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To all conservatives and moderates, what were on people's minds when

  1. gmwilliams profile image86
    gmwilliamsposted 2 years ago

    http://s2.hubimg.com/u/8899025_f520.jpg
    they saw President Barack Obama as the president of promise and reformation?   During President Obama's administration, unemployment and national debt is the HIGHEST it has been.  More and more civil liberties are being eroded. Despite Obama's dismal and horrific record, Americans voted for him TWICE!  What are people "thinking"?  America as we know it has been HAD and totally BAMBOOZLED!

    1. rhamson profile image75
      rhamsonposted 2 years ago in reply to this

      The choices in both elections falls clearly on the GOP as they offered even candidates most Republicans felt queasy about against a consummate politician. With McCain and then Romney the GOP offered candidates who clearly did not understand the constituency and lost as a result. Was America fooled by an incredibly gifted orator and political strategist? Probably. Did the GOP offer a clearly better choice? The results are in the proof of the pudding. The real question to ask is what are they going to do about Hillary? Benghazi? Whitewater? Vince Foster? And ignore the issues as a result. They will get more of the same unless they wise up.

      1. 60
        retief2000posted 2 years ago in reply to this

        +

    2. wba108@yahoo.com profile image85
      wba108@yahoo.composted 2 years ago in reply to this

      The only reason any liberal can get elected in America, is because of the decay of christian morals and a profound ignorance of history and the Constitution. The real truth is that a good man is not easy to con but a con man can be conned because of his vices. Why was a man with no experience in governing elected when America was and is in a great crisis? Well Obama is very charismatic, intelligent and well spoken. And also the novelty of electing the first black president was more than a lot of people could resist.

    3. tsmog profile image85
      tsmogposted 2 years ago in reply to this

      Interesting question and I had a curious hair rise up and looked about with recent Calif activity with politics.

      Data from Info Please sourced to New York Times
      2008 Election
      Popular Vote
      Obama - 66,882,230
      McCain - 58,343,671
      Total 125,225,901

      2012 Election
      Obama - 62,611,250
      Romney - 59,134,475
      Total 121,745,725

      Difference 3,480,176 less total votes. Where did they go? Were there that many deaths? Did they vote another party? How many simply abstained?

      Difference by %
      Democrat @ 6% Less votes between 2008 & 2012
      Republican @ 1% Increase in votes between 2008 & 2012
      Overall difference 3% less votes Total

      Yes, old news . . . but who elected who?

      Electoral College
      Democrats increased from 332 (2008) to 365 (2012)
      Republicans decreased from 206 (2008) to 173 (2012)
      Difference is 33 vote gain by Obama or +6%
      (Calif = 55 = Democratic)

      The 'What if' is Romney 62,614,651 if those 'did not votes were his'. That would mean he would have the the popular vote by 3,401. "Of Course" that is a big 'What if'!

      I see it as a minority of voters changed destiny with the popular vote. The minority being those who did not vote along a party line. The question is would that have changed the 'Electoral College' voting? That said the vote that changed destiny could be said was the vote of the states and their destiny(s) were overwhelmingly greater than the populous. Or, what statement was made regarding the state of affairs of individual states contrasting the US?

      So, that brings up the issue of dividing California (55 Electoral votes, 2 senators, and 53 representatives) into 6 separate states. Initiative #13-0063 on the November 2014 ballot is at issue for California as the petitions have been pressed and flying strong.

      How would that affect the next presidential election and strengths in congress. There would still be near the same representatives, yet party affiliation may change by district. There would be 12 senators or the addition of 10. And, the electoral college would change too.

    4. bethperry profile image88
      bethperryposted 2 years ago in reply to this

      I think during the first election, those that voted for Obama saw him as young, unspoiled by wealth, impassioned toward doing the right thing and a fresh alternative to the Bush royal house. During the second election, I think those that tapped the winning votes for him were too busy enjoying the afterlife to care who had pilfered the info off their voter registration cards.

    5. oceansnsunsets profile image88
      oceansnsunsetsposted 2 years ago in reply to this

      I remember several years back when people were saying this was going to happen, and everyone thought they were just being racist, hateful, or crazy.  None of us can just believe what we are told anymore, not by just anyone. 

      The scary part about it is that people are not using critical thinking in much of anything anymore.  So the "ear tickling" stuff is very appealing.  People want what they want to be true so often over what actually is.  It is hurting all of us as a country and not helping the world either.

  2. Zelkiiro profile image84
    Zelkiiroposted 2 years ago

    We were thinking, "Okay, he's not great and I kinda don't want to vote for him. What's the Republican party offering--OH SH*T NOPE NOPE NOPE NOPE NOPE NOPE NOPE *vote Obama*"

    1. gmwilliams profile image86
      gmwilliamsposted 2 years ago in reply to this

      Uh huh, understand, so Obama was the lesser of the two evils, so let's vote for him to see how it will go.   Oops, Obama did not do so well,oops, there it IS!

    2. Superkev profile image87
      Superkevposted 2 years ago in reply to this

      So Zelkiiro, what was it that got your vote? Was it the record debt? The persistently high unemployment over the length of his first term? High gas prices? 47 million people on food stamps? The lowest labor force participation since the great depression? The billions of taxpayer dollars lost to his "green investments"? The shovel ready jobs that weren't or the recovery summer that wasn't?

      Seriously, what really earned your vote for Obama? I mean with that list of achievements I know it might be hard to pick just one, but try ok?

      And you can't choose Obamacare because the election was before that glorious and successful piece of work really rolled out.

      1. Zelkiiro profile image84
        Zelkiiroposted 2 years ago in reply to this

        The fact that Mitt "I'd sell my mother to a whorehouse for $5 and a ham sandwich" Romney was his opponent.

        1. 60
          retief2000posted 2 years ago in reply to this

          Cogent reasoning as always. I wonder how much he would have received for the sale of the XL Pipeline, Barrack only got $100 million from billionaire phony and hypocritical, BIGOIL polluter Tom Steyer.  Such a deep and reasonable argument you have there.  Since Barack's mother is dead we will never know how much Tom Steyer might have paid for her

        2. wba108@yahoo.com profile image85
          wba108@yahoo.composted 2 years ago in reply to this

          Why because Romney is a business man, is that what makes him evil? That's a bunch of liberal non sense. All Obama ever did for a living is rabble rouse and run for office, Romney actually ran a business and governed a state.

          1. Zelkiiro profile image84
            Zelkiiroposted 2 years ago in reply to this

            Nope. He was a businessman who frequently flip-flopped about his policies just to try to appeal to the masses, instead of relying on his actual policies (whatever they might have been, we'll never know) to win people over.

            Same thing happened in 2004 with legendary flip-flopper John Kerry, and everyone gave him sh!t for that. Why so surprised that Mitt Romney receives it, too?

            1. 60
              retief2000posted 2 years ago in reply to this

              1) Closing Guantanamo - 5 years ago
              https://www.youtube.com/watch?v=oW65vlzLWHg

              2)End military tribunals - 5 years ago
              https://www.youtube.com/watch?v=zwOLbZ1MEHQ

              3)End Rendition
              https://www.youtube.com/watch?v=m3VYvSJKfIY

              4)Limited Presidential Power - to conduct an unauthorized war(Libya)

              5)                                           - to conduct surveillance(NSA)

              6)                                           - to issue signing statements(NDAA)

              7)                                           - to hold Americans as unlawful combatants( or kill them)

              8)                                           -to ignore human rights treaties (http://www.kearneyhub.com/opinions/nati … 963f4.html)

              9)                                           - to ignore Habeas Corpus
              (http://www.salon.com/2010/05/21/bagram_6/)

              10)                                          - to do all the things covered by the Patriot Act
              (http://www.huffingtonpost.com/2011/05/2 … 67851.html)

              ALL from one interview - http://www.boston.com/news/politics/200 … A/ObamaQA/

              11) Put anti-missile systems in Poland and Czech Republic - 5 years ago
              http://www.whitehouse.gov/the_press_off … Delivered/

              12) Hold Sudan accountable for Darfur Genocide - 10 years ago
              http://blogs.telegraph.co.uk/news/nileg … -in-sudan/

              13) Support national sovereignty in Europe - 5 years ago
              "Hillary Clinton described the Lisbon Treaty, a blueprint for a European federal superstate, as “a major milestone in our world’s history”, and Obama's Ambassador to London, Louis Susman, told a group of MEPs in Brussels that “all key issues must run through Europe.”"
              http://blogs.telegraph.co.uk/news/nileg … lip-flops/

              14) Restore America's global standing - http://www.bbc.com/news/world-middle-east-23721918

              15) Reinvigorate NASA - http://www.washingtonpost.com/wp-dyn/co … 02810.html



              Obama has been a lying disaster. I wonder what Romney flip-flop compares to any one of Obama's?

              1. rhamson profile image75
                rhamsonposted 2 years ago in reply to this

                Hindsight is always 20/20. What makes you think Romney would have handled any of it differently? The GOP was so adamant about backing Bush's policies that who could believe anything they were saying. Is Obama any good? Who knows with the partisan bickering and failed policies due to it but you can't know that Romney and his cronies would have been any better. The funny thing is that these arguments always revolve around what power the president has to effect changes while congress is always in the mix to help really screw it up. They are politicians with a totally separate agenda that does not include us!

                1. 60
                  retief2000posted 2 years ago in reply to this

                  You mean like the legislature in Massachusetts that added its own little flare to Romneycare?  Of course Romney would have been different.  For one thing there would have been much less name calling and pouting.

                  1. rhamson profile image75
                    rhamsonposted 2 years ago in reply to this

                    "For one thing there would have been much less name calling and pouting." and less transparency and special interest and etc.........  Don't you understand that they are all cut from the same cloth now. Where are the Lincoln's, Adams's and Washington's anymore? They are dead and gone as the billion dollar campaigns are run and rewarding those that donate. Romney was just another tool of the GOP as was Obama of the Liberal Democrats. Until the money is out of the election process we will encounter more of the same elite candidates bankrolled by the very rich who have their own agendas.

                2. Superkev profile image87
                  Superkevposted 2 years ago in reply to this

                  Being better than Obama is a pretty low bar don't you think?

                  By any possible metric the man is a failure as president, that he had not one whit of experience as an executive or a leader should have been more than a clue, especially after the whole nation being witness to his first term.

                  1. 60
                    retief2000posted 2 years ago in reply to this

                    +

                    I am not convinced that he is such a great speaker or all that bright and considering his callous disregard for his own aunt, all that compassionate.

                  2. rhamson profile image75
                    rhamsonposted 2 years ago in reply to this

                    I don't know if what you say is entirely accurate as a leader but he did address the economic disaster with the exact opposite that Romney was spouting. Hoover was in charge and said let the markets control the destiny of the economy and did nothing to prevent it. One of Romney's main proposals was to rescind the Dodd-Frank Act that regulated investment banking in:
                    1.The consolidation of regulatory agencies, elimination of the national thrift charter, and new oversight council to evaluate systemic risk;
                    2.Comprehensive regulation of financial markets, including increased transparency of derivatives (bringing them onto exchanges);
                    3.Consumer protection reforms including a new consumer protection agency and uniform standards for "plain vanilla" products as well as strengthened investor protection;
                    4.Tools for financial crises, including a "resolution regime" complementing the existing Federal Deposit Insurance Corporation (FDIC) authority to allow for orderly winding down of bankrupt firms, and including a proposal that the Federal Reserve (the "Fed") receive authorization from the Treasury for extensions of credit in "unusual or exigent circumstances";
                    5.Various measures aimed at increasing international standards and cooperation including proposals related to improved accounting and tightened regulation of credit rating agencies.

