Re: The real deal....

That seems to be what Dean Baker & Ron Paul are asking here:

Disclaimer: I have no idea if that would work or not.

-- Les Cargill

It's not reasonable if it's regressive, and that is very regressive.

-- Les Cargill

Consuming more Hondas and Korean wide-screen TVs and Chinese-built cell phones is not a path to prosperity. The economists' mantra "consumer spending drives the economy" made a little sense 40 years ago; it makes a lot less sense now. If it were so, the people in Zimbabwe could spend their way to prosperity.

So the consumption doesn't create jobs. If we consumed more American stuff, we'd have more jobs.

Velocity is not a virtue when the dollars are flowing to China.

A modest tax - 0.1% has been suggested, I'd prefer more - would damp what has become millisecond-scale, wildly unstable speculation. Something like half the MIT graduates are now going into "financial services", namely becoming quants. The NYSE is already getting out of the stock market, because individual suckers have already been bled dry. The new-new thing is derivitives and swaps and options. So much for investing in productive capacity.

Really, with globalization and the internet and deregulation, we are in uncharted territory, where the lessons of history are more useless than ever. The only thing that's predictable is increasing boom-bust cycles. Anybody deep into Social Networking stock?

John

Don't those bonds represent money the fed has "printed"? In effect burning them would simply make this printed money go unaccounted for. Hell, just print a few more trillion and pay off the debt altogether. Hmm, I think I'll borrow some money from myself and then forgive the debt.

It is regressive because poor people spend a larger fraction of their income on consumption.

I don't know how that works. Right now, several states exempt food from sales taxes. Beoming much cheaper rapidly I believe; free, not so much.

I want to optimize general well-being*. Consumption taxes limit people's ability to consume, which reduces the flow of money through the system.

Assuming basic monetarism is true ( sfaik, it still is ), then the Big Bad is when velocity declines - when a dollar turns over fewer times. Consumption taxes reduce the velocity of money.

That's true.

Financial transaction taxes can have really hard to explain unintended consequences.

-- Les Cargill

times.

mandatory

Manufacturing wages are going to China. And lots of formerly good jobs, like construction and roofing and landscaping and cooking are going to immigrants, legal and otherwise, who work cheap and off the books.

Sure, TV sets are cheap. That's great for the people, like most of us here, who have jobs. Not so good for the people who don't have jobs.

Century-old economic concepts don't mean much anymore. Hell, most economic concepts never meant much, any time. When have economists ever predicted or recommended anything useful?

John

You can only do that if you're king.

It's good to be the king.

-- Les Cargill

times.

mandatory

sense.

place,

feeble-

Salivation

the

I think you have failed to remap the outgo of the poor in the revised situation. Food, medical care, and perhaps housing already paid? What consumption it the money going to? Luxuries (name brand instead of = merely functional shoes)? Where does the money go?

lean times.

mandatory

makes sense.

place,

feeble-

Salivation

confiscate the

Not

taxes

regressive.

Rich

more

Apple.

and

Damn, that memo is ten years old now. Haven't you been sent enough = copies yet? The US is on its way to becoming the next Greece.

Look around you. It is. An RCA 15" color TV in 1954 was $1000:

That's $8017.26 in 2010 dollars... *lots* of stuff has gotten cheaper, not just TVs.

You're soaking in it. So what else explains what you see now? Wages have collapsed because labor is *naturally* a declining fraction of production.

If you *really* don't know the difference between the US and Zimbabwe...

That's Mercantilism. Mercantilism is deprecated.

This is not what is meant by that. 'Tis a technical term. When you buy an iPhone, the money almost all goes into retained earnings for Apple.

That's very low velocity.

The more speculation, the better. Keeps prices down.

Yes, and? As opposed to starting another Google?

Why, you'd think the technology leadership in the US had failed or something...

Good God, no. There are only so many mirrors you can sell to the narcissists.

-- Les Cargill

production.

Perhaps. I say they are doing a more thorough job of removing anything valuable (than mere reduction to plasma) before selling as "whole blood".

:'-(

of GDP is

economic

increases.

qualitative

production.

Don't forget to add the hallucinogens.

?-(

Of items that J. Larkin would allow to be exempt.

times.

mandatory

sense.

That's the wrong place to look. Cost pressure means fewer people produce more in manufacturing. It's hardly "going to China"; Chinese labor is cost effective because 30 years ago, the majority of people there were peasant farmers.

That's quite mixed. When there is construction work, some of it is immigrant, some isn't.

If you could still rent a house for $100 a month, car insurance was $50 a year like it all was 30 years ago, people might be able to work in manufacturing.

That one does. Ther'es a lot of mercatilism ot China's policies; it's causing problems. We win that one.

It's not physics. So?

-- Les Cargill

Yes, the math doesn't work out any better when the king does it but he can because he is the king.

It works, it just dilutes the currency, right?

The Treasury sold those bonds, and the gov't spent the money. That released 'new' money into circulation. The bonds were the promise to pull that money back some day.

Forgiving the bonds just leaves the money in circulation permanently.

-- Cheers, James Arthur

In my new location most of those jobs are done by Americans, just like when I was a kid.

Lots is done for cash and off the books, and often by people collecting a subsidy or two. And, illegals are arriving, competing for and displacing the locals. It's like California, twenty years or so ago.

James

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That's how I read it, except you forgot to spend it first. Borrow it from yourself, spend it, *then* forgive yourself.(*)

(*) Because you're good enough, you're smart enough, and gosh darn it, you're just plain special enough.

-- Cheers, James Arthur