Mr.Al said:

You are "drain-bamaged" if you don't comprehend the federal reserve notes are monopoly money. If you can not legally enforce a contract with said money it is not realistic to use it in the economy.

Legal tender laws prevent the emergence of competing mediums of exchange that would halt reckless government spending.


You cite foreign central banker funny money .

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Yrat said:

you keep harping on Mr. Al for things that you are doing yourself.  i've already refuted our "similar" debt situation to WWII, and yet you keep bringing it up as a seemingly valid point.

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Falcon91Wolvrn03 said:

Yrat said:

Falcon91Wolvrn03 said:

We have one hell of a lot more debt than we should.  Deficit spending should ONLY happen when the economy needs a boost; NEVER when the economy is good.  But I digress.

Here is an interesting graph putting our current debt into perspective.  It's still at a level we can overcome; altough I agree it's MUCH higher than it should be.


How We Get Out of the Great Depression II
By Steven Stoft, March 2, 2009

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Yrat said:
that debt was able to be paid off through massive production generated by a HUGE manufacturing industry built up during WWII.  today, our biggest export is our debt.  we have no production capacity to overcome this situation.  it is a different beast altogether.

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Falcon91Wolvrn03 said:
With that being the case, all I can say is that I hope stimulus money is used to bring back our production capacity.

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Falcon91Wolvrn03 said:

Yrat said:

you keep harping on Mr. Al for things that you are doing yourself.  i've already refuted our "similar" debt situation to WWII, and yet you keep bringing it up as a seemingly valid point.

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Ok, let's look at the discussion:

Falcon91Wolvrn03 said:

Yrat said:

Falcon91Wolvrn03 said:

We have one hell of a lot more debt than we should.  Deficit spending should ONLY happen when the economy needs a boost; NEVER when the economy is good.  But I digress.

Here is an interesting graph putting our current debt into perspective.  It's still at a level we can overcome; altough I agree it's MUCH higher than it should be.


How We Get Out of the Great Depression II
By Steven Stoft, March 2, 2009

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Yrat said:
that debt was able to be paid off through massive production generated by a HUGE manufacturing industry built up during WWII.  today, our biggest export is our debt.  we have no production capacity to overcome this situation.  it is a different beast altogether.

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Falcon91Wolvrn03 said:
With that being the case, all I can say is that I hope stimulus money is used to bring back our production capacity.

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Now it's YOUR turn.  Since you didn't reply, I assumed that you agreed with me that we should use stimulus money to bring back some of our production capacity.  If you don't agree with me, tell me why you think it's a bad idea.  That's generally how debate works.

Mr.Al has consistently avoided addressing any of my responses to his posts.  He just keeps posting the same stuff over and over.  HE NEEDS TO TELL ME WHY HE THINKS I'M WRONG!  What good does it do to keep repeating the same posts over and over when I've already replied to them?  I really am open to learning something, but I can't learn if no attempt is made to correct my mistakes.

A nice start would be for him to answer the four questions I posted above.

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Quote:

"stimulating" the economy will do nothing but delay the inevitable downturn, while making said downturn even more painful due to higher debt.  the recession (depression) is the CURE for this economy's ills.  sometimes medicine tastes bad, but you have to swallow it.  the economy needs to contract to a size representative of its actual worth.  right now the bubble is being kept inflated.  it needs to pop.  NEEDS TO.  only then can REAL growth begin.

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Exactly.

The stimulus approach reminds me of how we have often managed our public lands to prevent wildfires. They would suppress any small fires since we all know small fires lead to big fires, right? What happened was that underbrush was allowed to build up to extreme levels since there were no small fires to prune it back and when fires did happen they were freakin' HUGE.

Recessions and depressions are the natural result of unmanageable debt. These corrections come along to cleanse the economy of that bad debt so the economy can resume healthy growth. You cannot defeat nature- you must work with it.

What we have is politicians thinking about the next election rather than the long-term fiscal health of the nation. So instead of a relatively short recession we are going to get a painful and protracted depression due to their meddling and because people are believing their lies such as:

1) The economy needs "stimulating".

The economy needs to be allowed to purge itself of bad debt so consumer spending can recover.

2) Too big to fail.

Too big to fail means its too damn big. See: dinosaurs.

3) We are seeing "green shoots" in the economy.

We are seeing the economy continue to lose jobs.

4) We are having a "jobless recovery".

We are enjoying an eggless omelette.

We need a return to common sense.

Don't believe the lies from the mainstream financial media. They are nothing but cheerleaders for the markets. 

Yrat said:

can you show me examples of "production capacity" that has been increased by stimulus money?

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Yrat said:

i do not agree with the magical printing of money for the very reasons Mr. Al has explained.  nor do i agree with borrowing the money from productive countries to merely deepen our debt.

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Yrat said:

when you are drowning in debt, do you take out another loan to pay it off?  the concept seems absurd on an individual level, but for some reason at the level of individual countries, people lose sight of such a relationship.