                    The repeal of this would send us immediately back on a track towards the depression the Glass-Steagal act was created to protect us from another depression. That was repealed in 1999 which paved the way for the banks to become too big to fail.

                    Romney wanted to repeat the past with the economy and that was a shame as I thought he had some good ideas beyond this.

                  3. rhamson profile image75
                    rhamsonposted 2 years ago in reply to this

                    He may be a failure as a leader but as a politician he rates among the best. Besides we got what was presented by the elite who bankrolled him, a great strategist and politician. The proof is that he got elected twice and won some and bamboozled others.

        3. rhamson profile image75
          rhamsonposted 2 years ago in reply to this

          While I voted for Obama I did not like the choices presented me. Obama was at least not as immersed in executive politics as Romney but possessed the savvy and knowhow to assemble a good group of advisors and run a successful campaign. On the other hand Romney held no clout with the constituency with regards to relating on the masses level. Romney also had a cloud of oligarchic backing with his ties to Bain Capital that was murky in its definitions of who was in charge and what decisions were whose. Bain Capital that oversaw many a takeover and debt loaded sell off of many companies was what concerned many and therefore labeled him as a corporate sell out in many liberal and independents minds.

            http://www.politifact.com/truth-o-meter … in-romney/

  3. 84
    Education Answerposted 2 years ago

    Here's how great Obamacare is:

    My family and I have health insurance.  I pay for it through my work.  We were just given notice that our insurance premium will increase quite substantially, as it has four of the last five years.  I decided to shop around to see if I could get a better deal.  That seems reasonable, right?

    Because of Obamacare, I'm not permitted to change insurance plans now.  If you have existing insurance, you're not allowed to change until the next Obamacare open enrollment, starting next November.  This is America?  Since when can't I shop for insurance?  Now, I have to find a way to pay for insurance I can't really afford.  There's something wrong with a system that makes you keep insurance that is overpriced and won't let you comparison shop until you're given permission by the federal government.  My other option is to drop existing insurance coverage for my family and pay the tax penalty for having no insurance.  I HATE Obama"care."

  4. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    Two points here....  first, you said yourself that your premiums had increased substantially in four of the last five years - so you can't blame the ACA for the increase, as it was likely to happen anyway.  Second, all health insurance policies have a period of open enrollment, and they have for years.  The only time you have ever been able to get new insurance in the middle of the year is when you get a new job (or become eligible in your present job).  And if you ever wanted to change or upgrade your employer-provided insurance plan, you probably had to do so before the new year.  So you can't blame the ACA for that, either. 

    Not as much has changed as you think.

    1. 84
      Education Answerposted 2 years ago in reply to this

      ". . . so you can't blame the ACA for the increase,"

      I didn't say Obamacare is responsible for all of those increases.  However, health insurance has increased directly because of Obamacare.  That is a fact.  Somebody has to pay extra to make sure that some pay less.  Insurance companies aren't going to just cut their premiums, because it's the right thing to do.  Somebody has to pay, healthy people and the middle class. 

      "The only time you have ever been able to get new insurance in the middle of the year is when you get a new job."

      According to six different insurance agents and several articles, that is entirely false.  Yes, you could get insurance, at any time of the year, prior to Obamacare and not just when you were fired, had a baby, or found a new job.  Obamacare changed that and made it more difficult for people to get insurance.  Here's an article that addresses the issue.  If you don't like this article, I can provide other sources.  Better yet, call an insurance agent.  You'll find that you could get insurance at any time of the year prior to Obamacare.

      "Until now, customers could walk into an insurance office or go online to buy standard health care coverage any time of year. Not anymore.

      Many people who didn't sign up during the government's open enrollment period that ended Monday will soon find it difficult or impossible to get insured this year, even if they go directly to a private company and money is no object. For some it's already too late."

      http://www.foxnews.com/politics/2014/04 … ear-round/

      Obamacare makes insurance more expensive for millions of people; young, healthy people and the middle class will now pay more than their fair share.  Obamacare makes it more difficult for some to get insurance.  It's okay though, because I can keep my doctor, right?

    2. 60
      retief2000posted 2 years ago in reply to this

      The market place for health insurance has been severely regulated for years. Medicare and Medicaid had already distorted the cost and availability of medical care. There hasn't been a government distortion free market place in either health insurance or health care since the 1960's - or even as far back as the 1940's when employers started offering any number of perquisites to retain employees because the Federal Government froze wages while the supply of labor contracted.  When the government insinuates itself into economic decisions it distorts those decisions.

      One need only look at other complex medical care that is not covered by insurance or government regulation - outside of safety - to see that the market works when left to do so.  Vision correction and cosmetic procedures are far less controlled and typically not paid for by insurance, government or private, yet the availability increases and the cost declines for both types of medical care. Why?

      Demand is up, as is supply, as the population ages and doctors flee the restrictive and burdensome government controlled market.

    3. tsmog profile image85
      tsmogposted 2 years ago in reply to this

      Are you referring only to Employer offered plans vs. Individual plan purchase? I agree regarding employer plan qualifiers. I disagree with individual application and plan purchase having been regulated in the past.

      1. JohnfrmCleveland profile image80
        JohnfrmClevelandposted 2 years ago in reply to this

        It's been a while since I had to buy insurance a la carte, as I have been fortunate enough to have had employer-subsidized insurance policies (and college-subsidized policies, too), but in my experience, I had to wait for months (while I paid premiums) before actual coverage would kick in.  The exception was at the very end of the year, when there was "open enrollment," and the waiting period was waived. 

        My other experience is through clients (I'm a divorce attorney), who always have had trouble getting health insurance if and when they lost access to their spouse's plan.  In my experience, it is not possible to simply buy a health insurance policy and be immediately covered, as when you buy auto insurance.  Maybe the recent changes in the laws have improved things, I don't know.

        1. tsmog profile image85
          tsmogposted 2 years ago in reply to this

          I am not sure, so a IMHO. When acquiring work having a disability I shopped and do not remember a waiting period told to me. Cost was prohibitive. Recently I elected Cobra because of market policies being cost prohibitive. That was expensive too as the former employer paid 50%. A quick hike in allocated personal budget. Yet, I needed it with a disability, medications, and a recommended operations, of which were approved and very expensive.

          Also, now on disability (state) in Calif with no income indicated with earnings it kicks the applicant to Medical - state program, while declaring an option for private is kinda' not allowed. There website does not allow shopping to occur. It prevents that unless you change the income to near $20K or about. Savings would last until a new job for a private carrier. But, medical will not provide the quality health care I have received in the past.

  5. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    From your source: 

    >>The federal law doesn't prevent companies from selling policies to everyone all year. But insurers consider it too risky now that the law prohibits them from rejecting people in poor health.

    "If you didn't have an open enrollment period, you would have people who would potentially enroll when they get sick and dis-enroll when they get better," said Chris Stenrud, spokesman for insurer Kaiser Permanente. "The only insured people would be sick people, which would make insurance unaffordable for everyone." <<

    It is not the ACA preventing insurance companies from selling you insurance.  They are just afraid of losing money, as always.  Before legislation forced them to cover everybody, insurance companies wouldn't cover you if you were sick or had preexisting conditions (or, they just made it prohibitively expensive).  It has never been cheap or easy for an individual to buy health insurance in this country.

    You are looking back as if we moved away from the good ol' days, the Golden Age of healthcare insurance.  You have a short memory, because healthcare insurance was a huge mess (and getting worse every year).  Employers were paying higher premiums, too.  The percentage of people covered by employer-subsidized insurance was going down, and insurance was unaffordable for individuals. 

    As for your contention that "somebody has to pay more so that others can pay less," that is actually not true.  The Feds can pay for this (and they are paying for much of it) with deficit spending.  And no, nobody has to "pay that back."

    You have very little to complain about.  Your costs always went up anyway.  Look around and appreciate that the less fortunate people around you, the ones that ring you up at the store or cook your lunch, can now get affordable, subsidized health insurance for the first time in their lives.

    1. 84
      Education Answerposted 2 years ago in reply to this

      One of the insurance agents I talked to was pretty depressed.  She said that her livelihood has been largely destroyed, because now she can't sell insurance until the next Obamacare open enrollment. Her job is now going to be a feast-or-famine kind of job. She needs a good laugh.  I think I'll call her and read your post. 

      http://www.chrisjacobshc.com/wp-content/uploads/2012/06/Kaiser-Premiums-2011.bmp

      Please, I urge you to call an insurance agent, any insurance agent.  You'll find that Obamacare has increased insurance premiums, and you'll find that it has also made it much more difficult for people to change insurance plans.

      I have a lot to complain about.  My insurance DOES cost more because of Obamacare, and yes, Obamacare has made it more difficult for me to change insurance. 

      You said, "The Feds can pay for this (and they are paying for much of it) with deficit spending.  And no, nobody has to 'pay that back.'" That's part of the problem with the Left.  Yes, deficit spending is a problem.  EVEN if you don't intend to pay back the debt, you have to pay the interest.  If you stop paying the interest, you've defaulted.  The interest on 18 trillion dollars isn't a small sum, and that perpetual interest payment sucks our country dry, leaving less and less money to spend on important infrastructure and the taxpayers.

      "Erskine Bowles, a co-chair of the president's bipartisan deficit-reduction commission known as 'Simpson-Bowles,' has called the nation's compound interest burden one of the biggest long-term challenges facing the United States."

      "'We'll be spending over $1 trillion a year on interest by 2020. That's $1 trillion we can't spend to educate our kids or to replace our badly worn-out infrastructure,'" said Bowles at a recent forum hosted by IHS Global Insight. 'What makes it doubly bad is that trillion will be spent principally in Asia, because that's where our debt is.'"

      What's worse than that is the fact that we're paying low interest rates right now.  What happens when global interest rates increase?

      "'Interest rates have fallen through the floor,' says Baker. 'What that means is at the moment our interest burden is pretty low.'"

      "But low interest rates will eventually disappear as the economy recovers. And if investors should decide that U.S. debt is a risky investment, that would also drive interest rates up, making U.S. debt increasingly difficult to manage."

      http://www.usnews.com/news/articles/201 … -stacks-up

      1. wilderness profile image97
        wildernessposted 2 years ago in reply to this

        Now I took that "no payback" to mean the govt. can simply print the money it needs, an extra trillion a year or whatever, and mail it out in payments to doctors, nurses, hospitals, etc.

        This is a very smart move, as it will cause very high inflation, meaning more taxes taken in and more ability to pay our debt.  That it also causes hunger, despair and poverty is irrelevant; govt. can simply print more money to give out more food stamps, free housing, etc. and thus lock more people into perpetual poverty.  And what could be better than locking people into dependence on the party of entitlements?  It keeps them in power, and produces perpetual power and income to it's politicians.

