Think of it terms of your own house
 

Governments do not create private sector jobs, only public sector jobs through tax supported payrolls. If tax revenue drops but spending does not drop in porportion to reduced revenues, it creates a deficit. Not rocket science here. FDR prolonged the Great Depression for an estimated 4-5 years because of his massive defict spending with no additional tax revenue to refill the coiffers. WWII gave the entire world an economic shot in the arm, especially the US because we did not enter the war until after Europe/Russia/Japan were depleting their resources while we were stockpiling and selling to England. The New Deal is considered by some economists a complete failure. If WWII had not begun (stimulated by a world depression) no telling how long the US economy would have suffered. Federal and National governments are the only entities that operate in deficit spending because the print and issue their own currency. However, without sound fiscal policy, just like your household fiscal spending, governments can spend themselves into their own demise. The US Dollar is only backed by the good faith and credit of Washington. When that faith and credit starts to deminish, the USD drops below what other countries are willing to pay and we have no one buying our Treasury Bonds (debt and revenue generator). At that point the US Government goes Bankrupt! Where did that government run healthcare plan get us?

It is "theoretically" proven that in hard economic times public sector spending must reduce by the same ratio as the reduction in tax revenue with some deficit spending as a 'lagging' factor, not a stimulus factor. Reduceing taxes, spending, size of government, federal entitlement programs is the right thing to do but not the Political thing to do if YOUR livlihood depends on reelections. That is why I first stated "theoretically" proven. The World has yet to produce a politician with the balls big enough to stand up in front his or hers constituinets and give US the stright dope. Instead they treat us like 'sheeple' expecting us to accept them as the expert, not ask any questions, and form a line here for our entitlement. We'll figure how to pay for it later.

I supported Bush for the first 6 years then his admin ran out of control. The 'Stimulus' bill to save AIG and GM, too big not to bail out, was vote buying. Why did McCain STOP his election campaign, go back to Washington, appear to make a stand only to vote for the biggest nightmare in US Financial history? To 'look' like the working guys candidtate. BS. Politicians only think in VOTES. They tell us whatever they think we want to hear so we will mark the radio button next to their name in the voting booth. That's it! They will find 'experts' to spin any opinion to their favor. Sheeple, open your eyes, apply basic logic to your political decisions, read between the lines, ignore anything coming out of a politiciains mouth and react to their actions. Words are meaningless if not backed up by action.

Healthcare reform is another vote buying tactic for Pelosi and Company to stay employed for several years-to-come while giving more and more control of our lives over to the same poeple that will tell you anything you want to hear for your vote.

We are a CAPITALIST society. Everyone on this board is a pure capitalist. Marx is rolling in grave by how we embrace and promote capitalism. Capitalism is based on the premise of each individual and indivdual company is free to operate at will, as long as it is not infringing on someone else's civil liberties. Every bill pased by congress limiting our capitalist freedoms is one step closer to total control of our lives by politicians. Is that what you want? Is that what America stands for? Is that what so many poeple from all over the world are beating down our borders for? No. That is what they are leaving. Government control and oppression. Right and Left opinions are what makes any politican system work. But, if too far left or too far right get too much control, government and society go out of control. Moderation, erring on the side of conservatisim, will make for a strong and viable Country everytime.

Holy shit, you and kane are the smartest guys on this board. Nobody else on here understands economics better. There are very few people who understand that the Great Depression was prolonged with continuous government intervention. I'm a huge follower of the Austrian School of economics and a big believer of Laissez-faire. Unfortunately, mainstream economics is destroying this country. That and monetary/fiscal mismanagement.

One more thing - short, i promise- if Obama is the President that was going to get us out of War in the Middle East, then why did he agree to send 30,000 MORE troops into battle? I thought that was a great opportunity for him stand tall and proud on his campiagn lie, oops I mean promise, and tell Afganistan and Pakistan to deal with the Taliban on their own, through Diplomatic Negotiations. The US has it's own domestic problems to take care of right now.

Doc, I've been following your posts and you make no sense. Your posts are misleading and missing the factual credibility you claim. After a full year in office, EVERYTHING is Obama's now. He had a year to make something happen and we got nothing. It's his baby now. He needs to take full responsibility for where we are today.