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Yrat said:

"stimulating" the economy will do nothing but delay the inevitable downturn, while making said downturn even more painful due to higher debt.  the recession (depression) is the CURE for this economy's ills.  sometimes medicine tastes bad, but you have to swallow it.  the economy needs to contract to a size representative of its actual worth.  right now the bubble is being kept inflated.  it needs to pop.  NEEDS TO.  only then can REAL growth begin.

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Yrat said:

bankrupt institutions need to be allowed to fail, so they can sell off assets to productive industries, which can continue to grow and provide jobs, evolving into the next natural form of the economy.  this is the natural flow of a market, and this is being prevented by artificially supporting old, dying, inefficient institutions which should be allowed to keel over.

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Here I can agree with you, as I've previously said.  The bailouts are all about politics, and I don't know why you claim that has anything to do with Keynesianism. 

Yrat said:

why do you think it is alright for government to decide that you as a consumer are not spending enough, and spend your money for you, sticking you with the bill?

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Mr.Al said:

Falcon, you should read this.  You need to realize that government statistics are bullshit.


http://www.shadowstats.com/article/consumer_price_index

I think I recall Yrat mentioning that government had manipulated numbers used for economic measurement.

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Falcon91Wolvrn03 said:

Yrat said:

by the way, that 3% inflation rate is complete bullshit.  did you know the CPI is constantly altered, changing the goods it measures, so that inflation can be reported as low?  what good is even bothering to measure inflation if you can change which prices to measure to suit your desired outcome?

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Falcon91Wolvrn03 said:
Yes, I'm aware of that.  It's probably off by as much as 10% or 15%.  Which means the "real" inflation rate is more like 3.3% per year.  Feel free to substitute 3.3% for 3% in my posts above.

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Falcon91Wolvrn03 said:

Yrat said:

can you show me examples of "production capacity" that has been increased by stimulus money?

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The website Recovery.gov tracks stimulus spending, and it shows that a lot of money went to highway construction, home imporvement, and infrastructure upgrades.  It's not the greatest website, but Manufacturing.net says the Government will provide detailed national data of how the stimulus money is being spent later this month.

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Quote:

Falcon91Wolvrn03 said:

Mr.Al said:

http://www.shadowstats.com/article/consumer_price_index

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Falcon91Wolvrn03 said:
Yes, I'm aware of that.  It's probably off by as much as 10% or 15%.  Which means the "real" inflation rate is more like 3.3% per year.  Feel free to substitute 3.3% for 3% in my posts above.

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Please note that I was being generous with a 10%-15% estimate.  Your article claims the error is "roughly 7%".

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Seuss said:

> Personally, I think welfare is symptomatic of the problem which is government monopoly money.

It also comes in handy when you are trying to keep your seat in congress.  It is easy to bribe poor people to vote for you... and the best part, you don't have to pay.  Instead, you blame "the other side" for stalling the reforms you promised.  The current welfare system is designed to maintain people in a state of poverty, not to empower people to climb out of poverty.  The big question is who benefits from the current system?

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ArmFromTheAbyss said:

Yrat said:

i asked for examples of increasing production capacity, not an endless list of highway re-pavements.

in the bill clinton thread, you claimed that our debt as %GDP isn't bad because we've worked our way out of deeper.  i reminded you that we actually had a manufacturing base back then, and actually produced and exported products, to which you responded, "With that being the case, all I can say is that I hope stimulus money is used to bring back some of our production capacity."  in following posts, you then assume that stimulus money has increased production capacity.  so i am simply asking you to provide the examples that seem to have confirmed your "hopes."

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ArmFromTheAbyss said:
There's already an insane amount of excess production capacity in the US- 30%

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ArmFromTheAbyss has a very good point.  We are currently only at 70% production utilization:



We certainly don't want to increase our production capacity until after we first improve our production utilization.  And the chart above shows that production utilization is on the rise.  It may not look like much yet, but compare that to what it would be if we let it continue to drop, and also consider that only 14% of the stimulus package has been spent so far.

Yrat said:

you can not save jobs in a failing industry that is trying to die.  failing industries are a result of inadequate customer base, as a result of people moving to newer and better things (or not being able to afford something too expensive).  it is a natural process.  think of how newspapers are going under as a result of the explosion of the internet.  the process of failure and bankruptcy is a natural culling process in the natural flow to higher efficiency.

by "stimulating" and keeping should-be-dead institutions hanging on to threads of life, you merely prolong the inevitable collapse and the loss of jobs.  by trying to "save" jobs, you simply delay the move to the next newer, better thing.  you prevent these new industries, and the jobs involved, from getting established and growing.  in doing so, you are actually preventing the creation of new, sustainable jobs.

the longer the inevitable is prolonged, the more painful the correction will be.  the sooner it comes, the better.

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Again, I'm in agreement with you.  Bailouts is politics; I told my congresswomen to oppose the bailouts.  Stimulus (ARRA) money shouldn't be used to bailout companies that are in trouble.  And I don't believe any of it is; that's TARP money (separate thread).