        After all, it worked in 1920's Germany, didn't it?  Ending up with Hitler and WWII?

    2. 84
      Education Answerposted 2 years ago in reply to this

      "Look around and appreciate that the less fortunate people around you, the ones that ring you up at the store or cook your lunch, can now get affordable, subsidized health insurance for the first time in their lives."

      And now, in order to help pay for less fortunate people, I may be working right next to them.  After working 10 hours in my regular job, I may have to go work for a few more hours in a second job, so I can afford insurance under Obamacare.

      It seems that, now, I will be the less fortunate person.  Thank you Obamacare!

      http://thenewssucks.com/wp-content/uploads/2013/07/obamacarez-610x400.jpg

      1. wilderness profile image97
        wildernessposted 2 years ago in reply to this

        Don't bother - that "affordable, subsidized health insurance" is just that - insurance.  It is not health care and will not provide for any, either.

        I know - I'm one of those getting 100% subsidized insurance, but with a deductible so high it will bankrupt me before the insurance ever pays a dime.  As far as I'm concerned, then, it is worth exactly the same as not having insurance at all - either way I can afford a few thousand but will be bankrupted with any major bill.

  6. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    EA and Wilderness - I have some articles about the deficit that you could both learn from.  In a nutshell, governments that print money get the benefit of spending that money into the economy.  Call it seigniorage, if you like (it's a bit different).  It does not lead to inflation.  And Germany didn't go broke printing money, they printed money in response to going broke.  They owed war reparations, in gold.  Next topic...

    Interest rates on govt. bonds do not go up and down with "global interest rates" (which do not exist).  The Fed sets the rate by participating in the bond auctions.  Not that it would matter, because it costs the govt. nothing to create the dollars to pay the interest.  Next....

    Sorry you guys have such crappy health insurance situations, but I doubt they would be any better than they were pre-ACA.  Wilderness, if you are getting 100% subsidized insurance, what did you have before this?  Nothing?

    Finally, while I never like to hear about anybody (the insurance agent) hitting hard times, I'm not nearly as concerned with keeping insurance companies rich as I am with making healthcare available to everyone that needs it.  The old system wasn't coming close.  I personally would have preferred single-payer, but Republicans killed that dream long ago.  (Probably at the behest of the insurance companies.)

    ***********

    It strikes me that a lot of this complaining revolves around money - higher costs, higher taxes, and higher govt. spending.  The solution to all of this is, brace yourselves, higher government spending.  You both think it's a bad thing, that the govt. is like a household, and when they print dollars, it's like you or I using a credit card.  That is not even close to being correct.  That kind of thinking, though, has dominated for the past 40-50 years, and a lot of it can be blamed on Milton Friedman - a smart guy, but wrong about the economy - he thought it was all about the number of dollars.  Look at the past 35 years, since Reagan really started to deficit spend heavily - we don't have high inflation; we don't have high interest rates; the economy is doing pretty well (except for providing jobs); and basically everything that those Friedmanite economists have been afraid of has turned out to be wrong.  Yet an irrational fear of deficit spending still drives policy, because it's still what most people believe, and they vote accordingly. 

    You are both in favor of cutting government spending, which obviously hurts a lot of people.  But why?  None of your fears have been borne out, after 35+ years.  It's time to re-examine your beliefs about the economy.  This self-imposed austerity just isn't necessary.

    1. wilderness profile image97
      wildernessposted 2 years ago in reply to this

      Sorry, Germany had raging hyperinflation before it paid the first dollar of war debt.  Yes, they were broke, even more so that the US is, but it was only made worse by printing extra money.  As it would be here - any economist worth anything could (and would) tell you that indiscriminate of money printing is a road to disaster.

      Insurance - I had none that would help me pay any health care bill.  Which is what I have now - after going bankrupt before meeting the deductible I will no longer own any money, so anything paid by the insurance company won't help me at all.  The Affordable Care Act produced affordable (free) insurance in my case, but no affordable care at all.  And, after examining the insurance plans in my state, I very highly doubt that any of them are any different; it will take a rich person indeed to cover the costs of any major care.

      And yes, govt. spending badly needs cut because the money isn't there to be spent.  Despite what you claim, the govt. cannot continue to borrow money without paying interest AND principle back, neither of which it has.  And neither of which can be simply indiscriminately printed or created by some other magic. 

      Now if you could magically erase all govt. debt - it would certainly be time to simply eliminate all medical insurance and make all care bills paid by government.  We would then have the money to do that.

    2. 84
      Education Answerposted 2 years ago in reply to this

      Your policy is to let the good times roll, to print, borrow, grow government, and pretend that none of this matters?  Are you from Greece?

      http://t2.gstatic.com/images?q=tbn:ANd9GcSk7_TF54z50R16uSQa5qwsgbIElB7F8sLcGX5SO_lsBLd-b1Jx

      Actually, we're spending more, per person, than Greece was.  How did that turn out for Greece?

      My insurance poor, and I pay a lot for it.  You don't want to acknowledge that insurance premiums have increased under the debacle we call Obamacare.  Fine.  Let's talk about whether or not the insurance has improved.  The answer is a resounding. . . NO.

      Obamacare is a total failure.

      http://1.bp.blogspot.com/-HYZLFgQNW7Q/Uox5LsS9jeI/AAAAAAAABgA/MM0cd7JLaH8/s1600/d885f445c01d2009c3a2ba8eefb04254.jpg

  7. 0
    Beth37posted 2 years ago

    John, where are you from?

  8. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    Is that a serious question, Beth?

    1. 0
      Beth37posted 2 years ago in reply to this

      No. wink

  9. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    smile

  10. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    EA and Wilderness, it is obvious that neither one of you has put any sustained effort into understanding economics.  Both of you are just repeating the same old stuff we hear from journalists (who know nothing about the subject).  This is understandable - not many people are interested enough to want to do the work to learn.  But this is also the tragic part of it, because America's collective inability to understand economics is why we keep electing the idiots we elect.  Economically, we are voting ourselves a starvation diet, when there is plenty of food to be had.

    EA - Greece cannot print their own money.  They use the euro, which they have to borrow from the ECB.  You see, there is much to learn about this stuff.

    Wilderness - what makes you think that the U.S. is broke?  The fact that there are a lot of federal bonds outstanding?  Do you think that equals debt in the same sense that you or I can be in debt?  Do you think that China can demand anything but more paper for their bonds?

    1. 60
      retief2000posted 2 years ago in reply to this

      It is amusing to hear an advocate of increased government spending criticize others for failing to understand economics.  Government has no money.  It takes, inflates or borrows money, all three of which have an adverse impact on the direction and flow of money through the economy. Although China may be unlikely to "call its note," the interest paid to the Chinese on the debt they hold is sufficient to bankroll the expansion of their military. Though Greece may not be able to print its own money and must borrow from the European Central Bank, the United States government merely distorts the value of the aggregate dollars in the economy to finance spending driven by policy rather than the billions of decisions made by those who produced those dollars in the first place.

      Concentrating economic decision making in the hands of 536 people who make a few, grand policy decisions each year that are driven by political agendas and the desire for perpetual re-election is irrational when the alternative is billions of small economic decisions made everyday by millions of individuals, as well as every conceivable size business, based solely in the desire to maximize the efficient and effective use of those dollars.  How does a central economic authority gather a sufficient amount of economic information to effectively and efficiently spend money in such a way that it is superior to the micro-economic decisions of millions of consumers?

      Centrally directed economies are rubbish and concentrating vast sums in the hands of the federal government is a recipe for disaster.  You might understand that if you knew more about economics than what Paul Krugman, that phony hack, spouts.

      1. wilderness profile image97
        wildernessposted 2 years ago in reply to this

        "It is amusing to hear an advocate of increased government spending criticize others for failing to understand economics. "

        Good point.

    2. 84
      Education Answerposted 2 years ago in reply to this

      That's nice.

      Read this.

      "Second, because Greece has the physical means to create any amount of euros it wants. Indeed, by dint of repeating that Greece cannot print its own currency, the politicians and media seem to have been forgotten that the National Bank of Greece does have its own euro printing press – and this in two ways[b]:

      "[b]On one hand, it can create euros in a few "clicks" under the cover of the opaque Emergency Liquidity Assistance (ELA) program. Greece is already estimated to have created up to 96 billion euros to help its banks using the ELA.


      "On the other hand, the Greek central bank is able to turn on the printing press  the old-fashioned way. As per the EU constitutional texts, printing euro banknotes (and manufacturing coins) has been physically delegated to the national central banks, including the National Bank of Greece. The Mint of Greece (IETA) thus already prints euro banknotes. It has the latest state-of the art printing presses – it just has to keep running them when no one is looking."

      http://www.europac.net/voices/what_if_g … s_it_needs

      Greece can and does print euros.  How did that work out for them?

      "You see, there is much to learn about this stuff."

  11. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    Retief - you are wrong.  If governments do not create money, who does?  The bills in my wallet don't say "Citibank" on them.

    China cannot "call its note" on U.S. bonds.  Nobody can.  Bonds have a designated time at which they mature, and when they do, we simply exchange the mature bond for dollars.  The exchange costs our government nothing.  They exchange dollars for bonds and bonds for dollars every day.  And they produce both dollars and bonds out of thin air.  The idea that China loans us dollars demonstrates a complete lack of understanding of how bond sales work.

    Finally, your faith in the decision-making of the masses is misplaced.  People, including people as a whole, make terrible decisions all the time.  The whole idea is just more Austrian garbage that has zero basis in reality.  And calling all government spending a "centrally-directed economy" is ridiculous on its face.  Every government in the world spends money.  I suppose you think that every country now has a centrally-directed economy, too.

    1. wilderness profile image97
      wildernessposted 2 years ago in reply to this

      What is your take on why government collects taxes instead of just printing another few trillion?  Or for that matter why govt. doesn't simply give everyone a billion or so fresh dollars so they don't have to work?  We could all buy a new Italian yacht with a Rolls Royce on board, helping the economies of Italy and the UK at the same time.

    2. 60
      retief2000posted 2 years ago in reply to this

      This is all one need read to dismiss everything else you have written.

      1. 84
        Education Answerposted 2 years ago in reply to this

        I couldn't agree more.

      2. JohnfrmCleveland profile image80
        JohnfrmClevelandposted 2 years ago in reply to this

        So you have no answer then.

        Retief said:  "Government has no money.  It takes, inflates or borrows money, all three of which have an adverse impact on the direction and flow of money through the economy."

        How, then, does the number of dollars increase?  Does China print them?  Do the banks?  Where do you think dollars come from in the first place?

        The problem with your thinking is that you are starting with a political slant ("the government is bad"), and then you attempt to make the facts fit your political slant, instead of the other way around.  You would be better off learning how things actually operate, then base your political views on that (new) knowledge.

        1. 84
          Education Answerposted 2 years ago in reply to this

          The government isn't bad when it isn't bloated and irresponsible.  Of course, I don't know when that last was.

