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Presidential Race (Respector Edition)


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Lets see. Communism lost, capitalism won. I don't see how we don't live in a free market economy. You can make anything you want and sell it. Aside from not being able to sell shit that is obviously bad for someone (or even if it is) or not foul the environment (or even if it is), I don't see the free market as not being in effect. Once again Sparky you are deluded.

 

LouieB

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The real jobs numbers: 41% of America unemployed, 1 in 3 doesn't want work at all

 

 

Yeah, 7.8% of people looking for jobs can't get one. The rest are retired, full-time students or other. Statistics without proper analysis are worthless.

 

There are people out there who don't want to work for whatever reason. That is not evidence of a fiscal cliff.

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Oh yea and Ron (and son Rand) are both Republicans. Mitt Romney is a Republican. So essentially the believe the same thing, and have proven so partially on social issues. Yea Paul doesn't want foreign wars and doesn't like the drug war, but on most issues they are on the same page (and shared the stage.).

 

LouieB

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Do you actually believe that? The cuts are only in the proposed increases not actual cuts if they even do take place.

 

I just came across some recent conservative estimates have Romney increasing spending on the military by a trillion dollars.

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That was an amazing speech. Watch until the end of it everybody. For my money this stuff is the civil rights struggle of our time.

 

that was a good speech. unfortunately, i watched some of the crazy speech's. amazing how hateful supposedly loving christians are. i don't know why i'm surprised though. it still blows my mind that everyone votes on issues that effect 10% of the population. sad state of affairs. add in the fiscal cliff and.... :headbonk

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that hot chick in Sparky's latest post is clearly his stringest contribution to this thread.

 

I sense an, ummmmm, uptick in his content!

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Lets see. Communism lost, capitalism won. I don't see how we don't live in a free market economy. You can make anything you want and sell it. Aside from not being able to sell shit that is obviously bad for someone (or even if it is) or not foul the environment (or even if it is), I don't see the free market as not being in effect. Once again Sparky you are deluded.

 

LouieB

 

Lou, we have no free market as long as we have constant government created central bank intervention through the manipulation of money and credit every time there are signs of a slumping economy. This intervention gives rise to the boom-bust cycle which plagues us constantly and has lead to the current economic crisis we have been experiencing for over four years. How does it do this? Here's and explanation that should help you see what I am talking about...

 

Government-established central banks can artificially lower interest rates by increasing the supply of money (and thus the funds banks have available to lend) through the banking system. This is supposed to stimulate the economy. What it actually does is mislead investors into embarking on an investment boom that the artificially low rates seem to validate but that in fact cannot be sustained under existing economic conditions. Investments that would have correctly been assessed as unprofitable are falsely appraised as profitable, and over time the result is the squandering of countless resources in lines of investment that should never have been begun.

 

If lower interest rates are the result of increased saving by the public, this increase in saved resources provides the material wherewithal to see the additional investment through to completion. The situation is very different when the lower interest rates result from the Fed's creation of new money out of thin air. In that case, the lower rates do not reflect an increase in the pool of savings from which investors can draw. Fed tinkering, in other words, does not increase the real stuff in the economy. The additional investment that the lower rates encourage therefore leads the economy down a path that is not sustainable in the long run. Investment decisions are made that quantitatively and qualitatively diverge from what the economy can support. The bust must come, no matter how much new money the central bank creates in a vain attempt to stave off the inevitable day of reckoning.

 

The recession or depression is the necessary, if unfortunate, correction process by which the malinvestments of the boom period, having at last been brought to light, are finally liquidated. The diversion of resources into unsustainable investments out of conformity with consumer desires and resource availability comes to an end, with businesses failing and investment projects abandoned. Although painful for many people, the recession/depression phase of the cycle is not where the damage is done. The bust is the period in which the economy sloughs off the malinvestments and the capital misallocation, re-establishes the structure of production along sustainable lines, and restores itself to health. The damage is done during the boom phase, the period of false prosperity that precedes the bust. It is then that the artificial lowering of interest rates causes the squandering of capital and the initiation of unsustainable investments. It is then that resources that would genuinely have satisfied consumer demand are diverted into projects that make sense only in light of the temporary and artificial conditions of the boom.

