004 03:11									#168
	Put an end to popups!

quote: Originally posted by Lawrence of Arabia yea, but then how do you calculate what each person needs? how much water, how much housing, how much toilet paper.

Those things are pretty easy. You calculate the amount of each that the normal person needs and then you multiply that my the number of people.

When you get past needs, on to desires, you need to let each person decide, so you provide them with money to make the decision for themselves.

	16-03-2004 03:20									#169
	Support Apolyton buy from Amazon

quote: Those things are pretty easy. You calculate the amount of each that the normal person needs and then you multiply that my the number of people.

and what happens if a person needs more toilet paper one week because of diahrea. then what? and what about choice? what if i dont want fish, but my neighbor does. how can someone know what i want and give it to me?

	16-03-2004 03:36									#170
	Help yourself to an AD-FREE life

quote: Originally posted by Lawrence of Arabia and what happens if a person needs more toilet paper one week because of diahrea. then what? and what about choice? what if i dont want fish, but my neighbor does. how can someone know what i want and give it to me?

The risk of diahrea can be calculate in.

I should tell you that I'm not a utilitarian. That being said, ideally if you want fish, and fish is cheap to produce, then you should get fish.

	16-03-2004 03:50									#171
	Support Apolyton, pre-order Civilization IV

quote: Originally posted by Vanguard This is not clear. But if you repeat it over and over, I'm sure people will start to believe it.

Vanguard, in a world where a significant amount of debt is held offshore, it is almost self evident.

However, I cite an article that demonstrates how surpluses reduce DI.

	16-03-2004 04:07									#172
	Tired of ads?

quote: I should tell you that I'm not a utilitarian. That being said, ideally if you want fish, and fish is cheap to produce, then you should get fish.

but how much? and what if one person wants more fish than another. how can this be factored in.

	16-03-2004 04:37									#173
	Support Apolyton, buy Alpha Centauri

quote: Originally posted by Lawrence of Arabia but how much? and what if one person wants more fish than another. how can this be factored in.

This is getting a little bit old. What are you getting at?

	16-03-2004 04:40									#174
	Support Apolyton, buy Civilization: The Boardgame

quote: Originally posted by Ned However, I cite an article that demonstrates how surpluses reduce DI.

But a surplus has never reduced DI.

	16-03-2004 05:01									#175
	Support Apolyton, buy Galactic Civilizations: Deluxe Edition

quote: Originally posted by Kidicious But a surplus has never reduced DI.

oh pffffttt... Ned won't let a little thing like historical fact disrupt his rhetoric.

	16-03-2004 05:38									#176
	Lose 30 kilos (of popups)

quote: This is getting a little bit old. What are you getting at?

sorry, im trying to understand how you would distribute resources to every single person so that every single person is satisfied. i just cant see a system which can provide exactly what everyone needs without having some sort of property laws and price mechanism, and an open market where each individual can get what they need, and pay how much its worth to them (or at least the firms reservation price)

	16-03-2004 05:47									#177
	Support Apolyton, buy Galactic Civilizations

quote: Originally posted by Kidicious But a surplus has never reduced DI.

Huh? Please explain.

Example 1: Gov't taxes $1 billion from US taxpayers. Gov't spends none of it. Gov't retires $1 billion in bonds held by foreigners. Foreigners put money in foreign bank to be spent in due course.

It seems to me that the US taxpayer is out $1 billion in DI.

If these words are not right, clearly the US taxpayer no longer has $1 billion. It is now deposited in foreign banks. That hat to reduce US spending on goods and services by $1 billion with corresponding secondary, etc., effects.

	16-03-2004 06:03									#178
	Lose 30 kilos (of popups)

sure, they lost $1 billion, but its a billion that wasnt theirs in the first place, it was simply loaned to them by foreigners. now the foreigners have made a profit on those bonds, and will reinvest some or most of it, and no mater where it goes, it will most likely benefit americans.

	16-03-2004 06:18									#179
	Support Apolyton

quote: Originally posted by Lawrence of Arabia sure, they lost $1 billion, but its a billion that wasnt theirs in the first place, it was simply loaned to them by foreigners. now the foreigners have made a profit on those bonds, and will reinvest some or most of it, and no mater where it goes, it will most likely benefit americans.

OK, we are making some progress here.

The $1 billion the American public no longer has will not be spent on cars, clothes and cookies. There will be a major falloff in DEMAND, that will have a ripple effect in the so-called business cycle.

Do you disagree with this?

	16-03-2004 07:07									#180
	Support Apolyton buy from Amazon

quote: Vanguard, in a world where a significant amount of debt is held offshore, it is almost self evident.

Yeah, okay, you have a important point here. The extreme cheapness of money in Japan makes it attractive to sell them bonds. Might as well take advantage of it while we can.

It is not true, however, that borrowing 1 billion dollars is the same thing as adding a billion dollars to your economy. You do have to pay it back. But if you borrow at a really cheap rate, then growth could reduce the amount you have to repay. So you don't gain a billion dollars to your economy, you might gain, say, 50 million dollars.

But that only applies at very low interest rates in country with large amount of capital (ie Japan). And it cannot go on forever. Eventually interest rates or exchange rates will adjust, or the resulting trade deficit will reduce your own economy by the same amount as you gain.

Still it is nice of Japan to give us free stuff.



EDIT: Errr, sorry, scratch this, it's wrong. There may be a grain of truth in it, so I'll leave it in. But we still sell our bonds in dollars at our interest rates. I not sure what happens here exactly.