        2. 60
          retief2000posted 2 years ago in reply to this

          paper chits are not money

          1. JohnfrmCleveland profile image80
            JohnfrmClevelandposted 2 years ago in reply to this

            Go to the grocery store with some "paper chits", a credit card, and some gold bullion.  See which two methods of payment will allow you to buy groceries, then get back to me.

            1. 60
              retief2000posted 2 years ago in reply to this

              Oh, now relying on the micro-economic.  What next a reliance on aggregate consumer decision making?  I am not China and that was your point.  You have a problem understanding money.  It is okay, one cannot expect too much from lefties.

  12. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    EA - that article is talking about an illegal act, basically printing counterfeit money.  (It even said so.)  It is not relevant to the discussion.  Greece (as long as it does not go rogue and start counterfeiting euros) does indeed borrow euros.  All Eurozone countries do.  They do not get the benefit of seigniorage -  they can only spend what they can tax away or borrow.  This is a huge disadvantage, as it basically eliminates govt. deficit spending as a fiscal policy tool.

    1. 84
      Education Answerposted 2 years ago in reply to this

      It's totally relevant if Greece did it.  Greece did it, and its economy still tanked.

      The Krugman solution of minting a trillion dollar coin, printing money to pay for debt, was the laugh of the decade.  His notoriety plummeted, among both economists and the untrained, when he came up with that "winner."  You're advocating the same thing, print and spend.  With all due respect, it's not a deep thought, and it doesn't show some kind of greater analysis. 

      The theory is that countries that print their own money can not default on their debt. Tell that to Russia, Jamaica, Ecuador, Argentina, Brazil, and so many other countries that print their own currency.

  13. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    To all 3 of you - I have never understood the sheer hostility to new or different ideas when people discuss economics.  It's like discussing religion, except that there is some available data and evidence to go on. 

    After listening to politicians and pundits blather on incorrectly for 35+ years about all of the horrible things that are just about to happen if we don't stop deficit spending, why are so few people unwilling to even question the validity of these dire predictions?  Interest rates haven't gone up, inflation has remained low, the economy is still the largest on Planet Earth, yet you guys still believe the same old stuff.  That is the very definition of insanity.  Or religious faith, take your pick.

    1. wilderness profile image97
      wildernessposted 2 years ago in reply to this

      But...there is nothing new about government creating false value by printing $$ or borrowing more than we can ever pay back.  It is been the liberal dream for decades!

    2. 84
      Education Answerposted 2 years ago in reply to this

      Printing money to cover debts isn't new. 

      What does religion have to do with this?  Was it just a way to work it into the discussion?

  14. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    Wilderness - first of all, if we can print it (and we can), why on Earth would we borrow it, too?  Think it through.  We haven't "borrowed" dollars since we were on the gold standard, and new dollars cost something (we had to procure the gold) to create.  Second, what is "false value"?  A dollar is a dollar.  If you believe that the value of dollars can be somehow "diluted," you need to realize that there is not a fixed quantity of goods that are being produced.  The more dollars that are spent, the more demand there is, and the more goods that are produced.  Prices don't go up unless companies are no longer able to increase production to meet demand.

    1. wilderness profile image97
      wildernessposted 2 years ago in reply to this

      Odd - I was sure we sold bonds ("borrowed") every year.

      A dollar is a piece of paper.  It represents a certain value, which is not a piece of paper, and that value can indeed be diluted.  It has happened very nearly every year for the past 100 or so.

      If you think prices don't go up until maximum production is reached you obviously did not live through the double digit inflation of the 70's.  Prices rose even as factories closed because no one was buying.

  15. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    EA - you didn't even read your own article.  Greece did NOT do it.  They did not go rogue and start counterfeiting euros.  If that's your argument, you lose.

    Also - it was never Krugman's idea to mint the coin.  And his good reputation remains intact, btw.  You simply do not understand the mechanics of the coin - yet that does not seem to stop you from denigrating the idea.  That's typical of people who don't want to bother learning.

    Finally (and it's not a theory, it's fact), countries that print their own fiat money AND HAVE NO FOREIGN-DENOMINATED DEBTS can not be forced to default on debts DENOMINATED IN THEIR OWN CURRENCY.  All of those countries you mentioned (and others) had foreign debt, which you pay off with, guess what, foreign currencies.

    1. 84
      Education Answerposted 2 years ago in reply to this

      Are you kidding?  I don't want to learn from Krugman when he starts talking about printing trillion dollar coins.  His reputation is not secure.  Let's see a list of economists who didn't laugh at his idea and actually got on board with printing trillion dollar coins.  GOOD LUCK creating the list.

      http://thedailyshow.cc.com/videos/8tl06 … ollar-coin

      This is what the article you are referencing says:

      "Greece is already estimated to have created up to 96 billion euros to help its banks using the ELA."   

      Here's another source:

      "The new arrangement allows Greece to print T-bills and then sell them to its own banks who then pledge them to the Bank of Greece as collateral for euros. In this way, Greece has already printed 5 billion euros into existence."

      The end result is free euros.  How did the free euros work out for Greece?  What about Russia?  They don't use the euro.   How about Argentina?

  16. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    I compared your faith(s) in economic schools of thought to religion because the analogy is fitting.  You are defending the legitimacy of something that you don't understand, you have no firsthand knowledge of, and have no solid proof of.  That "something" being what you all believe will happen if we continue deficit spending.  Like scientists who carbon-dated dinosaur bones and provided solid evidence that the Bible's timeline was impossible, I tried to explain how we don't really borrow dollars and pointed out that inflation and interest rates did not actually behave as you would expect them to.  Yet, against the weight of the evidence (and with none of your own), your belief in monetarism persists.  So my analogy stands.

  17. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    Wilderness - please read my article on the gold standard.  It explains the very real difference between bond sales in gold-convertible and fiat economies.

    As to the dilution thing - if your business produces 100 loaves of bread/day (to meet demand), but is capable of producing 120 loaves/day, what happens when demand goes up?  Do you increase your prices, or do you just bake and sell more loaves?  Because if you raise your prices, the bakery down the street will undercut you every time.

    I was only a teenager during the 70's, but even so I understand that our inflation was caused by oil prices.  There was even an embargo, remember?  It certainly wasn't caused by printing too much money, because we didn't start heavy deficit spending until Reagan's presidency.

    1. wilderness profile image97
      wildernessposted 2 years ago in reply to this

      Inflation (devaluing of our money) in the 70's was driven by excessive union power as much as oil prices.  Unions demanded, and got, higher wages for no additional production, requiring raising prices.  Which caused others to also demand raises, putting them back on par with the unionized employee.  Who then wanted, and got, another raise to once more (temporarily) earning more than his neighbors.  And round and round and round.

      And yes, when demand goes up so does price.  Because the bakery down the street will see you raise yours but instead of picking up more sales by undercutting your price (and increasing production via more workers and equipment) will raise theirs as well.  Free profits for the taking, and not requiring any more company infrastructure or investment.

  18. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    Don't ever open up a bakery.  You'll be out of business in a month.

    I have NEVER heard the theory that unions caused inflation.  And I don't think I ever will again, to be honest.

    1. wilderness profile image97
      wildernessposted 2 years ago in reply to this

      Union sympathizers never think that raising costs will result in rising prices. It is always assumed that the companies will simply take it out of profits (even when those profits won't cover the raises) but somehow it never works that way.  Prices rise, causing another round of wage demands, causing another round of price increases.  It's pretty simple, really.

      I take it you are a union sympathizer, assuming that prices won't rise when labor costs go up?

    2. Quilligrapher profile image90
      Quilligrapherposted 2 years ago in reply to this

      Good evening, John. Happy to run into you here.

      Perhaps, when it comes to economics and the many causes of inflation, you may not have read all there is to read and, hence, you may not know all there is know. I know near to nothing about economics, but I do know that Wilderness did not fabricate the notion that unions in the '70s caused inflation.

      In a paper by Robert L. Hetzet, “Arthur Burns and Inflation”, the author explores the unusual inflation of the ’70 while Arthur Burns was Chairman of the Federal Open Market Committee (FOMC) of the Federal Reserve System (the Fed) from February 1970 until December 1977. When discussing Mr. Burns' inflation views as chairman, Mr. Hetzet says, “He believed that a central bank could cause inflation by monetizing government deficits but did not attribute inflation to that source in the early 1970s. Instead, he attributed it to the exercise of monopoly power by unions and large corporations.” {1}

      "Burns drew the conclusion that the contemporaneous inflation arose primarily from a rise in wages due to the exercise of monopoly power by labor unions...
      The Nixon Administration designed the wage and price controls program that began August 15, 1971, on the assumption that the monopoly power of labor unions was producing a cost-push inflation."
        {2}

      You heard it from Wilderness. You heard it again from me with a link to a verifiable source. Finally, if you follow the link and read the source, you will have heard it for a third time from the Federal Reserve Bank of Richmond Economic Quarterly.

      I think NEVER is NEVER as far off as we think and I think Wilderness would do quite well in the bakery business. smile

      Your posts are interesting, John. I enjoyed reading them.
      http://s2.hubimg.com/u/6919429.jpg
      {1}
      http://www.richmondfed.org/publications … hetzel.pdf P.23
      {2} Ibid. p.35-36

  19. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    I have no problem with unions.  They don't have much power when the demand for labor is low (like today).  We are generally better off as an economy when the demand for labor is higher and more of the economy's profits go to workers.  Unfortunately, I think those days are over. 

    Here is a chart of historical oil prices.  Between 1972 and 1979, the nominal price went up almost 7x.  Since the price of oil affects the price of just about everything else, I think it more than explains the inflation we had in 1970.  http://inflationdata.com/inflation/infl … _Table.asp

    1. wilderness profile image97
      wildernessposted 2 years ago in reply to this

      I'm aware of what oil prices did then; I worked in a gas station during the period when gas became scarce and prices rocketed.

      I'm also aware of what labor costs did, nearly always beginning with a large, strong union somewhere.  One local town near me nearly became a ghost town when the union demanded a raise the leading employer there could not afford to pay and they closed their doors.  As a union employee myself (prior to the gas crunch) we struck each year, gaining a raise big enough to make up for lost wages from striking, spread over the next year - a fine example of the value of indiscriminate union demands.

  20. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    Wilderness - sorry, I missed one of your earlier posts. 

    "What is your take on why government collects taxes instead of just printing another few trillion?"

    First of all, most in government are still in the same monetarist rut that you guys are in.  Even Democrats think there is a need to keep the deficit low. 

    Taxes still have a useful purpose - they still drive the demand to earn dollars (as opposed to bitcoins or some other form of currency).  They are still useful for pushing people in certain directions (home ownership, etc.).  And theoretically, taxes carve out a portion of our economy's production for the government's use.  I'm sure you have heard the axiom that production = consumption, right?  If we produce $100 worth of widgets, we will earn $100, which can then be spent on the next round of production, etc.  Now this is a terribly oversimplified scenario, because it doesn't allow for savings or trade imbalances, etc., but anyway, the theory goes that if you consume all that you can produce and don't save, any new dollars the govt. introduces as demand will drive up prices, assuming the economy is already at max production.  So they would tax away some of your dollars to spend and not introduce new demand.  In reality, there is LOTS of unused productive capacity, and our economy is capable of producing quite a bit more than it does presently, so new demand will not drive up prices.  >> That, btw, is the problem with the idea that ANY new demand will drive up prices.  There aren't many businesses around that are turning away customers these days, are there?