 

When things do go bad, pumping more money into the banking system, thereby lowering interest rates once again, only exacerbates the problem, because it encourages the continued wasteful deployment of capital in unsustainable lines that will eventually have to be abandoned anyway, and it forces healthy, wealth-generating firms to have to go on competing with bubble firms for labor and capital. When interest rates are made artificially low, they encourage the kind of investment that would normally occur only if more saved resources existed to fund them than actually do. Continuing to force interest rates down only perpetuates the allocation of capital into outlets that the economy's current resource base cannot sustain.

 

Fiscal stimulus, meanwhile, merely diverts resources from the productive sector in order to fund money-losing enterprises arbitrarily chosen by government. These artificial expenditures, moreover, interfere with the market's attempt to sort out genuine demand from bubble demand. “Stimulus” spending can in fact keep firms (construction companies, for example) in business that for the sake of genuine economic health need to be liquidated so their resources can be more sensibly employed in more urgently demanded lines of production.

 

F.A. Hayek won the Nobel Prize for his work showing how the central bank's intervention into the economy gives rise to the boom-bust cycle, making us feel prosperous until we suffer the inevitable crash. Most Americans know nothing about Hayek's theory (known as the Austrian theory of the business cycle), and are therefore easy prey for the quacks who blame the market for problems caused by the manipulation of money and credit. The artificial booms the Fed provokes, wrote economist Henry Hazlitt decades ago, must end “in a crisis and a slump, and…worse than the slump itself may be the public delusion that the slump has been caused, not by the previous inflation, but by the inherent defects of 'capitalism.'”

 

http://www.tomwoods.com/articles/

 

So you see, the free market is not free. I know this is not something most people understand or are aware of because we are taught nothing of the Federal Reserve and the consequences of its' actions in school other than it was a part of the Progressive Era and it was supposed to be good for us. It wasn't. The people were sold a bill of goods at the time by the banking establishment through their allies in Congress. I've posted plenty here that explains this. I hope this helps you understand what I am talking about in regards to the free market not being free. It goes beyond the idea that you can make and sell anything. It has to do with the artificial stimulus forced upon the markets by central bank intervention in times of downturn that creates a false prosperity that causes the booms and the inevitable busts that follow. Until that stops nothing will change.

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Fiscal stimulus, meanwhile, merely diverts resources from the productive sector in order to fund money-losing enterprises arbitrarily chosen by government. These artificial expenditures, moreover, interfere with the market's attempt to sort out genuine demand from bubble demand. “Stimulus” spending can in fact keep firms (construction companies, for example) in business that for the sake of genuine economic health need to be liquidated so their resources can be more sensibly employed in more urgently demanded lines of production.

 

This seems to be a pretty big misunderstanding of how a stimulus can work, and why we put it into action. The first mistake is it makes the assumption that all employment in our country, and the capital it provides individuals to spend on the market is private. The assumption that the garnered stimulus money is diverted from productive channels undermines several of your conservative economic perspectives; namely that the government uses capital that isn't really there. In other words the stimulus didn't mean that Bush, or Obama raped the pocket books of businesses that were still above water. They diverted and borrowed for better or worse.

 

 

I feel compelled to bring up the successes of the stimulus in my state of CO, which employed a massive amount of money designed for "shovel ready projects". Because CO has a well organized transportation department, we were ready to collect alot more of those funds than other states. The money put qualified workers to work updating our outgrown highway system, renewing urban streets, and extending our commuter rail project into strategic areas. The Denver metro area is still being improved, and the stimulus will be a boost to our infrastructure for decades.

 

While it would be an overstatement to say that it is the reason, I believe it is one of many reasons that CO weathered the recession a good deal better than several other states.

