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Old 03-19-2019, 11:13 AM
 
Location: Kansas City, MISSOURI
7,812 posts, read 2,325,565 times
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https://en.wikipedia.org/wiki/Demand-side_economics
https://en.wikipedia.org/wiki/Supply-side_economics
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Old 03-19-2019, 11:34 AM
 
Location: Ruidoso, NM
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Quote:
Originally Posted by cttransplant85 View Post
What are you talking about? We had extremely high inflation during the Carter years 18% by the end of his term.
The high inflation of the late 70s were caused by the growing pains of instituting fiat currency and Opec creating an oil shortage. Nothing to do with supply or demand side policy. Inflation was low for the 40 years prior when a lot of demand-side policies were made.

Quote:
What you want is an abundance of supply, too much supply where it brings down prices.
You are turning it into a chicken and egg problem, but it isn't. Business decisions are based on expectation of demand. Investment in higher production will only occur if higher sales are expected. This is the systemic problem we've created. Companies in aggregate have accumulated loads of capital (profit), but they don't invest in production because wages (demand) are depressed. Instead they bid up asset prices. That is why RE is inflated, and stock P/E is at all time highs.

It's a matter of intelligent policies and laws to create an optimal "economic playing field". We know how to do this; we've done it in the past, and could easily do it now. The problem is that the few beneficiaries of the "trickle down" BS we've had for 40 years, like it the way it is. And they get what they want.
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Old 03-19-2019, 05:42 PM
 
15 posts, read 2,102 times
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Quote:
Originally Posted by rruff View Post
The high inflation of the late 70s were caused by the growing pains of instituting fiat currency and Opec creating an oil shortage. Nothing to do with supply or demand side policy. Inflation was low for the 40 years prior when a lot of demand-side policies were made.



You are turning it into a chicken and egg problem, but it isn't. Business decisions are based on expectation of demand. Investment in higher production will only occur if higher sales are expected. This is the systemic problem we've created. Companies in aggregate have accumulated loads of capital (profit), but they don't invest in production because wages (demand) are depressed. Instead they bid up asset prices. That is why RE is inflated, and stock P/E is at all time highs.

It's a matter of intelligent policies and laws to create an optimal "economic playing field". We know how to do this; we've done it in the past, and could easily do it now. The problem is that the few beneficiaries of the "trickle down" BS we've had for 40 years, like it the way it is. And they get what they want.
So its up to a president or congress that not full of rich people to change policies back to where it needs to be correct?
After all most got rich because of tax cuts, policy changes and not spending ( putting money back on the market).
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Old 03-19-2019, 08:23 PM
 
Location: Ruidoso, NM
5,331 posts, read 4,953,527 times
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Quote:
Originally Posted by m4c6yv3r View Post
So its up to a president or congress that not full of rich people to change policies back to where it needs to be correct?
If our government was effective, this wouldn't have happened in the first place. Now not only is the government ineffective, but the public is distracted, divided, and confused like never before. Democracy is dead I'm afraid... if it ever was alive.

I think the rights, privileges, and living standards that we've enjoy for the last couple hundred years are a direct result of industrialization and mass production. The cycle of production and consumption meant that the rich could not get richer unless the masses did as well. And when war time arrived, leading edge tech and high aggregate production and productivity were necessary for securing victory. Very darwinian. But the rich found a way to divorce themselves (temporarily, but 40 years and running!) from a dependence on rising consumer incomes. It was brilliant and I'm very impressed with how well it's been executed.

This symbiotic socio-economic relationship is likely coming to and end, via AI. And the likely outcome of that will not be good for us unless democracy becomes real.
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Old 03-19-2019, 09:07 PM
 
Location: Kansas City, MISSOURI
7,812 posts, read 2,325,565 times
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Quote:
Originally Posted by James Bond 007 View Post
Incidentally ...

Quote:
The Bill Clinton years represent a counter-example to supply side economics as tax increases coincided with record job creation. President Clinton presided over the budgets for fiscal years 1994–2001. From 1998 to 2001, the budget was in a surplus for the first time since 1969.

Clinton signed the Omnibus Budget Reconciliation Act of 1993 into law, which raised income taxes rates on incomes above $115,000, created additional higher tax brackets for corporate income over $335,000, removed the cap on Medicare taxes, raised fuel taxes and increased the portion of Social Security income subject to tax, among other tax increases. The bill was strongly opposed by Republicans, vigorously attacked by John Kasich and Minority Whip Newt Gingrich as destined to cause job losses and lower revenue. Nonetheless, income tax revenues nearly doubled in dollar terms, from $510B in 1993 (7.5% GDP) to $994B in 2001 (9.4% GDP).[52] Income tax rates were still at historically low marginal rates however.

More jobs were created during the Clinton era than the Reagan era in both relative and absolute terms and the rate of GDP growth was higher. Defense spending was held roughly flat in dollar terms at $282B in 1994 (3.9% GDP) and ending at $306B in 2001 (2.9% GDP). Likewise, non-defense discretionary spending fell from 3.6% of GDP in 1994 to 3.2% of GDP in 2001. The combination of increasing tax revenues and falling spending relative to GDP moved the budget from a 2.8% GDP deficit in 1994 to a 1.2% GDP surplus in 2001.
So, yeah, demand-side economics aren't necessarily bad.
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Old 03-19-2019, 10:53 PM
 
Location: Ruidoso, NM
5,331 posts, read 4,953,527 times
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Quote:
Originally Posted by James Bond 007 View Post
Incidentally ...
There was one major fortuitous anomaly in the 90s though. The explosion of a new industry (computers and internet) that was centered in the US. We even closed the trade gap for awhile. Policy changes were minor IMO, we just had a booming new business.
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Old 03-20-2019, 02:51 AM
 
Location: Los Angeles
2,855 posts, read 1,527,817 times
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Quote:
Originally Posted by rruff View Post
There was one major fortuitous anomaly in the 90s though. The explosion of a new industry (computers and internet) that was centered in the US. We even closed the trade gap for awhile. Policy changes were minor IMO, we just had a booming new business.
Yep, productivity in the U.S. economy had slumped since the 1970's despite increasing importance of personal computers. That led Nobel laureate economist Robert Solow to famously quip, “you can see the computer age everywhere but in the productivity statistics."