    "...Or for that matter why govt. doesn't simply give everyone a billion or so fresh dollars so they don't have to work? We could all buy a new Italian yacht with a Rolls Royce on board, helping the economies of Italy and the UK at the same time."

    Why don't we play this game with realistic numbers?  Remember when Dubya sent out those tax rebate checks, and everybody got about $800 in the mail?  That didn't cause inflation, even though there was a rash of spending.  (Also, our government didn't have any trouble at all covering those checks.)

    What you need to understand about government spending is that (except for some welfare and SS checks), the government gets something for their dollars, either services (from, say, paying govt. empoyees) or goods.  (Even welfare and SS checks are quickly spent into the economy.)  New dollars aren't just sprinkled over the populace - they are spent.  And if you want some of them, you have to earn them.  That is production - production that would not have existed without government spending.

  21. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    EA said:  (from an article)  "Greece is already estimated to have created up to 96 billion euros to help its banks using the ELA."

    Using the ELA is still borrowing from the ECB.   In each case, most of the collateral is still that country's bonds.   The main differences are a higher interest rate, lower collateral requirements (i.e., lower rated bonds), and the liability sits on the books of the country's central bank instead of directly on the ECB's books.  (Though each country's central bank is just an arm of the ECB anyway.)

    It is not "free money."  It is not under the sole control of the Greek government or the Greek central bank, either - the ECB has to approve use of the system and they can pull the plug on ELA lending with two-thirds of the countries' say-so.  In each case, most of the collateral is still that country's bonds.

    Lots of Eurozone countries have used ELA loans - Ireland, Belgium, Cyprus, etc.

    1. 84
      Education Answerposted 2 years ago in reply to this

      So, basically you're saying that borrowing too much money can result in a debt default?  Go figure.

      Were you able to come up with a lot of economists who agreed with Krugman's trillion-dollar coin idea?

      1. JohnfrmCleveland profile image80
        JohnfrmClevelandposted 2 years ago in reply to this

        Greece borrows euros from the ECB, and does not have the authority to print euros as they see fit.  That is a true debt situation, and they can certainly default. 

        The U.S., like Canada, Japan, the U.K., Australia, et al, does not actually borrow their own currency.  Bond sales are unnecessary in fiat currency economies.  They are relics of the gold standard days.  The fact that the number of dollars in existence keeps going up should clue you in to the reality that the same dollars do not get recycled over and over. 

        There is still a ton of monetarist thinking dominating the world, and a lot of people who should know better are still convinced that bonds are what keeps inflation in check.  But, as I tried to point out earlier, there is no evidence to back up this thinking.

  22. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    Quilligrapher - welcome to the discussion.

    Interesting article, thank you for the link.  From that article:
    “He believed that a central bank could cause inflation by monetizing government deficits but did not attribute inflation to that source in the early 1970s. Instead, he attributed it to the exercise of monopoly power by unions and large corporations.”

    I do agree that labor costs can contribute to inflation, but I disagree with Burns when he blamed inflation primarily on labor unions.  With or without labor unions, the price of labor should rise and fall depending upon the demand for labor.  In times of high demand, when labor unions are strong, they can flex their muscle.  But in times of low demand, like today, unions lose much of their power, and labor costs are relatively low.  I know that there are some exceptions, and other factors can have an effect, but I think the general rule holds pretty well.

    My take is that inflation is caused by leverage.  Competition keeps prices low, unless somebody somewhere has leverage over the situation.  OPEC had the leverage in the 70's, and they still have quite a bit today.  Unions used to have a lot of leverage; today, they have little.  If you have a brand that has no generic equal (Apple, for instance), a professional sports team that you can hold over the head of a city, if you hold a commodity that is in truly short supply, you can push prices up, regardless of your costs.  If, on the other hand, you are the producer of no-name Android tablets, loaves of bread, or some other commodity-type product, keeping your prices down is everything. 

    Now I'm going to take the opportunity to blather on about "monetizing the debt," a phrase which has a lot of people, some economists included, absolutely terrified.  Monetizing the debt would basically be exchanging dollars for bonds - so instead of $17 trillion in outstanding bonds and $1 trillion in dollars, there would be $18 trillion in dollars floating around out there.  Monetarists believe this would lead to instantaneous inflation.  I don't agree, and here is why...

    Bonds are already very liquid instruments.  If you have $1 million worth of U.S. bonds, you can change that into dollars in minutes.  So if there was something the bondholder would like to spend that money on, including an investment with a higher return (and more risk), there is nothing preventing him from doing so.  And the paltry interest we are presently paying on bonds can't be the incentive to sit on those dollars, because it probably doesn't even keep up with inflation.  There is simply a desire to sit on savings.  People have always done it.  If we ever exchanged dollars for bonds, I think the vast majority of those dollars would be moved to vaults; not other investments, and certainly not goods or services.

  23. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    "Were you able to come up with a lot of economists who agreed with Krugman's trillion-dollar coin idea?"

    Again - it wasn't Krugman's idea.  I don't know why you insist on repeating that. 

    The idea has been around for a while, but the recent (within the last few years) interest in the idea came from an economics poster with the screen name Beowulf, who posts on MMT forums.  (The whole story is on Wikipedia.)  And you will get the best commentary on the coin from MMT economists - Mosler, Kelton, Wray, etc.  It's not a compicated idea - if you have an open mind, I explain it in my hub on the gold standard:

    "Since the Treasury can mint coins as needed without backing, the idea of minting a few trillion-dollar platinum coins and depositing them into Treasury's account has been considered. This would satisfy the requirement to keep Treasury's account in the black without issuing more bonds (and increasing the national debt), while allowing the government to spend dollars. If nothing else, this should serve to illustrate that fiat dollars are not backed by anything, since the true value of the metal in the coin is minimal. By the same token, bonds are merely promises to deliver paper dollars at a later date - so bonds and dollars are basically equivalent instruments."

    There is general agreement out there that this would satisfy the legal requirement that Treasury keeps its Fed account in the black while it spends money.  The monetarists are worried that it will cause inflation, but they, of course, can offer no proof or evidence of this. 

    BTW, did you ever come up with any evidence that deficits cause inflation/high interest rates/an inability to sell bonds?

    1. 84
      Education Answerposted 2 years ago in reply to this

      "BTW, did you ever come up with any evidence that deficits cause inflation/high interest rates/an inability to sell bonds?"

      When did I say any of this?

      Yes, the idea of print and spend has been around for a long time.  Paul Krugman didn't invent the idea, but he took it to a new level.  You said that Krugman did not diminish his reputation.  I would like to see proof.  Were any economists in agreement with the whole coin idea?  Please provide a list of economists who were on board, perhaps some quotes.

  24. GA Anderson profile image86
    GA Andersonposted 2 years ago

    Greetings JohnfrmCleveland,

    Can I pull up a chair?

    You seem to b e both knowledgeable and a proponent of MMT.

    I did not know what it was until I stumbled across your comments.
    (but I have been trying to understand it more in the last few days through available materials)

    You sparked an interest that has put me in a quandary. So as the instigator of my interest, I hold you responsible for my "quandary."

    My perception is this:
    As an explanation, or theory, MMT seems logical in its accounting perceptions. If the premise of MMT is correct, then even the "trillion dollar coin" solution doesn't seem too illogical.

    But in all the accounting jazz, I keep stumbling over my thought that money - any of the various kinds the explainers of MMT describe, is more than an accounting entity.

    Of course I have only grazed the surface of the theory, (so far), but I think money has a "perceived value component. Whether it was physical gold in the ol' days, or the confidence of the market, (users), my gut tells me that money has to have that component.

    For instance; if I have one bar of gold, and you asked for it, I probably would not give it too you. But if I had a million bars of gold - that one bar would probably have a lesser perceived value to me and I would probably generously hand one over to you.

    Maybe that is a poor example, and illustrates my misunderstanding of what you are trying to explain. But, I don't feel too lonely, as several sources I read offered similar thoughts.

    One writer used the phrase "accounting is not economics," and another remarked comparing it to socialism - in that as a theory it sounded good and seemed to make sense, but it just doesn't, (or hasn't  so far), work in the real world of humans.

    So there you have my quandary; I can't seem to find where MMT considers user confidence, or perceived value" as important. Yet my gut, and recollections of past readings of "wheel barrows of paper to buy a loaf of bread"  historical instances, tell me that if the users lose confidence in a fiat currency then all the logical accounting explanations of MMT won't save their economy.

    Today I think that perceived-value component is the users opinion of the issuers fiscal responsibility.

    Your responsibility, should you decide to accept it, is to point out the primary mistake in my thinking. And perhaps explain why a theory first introduced in the 1890s, and further studied, tweaked,  refined and propounded  by some apparently smart and savvy guys over the last hundred years or so, is still looked at as a system that "just isn't right."

    ps. I did read several of your hubs on the topic. It all sounds logical if the world worked as an accountant's ledger does - but that isn't the reality of human behavior.

    pss. you do present a very understandable explanation of MMT and why it should work - interesting reads


    GA

  25. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    "When did I say any of this?"

    Right here. 

    "Yes, deficit spending is a problem. EVEN if you don't intend to pay back the debt, you have to pay the interest. If you stop paying the interest, you've defaulted. The interest on 18 trillion dollars isn't a small sum, and that perpetual interest payment sucks our country dry, leaving less and less money to spend on important infrastructure and the taxpayers."

    Then, you went on to quote Erskine Bowles, who couldn't be more wrong about economics.

    I gave you a list of economists in my last post - Mosler, Kelton, Wray, and MMT economists in general, in addition to Krugman.  The discussion of the platinum coin option SHOULD serve to illustrate that bonds and the national debt are not a problem; the fact that a coin with no metallic value can take the place of a trillion dollars' worth of bonds should clue you in to the fact that those bonds do not represent actual debt.  The coin is a political tool, an option to circumvent the idiots in Congress who are trying to use the debt ceiling as leverage.  These economists understand that bonds are not a problem when you control your own currency.  A simple search will give you a wealth of information on the subject.

    1. 84
      Education Answerposted 2 years ago in reply to this

      You said, ". . .deficits cause inflation/high interest rates/an inability to sell bonds?"

      I said, "Yes, deficit spending is a problem. EVEN if you don't intend to pay back the debt, you have to pay the interest. If you stop paying the interest, you've defaulted. The interest on 18 trillion dollars isn't a small sum, and that perpetual interest payment sucks our country dry, leaving less and less money to spend on important infrastructure and the taxpayers."

      I didn't mention inflation.  I didn't mention the inability to sell bonds.  I didn't mention high interest rates; I mentioned paying interest.  The interest rate and the interest paid are not the same thing, and we both know it.

      I did that "simple research."  I found people like Alan Greenspan warning about crushing debt one day and then explaining it all away by saying that we'll never default if we own our own currency.  It seems pretty fickle if you ask me.  Why was he so concerned prior to his epiphany?