ROFL!!! Exactly what he is known and accused of doing on a daily basis. Hilarious. I wouldn't suggest arguing with him, seeing as how he doesn't understand simple, basic concepts regarding...Well anything.

Thanks Demon. BS in Keynsian Economics and Anthropology paying off. I actually admired Marx in school but I grew up and began making my own living.

There's A LOT more to the new deal than most people know. There's a reason why he "intentionally" prolonged the Great Depression. The biggest reason is the US was declared bankrupt in 1933 (by design) and FDR signed the War Powers Act of 1933 which declared all US citizens enemies of the STATE. Since this time they have allowed it to continue and is why every President declares a national emergency within months of being in office. This gives them cover to continue their war on the people.

Same degree as you(Eco). Now you're starting to see the fundamental flaw of Keynesian economics, the bullshit they teach you in school. I had to read shit on my own for almost a year to get ahead of most economic grad students, because they're learning the wrong school of thought.

qft.......

He never said he would get out of the Middle East, he campaigned on sending more troops to Afghan and dealing with the REAL problem.

How are you confused? You simply backed up what I said with far more detail... I was only covering the topic at hand, not writing a book about it.

Yes, we know Obama has been in office for a year... he has done a lot in this year, for sure based on what he had to deal with... he deserves a pat on the back.

How is that, saying everything isn't Obama's now? Of course it is, that is a kind of a stupid statement.

The Bush economic effect was already set in motion. Obama really had to spend more than half of that because pf Bush. I don't like his flaming liberal games of passing out money but considering how flaming his senate voting record was this is better than we should have expected. Also, if you fools hadn't voted the worst economic president of all time into office twice the republican backlash would not have been so great and a such a huge flamer would not have got elected. You own a little more than half of this anyway you slice it.

You don't have a degree in shit... You have said you were a Doctor, going to school to be a lawyer, a lawyer, and now you have a degree in Economics?

Bullshit...

You're a pathological liar...

Hard to believe but it's true. I have a local judge who just this week set aside an entire day (special hearing) for me to lay out my case. He acknowledged just what I said there ON THE RECORD. Even the lawyers in the courtroom were asking me what it was all about because they weren't even taught this stuff obviously because they are committing treasonous acts daily...

Like I stated in that 'book', sheeple will only get out of government what sheeple put in government.

Shit-in=shit-out.

You are right in that Bush started this whole thing but Obama voted for it while a Senator and knew what he was getiing into before he was elected president. Obama needs to stop passing the buck and take responsibity.

Obama never promised to pull the troops out of the "middle east". He promised to end the war in Iraq, and focus more attention and troops on Afghanistan. Which is precisely what they are doing.

While I agree with much of what you have said here (especially the part about our leaders not doing what is necessarily good for the country, but instead what will get them elected again) the one thing I disagree with is health care reform. Sure, some of it, for some of these politicians, is a tool they will use to get elected again, but I think it is something we badly need. If left unchecked the cost of health care will eat away at the middle class in this country. The strength of this country and our economy rests firmly on the backs of the middle class. As the years go on and the cost of health care goes up and up and up more and more people end up in bankruptcy and losing much of what they have worked years to get just because a family member got hurt or sick. Some people will say that it is not the governments place to take care of people, nor is it a right to get health care. I happen to feel that we can maintain our capitalist ideals, while sometimes stepping in and doing what is best for all of us as a whole.

I'm not saying that the government should run health care. I'm simply saying that health care reform is something that I feel is vital to the future success of this country and if we don't do something about it eventually it is going to bite us in the ass.

Also, I happen to think some government regulation of the financial markets is a good thing. When you look back in history you see that our past is filled with boom and bust periods. Not gain and recession, boom and bust. We need some regulation (much of which was put in by FDR) to help reduce the chances of that happening. As times change more and more people are now relying on 401K and other tools like that for their retirement. You can't allow these people to work their entire lives setting up a retirement fund only to lose it all because a few people on Wall Street got greedy. Over regulation is bad, but putting some in place to keep those that would abuse the system while fucking over the rest of us is a good thing.

He did know what he was getting into, he said more than once it would be a long hard road, as the short version.

He has taken responsibility on many things too, stuff that isn't his fault and some stuff that is.

