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Old 09-19-2008, 09:26 AM
 
Location: western East Roman Empire
8,074 posts, read 11,881,969 times
Reputation: 8087

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We have galloped towards a command economy system, like ancient Egypt or, more recently, the Soviet Union.

The Bush adminstration has started it through monetary policy, McCain or Obama will continue with that, and Obama would finish the gallop to the goal line through fiscal policy.

The underlying problem is that the average US worker has lost a lot of relative competitiveness in the global economy, while at the same time the country's monetary and credit policies completely papered over that reality by encouraging the massive allocation of resources to inefficient housing just as the global energy paradigm has shifted.

The government artificially intervened in the money and credit markets, setting interest rates too low for too long, grossly impairing the currency's ability to act as a means of exchange, unit of account, and most of all, I would say, a store of value. By fiat, by government command, through the monetary system, the country misallocated resources.

How do we get back on a path to creating productive jobs for the average worker?

Reform of the monetary system and of the Federal Reserve, letting the markets set interest rates and re-introducing prudent credit policies?

Protectionism and government-determination of investment (based on what saving? or more borrowing?) to create work in what the government decides are strategic sectors through fiscal policy?

Restoring real market principles and the price mechanism to determine the allocation of resources, though re-introducing prudent regulations on credit policy, and perhaps mixed in with a reforms on corporate taxation?

Some combination of the above?

The most alarming thing, with either presidential candidate, is that monetary reform and reform of the Federal Reserve are not on the agenda; on the contrary, the movement is toward giving Treasury and the Fed more command power over the economy.

Meanwhile, it seems that the Obama plan is geared towards protectionism and government-determination of investment (based on what saving? or more borrowing?) to create work in what the government decides are strategic sectors through fiscal policy.

We have already shot ourselves in the foot with cockamamie monetary policy and no improvement is in sight. Now we risk shooting ourselves in the other foot if we don't get fiscal policy right.

Is a command policy, perhaps mixed with protectionism, necessary to transition from unproductive, uncompetitive jobs and to overcome the energy constraint?

Or is returning back to market principles the way to go?

In my view, returning back to market principles is the way to go, in theory, but the reality is that we have galloped towards a command system, first via monetary policy, and to get out of the hole we are in, a command system through fiscal policy seems in the offing as well, whether or not it is the right path.

For sure, in a leadership vacuum, hobbling on one leg, we will take further steps towards a command system through Treasury and Fed control. On top of that, we could be reduced to complete cripples if we don't get fiscal policy right.

What do other posters think?
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Old 09-20-2008, 12:57 AM
 
Location: Ohio
22,798 posts, read 16,026,282 times
Reputation: 19289
Quote:
Originally Posted by bale002 View Post
We have galloped towards a command economy system, like ancient Egypt or, more recently, the Soviet Union.

The Bush adminstration has started it through monetary policy, McCain or Obama will continue with that, and Obama would finish the gallop to the goal line through fiscal policy.
You can always spot the people who have never been in a "communist" country.

In a Command Economy, the government dictates wages. It tells you where you will work and what job you will do. The government dictates prices, and it allocates resources.

The first thing you noticed in "communist" countries is no car lots. No new car lots and no used car lots. If a used car worked, you could sell it on the black market for a nice price. For a new car, you went to the post office, filled out a form, and started making payments.

When you finished making payments, you'd get a postcard in the mail telling you where to pick up your car, and hopefully, you liked the color because you weren't allowed to choose the color of your new car.

That's why 1984 was a banner year for East Germans. For the first time they could choose the color of their car, among blue, red, tan and green. Black was for party officials and white wasn't allowed.

The government doesn't authorize cotton to be used to make denim jeans. So I'm in Szeged at a nightclub and this maghiara has a nice pair of leather pants and he wants my Levi's, so we traded right there in the club. I used to trade and sell Levi's at Soviet Checkpoint Magdeburg.

If you see a line, you drop what you're doing and go stand in line. You don't care why. It might be the last of the bread or vodka for the month, or maybe it's something very very special, like corn. You ain't had corn in 3 years and now grocer has a small amount, you'd better get in line or you won't get any for another 3 years. Maybe it's Cuban rum. You'd be a fool not to get in line. You could buy a few litres keep one for yourself and black market or trade the rest.

That's life in a Command Economy.

You do have some aspects of Command Economics, like Social Security, Medicare, Medicaid and "health insurance."

Quote:
Originally Posted by bale002 View Post
The underlying problem is that the average US worker has lost a lot of relative competitiveness in the global economy
They haven't lost competitiveness, rather the rest of the world is catching up.

Quote:
Originally Posted by bale002 View Post
while at the same time the country's monetary and credit policies completely papered over that reality by encouraging the massive allocation of resources to inefficient housing just as the global energy paradigm has shifted.
It takes at least 3 to have a circle-jerk.

Blame should be equally apportioned to developers, the banks who lent developers money and the greedy materialistic Americans wanting increasingly larger houses.