      I appreciate that you've listed some people who you claim agree with the TDC, but I'd like to see some quotes by these people, quotes that truly show that they believe in the TDC

      Still, I'd like to thank you on raising the bar a bit.  This is a fine debate, and I appreciate the level of discussion.

  26. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    GA - welcome to the discussion.  I'm not completely sure I'm understanding what you want here, so please stick with me and help me understand your concerns, if I don't get them right.

    "So there you have my quandary; I can't seem to find where MMT considers user confidence, or perceived value" as important. Yet my gut, and recollections of past readings of "wheel barrows of paper to buy a loaf of bread" historical instances, tell me that if the users lose confidence in a fiat currency then all the logical accounting explanations of MMT won't save their economy."


    In the world of finance, there is no problem with confidence in the U.S. government.  Bond traders understand that governments sovereign in their own currencies can always meet obligations in their own currencies (they can always redeem their bonds).  The risk is (almost) zero - the small bit of risk is the chance that Congress will refuse to allow an increase in the debt ceiling, and no emergency measures would be used to allow Treasury to pay the bills.  So bonds from the U.S., Japan, Canada, U.K., Australia, etc., are all considered zero-risk places to park money, and the (low) yields reflect this confidence. 

    Consumer confidence is more an issue of whether or not people feel secure in their jobs.  For most people, what they believe about the U.S. economy doesn't really affect their spending.  You have to pay the rent and buy the groceries, no matter what you think about the dollar. 

    If you are referring to the possibility of hyperinflation, that is not caused by money printing (although that could do it, in theory).  Every instance of hyperinflation that I can think of has been the result of a large dropoff in production, excessive foreign debts, or some sort of social upheaval (like war, or Yugoslavia splitting up), or some combination of those factors.  Printing money in an attempt to match inflation comes as a response.  Hyperinflation normally goes hand in hand with a lack of stuff on the shelves to buy, especially food.  America is a long, long way from running out of stuff on the shelves to buy, and we have the capacity to produce far more than we are presently producing.  All demand is being met, and the economy isn't breaking a sweat.  More demand isn't going to push us over the edge.

    Many people (and economists) will say that deficit spending will somehow "dilute" the value of the dollar, because there will be more dollars chasing the same amount of production.  But money enters the economy by spending, and that spending induces new production, so that reasoning is clearly incorrect.  New demand should not lead to serious demand-pull inflation until there is a shortage of some component of production - energy, labor, raw materials, etc.  The goal of MMT is to spend for the purpose of reaching 100% employment.  The theoretical limit on spending would be (serious) demand-pull inflation. 

    That was kind of scattershot - did any of that answer your question(s)?

    1. GA Anderson profile image86
      GA Andersonposted 2 years ago in reply to this

      It was an honestly valiant attempt to explain, but I just can't get passed my instinctive reaction to  the importance and impact of the currency users perceived-value component.

      From what little I understand at this point, MMT just doesn't see that as important. Nor did your explanation imply that it was. as in...

      "...the small bit of risk is the chance that Congress will refuse to allow an increase in the debt ceiling, and no emergency measures would be used to allow Treasury to pay the bills.  ..."

      This has been shown to not be an improbable event.

      "...Consumer confidence is more an issue of whether or not people feel secure in their jobs.  For most people, what they believe about the U.S. economy doesn't really affect their spending...."

      I don't agree with this one at all. Of course we worry about our jobs, but we also worry about the value of our earnings - our money. If we perceive our money to have less value, then won't that be true in fact? Isn't that the foundation of fiat currency - it is based on a perceived value rather than a collateralized value?

      Thanks for the effort though, and I will continue to look into MMT. However, I am not optimistic about a conversion -  I think I am going to continue to run into the apparent common sense vs. theory roadblock.

      GA

  27. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    "I didn't mention inflation. I didn't mention the inability to sell bonds. I didn't mention high interest rates; I mentioned paying interest. The interest rate and the interest paid are not the same thing, and we both know it."

    Sorry.  These are the standard arguments that go along with the fear of deficits.  When you went on to quote Bowles and what he had to say on the possibility of interest rates rising, I assumed you went along with that thinking, since you did quote it.

    "I said, "Yes, deficit spending is a problem. EVEN if you don't intend to pay back the debt, you have to pay the interest. If you stop paying the interest, you've defaulted. The interest on 18 trillion dollars isn't a small sum, and that perpetual interest payment sucks our country dry, leaving less and less money to spend on important infrastructure and the taxpayers.""

    This is incorrect, because there is not a finite number of dollars.  Paying interest does not remove dollars from a finite pile from which we pay for other things.  Also, "paying back the debt" is a misnomer.  There is no extinguishing sovereign debt in the same way you or I extinguish a bank loan when we finish payments.  The government exchanges bonds for dollars - this is commonly called "debt."  When the government completes its bond obligation, it returns the dollars, plus a few more, in exchange for the bond.  But their liability has not changed - dollars are accounting liabilities, too, same as bonds.  On the government's ledger, there is no difference between the two.  And fiat dollars are not true liabilities, like convertible dollars were - they are just out there, and the government has no further obligation on them.  The only thing the government does with dollars is replace them from time to time when they get too ragged.

    "I did that "simple research." I found people like Alan Greenspan warning about crushing debt one day and then explaining it all away by saying that we'll never default if we own our own currency. It seems pretty fickle if you ask me. Why was he so concerned prior to his epiphany?"

    Greenspan (like any Fed chair) understood the mechanics of dollar creation - the govenrment can produce dollars at will, they can buy their own bonds without limit, and they can control the interest rate.  But he was also a monetarist who believed that, somehow, you controlled inflation by controlling the number of dollars in play.  That includes interest payments, even though interest payments are overwhelmingly rolled over into more bonds, and never spent.

    "I appreciate that you've listed some people who you claim agree with the TDC, but I'd like to see some quotes by these people, quotes that truly show that they believe in the TDC."

    You aren't going to find a lot of quotes out there.  You would have to dig through the comments sections of blogs, and (sometimes) know who was behind the screen names.  The coin idea was a product of discussion forums, not research papers.  I know this, because it came from the discussion forums and blogs that MMTers (including myself) participate in.  There is an understandable reluctance for big name economists to officially endorse something like the coin, because there is so much immediate blowback (like on this thread, for instance wink ), and it's hard enough to get people to give heterodox ideas a fair chance without tossing an easy talking point like a trillion-dollar coin out there for reactionists to jump on before they even hear the details.  (If you doubt that, just look at the crap a Nobel laureate like Krugman got from a bunch of nobodies for even discussing the subject.)

    1. 84
      Education Answerposted 2 years ago in reply to this

      "These are the standard arguments that go along with the fear of deficits."  I understand that, but they weren't my arguments.  I specifically strayed away from making those arguments.

      Your answer, regarding economists' quotes, was plausible.  I'll drop that point.

      A fiat system has no physical backing, just the faith of the public.  The studies I've read indicate that a gradual increase in the available currency has little impact on inflation.  A fiat system is based on the belief in the currency.  If a government were to dump trillions of dollars worth of printed or minted money, the value of the dollar would likely diminish, because people would value the money less.  Inflation would be a concern, because the value of the dollar wouldn't be as great.   Dumping mass quantities of money is far different than a gradual buildup over decades.  Has there been a study that looked into dumping trillions and trillions of dollars and whether or not that would result in inflation? 

      Further, wasn't the trillion dollar coin (TDC) really intended to be used as a way around the debt ceiling argument between the Right and the Left?.  The coin was to be used as a temporary workaround.  There's a big difference between issuing one coin to increase the debt ceiling and paying off roughly eighteen trillion dollars.

  28. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    GA wrote:  "I don't agree with this one at all. Of course we worry about our jobs, but we also worry about the value of our earnings - our money. If we perceive our money to have less value, then won't that be true in fact? Isn't that the foundation of fiat currency - it is based on a perceived value rather than a collateralized value?"

    Are you implying that prices are determined by what we think they should be?  As in, "one dollar should buy a loaf of bread"?  Or are you saying something like "I perceive prices to be going up, so I should be ready/willing to pay $1.25 for a loaf of bread"?

    Prices are what prices are.  They don't go up or down based on perceptions.  Now, if you are doing well and have a pocketful of money, you might be less inclined to fret about getting the best deal, but that works in the other direction as well. 

    I don't think that gold-convertible currency had any anchoring effect on our money, either.  Prices fluctuated back then, too.  But very few people ever bothered converting their bills to gold, and I doubt that they checked the spot price of gold before they shopped.  Besides, what determines the price of gold?  It's just another commodity, one of many. 
    ***

    "Thanks for the effort though, and I will continue to look into MMT. However, I am not optimistic about a conversion - I think I am going to continue to run into the apparent common sense vs. theory roadblock."

    In a sense, you are already a convert - we all are - because most of MMT is simply a description of how our economy works right now.  That's why it is so heavy on the accounting - it is meant to demonstrate what happens to dollars, where they come from, why they don't cost anything for the government to produce, etc.  The only "theory" is in the policy prescriptions that stem from the understanding that fiat currencies are not borrowed or financed.  Those policies are obviously not in place, but the mechanics of dollar creation, bond sales, reserve banking, and interest rate control are all accurate descriptions of how today's economy actually operates.  Even the Austrians agree that MMT has the mechanics right.

    1. GA Anderson profile image86
      GA Andersonposted 2 years ago in reply to this

      No John, I don't think I am a convert. Mainly because it seems that, of the reading I have done so far, most proponents of MMT, while saying it is a description, are also saying if the prescriptions deduced from accepting the premise of MMT were actual policies - everything could be honky-dory   .

      To me, the mechanics of MMT's description of a fiat currency economy were easily understood and very educational. Your own writings were as good as any I found elsewhere. (I did read all of them)

      But... and this is where my initial "gut instinct" kicked in, while excelling as a description of the accounting process - it appears totally lacking in understanding the human involvement factor.

      As one writer said, "Accounting is not economics."

      MMT excels at accounting but fails at economics, at least in my weakly informed mind.

      For instance; defaulting on debt - you say the only way, (or almost only), way a default can occur is via some "stupid" political move. ie. the debt ceiling.

      MMT, and you seem to consider this as the remotest of possibilities, yet it is a very real political and economic issue that has occurred.

      My understanding of MMT so far, and as you have stated, is that supply shortages are the only probable factor that could influence the value of any fiat currency - I disagree. I still believe "perceived value" by its users, (the market), can also affect its value.

      What would happen if the market's big players, (Wall Street, other nations, etc.),  decided to shift to another currency because they lost faith in the government behind the fiat currency?

      Another writer, an MMT criticizer, uses an example of U.S. big market players using other currencies for their transactions, (Francs, Yen, whatever), and only converting to dollars at the moment of need for a dollar required transaction.

      While agreeing with MMT's description of money as just another name for debt for use in accounting practices and descriptions - in reality, money and debt are not the same. Money is a medium of exchange, not just an accounting notation, and that medium must be trusted by both sides of any transaction to be viable.

      Anyway, I probably got the specifics of what I said above wrong, but the point it all leads to is that I don't think MMT understands real world, human involved economics.