 

Finally, the argument about whether or not our market is truly free is a moot point. It is searching for a definitive polarity inside a continuum. The United States has prospered as a social democracy, which leans a little harder towards the free market, for centuries. Our economy has enjoyed a stabilizer in the complex of people who are employed in providing essential services that allow our country to function. A critique stating that we do not have a free market is about as wise as critiquing Norway as a country that doesn't have a true socialism.

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new-new-deal.jpeg

 

Speaking of the Recovery, I am about finished with the above book. Informative and well written. He writes about all the successes and failures. Did bring up a lot of bad memories,though.

 

Nice interview with author below.

 

http://www.slate.com/articles/news_and_politics/interrogation/2012/08/the_new_new_deal_a_book_argues_that_president_obama_s_stimulus_has_been_an_astonishing_success.html

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That's just alot of bullshit and exactly the answer I was expecting.

 

LouieB

 

I actually thought you would give this some serious consideration. This explanation and the interview about how the Fed funds war as well as the 12 year old girl video pretty much says it all. It is pretty simple really and makes perfect sense. Stimulus is a temporary fix that takes money out of productive pursuits...

 

"Stimulus" Spending Doesn't Work — Or Make Sense

On a more basic level, the jobs that government creates are unprofitable — that is, they consume more resources than they produce. If that weren't true, then the profit-seeking private sector would be funding them already. In fact, it's impossible for government to know whether it is engaged in profitable, productive activity, since it lacks a profit-and-loss mechanism whereby it can calculate whether it is making efficient use of resources. "Stimulus" packages therefore drain the productive economy of resources in order to subsidize money-losing ventures. Because these money-losing ventures get resources shifted to them, fewer resources are available for use by the productive economy; and since the government sector uses resources less efficiently than the private sector, the net result is a decline in wealth — a fact no magical "multiplier" effect can overcome.

The more sophisticated Keynesians will come back with the argument that government stimulus can kick-start "idle resources" that weren't being employed in any production process anyway. But how can it do that? Our idle resources include, for instance, some of our automobile production capacity, some construction capacity, some of our financial services sector, and the like, as well as a wide variety of types of labor. Now Obama's stimulus package includes (for example) money to weatherize 2 million American homes. How can weatherizing homes put these and only these idle resources to work? It can't, of course. And are there enough unemployed weatherizers to take these jobs, or will we be drawing labor from its current uses in the private sector? The question answers itself. In other words, the weatherizing job will have to draw from already employed factors of production, thus redirecting them to a less urgently demanded use than the one the market was already employing them for. That does not create "stimulus." It destroys value and wealth. And if the claim is that the money spent on weatherizing homes will eventually trickle down, somehow, to the unemployed workers in these other fields, it is hard to take such a crude mechanism seriously.

If we did happen to have enough unemployed weatherizers to weatherize people's homes, then why would we need Obama's stimulus package to force laborers and customers together? If prices were allowed to adjust freely, people wanting their homes weatherized would find the weatherizers on their own, and thus the effort to "stimulate" these transactions would become superfluous.

 

 

What Should Be Done vs. What Will Be Done

 

For the sake of American prosperity, Obama should consider the one path the political establishment has not considered: allowing the free market to allocate capital and labor, to price assets, and to choose winners and losers. The recovery would be swift in coming, as it always is when the market is allowed to operate. And economic success would once again be the product of hard work and entrepreneurial skill, not cultivating political connections in Washington.

As usual, the politicians have other ideas: bail everyone out, try to reinflate the bubble, squander more resources on arbitrary projects, reward borrowing and debt, and create lots of new money. Every one of these measures props up bubble activities and undermines genuine wealth-generating activities. The bailouts allocate capital away from the prudent and competent and toward the imprudent and incompetent, from the wealth creators to the wealth destroyers. The "fiscal stimulus" fritters away scarce resources on money-losing (that is, value-destroying) projects. Making debt more attractive encourages more of the behavior that brought us to this unhappy impasse, thereby guaranteeing a worse bust in the future. Printing up new money does not magically create new real resources in the economy. It merely redistributes the existing pool of resources into a configuration that does not correspond to real consumer demand. It diverts resources into artificial activities with which genuinely wealth-generating activities are then forced to compete.