If you listen to him speak, you may see some qualities in him that most people in business people do not possess, he takes responsibility directly and deals with it too. Shit is rolling up hill to him, and he isn't pushing it back down as much as 99% of us would.

The worst economic president of all time would be Obama.

Show me where I said I was a doctor. I AM going to school to be a lawyer. Guess what comes before grad school? If you said undergrad, you would be correct:) Of course you couldn't even get that far in your rant, which kinda makes me wonder what "phd" you got. ROFL what a moron.

We ALL want health care reform. We DONT want Obamacare.

Kane, boom and bust cycles are a natural part of economics. Goverment regulation prolonges or shortens these booms and busts and there are usually economic consequences afterwards. If they stepped out of the economic spotlight and let us have a true free market economy where the markets control everything and correct when they need to correct, then we would be more prosperous in the long run.

Health care and the "climate change" BS is Obama's New Deal. All they are doing is coming up with and trying to sell to the people new funding schemes to keep their bankrupt corporation afloat.

Kane, I agree that a primary role of government, granted in the Constitution, is to regulate interstate commerce. This is effectively done through regulatory agencies such as HUD/FHA, SEC, NASD, FAA, FCC, and so forth. We have laws on the books that are not being enforced allowing corporations and entire industries to operate "at will" with no accoutability until the shit hits the fan. Then the Politicians call for an entire industry overhaul. Example: healthcare. I sold health insurance for several years. Health insurance in AZ is very affordable through a variety of carriers. If Washington wants to overhaul the healthcare industry, start with the lawyers and tort reform limiting liable payouts from occurances that were truly accidents. Gynocologists have to join local professional OB/GYN groups in order to afford malpractice insurance. They are the most sued medical group in america. The docotor that wants nothing more than your baby to come into world healthy and well is the one who gets sued the most. The ONE doctor who acts on the spur of a moment, when you baby is ready to come into the world, is the one who has to worry if your going to take him/her for everything your ambulence chasing - John Edwards - lawyer can get. Reduce that abuse and you'll see premiums drop remarkebly.

Why did the SEC not stop Madoff 10 YEARS AGO when they were originally tipped off? Why did the SEC not investigate Credit Default Swaps and Deriviatives when notified in 2003 that they are out there unregulated and heavily traded between banks, insurance companies and uber large multi national corporations? Why did Barney Franks, Mass. Senator and Chairman of the Senate Finance and Banking Comittee, turn a blind eye to Fannie Mae and Freddie Mac's terrible lending guidelines? Also, isn't he the Distinguished Congressman who took a multi million dollar home loan from Countrywide with no payback rquirements? That's like the fox gaurding the hen house.

My point is, yes we need reform in all major sectors of our economy. But, we do not need to throw the baby out the window with the water. Look at the current laws and enforcememnt of those laws. Get the agencies in order and go stop the bad guys. We do not need one of the world's largest industries taken oven by Washington in order to make it effecient.

I guess I disagree. Not too long ago I read an article by a woman who is an economics professor at Harvard. She was talking about how you can go back to George Washington's presidency and see that he was the first US president to face an economic bust. We had little or no regulation then so banks went out of business, people lost everything and the economy collapsed. Then over time it rebuilt and we would have another boom period followed by another bust period. We played this game over and over again pretty much up until the 1920's when we had one of the largest boom periods ever followed by the largest bust period ever. Now we can debate how FDR's policies effected the length and depth of the depression, but something he did there was a proven winner. He decided that these boom and bust period periods are not good for the country and that some regulation was needed to help curb them. So he created the FDIC which kept people from shitting their pants every time there was a little downturn and draining all their money out of the banks (remember, before this there was no such thing so if you had a bunch of money in a bank and it went out of business, you were screwed). He also helped regulate the markets. Pretty much since then we have had a prolonged period of steady growth. Sure, we have had recession and a couple of them have been bad, but they were nothing like the bust periods of old. Just look at the markets and see how they, and the overall economy have grown since 1940 compared to all the time before that.