      Finally, I must both curse you and thank you. The "damn you" curse is for showing me another rabbit hole to chase something down, (my quest to understand MMT), and the thank you is for providing the prompt that caused me to learn something.

      Any day I learn something new is a great day!

      GA

  29. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    "A fiat system has no physical backing, just the faith of the public.  The studies I've read indicate that a gradual increase in the available currency has little impact on inflation.  A fiat system is based on the belief in the currency.  If a government were to dump trillions of dollars worth of printed or minted money, the value of the dollar would likely diminish, because people would value the money less.  Inflation would be a concern, because the value of the dollar wouldn't be as great.   Dumping mass quantities of money is far different than a gradual buildup over decades.  Has there been a study that looked into dumping trillions and trillions of dollars and whether or not that would result in inflation?" 

    Well, how do you think a government would even go about "dumping" a bunch of money into the economy?  This is a real sticking point, because it is easy to look at the increase in base money and just assume that all of these dollars are out and about, getting spent.

    Lots of people think that QE pushed a lot of dollars into the broad economy, but it didn't.  During QE, a lot of dollars were created, but they were only used to pump up bank reserves, exchanging dollars for bonds or other assets (often, MBSs and other troublesome assets).  The thinking was that this would drive banks to make more loans, thereby stimulating the economy.  The problem with that thinking is that banks were always able to make loans - there just weren't many creditworthy borrowers out there to create loans for.  The amount of reserves that banks have has no bearing on their ability (or even willingness) to create loans, because they don't actually loan out reserves; reserves (for the most part) remain in their accounts at the Fed.  The only reserves that ever leak into the broad economy come from vault cash - vault cash counts as reserves, and that's where you get your ATM money from.  So the amount of cash in circulation is determined by the public's demand, largely through cash withdrawls and deposits.  But even in times of high demand for cash (like Christmas), that is just a trickle.  And since the Fed has never failed to provide banks with any reserves they wish to borrow, there is no "supply" factor when it comes to dollars - it is determined solely by demand.  So QE never made a difference in the demand for cash or the demand for loans. 

    Dollars generally enter the economy through government spending.  So for our government to "dump" a bunch of dollars into the economy, they would either have to spend it in, or give it to somebody that would presumably spend it as well.  The only other ways I can think of to push money into an economy are to give money to banks, or to give money to people.  As was true in QE, banks would still have no extra incentive to spread that money out to borrowers unless they expected more dollars back in return.  Giving money to people, though, is a viable alternative, assuming you don't give them so much that their demand would overwhelm the economy's ability to meet that demand.  This is actually being considered in Switzerland - giving people an annual stipend.

    Some economists have tried to track what governments have done in times of hyperinflation, but the records of these events are amazingly lacking.  I was reading about the Yugoslavian hyperinflation of the 90's, which started when the country split apart, trade slowed, and production dropped way down.  Apparently the government tried to anticipate how much inflation was going to go up over the short term and increased their payments accordingly - to me, that sounds like an inflation driver right there.  It always seems to be a big dropoff in production that gets the inflation started. 

    "Further, wasn't the trillion dollar coin (TDC) really intended to be used as a way around the debt ceiling argument between the Right and the Left?.  The coin was to be used as a temporary workaround.  There's a big difference between issuing one coin to increase the debt ceiling and paying off roughly eighteen trillion dollars."

    No, it wasn't a Democratic idea at all.  It was purely a topic of discussion in the MMT blogosphere, until some mainstream news outlets (and mainstream economists) picked up on it.  It had been out there for a  couple of years before the Dems kicked the idea around. 

    It could have been a temporary workaround, or it could have simply replaced bonds altogether.  Bond issuance is not operationally necessary - a government can simply issue currency directly and be done with it.  But we are required by law to keep Treasury's balance at the Fed in the black, and this is normally done through bond sales (even if we buy our own bonds).  The coin, deposited in that same account, would take the place of $1 trillion worth of bonds.

    There is a school of thought out there that believes we need to keep the number of loose dollars in play down, and this is done by exchanging bonds for dollars.  There is another school of thought that says there is no evidence or logic behind the other school of thought, and bonds - which are very liquid and yield little interest - aren't what keep bondholders from spending that money at all.  (This is where I stand.)  If so, we are paying interest for no reason at all, and while it doesn't cost our government anything, it does put even more dollars in the hands of the already rich, which affords them more political power.  Anyway, it's an arguable point, and nobody in the MMT crowd is adamant about eliminating bond sales, because they do serve to control interest rates, and they do little (or no) harm.  But the whole debt ceiling debate drives us crazy, because we generally believe that the government should be deficit spending more than they do now.

  30. JohnfrmCleveland profile image80
    JohnfrmClevelandposted 2 years ago

    EA said:  "A fiat system has no physical backing, just the faith of the public."

    The anchor I think you are looking for is taxation.  The government that creates the fiat currency also demands taxes paid in that currency.  (Some people also think this helps to set the value.)  So, faith or not, people are forced to use the country's currency.

    1. 84
      Education Answerposted 2 years ago in reply to this

      I haven't responded, because I'm doing extensive reading on the subject.

      I'm not trying to totally diminish the value of MMT, but I would like to point out that it is theory, theory that flies in the face of a lot of traditionally fundamental concepts in economics.  Further, there are a lot of economists who are not supporters of the theory.

      I'll get back to you once I feel better versed in the concept.

      Best wishes.

      1. JohnfrmCleveland profile image80
        JohnfrmClevelandposted 2 years ago in reply to this

        I'm happy to hear that you're trying!  I had to unlearn a lot of stuff before I got over the hump.  Almost all MMTers do, because most of us had the same Econ 101 experience, we read the same news stories, and we hear the same political posturing about the deficit.  There is a tremendous amount of noise to tune out.

        Keep in mind that other economists usually have a lot at stake, and they are slow to admit that they have been wrong.  Paul Krugman, for instance, is doing very well being Paul Krugman, and he's not about to stand up and say, "This other guy is correct."  He agrees with about 95% of MMT, though, and he admits that we have the mechanics right.  He just won't completely abandon his concern over deficits.

        1. 84
          Education Answerposted 2 years ago in reply to this

          I'm no Krugman fan, but I want to learn about the theory.

    2. 84
      Education Answerposted 2 years ago

      I like that Warren Mosler believes in minimal taxes.  However, IF taxes are not necessary to fund government, why do we need taxes at all?  Wouldn't a tax-free society be a massive stimulus to the economy?

      1. JohnfrmCleveland profile image80
        JohnfrmClevelandposted 2 years ago in reply to this

        Taxes are necessary, at some level, to make ensure that people use the currency.  If you have to pay taxes in dollars, then you need to get your hands on some dollars, and not bitcoins or bank script, etc.  On a more theoretical level, if your economy is at full employment/full production, and your populace is spending all of its earnings on that production, any deficit spending would cause demand-pull inflation, because there would be no idle resources to meet the new demand.  So government would need to tax away some of the populace's demand for its own use.

        Plus, in the real world, you can't go around saying you want to eliminate all taxes, because you won't be taken seriously.  And being taken seriously is the hurdle we are facing now.  We can win the debates with other economic schools of thought, but average people simple are not ready to accept that we don't (presently) need taxes, the "national debt" is not really a debt, China is not going to foreclose on us, etc.

        1. 84
          Education Answerposted 2 years ago in reply to this

          An electronic transfer is necessary?  People will use the currency regardless of whether or not there are taxes. . . .unless somebody is worried about the devaluation of the currency should there be massive hyperinflation.

          Seriously, why would anybody be worried about people abandoning the currency unless they realized that there might be a lack of belief in the fiat system?  Why would there be a lack of belief in this system, hyperinflation?  Why would there be hyperinflation, devaluation of the currency?  Why would there be a devaluation of the currency, printing-and-spend policy?

          I found MMT supporters who said that taxes were necessary to ensure that there wasn't too much currency available.  Others say that it is necessary to ensure that people use the currency.  It seems there is a disagreement among those who believe MMT.  The first implies a merging of conventional money theory and modern theory.  The latter implies concern about people abandoning a currency.

    3. WiccanSage profile image94
      WiccanSageposted 2 years ago

      I believe the media has led people by their noses for the most part.

      On one side you have Fox news fueling this conservative indignation with the radical right.

      But vast majority of the media lean left, many lean heavily left. If anyone thinks the liberal media is being any more honest than Fox news, they themselves are deluded by left-wing media. The liberal media wasn't reporting facts and they essentially were campaigning for the Democrats. And there are simply more liberal media outlets than there are conservative.

      To further the problem, people don't do their own responsible research. They parrot the rah-rah-rah extremist websites that tell them what they want to hear. They think shows like the Colbert Report is news, and they can't tell the difference between news reporting and news commentary.

      It became an us-against-them game of schoolyard dodge ball. People were loyal to their "team" so they would fail to point out their side's flaws, and go overboard in nit-picking on the other side. People stopped listening to people with different views-- the rivalry between the teams became too intense and people had a knee-jerk reaction the minute they found someone disagreed with them. Minds shut down, confirmation bias kicked in.

      They "villanized" each other, and the media fueled it giving people all the ammo they could find (even if it was intellectually dishonest, it didn't seem to matter).

      President Obama has exacerbated the division between the parties like no president before him has ever done. He's all but stamped his foot on the floor in a huff when pointing to the Republican side of the isle in blaming every problem in the country on Republicans. And unfortunately, the majority of the media being left wing, have supported this and hailed it as some kind of heroic action when it was really just bad leadership. And even more unfortunately, most monkeys just follow along, hooting and hollering that it's another point for their team.

    4. JohnfrmCleveland profile image80
      JohnfrmClevelandposted 2 years ago

      EA said:  "An electronic transfer is necessary?"

      What do you mean? 

      "People will use the currency regardless of whether or not there are taxes. . . .unless somebody is worried about the devaluation of the currency should there be massive hyperinflation."

      This is the theoretical basis.  I agree that once a currency is established, it will get used at least as long as it holds its value.  The dollar is so stable that it is difficult to imagine people looking for alternatives, but there are a lot of currencies out there that might make their users worry.  The Fed, for all of the complaints people come up with, has very stablizing policies.  But there are a lot of other currencies (or bonds) that I wouldn't want to hold long-term.

      "Seriously, why would anybody be worried about people abandoning the currency unless they realized that there might be a lack of belief in the fiat system?  Why would there be a lack of belief in this system, hyperinflation?  Why would there be hyperinflation, devaluation of the currency?  Why would there be a devaluation of the currency, printing-and-spend policy?"

      Currencies retain value when there is stuff on the shelves to buy.  If an economy is producing, money will be moving around and product will be bought and sold.  But look at countries where there has been some form of upheaval.  When Yugoslavia split apart, trade between the new territories stopped, then production went way down.  Food gets scarce, so prices go up.  When food is scarce, all currencies lose value.  If you can't buy potatoes with dinar, you probably can't buy them with American dollars any easier.

      "I found MMT supporters who said that taxes were necessary to ensure that there wasn't too much currency available.  Others say that it is necessary to ensure that people use the currency.  It seems there is a disagreement among those who believe MMT.  The first implies a merging of conventional money theory and modern theory.  The latter implies concern about people abandoning a currency."