Quote:
Originally Posted by bale002 View Post
The government artificially intervened in the money and credit markets, setting interest rates too low for too long
That was the Federal Reserve, not the government. The funny thing is that if the Federal Reserve had not lowered rates, everyone would have been whining that they should lower rates.

Congress doesn't get a free ride, because it can negate any action the Federal Reserve takes, but then why didn't Congress take action? Americans want to see nice pretty numbers and they panic when they don't. You can't blame Congress for meeting the self-fulling prophecy set by Americans.

Quote:
Originally Posted by bale002 View Post
How do we get back on a path to creating productive jobs for the average worker?
We don't. If someone wants a job, they can start their own business, and if they don't know how, they can ask for help and if they can't then they can work for someone who is smarter than they and be a cog in the machine.

Providing jobs is what "communist" countries do.

Now if you wan to provide incentives to steer people and businesses toward certain economic sectors, that's different.

How about no federal taxes or social security taxes for single family farms, with interest free loans and state and federal EPA waivers?

Doesn't that sound good? That's good job creation. Ohio has 4.0+ Million acres of fallow farm land doing nothing except getting eaten up by urban sprawl.

That's something that needs to be done in the next 4-6 years, otherwise a lot of people will wish they were dead.

Quote:
Originally Posted by bale002 View Post
Reform of the monetary system and of the Federal Reserve, letting the markets set interest rates and re-introducing prudent credit policies?
That's great for Sweden or Denmark, but not for a country that wants to be a world power.

Quote:
Originally Posted by bale002 View Post
Protectionism and government-determination of investment (based on what saving? or more borrowing?) to create work in what the government decides are strategic sectors through fiscal policy?
I'm not opposed to limited protections for key industries in defense or national security, but with continuing Cost Inflation protectionism will only recreate 1930 that much faster.

Quote:
Originally Posted by bale002 View Post
Restoring real market principles and the price mechanism to determine the allocation of resources, though re-introducing prudent regulations on credit policy, and perhaps mixed in with a reforms on corporate taxation?
That's tough. It's a consumer driven economy. 72% is consumer spending and what part of that is credit spending?

I don't know. Given credit card debt and auto loan debt, obviously a huge chunk.

You want to raise interest rates, then credit card and auto loan interest rates go up and you have people defaulting or spending less. Tell banks they cannot raise interest rates and they start sending out notices to customers notifying them that their credit limits have been reduced, start making less money available for new lines of credit and reduce available credit for auto and other loans.

Same boat, different color, and both are missing an oar.

What is it now? 1.4% Agri-Business, 13% Manufacturing, and the rest is Health Care, Government, Retail, Hospitality/Entertainment and (useless) Services (like colonic irrigation).

Quote:
Originally Posted by bale002 View Post
The most alarming thing, with either presidential candidate, is that monetary reform and reform of the Federal Reserve are not on the agenda; on the contrary, the movement is toward giving Treasury and the Fed more command power over the economy.
None of that is relevant. The killer is Cost Inflation. There's only two ways out, stop consuming, which leads to instant recession/depression, or increase the supply of commodities on the world market.

If nothing is done, then Cost Inflation will continue to erode disposable income very slowly until the US does eventually enter recession.

I mean no one will give a damn about Federal Reserve policies if they cannot maintain their standard of living.
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Old 09-20-2008, 01:43 AM
f_m
 
2,289 posts, read 7,812,626 times
Reputation: 877
Quote:
Originally Posted by Mircea View Post
That's tough. It's a consumer driven economy. 72% is consumer spending and what part of that is credit spending?
Yes, consumers are the biggest driver, but given that a lot of the consumer spending goes out the back door to made in China and the Middle East, that and easy money have created a mess. You will need to adjust the way consumers spend. Get it to recirculate in the US.
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Old 09-20-2008, 05:23 AM
 
Location: Los Angeles Area
3,306 posts, read 3,662,178 times
Reputation: 592
I think the best way would to be to give me 1 trillion dollars = )
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Old 09-20-2008, 05:44 AM
 
Location: USA
27 posts, read 70,019 times
Reputation: 16
Quote:
Originally Posted by Humanoid View Post
I think the best way would to be to give me 1 trillion dollars = )
Not only u, u can offer the same to anyone
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Old 09-20-2008, 12:27 PM
 
673 posts, read 2,552,638 times
Reputation: 415
Support small, growing manufacturers in the US. They are innovative, energetic, flexible. They were the foundation of this country's economy once upon a time.
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Old 09-20-2008, 01:16 PM
 
5,343 posts, read 8,897,773 times
Reputation: 7670
Companies automatically create jobs to fill their needs, duh. American companies are creating jobs as we speak.....in foreign countries for foreigners.
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Old 09-20-2008, 01:18 PM
f_m
 
2,289 posts, read 7,812,626 times
Reputation: 877
Quote:
Originally Posted by aaauger View Post
Support small, growing manufacturers in the US. They are innovative, energetic, flexible. They were the foundation of this country's economy once upon a time.
I agree with this. I used to work for a small company making products in the US, and yet even with comparable pricing on some items, people would choose to pay the huge markup on Made In China products (which went into the pocket of the importer or salesman).
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Old 09-20-2008, 02:24 PM
 
