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i don't agree. i'd compare it to a football game that never ends. you're going to need a big scoreboard.
We can print money but much of the rest of the world can not. The economy is tied too much to the rest of the world today for a football game that never ends unless you are OK with a growing portion of the world becoming third world countries.
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If you expect the price of the house to decline, you'd be a fool to buy it. You'd just rent it and enjoy your annual decrease in rent caused by the deflationary environment.
Apply this mentality of debt-aversion across the entire economy, particularly manufacturing, and you get something that looks like the great depression.
This would be built into rent also. I would not be a fool to buy either. So I rent or buy for $700 a month. I still get a good portion of that back when I sell where I do not get anything back when I rent. I still at the end of the road have an asset that my kids can sell. I still have a place I can change as I wish.
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because our monetary policy sucks. our government outsourced it to private banks (primary dealers), and they care about short-term profits -- not the greater good of the nation, the long term or the big picture.
Of course but I will note that I am not the one arguing that we should continue down the same path.
When the economy is thriving that means more people are working which means more tax dollars being collected. Right now we have millions out of work who aren't paying taxes to the government while at the same time collecting benefits. That has to change. The only thing I'm seeing at this time is the government stifling business with regulation on top of regulation. We also add in the healthcare mandate and this is only stifling expansion further. Government needs to get out of the way and let the economy heal itself which it will do.
This is how Bush did it after the dot-com crash Clinton handed him...
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Mr. Obama could learn an important lesson for his own economic plan by studying Mr. Bush’s two very different attempts at tax-cutting. As the Wall Street Journal’s Stephen Moore illuminates in his 2008 book “The End of Prosperity” (Threshold Editions), Mr. Bush’s 2001 tax cuts failed to revive an economy still staggering from the bursting of the dot-com bubble. Mr. Bush’s strategy had been to adopt a demand-side, Keynesian stimulus, hoping that putting a few extra dollars in Americans’ pockets would jump-start the economy through increased consumption. This approach faltered, not just because Americans opted to save their rebates, but because it neglected the importance of business investment to overall growth. Predictably, the economy lagged and government revenues stagnated. What the United States needed then (and needs now) was to stimulate investment, not consumption. By 2003, Mr. Bush grasped this lesson. In that year, he cut the dividend and capital gains rates to 15 percent each, and the economy responded. In two years, stocks rose 20 percent. In three years, $15 trillion of new wealth was created. The U.S. economy added 8 million new jobs from mid-2003 to early 2007, and the median household increased its wealth by $20,000 in real terms. But the real jolt for tax-cutting opponents was that the 03 Bush tax cuts also generated a massive increase in federal tax receipts. From 2004 to 2007, federal tax revenues increased by $785 billion, the largest four-year increase in American history. According to the Treasury Department, individual and corporate income tax receipts were up 40 percent in the three years following the Bush tax cuts. And (bonus) the rich paid an even higher percentage of the total tax burden than they had at any time in at least the previous 40 years. This was news to the New York Times, whose astonished editorial board could only describe the gains as a “surprise windfall.”
We can print money but much of the rest of the world can not.
correct.
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Originally Posted by pknopp
The economy is tied too much to the rest of the world today for a football game that never ends unless you are OK with a growing portion of the world becoming third world countries.
uh.. how does the interconnectedness of the economy make US inflation turn the rest of the world into third-world countries?
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This would be built into rent also. I would not be a fool to buy either. So I rent or buy for $700 a month.
Right, and in this deflationary environment we're talking about, over time that $700 becomes a larger and larger burden, because your income is decreasing every month. Your payment, by staying static in a deflationary environment, is getting more expensive over time.
If you'd chosen the rent, your rent would decline along with the decline in pay and decline in housing prices.
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I still get a good portion of that back when I sell where I do not get anything back when I rent.
Maybe if you consider a negative number to be "a good portion"
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I still at the end of the road have an asset that my kids can sell. I still have a place I can change as I wish.
Or you could've saved the difference between your rent and your mortgage payment, invested it in bonds, and then bought a far more expensive house 10 years later and left it to your kids.
