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Thread: Americans Blame Wasteful Government Spending for Deficit

  1. #111
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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by cpwill View Post
    except that the theory assumes that the government gets that money from the magic money tree.
    No it does not!

    it pulls money out of the market before it puts it back in.
    Accounting identities are taught in act 101. By taking a loan (accumulating capital) the Treasury increases both their assets and liabilities; assets in the form of cash and liabilities in the form of structured debt.

    On the lenders balance sheet, the asset (cash) is "swapped" for an interest bearing asset e.g. a bond. However, in this case no liability or owners equity was created as the nominal value of the cash was equal to to value of the bond at the time of purchase.

    Therefore, you "pulls it out before it puts it in" comment is invalid.

    so the TRUE multiplier must subtract the economic productivity of privately spent and invested funds from the economic productivity of bureaucratically spent and invested funds.
    You are assuming the private sector would have spent it. As monetary velocity and the short term asset accumulation by the private sector would indicate, that was not the case in the midst of the financial crisis.

    oh, but they have done some interesting study of the "multiplier" effect of the government "stimulus". care to guess? negative. as in, a multiplier of less than 1.
    An actual study published by and accredited economic journal?
    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.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

  2. #112
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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by Goldenboy219 View Post
    Accounting identities are taught in act 101. By taking a loan (accumulating capital) the Treasury increases both their assets and liabilities; assets in the form of cash and liabilities in the form of structured debt.

    On the lenders balance sheet, the asset (cash) is "swapped" for an interest bearing asset e.g. a bond. However, in this case no liability or owners equity was created as the nominal value of the cash was equal to to value of the bond at the time of purchase.

    Therefore, you "pulls it out before it puts it in" comment is invalid.
    In terms of real goods, there is no difference. Capital is held out of the private sector because it is taken by the public sector. You can play plenty of accounting games and mess with the monetary supply, but you cannot change that fundamental fact.

    You are assuming the private sector would have spent it. As monetary velocity and the short term asset accumulation by the private sector would indicate, that was not the case in the midst of the financial crisis.
    Without the FDIC, where would most people have their money today?

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by Indon View Post
    Get an external source that actually shows up.
    It shows up fine for me. The image shows from 1979 to today that effective tax rates are virtually the same.

    Since most federal reciepts are on payroll and income taxes, yes, the federal government does tax itself. But that was a clever try.
    So when the government builds a new road, 100% of the money it spends is taxed? You sure?

    Are you arguing that countries that spend more then increase this ratio? Because that's:

    -The opposite of the argument you made earlier in your very same post. Admittedly, the argument is wrong, so I could believe this one.
    -However, if higher spending artificially inflates this metric, it means that, because we have had high spending for decades and extremely high spending of late so our tax by GDP metric would have been overinflated, the US government is recieving taxes at an absurdly low rate compared to what we should be.
    Spending more in general will get you lower revenues/GDP, all other things being equal.

    Now are you going to answer my argument about raising taxes stifling a recovery?

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by phattonez View Post
    In terms of real goods, there is no difference.
    If the private sector did not demand the "taken capital", then it does not matter.

    Capital is held out of the private sector because it is taken by the public sector. You can play plenty of accounting games and mess with the monetary supply, but you cannot change that fundamental fact.
    Again, unless the public sector accumulation of cash forces businesses to pay more in terms of interest, it does not matter.



    Without the FDIC, where would most people have their money today?[/QUOTE]
    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.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by Goldenboy219 View Post
    If the private sector did not demand the "taken capital", then it does not matter.
    Better that capital is abandoned than kept alive with phony spending. At least then you can free the labor to do something more useful.

    Again, unless the public sector accumulation of cash forces businesses to pay more in terms of interest, it does not matter.
    I'm pretty sure that businesses care if the cost of capital increases.

    Quote Originally Posted by phattonez
    Without the FDIC, where would most people have their money today?
    You forgot a snarky answer to this question.

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by phattonez View Post
    Better that capital is abandoned than kept alive with phony spending. At least then you can free the labor to do something more useful.
    This is your opinion, based on a crude understanding of financial economics.

    I'm pretty sure that businesses care if the cost of capital increases.
    Of course they do, if and when public spending begins to crowd out the private sector. But this is not the case now.

    You forgot a snarky answer to this question.
    It was my intention to simply ignore your red herring!
    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.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by Goldenboy219 View Post
    This is your opinion, based on a crude understanding of financial economics.
    Which is better than theories that treat capital as homogenous.

    Of course they do, if and when public spending begins to crowd out the private sector. But this is not the case now.
    At any level we know a priori that it happens. There is no way around that fact. You can point out all kinds of econometrics, but the fact is that capital would be cheaper today than it is now if government borrowing were out of the picture.

    It was my intention to simply ignore your red herring!
    It certainly was not a red herring. You said that there was not enough private investment. I was just answering the contention by asking you a question.

    Who shall ascend the hill of the Lord? And who shall stand in his holy place? He who has clean hands and a pure heart, who does not lift up his soul to what is false, and does not swear deceitfully. Psalm 24
    "True law is right reason in agreement with nature . . . Whoever is disobedient is fleeing from himself and denying his human nature [and] will suffer the worst penalties . . ." - Cicero

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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by phattonez View Post
    he fact is that capital would be cheaper today than it is now if government borrowing were out of the picture.
    The user cost of capital is near its historic low. WTF are you even talking about?

    It certainly was not a red herring. You said that there was not enough demand for private investment. I was just answering the contention by asking you a question.
    You are being purposely indirect for lack of a valid response.
    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.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Americans Blame Wasteful Government Spending for Deficit

    Quote Originally Posted by phattonez View Post
    It shows up fine for me. The image shows from 1979 to today that effective tax rates are virtually the same.
    Well, since I can't see your source, I'll just look it up, shouldn't make you do so.

    A Note on Effective Federal Tax Rates: 1979-2002

    The source seems to say that between 1979 and 2002, that total effective federal tax rates dropped across the board, by about five percent. That doesn't look "virtually the same", that looks like a fairly significant drop.

    Quote Originally Posted by phattonez View Post
    So when the government builds a new road, 100% of the money it spends is taxed? You sure?
    It doesn't have to be - only about 20% of the money needs to be taken out in tax to maintain that ratio.

    Quote Originally Posted by phattonez View Post
    Spending more in general will get you lower revenues/GDP, all other things being equal.
    The evidence wildly disagrees with you. To reiterate it: List of countries by tax revenue as percentage of GDP - Wikipedia, the free encyclopedia

    By your statement, those nations with high tax-and-spend rates should have depressed values on this metric. But nations like Finland have extremely high rates compared to the US!

    How do you reconcile that - or are you just giving up on trying to defend "Hauser's Law"?

    Quote Originally Posted by phattonez View Post
    Now are you going to answer my argument about raising taxes stifling a recovery?
    I'm sorry, I must have missed this claim, as I don't recall you making it. World War II saw a substantial increase in federal taxation rates - as well as a recovery from a deep depression into a strong and stable economy.
    Last edited by Indon; 05-05-11 at 07:27 PM. Reason: Correction.

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    Re: Americans Blame Wasteful Government Spending for Deficit


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