In short, the president's program aggravates every existing problem in the American economy, and will make genuine recovery all the longer in coming. Whether we measure these policies against history or sound economic theory, the verdict is the same: the president has chosen a path that is guaranteed to fail. We were already on that path before his election. Only if President Obama genuinely changes course, and allows the free economy to restore the prosperity that so much previous intervention served to undermine, would we really have change we can believe in.

 

The fact that we have spent billions upon billions and we still have a crisis that is worse than it was four years ago proves throwing more money at the problem isn't going to work. Government does not create jobs. The private sector does. The best the government can do is expropriate wealth from the private sector and redistribute it.

 

Oklahoma model wins in clash of economic visions

 

The report found Oklahoma state government has slashed the number of its full-time workers by more than 2,000 and reduced monthly payroll by $4.2 million. Yet Oklahoma's July unemployment rate was 4.9 percent, among the lowest in the nation.

If Obama's view of economic growth were correct, then Oklahoma should be in the job-creation cellar by now. It's not. In fact, even though Oklahoma's July jobless rate increased for the first time in nearly a year, the state's rate of employment growth over the past year topped 3 percent. Lynn Gray, chief economist for the Oklahoma Employment Security Commission, notes that Oklahoma hasn't experienced an annual rate of employment growth that strong since 1984.

Those statistics must bewilder Obama. Much of his focus in office has been on boosting the number of government employees and protecting their jobs rather than unleashing the private economy. A huge share of stimulus money sent to the states was to prevent state worker layoffs, yet the national unemployment rate remains above 8 percent. On the other hand, Obama's tax and regulatory policies hinder private business growth and job creation.

Oklahoma policymakers responded to the recession by right-sizing government and reducing the burden on the private sector. The results suggest that economic approach is superior to Obama's theories.

 

 

Look, I can go on for ever about this. I once believed what you guys hope is true, that the government can spend its' way out of debt. It ain't gonna happen. They are running out of fixes and their efforts to kick the can down the road will result in a greater crisis than if the leaders with their failed economic policies you guys all seem to give blind allegiance to, faced the issues and made the hard choices. Look up the Depression of 1920 and see how we got out of that one. There are lessons to be learned from it. I bet you never heard of it. I wonder why?

 

 

The Forgotten Depression of 1920

 

Not surprisingly, many modern economists who have studied the depression of 1920–1921 have been unable to explain how the recovery could have been so swift and sweeping even though the federal government and the Federal Reserve refrained from employing any of the macroeconomic tools — public works spending, government deficits, and inflationary monetary policy — that conventional wisdom now recommends as the solution to economic slowdowns. The Keynesian economist Robert A. Gordon admitted that "government policy to moderate the depression and speed recovery was minimal. The Federal Reserve authorities were largely passive.… Despite the absence of a stimulative government policy, however, recovery was not long delayed."

 

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The causes and solutions for the Depression of 1920- 1921 seem to contradict your economic leanings as much as they affirm them. The three main causes of it were the pendulum fluctuation of inflation/deflation thanks to the formerly used gold standard, a major bump in the workforce population because of the ending of a war, and the Federal Reserve raising interest rates (the opposite of what they have been doing lately)

 

One of the major solutions to the depression was to expand the tax base to recover revenue, and have the Fed decrease interest rates.

 

All said, it can be compared to the recent recession because the Fed was involved and it was an economic depression. It makes for a pretty sloppy direct comparison to our current situation because the dynamics are so utterly different.