2,541 posts, read 10,686,182 times
Reputation: 983
try to keep the middle class large and in charge

dont make it so easy for the middle class and upper middle class to make it into upper uber exclusive class

I have nothing wrong with rich people, but you want to keep the money supply more even distributed

Not "90% of actual money in the bank account of like 1% of human beings" situation we have now, or whatever the percentage is

Emphasize small to medium size businesses over jumbo corps that pretty much cartel simple industries like retail

only allow corps in industries that require a huge capital investment to begin with

Corporations running mom and pop businesses out is not be allowed

giving me dictatorship of the USofA
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Old 09-20-2008, 03:45 PM
 
Location: Fort Myers Fl
2,305 posts, read 2,805,787 times
Reputation: 920
Quote:
Originally Posted by Mircea View Post
You can always spot the people who have never been in a "communist" country.

In a Command Economy, the government dictates wages. It tells you where you will work and what job you will do. The government dictates prices, and it allocates resources.

The first thing you noticed in "communist" countries is no car lots. No new car lots and no used car lots. If a used car worked, you could sell it on the black market for a nice price. For a new car, you went to the post office, filled out a form, and started making payments.

When you finished making payments, you'd get a postcard in the mail telling you where to pick up your car, and hopefully, you liked the color because you weren't allowed to choose the color of your new car.

That's why 1984 was a banner year for East Germans. For the first time they could choose the color of their car, among blue, red, tan and green. Black was for party officials and white wasn't allowed.

The government doesn't authorize cotton to be used to make denim jeans. So I'm in Szeged at a nightclub and this maghiara has a nice pair of leather pants and he wants my Levi's, so we traded right there in the club. I used to trade and sell Levi's at Soviet Checkpoint Magdeburg.

If you see a line, you drop what you're doing and go stand in line. You don't care why. It might be the last of the bread or vodka for the month, or maybe it's something very very special, like corn. You ain't had corn in 3 years and now grocer has a small amount, you'd better get in line or you won't get any for another 3 years. Maybe it's Cuban rum. You'd be a fool not to get in line. You could buy a few litres keep one for yourself and black market or trade the rest.

That's life in a Command Economy.

You do have some aspects of Command Economics, like Social Security, Medicare, Medicaid and "health insurance."



They haven't lost competitiveness, rather the rest of the world is catching up.



It takes at least 3 to have a circle-jerk.

Blame should be equally apportioned to developers, the banks who lent developers money and the greedy materialistic Americans wanting increasingly larger houses.



That was the Federal Reserve, not the government. The funny thing is that if the Federal Reserve had not lowered rates, everyone would have been whining that they should lower rates.

Congress doesn't get a free ride, because it can negate any action the Federal Reserve takes, but then why didn't Congress take action? Americans want to see nice pretty numbers and they panic when they don't. You can't blame Congress for meeting the self-fulling prophecy set by Americans.



We don't. If someone wants a job, they can start their own business, and if they don't know how, they can ask for help and if they can't then they can work for someone who is smarter than they and be a cog in the machine.

Providing jobs is what "communist" countries do.

Now if you wan to provide incentives to steer people and businesses toward certain economic sectors, that's different.

How about no federal taxes or social security taxes for single family farms, with interest free loans and state and federal EPA waivers?

Doesn't that sound good? That's good job creation. Ohio has 4.0+ Million acres of fallow farm land doing nothing except getting eaten up by urban sprawl.

That's something that needs to be done in the next 4-6 years, otherwise a lot of people will wish they were dead.



That's great for Sweden or Denmark, but not for a country that wants to be a world power.



I'm not opposed to limited protections for key industries in defense or national security, but with continuing Cost Inflation protectionism will only recreate 1930 that much faster.



That's tough. It's a consumer driven economy. 72% is consumer spending and what part of that is credit spending?

I don't know. Given credit card debt and auto loan debt, obviously a huge chunk.

You want to raise interest rates, then credit card and auto loan interest rates go up and you have people defaulting or spending less. Tell banks they cannot raise interest rates and they start sending out notices to customers notifying them that their credit limits have been reduced, start making less money available for new lines of credit and reduce available credit for auto and other loans.

Same boat, different color, and both are missing an oar.

What is it now? 1.4% Agri-Business, 13% Manufacturing, and the rest is Health Care, Government, Retail, Hospitality/Entertainment and (useless) Services (like colonic irrigation).



None of that is relevant. The killer is Cost Inflation. There's only two ways out, stop consuming, which leads to instant recession/depression, or increase the supply of commodities on the world market.

If nothing is done, then Cost Inflation will continue to erode disposable income very slowly until the US does eventually enter recession.

I mean no one will give a damn about Federal Reserve policies if they cannot maintain their standard of living.

I like when there is something worth reading on this forum. I have faith in Americans though, I believe will survive this and it will make us stonger.
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