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Thread: Obama to business owners: "You didn't build that." [W:417]

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by washunut View Post
    Yes, it's a conspiracy.

    Keynes believed that the government should regulate business cycles through monetary policy. He was not a socialist in any manner of speaking.
    Actually inflation has been running below 2% for decades. Food and energy are calculated in the overall inflation numbers. Inflation, as calculated does take into account things bought today, including electronics and this had had a damping effect on overall inflation.[/QUOTE]

    Which inflation index do you think includes fuel, food, and electronics?
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by Romulus View Post
    True but, Keynes' approach to inflation was the taxation of the wealthy NOT higher interest rates.
    Where exactly does Keynes say to tax the wealthy? Book/paper and page number, please.

    This model fails because we've observed rising unemployment and rising inflation (stagflation), we've observed higher interest rates, lower taxes, and declining inflation with the policies of Volker/Carter/Reagan. Non of this is possible according to Keynes.
    To the contrary, Keynesian economic theories best explain what happened in the 70s and 80s, which is why there was a resurgence of Keyensian economics following the 70s and 80s.

    In addition, Keynes does want to keep inflation in check, but inflation to Keynes is necessary. It may come as a shock to you having been acculturated through public schools and countless hours of MSNBC, but inflation is not necessary, deflation is good for those who save and savings is the basis of all wealth.
    Moderate inflation is far preferable to deflation. Just ask any of the millions of Americans who owe more on their homes than they're worth.
    Last edited by AdamT; 08-01-12 at 04:40 PM.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by AdamT View Post
    Actually inflation has been running below 2% for decades. Food and energy are calculated in the overall inflation numbers. Inflation, as calculated does take into account things bought today, including electronics and this had had a damping effect on overall inflation.
    Which inflation index do you think includes fuel, food, and electronics?[/QUOTE]


    The headline CPI number. Some like to talk about core versus headline inflation. Core inflation excludes food and energy. Actually the food component is broken into two buckets. Food bought at home and food bought from restaurants.

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by AdamT View Post
    Where exactly does Keynes say to tax the wealthy? Book/paper and page number, please.



    To the contrary, Keynesian economic theories best explain what happened in the 70s and 80s, which is why there was a resurgence of Keyensian economics following the 70s and 80s.



    Moderate inflation is far preferable to deflation. Just ask any of the millions of Americans who owe more on their homes than they're worth.
    So you can fixate on this one statistic. However inflation is called the cruelest tax for a reason. It hits the poor the hardest. the lowest 20% of family households spend about 27% on food and energy versus less than 20% for the highest income groups. Plus the lowest group have a tougher time having their income rise with inflation. Just ask any working mother who makes 30K a year if she is OK with higher food and energy costs and what impact it has on her life.

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by washunut View Post
    So you can fixate on this one statistic. However inflation is called the cruelest tax for a reason. It hits the poor the hardest. the lowest 20% of family households spend about 27% on food and energy versus less than 20% for the highest income groups. Plus the lowest group have a tougher time having their income rise with inflation. Just ask any working mother who makes 30K a year if she is OK with higher food and energy costs and what impact it has on her life.
    I'm not arguing that inflation is a good thing; just saying that deflation is worse.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by AdamT View Post
    I'm not arguing that inflation is a good thing; just saying that deflation is worse.
    Like a lot of things depends on the levels and the areas in the overall number. Deflation at 0.2% is not worse than inflation of 5% especially if the deflation was caused by oil prices going back to $25 per barrel. If inflation going to 5% because food prices rise 25% that would be a disaster for many Americans.

    Bernanke is worried about deflation because he has allowed debt to pile up so much.

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by washunut View Post
    Like a lot of things depends on the levels and the areas in the overall number. Deflation at 0.2% is not worse than inflation of 5% especially if the deflation was caused by oil prices going back to $25 per barrel. If inflation going to 5% because food prices rise 25% that would be a disaster for many Americans.