If you look back pre 1920 we had a pretty small middle class in this country. Part of that was simply because of the boom and bust economy. People would have a job for 4-7 years and do okay, then the bust would come and they would lose that job, lose their bank account, lose their house and have to scrape by for 4-5 years during said bust period. They eventually get a new job, but they spend at least the first few years of having that new job trying to rebuild what they lost during the bust times. They get it rebuilt, only to lose it again during the next bust. It is a vicious cycle. With this regulation we have seen a steady growth in the middle class and stability in the middle class and the economy has flourished. The middle class are the ones that buy most of the stuff. They buy houses and cars and vacations and big screen TVs etc. They do this because they know that things are pretty stable. That their retirement is reasonably safe and that they can put money in a bank savings account and not worry about it disappearing tomorrow. If people knew that they had to save every extra penny they made over the next 5 years so that they could survive the five years following that, they would pass up on many of the things they by now. They would get by, but they wouldn't thrive. If the middle class doesn't thrive, neither does the country.

Just my 2 cents. I'm not saying we have to be draconian, we just need to protect the average person from losing everything they have because a few people got greedy and fucked the markets and economy up.

I agree. I won't pretend to know what laws are on the books now that are not being enforced, but if they are they, they need to be used and enforced. You make a great point about Madoff. The SEC has been told many times about him in the past and did nothing about it. They could have done their jobs and stopped him from causing a lot of problems. One of the problems with our politicians is that when something happens they refuse to go back and look at the system that is in place and see if it failed somewhere. If they did that they would often see laws in place that if they just funded/enforced them would solve the problem, but instead they want to make a bunch of noise so they start passing new laws before they consider any other path.

While I agree that tort reform should be part of health care reform I think it is just a small part of the puzzle. You have to take into effect the millions of uninsured that get care, but never pay the bill so it is passed on to those that do pay or have insurance. You have to also count the extreme costs of medicine. We here in the states often get charged 2-4 times as much for the same medicine as other countries. Like I said before, I'm not sure that government controlled health care is the answer. They seem to screw up everything they handle, but I feel like something major must be done or the middle class is going to get hammered in the next 10-15 years.

Proven winner Kane? It took nearly 16 years of government intervention to call it a "proven winner". Free Market economies work. Economies with constant government intervention don't. Gold Standard works. In fact, the Gold Standard was in play until 1971, incidentally when our economy began a steady 30+ year decline.

Things that fail need to be allowed to fail. You know the concept of "If it ain't broke, don't fix it". There's a better chance of economic prosperity when the government doesn't involve itself in economics. All they do is run up the fiscal deficit with no real solutions.

Yes, there were a lot of greedy people in the private sector. When they fail, let them fail. But we don't need the government to step in, because I'd rather have a greedy Wall Street banker than a greedy government.

There was no surplus, it was a projected surplus which was from cooked books as well.

I voted for Obama because he promised change, I should have known better.

Meet the new boss same as the old boss

Of course there was no surplus. It's called making up facts and hoping someone doesn't call him out on it. It's his forte.

Watch this shit.


https://youtube.com/watch?v=JPs4lfWYwT0

Yes, I have read the theories about it not being real, they all stop in 1994/6... that's not when we had a surplus.

http://clinton3.nara.gov/WH/Work/102899.html

The Largest Surplus in History:

* The $123 billion surplus in 1999 is the largest dollar surplus in history, even after adjusting for inflation;
* The surplus, expected to be about 1.4% of GDP, is the largest surplus as a share of the economy since 1951;
* 1999 is the second year in a row of surplus, marking the first back-to-back surpluses since 1956-57;
* This is the first time in U.S. history that we've experienced seven years in a row of fiscal improvement.

Thanks for the clinton website rofl. Also, TheDoc forgets that Clinton incidentally started the credit/subprime mortgage crisis.

NP... facts can be checked all over..

I agree, but only after everything had been deregulated first.

If you look from 1940 until now average wage has gone up, GDP has gone up, the stock market has gone up. These are all good things that sat semi-stagnant for years or that went up and down like a roller coaster. I'm not saying these only happened due to regulation, there are a million other factors that can be added it, but regulation played a roll.

I agree that that gold standard is a good thing, but I don't see this steady 30 year decline you talk about. In 1971 the average household income in the US (adjusted) was $35,400 while in 2009 it was $50,300 and had just suffered about a 10% drop in the previous year due to the recession. The Dow in 1971 was around 1,000. Today is is around 10K (depending on the day). Home prices now compared to the early 70's are through the roof. I won't argue that there have been some bad things that have happened, but there have also been a long solid period of growth.