      No, the first point was the same one I made in my last post.  IF your economy is at full production (a big "if"), then the government will need to tax away some money (demand) in order to spend for the government's benefit without causing demand-pull inflation.  If you are at full production and the government adds more money (demand) to the mix by deficit spending, then there will be more dollars chasing the same amount of goods, and you would get inflation.  And that is really the only point on the curve where the conventional "more dollars = inflation" idea has any merit - when an economy is stretched to the limit and cannot accomodate any more demand. 

      A state of "full production" is a bit of a fantasy at this point, because productivity is so high, plus there is a lot of automation, plus you have cheap foreign labor.  But look back 100 years ago, when most people still worked in agriculture, because you needed that many farmers to produce enough food for the nation.  (Today, 2% of our labor force produces a large surplus of food.)  So when industry needed labor, they had to offer higher wages to pull workers from the farms.  Shortage of labor = higher wages = one cause of inflation.  Not that inflation is always bad - I'd rather have a growing economy and a high demand for labor with some accompanying inflation than the opposite.  So the goal is 100% employment - if you are ever going to run short of some material necessary for production, it should be labor.  But I don't think we could consume all that we would produce if all of our unemployed were producing goods for the private sector - this is why MMT advocates for a guaranteed government job; those workers would not be competing with the private sector, which already meets all demand.

      1. 84
        Education Answerposted 2 years ago in reply to this

        According to MMT, inflation won't occur when the government produces money to pay debt or purchase goods?   That's part of the premise when MMT supporters say that a country that produces its own currency can't default on debt.  That's based, in part, on the belief that doing this won't result in a devaluation of the currency, causing inflation.

        IF MMT is right, the government could quite literally purchase anything it desires.  It could deposit a billion dollars in each of our accounts.  After all, money wouldn't be a concern.  Hyperinflation would have to be the end result at some point.  Taxation wouldn't really be used to make sure the currency is in use; it would be used to remove excess currency, so there wouldn't be devaluation and thus inflation.

    5. JohnfrmCleveland profile image80
      JohnfrmClevelandposted 2 years ago

      EA said:  "According to MMT, inflation won't occur when the government produces money to pay debt or purchase goods?   That's part of the premise when MMT supporters say that a country that produces its own currency can't default on debt.  That's based, in part, on the belief that doing this won't result in a devaluation of the currency, causing inflation."

      No, that is not what MMT holds at all.  Those are two very separate issues.

      A country - ANY country - that a) creates its own fiat currency and b) has no foreign-denominated debts can always meet its obligations that are denominated in its own currency.  That says nothing at all about inflation.  It just states that, if all I owe you are pieces of paper with my signature on them, I will be able to pay that obligation.  And this is true of fiat currency economies, because there is no real cost (like gold) to creating those pieces of paper. 

      Inflation can be caused by a lot of things, but they generally involve production, not the number of dollars in play.  Some of these are out of our control - the price of oil; droughts that affect food production; things like hurricanes, that can lead to temporary shortages of building materials; etc.  But if the economy can meet the demand (and competition is present), then there is no reason that prices should go up, unless/until there is a shortage of some component of production (labor, energy, raw materials, etc.).  If government spending does not add so much demand that there is a shortage of goods on the shelves, then prices should stay the same.  But if government spending increases demand to the point where the economy cannot meet demand, of course you will get inflation. 

      And again - belief has nothing to do with it.  You don't pay more for a loaf of bread just because you somehow perceive that the dollar should be losing value - you pay the going price, just like everybody else. 

      EA said:  "IF MMT is right, the government could quite literally purchase anything it desires.  It could deposit a billion dollars in each of our accounts.  After all, money wouldn't be a concern.  Hyperinflation would have to be the end result at some point.  Taxation wouldn't really be used to make sure the currency is in use; it would be used to remove excess currency, so there wouldn't be devaluation and thus inflation."

      Where are you getting these ideas of what MMT is about?  It sounds like you are getting them from somebody trying to disprove MMT - somebody who really doesn't understand it well enough to do so.  There are plenty of those sites around.  This "billion dollars into everybody's accounts" is the same junk that I hear from every naysayer.  MMT doesn't advocate anything of the sort.  And the government can only purchase what its economy is capable of producing.  This isn't magic.

      The government is ABLE to create all the fiat currency it wants.  That does not mean that MMT advocates it, or says it's a good idea. 

      One of the insights from MMT is that you don't get inflation simply from putting more dollars in play.  The obvious policy prescription from this insight is that the government can help the economy by creating and spending some amount of new money (deficit spending over and above replacing saved dollars), and there is no big downside from deficits or debt.  The confusion (or disbelief) often comes when discussing how to go about putting that new government money into the economy.  There are 3 main ways - the government can spend in an attempt to boost private sector demand enough to get everybody a private sector job; the government can guarantee everybody a minimum-wage public sector job; or the government can simply give everybody a Basic Income Guarantee (BIG), some amount that still gives people an incentive to work, and also does not flood the economy with too much demand.  And of those who advocate for a BIG, there are exactly zero who think we should give everybody a billion dollars.

      1. 84
        Education Answerposted 2 years ago in reply to this

        " And of those who advocate for a BIG, there are exactly zero who think we should give everybody a billion dollars."

        Why not?  If the use of a fiat currency, utilizing MMT, really has no downside, why wouldn't you distribute massive quantities of currency?

        1. JohnfrmCleveland profile image80
          JohnfrmClevelandposted 2 years ago in reply to this

          Because you would outstrip your economy's ability to meet the new demand.  I think I already explained that.

          Allow me to frame this argument in different terms:

          JfC:  Aspirin is an effective anti-inflammatory that can ease pain.

          EA:  Why don't we just give everybody a billion aspirin tablets a day? 

          Do you see the problem here?  Nobody is proposing that we give anybody a billion aspirin tablets a day, because that is not the effective dose.  And saying that a billion aspirin tablets a day would kill you isn't a very good argument against the use of aspirin in normal quantities, is it?

          1. 84
            Education Answerposted 2 years ago in reply to this

            That's exactly my point.  If that's not the effective dose, what would the outcome be, inflation?  Inflation can occur when money is dumped in the market.  Dumping 17-18 trillion dollars, our debt, would cause inflation, because it's not the "effective dose."

            1. JohnfrmCleveland profile image80
              JohnfrmClevelandposted 2 years ago in reply to this

              How, exactly, is $17 trillion going to be "dumped" into our economy?

              IF a large number of dollars were ever spent in short order, enough to outstrip our economy's ability to produce and meet demand, then yes, of course there would be inflation.  But where is this giant heap of cash going to come from?  What, exactly, are you worried about?

              1. 84
                Education Answerposted 2 years ago in reply to this

                It would have to be electronic in nature.

                The point is that inflation could be a concern.  You don't see many MMT supporters admit that it's even a possibility, do you?

                1. JohnfrmCleveland profile image80
                  JohnfrmClevelandposted 2 years ago in reply to this

                  Inflation is always a concern - just about the only concern - and yes, it is an integral part of MMT.  If you are reading the main MMT sites, I'm surprised you haven't come across this yet.

                  Again, inflation happens when demand outstrips an economy's ability to meet that demand, or when there is an instance of leverage (OPEC, hot name brands, a monopoly, etc.).  MMT certainly recognizes the possibility of this happening, but we also recognize the reality of today's economy, in that our economy is nowhere near its capacity to produce.  So it is not a front-burner concern of ours. Right now, we are far more concerned with a) squashing the idea that the U.S. govt. is in debt, and b) spending in order to reach 100% employment.

    6. JohnfrmCleveland profile image80
      JohnfrmClevelandposted 2 years ago

      GA wrote:  "As one writer said, "Accounting is not economics.""

      But if your economics don't square up with the accounting, your economics are wrong, not the accounting.

      "For instance; defaulting on debt - you say the only way, (or almost only), way a default can occur is via some "stupid" political move. ie. the debt ceiling.
      MMT, and you seem to consider this as the remotest of possibilities, yet it is a very real political and economic issue that has occurred."

      First of all, to the best of my knowledge, we have never defaulted on our debt.  Second, the legitimacy of MMT does not hinge upon us not defaulting.  The point was always that we can never be forced into a default by our "creditors" (bondholders).  To this day, there are trained economists - with degrees in the field - that think China has us by the short hairs  because they hold a pile of our bonds.  We are also not dependent on outside entities buying our bonds.

      "My understanding of MMT so far, and as you have stated, is that supply shortages are the only probable factor that could influence the value of any fiat currency - I disagree. I still believe "perceived value" by its users, (the market), can also affect its value."

      OK.  How?  What is your mechanism?

      "What would happen if the market's big players, (Wall Street, other nations, etc.),  decided to shift to another currency because they lost faith in the government behind the fiat currency?"

      I don't know.  Why, exactly, do you think they would make this shift?  Why would they lose faith, and why would that matter?  Again - what is your mechanism?  I could make the claim that the sky might turn green tomorrow if everybody lost faith in blue, but it's an untestable hypothesis, especially if I have no basis for believing it. 

      "Another writer, an MMT criticizer, uses an example of U.S. big market players using other currencies for their transactions, (Francs, Yen, whatever), and only converting to dollars at the moment of need for a dollar required transaction."

      What was HIS mechanism?  And what was HIS reasoning?  I can hardly defend MMT against something when I have no idea what made the writer think that this scenario could happen.

      I'm more than happy to stay here and explain everything I know about MMT, but I need something solid to go up against.  I haven't come across a critic yet that has produced a good argument against MMT mechanics, or even MMT policies.  People are "uncomfortable" with the new ideas, but nobody has ever been able to convince me that I should be uncomfortable with them as well. 

      "Finally, I must both curse you and thank you. The "damn you" curse is for showing me another rabbit hole to chase something down, (my quest to understand MMT), and the thank you is for providing the prompt that caused me to learn something."

      I'm happy to have led you there. 

      I understand what you mean about the rabbit hole.  I was introduced to MMT on a debate site that I frequent.  The thread started at the end of 2010 and lasted for almost two years.  I have been obsessed with the idea for over three years now.  But getting other people to listen long enough to understand has been like pulling teeth.  That's my curse.

      1. GA Anderson profile image86
        GA Andersonposted 2 years ago in reply to this

        Thanks for the reply John, I started a new thread, (to avoid the continued hijacking of this one), to answer you. I hope you find it.

        GA

    7. JohnfrmCleveland profile image80
      JohnfrmClevelandposted 2 years ago

      We really should move this discussion over to GA's forum question, because it has gone way off topic.

    8. JohnfrmCleveland profile image80
      JohnfrmClevelandposted 2 years ago

      Can we move this over to GA's forum question, please?  We are completely off the subject of this thread.

      1. 84
        Education Answerposted 2 years ago in reply to this

        Yes, this is a worthy debate, one that I am enjoying and learning about at the same time.  Let's move to the proper forum.

        Best wishes.

        1. JohnfrmCleveland profile image80
          JohnfrmClevelandposted 2 years ago in reply to this

          See you there.

     
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