Yrat said:

Falcon91Wolvrn03 said:

Yrat said:

when you are drowning in debt, do you take out another loan to pay it off?  the concept seems absurd on an individual level, but for some reason at the level of individual countries, people lose sight of such a relationship.

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That depends.  If you're drowning in debt, it would be silly to take out loans to buy big screen tvs, fancy cars, and new yachts.  But if you use that money to invest in your business, then perhaps it makes sense.

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and if it fails, do you take out another?  how about another?  when do you draw the line, and make the move towards paying it off?  $15 trillion?  how about $20 trillion?  fuck it, let's push the debt so far, we can't even pay the interest.  again, on an individual level this is known as bankruptcy.

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Again, the US is investing in things that we believe will benefit us in the future.  Development of alternative energy sources, for example, will not only provide new jobs and products here in America that can later be sold abroad, but it also reduces our dependence on foreign oil and therefore reduces the amount of money that leaves the country and helps our trade balance.  It's a win now and a win in the future.

Yrat said:

Falcon91Wolvrn03 said:

That's the Ron Paul/Peter Schiff theory.  They are in the minority in the economic community.  If the economy tanks, then there are are fewer jobs, fewer people buying things, fewer profits being made, fewer taxes, which leads to fewer jobs, fewer people buying things...

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where to start with this one...

first of all, "fewer jobs, fewer people buying things" is the REASON for the economy tanking...

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But why are there fewer jobs and fewer people buying things?  It's mainly because of the housing bubble.  The cause of that is the topic of debate and of other threads.

Yrat said:

...by throwing out free money to the biggest banks, and encouraging more individual consumption, you are not going to improve people's economic situation.  we are still losing jobs at close to 300,000 per month, DESPITE your stimulus.  people STILL don't have enough money to spend like the last 10 years' extravagance, they STILL can't find jobs.  you can not try to keep that level of consumption going by "stimulating" the economy:

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Actually, it appears things ARE beginning to turn around.  Whether or not this trend continues remains to be seen, but that will be a good indicator of whether or not Government intervention is successful.

Yrat said:

people have reached the end of their credit lines, are realizing how absurd the "spending spree" phase was, and are rebuilding their savings.

trying to inflate things back up to the already-proven unsustainable levels of consumption is just simply not possible.  printing and borrowing money will not only fail to "fix" and "stimulate" the deflating economy, but will make the eventual downturn much worse by devaluing the currency and increasing the debt.

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Agreed - debt needs to be paid down.  And believe it or not, it is going down.  Significantly.  But too much savings, as you said, will kill any recovery, and if jobs are lost, people can't save.

Yrat said:

as far as these being Ron Paul and Peter Schiff points, I would like to know whose ideas you think we should follow since "they are in the minority in the economic community" but just so happen to have called out and predicted all these events well before hand.  Should we follow all those people who got fucking blind-sided by the "crisis," who, only MONTHS before it started, were on TV cheering the system on and claiming that nothing was wrong, and are now claiming to have fixed all the problems, like Bernanke?

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As I said before, Peter Schiff wasn't the only one to predict the financial downturn.  Others, such as George Soros did as well.  And there's one big difference betweeen Schiff and Soros that makes me trust George Soros more.  Soros made over a $Billion on the collapse, meaning he probably knew what was going on.  Peter Schiff, on the other hand, lost a lot. 

Yrat said:

you don't consider the "bailouts" to be stimulus money to rescue the failed financial industry?

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There's the bailout (TARP) money and the stimulus (ARRA) money.  Yes, both were designed to help the economy, though the OP wasn't talking about bailout money.

Yrat said:

the government is not investing in anything, you are.  government doesn't have its own money, only yours.  you think people have enough money right now to pay for what's going on?  you think they will in the near future?

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That's why I started this thread.  To ask a very similar question.  Is the stimulus a good investment?

Yrat said:

not 7% of 3%, 7%, meaning inflation = 3% + 7% = 10%

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Seuss said:

Mr.Al said:

Personally, I think welfare is symptomatic of the problem which is government monopoly money.

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It also comes in handy when you are trying to keep your seat in congress.  It is easy to bribe poor people to vote for you... and the best part, you don't have to pay.  Instead, you blame "the other side" for stalling the reforms you promised.  The current welfare system is designed to maintain people in a state of poverty, not to empower people to climb out of poverty.  The big question is who benefits from the current system?

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Way to derail the thread.  What does welfare have to do with stimulus money??? 

zappaisgod said:

What do you think those $250 checks are?  By the way you might want to revisit the title of the thread.  It is a lot more encompassing than you 3 guys arguing endlessly about the federal reserve, John Maynard Keynes and currency valuation.

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It has everything to do with Frederic Bastiat's That Which is Seen And that Which is Not Seen.

http://mises.org/resources/2735


You remember Fred don't you zap?


Bastiat's The Law also showed the problems inherent in big government spending...

http://bastiat.org/en/the_law.html#SECTION_G700


Is not currency valuation greatly effected by massive government spending?

How is government able to amass such a large debt?