Do me most of the downfall has come in the growth of the national debt. That has a lot more to do with politicians and their out of control spending and wasting of money than it has to do with some regulation of the financial markets.

It seems these days I hear the phrase "free market" more than I have in a long time. It is the new "It" word with the tea party and the republicans. I think a lot of people don't fully understand what a 100% free market is. A 100% free market, Capitalist society is a rabid, hungry wolf that will eat her own young and the bottom 90% of wage earners in this country are the young.

Sure, if a guy starts a business and he runs it like shit and it fails, it should be allowed to fail. If there is a market for the product or service that this business offered another business with step in and pick up the market this failed business has left behind. But there is a huge difference between a business being allowed to fail and entire industry cooking the books and playing Russian Roulette with people's 401K's, home values, college savings ect. These are people who just played by the rules and got fucked because there was nobody overseeing what was going on. Even a farmer gets a sheep dog to watch over his flock. You can still have a Capitalist society and promote Capitalist ideals, while overseeing how the game is played.

I go back to my previous point. A strong middle class is something that must be in place if you want long term economic growth and stability. If you don't have that, you will struggle. If you don't have some rules and regulations in place to help care for that middle class so that they aren't used as food and thrown out by the greedy bankers and barons, it hurts us all.

As I said, I don't think we need to get draconian and as was pointed out in another post there are plenty of rules on the books now that aren't even enforced. But I think there has to be some regulation there just to keep things in check so that average people can have a fighting chance to create a decent life for themselves and have a decent retirement when they get old.

This is incorrect kane, if we adjust it for inflation. 2000-2010 was the worst decade for stocks since the 30s, and there was actually a negative return. Ditto for GDP, wage, and deficit.

The fiscal and monetary mismanagement began after Nixon took us off the gold standard. That's when the printing presses rolled out. That's when we started spending and stopped saving. That's when we started moving away from being a manufacturing economy, and towards a service economy. The fact that home prices are so high is the leading cause of the sub prime mortgage failure as well as inflation. You have to adjust everything for inflation dude.

It's both, but regulation of the financial markets has met with constant failure.



I disagree. Because that rabid wolf will lose strength and there will be nobody to help him as he slowly lacks the ability to hunt. As greedy as people are, it's better that there's no regulation in the private sector than mass public regulation for everything. Again, whatever fails, should stay failed.

Government oversight is unnecessary. You speak about rabid wolves, but those same rabid wolves exist in government, which is even worse than independently in the private sector. AIG should have been allowed to fail. Everything that failed should have been allowed to fail, with new shit popping up. Instead, we bailed them out. Sad.

Again, same greedy people exist in government. With oversight, they have the full government backing to do what they want. That's a hell of a lot worse than what we had happen in the past 3 years.

Things have gotten worse since Obama took office, but he will blame Bush
3 years of democratic lead house and senate, still Bushs fault
Obama wants to lower the debt, then why are we spending more?
Sorry, something I learned in school about math!

It's been a year of Obama in office with more power than any president in recent times, thru his bad leadership, nothing is getting done, I don't want him to fail, but seeing him do something that made sence would be a nice change!

He bitches that the GOP doesn't want to play nice
They only want 2 things added to the health care package
Tort reform and accross state insurance
But Obama isn't won't listen to that, so why would the GOP vote his way?
I feel that it's going to get worse, at least till the late year elections
Contract with America Version 2010

Well said bro.

i remember when it was all clintons fault

Sure, there are a lot of reasons that things have gone south as of late. Regulation has played a small roll in that, as has greed, mismanagement, ignorance, overspending, and a million other factors.

Let me just ask you this: Which would be better for the country? 1. We let companies like AIG do as they please. They play risky games and create wealth out of thin air then when it catches up to them they collapse and burn, take with them 20%+ of the nations banks and cause massive unemployment, stock market collapse and all kinds of chaos. Once the dust has settled another company steps in and takes up the slack they have left behind and starts doing the exact same thing which will be great for about 10 years then it too will crash and burn.

or 2. We put in a regulation that either oversees how some of the derivatives are handled, or maybe we completely disallow them and say to the market :" If you want to make money, you need to sell a good or a service to someone. You can't just come up with complex formulas that just create wealth out of nothing?" And AIG is left making several hundred million dollars instead of a billion dollars. They still are huge, they still have an enormous amount of wealth, but they are a little more stable.