    Bernanke is worried about deflation because he has allowed debt to pile up so much.
    He's worried about deflation because it can, and usually does spiral out of control rather quickly, and there's not much you can do about it once it starts.
    "The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. ... It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion."

    -- Adam Smith

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by AdamT View Post
    Yes, Keynes thought that keeping inflation low was critical.



    There are many ways to calculate inflation, and it is calculated many ways. Food and energy are notoriously volatile and so don't give a great indication of historical trends. But you could look at the Consumper Price Index, for example. It's been in the 2-4% range for decades. In fact those numbers are probably too high, as they don't count electonics items that didn't exist when the index started, and which have fallen sharply in price over the years.

    Obvsiously energy prices are closely tracked, so that's not exactly sneaking up on anyone.

    Hmmmm.....I wonder why that is? Probably to secretly confiscate wealth.
    Yes, it's a conspiracy.

    Keynes believed that the government should regulate business cycles through monetary policy. He was not a socialist in any manner of speaking.[/QUOTE]

    Uhhh, Keynes WAS a Socialist. You just said it yourself. Here, let me quote you: "Keynes believed that THE GOVERNMENT should REGULATE business cycles through monetary policy." Excuse me, but this is precisely what Karl Marx argued as well. John Maynard Keynes opposed the gold standard, and was an advocate of large central banking systems. That's how he wanted GOVERNMENT to regulate business cycles through monetary policy; through central banks. Keynes references Marx in many of his writings, and agreed with Marx on virtually everything concerning organized labor.

    And you are also wrong about energy and food being factored into inflation rates. They are no longer factored in. They stopped being factored into inflation rates in the mid-1990s under Clinton. Now, just 4 years ago, a pound of hamburger meat cost you roughly $1.98/lb. Today, it's closer to $5/lb. What would you call that if not inflation? More importantly, what do you think has caused such an increase? Take other examples across the board. Milk, cheese, eggs, bread. You name it, it has rapidly increased in price. This is quintessential inflation my friend, and it has a profound impact on the American economy.

    Look at fuel prices. You are right, they are closely watched. That hasn't caused the price to decrease though has it? No, it hasn't. Now, over the past 5 years, gasoline has increased in price dramatically also. But, when you take a look at the profit margins of the companies who are producing the gas, you will see that the profit margins have also decreased. Simple question for you now, stay focused.....HOW IS THAT POSSIBLE?

    In the last post, I told you precisely how that is possible. Government is the primary cause of higher corn prices, because they were at record highs even before the drought we are in. They are the primary cause for higher commodity prices in general, which drives up the cost of living for American consumers. The way you verify this as well, is by looking at the profit margins of the companies producing these commodities. So, in the end, what can we conclude? That the government is doing far better than the producers of these commodities. They are driving up prices intentionally. Why? TWO WORDS: Social Engineering.

    Keynes was an advocate for low inflation, but he still maintained that GOVERNMENT control business cycles through monetary policy. You said so yourself. Hmmmm....can you tell me one of the primary ways to manipulate a monetary policy? INFLATION!!! That, and interest rates. We are seeing it right now man! The central banks are artificially keeping interest rates low, for two reasons. To incentivize spending, and to keep inflation low. But it's creating another bubble, and building up debt that in 5 years from now, we won't be able to pay the interest on.

    There's a line in Keynesian economics that Keynesians don't seem to recognize. Stimulating the economy is one thing. Spending TRILLIONS of dollars to stimulate is another. The amount of spending going on in Washington will never allow even a fully employed workforce in America (4% unemployment rate) to pay those TRILLIONS back. And Marxist Keynesians are calling for even more spending!!!