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Of course but I will note that I am not the one arguing that we should continue down the same path.
Nobody is arguing that we should continue down the same path.
I don't know if you've forgotten what we were talking about, but you've been arguing that deflation is good.
No it isn't. This is economic theory that doesn't play in the real world. The only way the government can grow GDP is inflation. Inflation causes people to spend less. People spend less and more are unemployed. We are forced to go farther in debt to cover welfare programs.
The debt goes to 22 trillion.
We clearly see this in action today. It's why unemployment is not falling but rather showing signs of doing the opposite.
No, it is possible to grow the size of the econmy and keep it healthy, and have full employment. Larger economy would make it easier to service the debt.
When the economy is thriving that means more people are working which means more tax dollars being collected. Right now we have millions out of work who aren't paying taxes to the government while at the same time collecting benefits. That has to change. The only thing I'm seeing at this time is the government stifling business with regulation on top of regulation. We also add in the healthcare mandate and this is only stifling expansion further. Government needs to get out of the way and let the economy heal itself which it will do.
That is a partisan view. The biggest problem we have is the political atmosphere, where politicians spend their time trying to sabotage whatever others are trying to build.
Well this latest round of QE3 and buying mortgages is doing nothing but making the banks richer.
The spread is now near 2% and banks are raking it in rather than passing that discount to the borrower.
uh.. how does the interconnectedness of the economy make US inflation turn the rest of the world into third-world countries?
Look at the PIIGS. Look at the riots. What happens when Germany decides they can no longer afford to support them? It gets even worse. They then start immigrating here. We as noted do not, will not have jobs for them so we either are forced to start turning them away or get further and further into debt to provide for them.
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Right, and in this deflationary environment we're talking about, over time that $700 becomes a larger and larger burden, because your income is decreasing every month. Your payment, by staying static in a deflationary environment, is getting more expensive over time.
Income has no option but fall sooner or later in todays world. More and more jobs leave for places that will work for a fraction of what we get paid here. Falling income with ever increasing inflation is going to be the real mess. Income falling or more likely remaining mostly static is not a problem as long as prices do the same.
Right now we are actually seeing incomes falling with inflation growing. More of the same is only going to cause that t0 grow even further.
Again we are seeing what I am saying working today. The government has decided to take the route of monetizing the debt. We are not creating jobs. Wages are falling. No? Yes.
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Maybe if you consider a negative number to be "a good portion"
A positive number is never a negative number.
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And you will have paid a ridiculous premium for that.
Ridiculous? Hardly, as I note it is what people do with cars every day. At the end though there is always the option of not wasting billions of dollars.
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Nobody is arguing that we should continue down the same path.
You are arguing for exactly what we are currently doing. Now maybe your thoughts are not complete such as my example above that notes that we could take the third option of not wasting all the money we do.
Well this latest round of QE3 and buying mortgages is doing nothing but making the banks richer.
The spread is now near 2% and banks are raking it in rather than passing that discount to the borrower.
Right. Wages are falling, unemployment is stagnant at best, starting back up at worse but the banks are getting rich.
The 'fiscal cliff' is the result of the debt limit 'hostage' negotiations last year. Both parties were a part of creating this 'automatic cuts' solution, and because neither party got serious about the manual/planned spending cuts, we will not have to face the automatic cuts. You get what you ask for.
Romney keeps talking about cuts, but if you ask him what he would cut specifially, he refuses to say. The Congress has done the same, they refuse to cut anything because they fear the citizens would be upset about the cuts.
BS. The fiscal cliff is the result of the expiration of the Bush tax cuts and the Obama payroll tax cut.
For years you libs denounced the tax cuts as a benefit to the rich. Some of us pointed out that 80% of the tax cuts went to the middle class and the poor, which you totally dismissed. Now that the CBO has concurred, and the middle class is about to take a big hit, it's suddenly my problem?
No, it is possible to grow the size of the econmy and keep it healthy, and have full employment. Larger economy would make it easier to service the debt.
It's not possible for the government to do that. It is certainly not what we are doing today. More of what we are doing today is not going to work.
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