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The Fed did nothing. There was no stimulus. Taxes were reduced and the debt was slashed by a third. And people went back to work in a very short period of time. The depression ended. Did I miss something?

 

The federal government did not do what Keynesian economists ever since have urged it to do: run unbalanced budgets and prime the pump through increased expenditures. Rather, there prevailed the old-fashioned view that government should keep taxation and spending low and reduce the public debt.

 

I know its' hard to accept anything I post here. You have all gotten so used to attacking everything I bring to the table but your knee-jerk reaction indicates you didn't even read the article or at least grasp what it was saying. It is very relevant to a solution for today's problems. Unfortunately, the injections of monetary stimulus, the Fed. intervention and manipulation of the interest rate and money supply are beyond anything that has ever been seen in world history. I don't think even what I am calling for will work at this point. It's too late in the game IMO. The inevitable fall will be very severe indeed. Time will tell.

 

Kind of presidential related news. One of my old liberal heroes bits the dust...

 

George McGovern dies; lost 1972 presidential bid

 

http://hosted.ap.org/dynamic/stories/U/US_OBIT_MCGOVERN?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2012-10-21-08-20-23

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The Fed lowered the interest rates that they had previously hiked which had been one of the causes for the depression. While its true they lowered taxes, they collected more revenue by broadening the tax base.

 

Hoover (then commerce secretary) added to the safety net for out of work people. They also drafted the Emergency Tariff of 1921 to subsidize farmers whose crops were less marketable in Europe than previous eras. They also raised taxes on imported agricultural goods. It was a protectionist measure which heightened the nationalization of the global market.

 

What you aren't getting is that reducing taxes is also a form of stimulus. George Bush did it some years ago to minimal effect.

 

Again, it was such a different economic situation that comparisons to the current one are a bit silly.

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You don't really need to respond to me Sparky. Until you start discussing this without quoting people who are suspect I see no reason to discuss these issues. Besides this election is NOT about the Fed. The Fed is 100 years old, it isn't going away. Clearly there are always things about every bueaucracy that need to be fixed, that goes without saying. Engage the other folks here in this convo. Kudos to lost highway for keeping up. Once again (broken record time) I work for the government I know lots of things need fixing.

 

George McGovern was certainly a heroic figure in many respects, but lost in a huge landslide to Nixon, in fact one of the biggest landslides of my lifetime. I am surprised he is one of your heros since he was hardly a libertarian, he was a big government liberal all the way. He was really big on government programs and insttumental in ramping up all kind of programs that the libertarians and the right now want to dump. Yea, he was anti-war though..

 

LouieB

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Lowering taxes or getting rid of them altogether gives the people their money back to spend or invest it as they choose. That is good. The less the taxes are the better. That is a significant aspect of libertarianism. The government actually did the right thing in allowing people to keep their money. Look what they did with it. You call that government intervention? Those taxes which were raised by government in the first place should have been lower. They realized the harm in keeping them so high and made the proper correction. When did I ever advocate higher taxes?

 

Lou, I was a Liberal at one time but I grew out of it. :thumbup I address you because you address me. I'm only trying to be polite.

 

In general, the art of government consists in taking as much money as possible from one party of the citizens to give to the other.

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I agree, less taxes are good. But after two wars that were not paid for, resulting in a huge debt, we gotta do something. We can cut back social programs and support systems or we can pay up and move on.

 

So you grew out of Liberalism?? I guess McGovern is now an anathema to you? There were few people on the 60s or 70s that were more liberal than he was.

 

I am really surprised you harp on the Fed so much. How about NAFTA and all those pesky trade agreements? Start harping on those for awhile. I would think that is really the issue with actual free trade.

 

LouieB

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Lowering taxes or getting rid of them altogether gives the people their money back to spend or invest it as they choose. That is good. The less the taxes are the better.

 

Except it didn't work. The Bush tax rebates didn't have their intended effect on the economy. They also lowered revenue which added to the deficit that was beginning to brew under a couple of middle east snafu's.

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