Which do you think is best for the country as a whole?




I agree with you that if something fails, it should stay failed. To me this isn't about the bailouts, this is about preventing situations that put us in a position where people even consider bailouts. The beauty of the free market rabid wolf is that it will never go hungry or get tired. It will eat its young as it burns the forest around it, then it will crawl into its den and sleep. When the forest has regrown and the animals have returned, it returns to hunt. For a while it is fine, but then it gets greedy again and kills too much and it is back to where it started.

I understand that there are greedy politicians and I understand that they often have their own self interests at heart. My point in all of this is that I don't see the harm in setting up a group of ground rules. Of saying, "These things are just too risky and pose a threat to nation as a whole so we aren't going to participate in them." If you want to make money as a Capitalist does do what they used to do which is offer a service or product for sale to someone. Deliver that service or product and get paid for it. But we should be allowing people to just create financial devices that create wealth out of nothing. I don't see the harm in having that type of regulation.

We have to learn from history. If history shows us that certain business practices are bad for the economy, then I see no problem in overseeing them just disallowing them. I could make a bunch of money selling meth, but the government has decided that this is bad and they don't let me do it. At least if I sell meth the person that buys it knows they are fucking up their lives. With a lot of the shady shit that goes down on wall street there are plenty of people who one morning wake up and find their 401K is worth half what it was the week before and it is all due to a few people who decided to take extreme risks so they could get a bigger bonus.

Regulation has played more than a small role. It has never truly helped.

Yes, and when those companies fail, we let them fail. AIG doesn't create wealth out of thin air kane. That would be the FED and the banks. Reserve ratio for banks, printing press for the FED. The FED has largely been responsible for every single recession since its creation in 1913. And the dollar has lost 96% of its value since that time.

A. Eventually go back on the gold standard. Right now, abolish unions, increase manufacturing, destroy the printing press, get rid of government regulation in the financial markets. I'll repeat, it's the FED and the banks who create money out of thin air.


I think your blame is misplaced. The whole crisis started in the 70s which I've already outlined. We stopped saving and started spending, we started outsourcing and not producing anything, banks ceased giving businesses loans and thereby, destroying capital investments. Banks also increased loans to individuals, who started living beyond their means. Then Clinton got rid of the cap placed on bank loans, people started buying houses, housing prices skyrocketed, people realized they couldn't pay, and then we had mass defaults. AIG and those few companies were just the tip of the iceberg.

No system is perfect, capitalism is the best though. If we would just change the mainstream economics back to Austrian, which focuses more on the supply side and marginal utility, we'd get this country back on track.

I guess ultimately we both agree that what this country needs most is a return to supply side economics. We have outsourced ourselves to death and with every passing year we seem to export less and less and import more and more and it is really catching up to us.

When I talk about companies like AIG creating wealth out of thin I air I mean that they heavily invested themselves into derivatives which allow them to invest 20 times the actual amount that they have in hand. So if they have a million dollars, they can control 20 million in stock then sell it and gain the rewards of a 20 million investment that they didn't make in the first place. If they lose, they cook the books, hide the loss and do it again. That shouldn't be allowed. if you want to invest, great, but you should only be allowed to control as much stock as you can actually pay for.

Yes, I understand the government has fucked a lot of things up and it is bloated and corrupt, but every time I hear about Raw Capitalism I get visions of third world countries where a small group of very wealthy control the masses of poor people and profit heavily off of the exploitation of them. When things like that happen people get scared. Fear breads fanaticism and they start to vote people into office that will head in a more socialist direction and promise them their fair share of the pie. If they had their fair share of the pie all along and weren't worried about losing it, they would be less likely to vote the people into office that will create the hurdles that block good business from being done.

Done correctly, I feel some regulation could work and has a seat at our economic table. Sadly, however, our government has yet to figure out how to do it correctly.

What is this talk about going back to the gold standard. It is my understanding that the US does not have enough gold to back a gold standard and it is also my understanding that if the US owned all of the gold in the world...we would not have enough gold to back the gold standard. Where am I mistaken?