    At some point, you have to dramatically reduce spending. HAVE TO. Now think. Even with a fully employed workforce in America, we cannot ever pay back this kind of debt. This is why Keynesian economics is a failure. You are betting money you don't have now, on money you are not for sure you'll have next year. It's a gamble both ways. INSANITY! Just think about it logically. If government spending stays on the same pace it's on, even a workfoce that is employed at a rate of 97% cannot keep up with their spending. So, I'm sick and tired of these Keynesians screaming that our solution is to spend more money. NO IT'S NOT. Our solution is to reduce government involvment in the greatest economic machine in the world, and that's the American private sector. Get competitive in our corporate tax rates. Get serious about repatriating offshore money. Lock in tax rates for a period of 5-8 years (like Bush did). And elect a business friendly Congress and President.

    I cant stress this enough. Keynes was a European living in the early 1900s. He was a Socialist. You cannot compare the economic success of England with the economic success of America. With all due respect, we don't need to solicit advice from a European Socialist. We need to remember what made America the economic powerhouse of the world. It dang sure wasn't "governments regulating business cycles through monetary policy". Go read our Founding Fathers, and how they railed against centralized banking, which allows government to control monetary policy via interest rates and inflation.

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by AdamT View Post
    He's worried about deflation because it can, and usually does spiral out of control rather quickly, and there's not much you can do about it once it starts.
    Not much you can do about hyper-inflation either once it starts. Take a look at the Weimar Republic in Germany, when a loaf of bread would cost you $1 million deutsche marks.

    Food and energy are no longer figured into inflation. That's just a mere fact. Yet food and energy are the two things within our economy that effect middle and low income people the most. Coincidence? I don't think so.

    Whether it's factored in or not really isn't the point. It doesn't take an economist to understand that a gallon of milk is much more expensive today that it was a year ago. The question common Americans fail to ask is "why".

    But liberals are smart. They try to get out in front of those issues. Which is why liberals try to demonize oil and gas companies over high fuel prices. BS is what I say. The oil companies are making less money today than they were 3 years ago. Proof? Look at their profits, and their profit margins. However, the price of gas is much higher too. One last time, HOW IS THAT POSSIBLE????

    I've already told you how it's possible. But you haven't given it a moment of serious thought. Profit margins are down, yet the price of gasoline is wayyyy up. How's it possible? And who is getting the lion's share of that money? GOVERNMENT!!!! And what do they do with it? Waste it, or at least a huge amount of it. $240,000 single day meetings for the GSA, and crap like that. But hey, let's just be Keynesians and SPEND SPEND SPEND some more!

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    Re: Obama to business owners: "You didn't build that."

    Quote Originally Posted by AdamT View Post
    Where exactly does Keynes say to tax the wealthy? Book/paper and page number, please.
    John Maynard Keynes, The General Theory of Employment, Interest, and Money (Amherst, NY: Prometheus Books, 1997) 249-59.

    But we don't really disagree on this do we?

    To the contrary, Keynesian economic theories best explain what happened in the 70s and 80s, which is why there was a resurgence of Keyensian economics following the 70s and 80s.
    Although you're correct about the resurgence of Keynes, the reanimation of his failed economics caused the dot com and housing bubbles. You are incorrect about the Keynesian model predicting stagflation.

    Moderate inflation is far preferable to deflation. Just ask any of the millions of Americans who owe more on their homes than they're worth.
    The question is how their homes became overpriced in the first place. Warping price signals by keeping interest rates artificially low and stimulating demand via quasi-government institutions like Fannie and Freddie is classic Keynesian economics and it failed, causing the current slump. What would Keynes do now?

    The right remedy for the trade cycle is not to be found in aboloshing booms and thus keeping us permanently in a semi-slump; but in abolishing slumps and thus keeping us in a quasi-boom.--Keynes, The General Theory, 322.

    Which is exactly what Bush/Obama/Bernanke/Greenspan have attempted to do, keep the bubble inflated. Deflation, at least in housing--is the only remedy. Propping up banks or propping up mortgages that aren't affordable to the owner, only perpetuates the next crash. Commodity inflation is at 11.5%--caused by QE cycles, monetizing the debt, subsidies to agriculture, plus ridiculous environmental and energy policies. Wouldn't it be nice for the poor and middle-class to see some deflation?

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