That all changed in the late 90's when GDP growth took off – averaging 4.3% a year in real terms from 1996-2000. This boom was driven by efficiency increases in the production of IT, including computers, software and telecommunications components.

But this came on the heels of two tax increases in the early 90's (Bush senior in 1990 and Clinton in 1993). So the larger point is that the supply-side mantra of cut cut and cut more taxes is just ideological posturing.

Again, I am NOT saying the tax increases led to the boom but the important point is you can have a government that is fiscally responsible and actually pays for the services it provide with TAXES...as opposed to putting the tab on a credit card to the future on behalf of comforting the already comfortable with upper bracket tax cuts.
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Old 03-20-2019, 02:54 AM
 
Location: Los Angeles
2,855 posts, read 1,527,817 times
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Quote:
Originally Posted by CaliRestoration View Post
You're right, Keynes was not a supporter of the minimum wage.

But do you deny that those of his line (Krugman, Stiglitz) are not hardcore minimum wage proponents?
If you want to debate the minimum wage then create a thread on that topic...there have been many in the past. The larger point is the entire premise of your thread is fatally flawed.
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Old 03-20-2019, 10:48 AM
 
Location: Ruidoso, NM
5,331 posts, read 4,953,527 times
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Quote:
Originally Posted by Astral_Weeks View Post
...you can have a government that is fiscally responsible and actually pays for the services it provide with TAXES...as opposed to putting the tab on a credit card to the future on behalf of comforting the already comfortable with upper bracket tax cuts.
Trade deficits and fiscal deficits go together. It's very hard to have one without the other. And the trade deficit has facilitated the gutting of unions and increasing profits. None of this has happened by accident.
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Old 03-20-2019, 06:14 PM
 
Location: Ohio
18,982 posts, read 13,829,235 times
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Quote:
Originally Posted by GotHereQuickAsICould View Post
As there appears to be a fair amount of confusion over supply side versus demand side economics, would you please summarize the two and describe how they differ.
Part of the problem has to do with the fact that there are two distinct definitions of Supply-Side Economics, one dealing with production and the other about efficiency.

Your Standard of Living is so high precisely because of Supply-Side Economics.

Right?

You cannot have what you do not produce.

The other facet of Supply-Side Economics has to do with efficiency, primarily through taxation and in particular something known as the marginal tax rate.

I'm a Supply-Sider on both accounts, because I want productivity to increase Standard of Living and there is an optimal marginal tax rate that will generate the greatest amount of revenues while simultaneously increasing efficiency in the economy....which leads to greater productivity and an higher Standard of Living.

Increasing the marginal tax rate creates inefficiency, stifles job growth, ultimately leads to job losses, and then never generates the amount of anticipated revenues, which then leads the rallying cry of increasing the marginal tax rate even more to offset the revenues never realized and it goes downhill from there.

Quote:
Originally Posted by rruff View Post
The high inflation of the late 70s were caused by the growing pains of instituting fiat currency and Opec creating an oil shortage.
That's not what happened.

Monetary Inflation and Wage Inflation began creeping into your economy in 1968. Years later, Nixon's Wage & Price Freeze ended Wage Inflation, but as anyone with half-a-brain knows, that has no bearing on Monetary Inflation, which kept rising.

Then you had the OPEC embargo.

There was no oil shortage. What you had was a gasoline and diesel shortage.

There's a reason why you imported Arabian Light, Iranian Light, Es Sider, Gulf of Suez Blend, Oman, Dubai and all the others, and that reason was to nearly double your gasoline supply over-night without having to build any new refineries.

Since the demand for gasoline and diesel did not change, and the supply dropped sharply, that created Demand-pull Inflation which central banks are powerless to stop. Even though you still relied heavily on rail, the prices of goods increased for those goods transported by truck.

The fiat currency was instituted by FDR, not Nixon, so you'd been on a fiat currency since the 1930s.

You apparently don't understand the gold you had backed your debt, not your currency, but none of that matters, since it had no effect whatsoever.

We can look at exchange rates to see how it no effect at all.

1 Jun 1973 $1 USD

DM 2.68
Yen 261
Dutch Guilder 2.79
French Franc 4.31
Swiss Franc 3.08
Swedish Krona 4.24
Pound Sterling 0.31

1 Jun 1974 $1 USD

DM 2.63
Yen 282
Guilder 2.66
French Franc 4.91
Swiss Franc 2.99
Swedish Krona 4.34
Pound Sterling 0.42

No significant changes. The US Dollar remained just as strong on the Gold Standard as it did off the Gold Standard.

Quote:
Originally Posted by rruff View Post
Trade deficits and fiscal deficits go together.
There's no relationship. You had trade surpluses for decades and still ran fiscal deficits, which debunks your claim.

Quote:
Originally Posted by InchingWest View Post
Supply side economics is bunknum. It essentially say: "if you build it, they will come".
That's not even close, but I can see why a 3-year old might think it says that.
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