Re: Budget deficits and GDP

On Sat, 01 Dec 2007 06:53:49 -0800, Lysander wrote:

On Nov 30, 11:29 pm, The Trucker <mik...@xxxxxxxxxxx> wrote:
On Thu, 29 Nov 2007 11:19:37 -0800, Lysander wrote:

Investment has almost _NOTHING_ to do with savings in a fiat money system.
I am always amazed when a neoconomist says there is no crowding out and
then gets right back on that ridiculous trickle down pony.


Quite the contrary. Investment is sometimes, but not always, financed
by loans provided from the banking system. The banking system can't
loan without foregone consumption.

Horse***/lie. With you it is hard to tell whether you are just ignorant
or actually aware yet lying. In any case government can most definitely
invest without any foregone consumption. The Reagan and Bush people have
proved this in spades. Their investments suck but the fact remains as I
have stated it. They have "borrowed" (unnecessarily of course) in order
to finance pig *** that busted the government.

For a bank to make a loan people
have to deposit money in the bank and the bank has to have people that
keep money in the bank. Deposits create excess reserves for loans. If
deposits are less than withdrawals reserves are dropping and the
amount of loans you can support is decreasing. Savings is necessary
for loans to occur.

Savings in the form of "paid in capital" (shareholders for instance and to
a very small extent CD's and government debt instruments) are necessary
for a bank to exist and for that bank to be able to create loans. But the
"savings accounts" at the bank have absolutely nothing to do with the
bank's loans. Little banks (banks with a small amount of paid in capital
and a small number of CHECKING account depositors) make small loans and
big banks (banks with many stockholders -- paid in capital -- and many big
checking or NOW account depositors) make big loans. When the loan is
"created" it exists in the bank making the loan. The borrower then writes
a check to some 3rd party and that third party deposits the check in a
different bank. But that is only the beginning of the story because the
receiving bank also loans money and the borrower at that bank will do like
wise and move money to yet another bank. And so on and so on. And so
long as the little banks make little loans and the big banks make big
loans then at the end of the day it all balances out and everybody still
has a musical chair. The money swirls around among the banks and is not
real money at all. It is only credit. And as the money is created and
placed into the accounts it creates the necessary "reserves". Canada
doesn't even have a "reserve requirement".

Saving is also necessary to invest. By buying a newly issued corporate
bond or a corporation deciding to retain earnings consumption is
foregone and savings exist.

Believe me, Bosco. There is MORE then adequate money in this system to
fund every stinking investment that any business puke can come up with.
And for the most part it isn't needed anyway.

The 90's is one long display of the data and the facts. Yet you dismiss
the data as being a reflection of the "business cycle" as oppose to at
least being a very strong indicator that taxes can be increased without
adverse effects on the overall economy. I just can't fathom what the hell
you would be satisfied with as "proof".

You see the Trucker deals in absolutes of proof or disproof. Scientist
dealing with the data suggest. "Proof" is a very hard thing to
provide. The data can suggest things. However, the Trucker's data is
not detailed enough to suggest anything about how consumption changes
when income changes.

Get it fixed, liar. You claim there were other contributing factors and
do not offer even one shred of anything REAL. All hot air.

Let me give you an example.

Take your tap dancing crap and stick it where the sun don't shine!

<<< bull*** theory about quasi "real" wages deleted >>>

Still not one shred of any other "contributing factors".

The Trucker can not isolate in his analysis the effect of taxes and
does not take into account ANY other factors that could have caused
growth.

That's _YOUR_ problem liar. Where the hell is _YOUR_ data? Where is the
data that shows these mystical powers intervening in the economy and
causing the better results? HMMMMMMMMMMMMMMMMMMMMM???

It is like saying the drain is open and the pool is filling up
so the drain being open must help the pool to fill. No the truth is
water is being pumped in at a faster rate than it is being pumped
out.

Which is the case!!! The economy got better because the thieving rent
collectors were actually INVESTING for capital gains tax treatment instead
of paying the 38% on interest and rents.

Tax increases were not the cause of growth in the 1990's. The economy
was growing too fast in short run terms before the tax increase.

BWAHAHAHAHAHAHAHAHAHAHA!!!!!!! Yet another absolute fabrication. Nice
claim liar. Where's the data?

The
taxes dampened AD without increasing unemployment because the economy
was operating at the natural rate of unemployment and AD was rising
meaning it was only affecting prices and not output. It was a correct
action to lower AD.

Tap, tap, tap, dance, dance, dance. And then the Good Fairy bit Santa on
the leg. Here's the unemployment numbers, Bosco:

http://www.greatervoice.org/econ/data/unemployment.jpg

For the Truckers claim that the rich react differently to tax cuts and
you can increase spending while increasing taxes and still stimulate
the economy the 1990's are meaningless.

And where did I claim that in the 90's there was increased spending???
I am absolutely convinced that it is entirely possible to increase
progressive taxation and increase government spending without adverse
effect to the real economy. But I did not make that claim in regard to
the 90's at all.

Spending and taxes did not
increase. Spending was decreasing and taxes rising.

Well, at least you are now admitting that the taxes increased. It has
taken a while to get this far.

You need data on
how consumption changes for different income groups when they receive
an extra dollar, this does not even have to be from taxes, to support
a claim that consumption from the rich will not be affected by higher
taxes. You need data on how much the savings and investment for the
rich change when they receive an extra dollar to support a claim that
high taxes will not lower investment. You have to isolate the effect
of increasing investment demand from the effect of receiving less
income to make a conclusion such as the Trucker makes.

Horse***! Where are the data that refute my analysis. I presented the
data that show the facts that I see. You have presented NOTHING but hot
air.

I can not deny that the 1990's saw good growth rates and the top
bracket was higher than the 1980's albeit, much lower than the 1970's.

Thank you for admitting that at last.

I see no evidence to suggest this is anything more than spurious
correlation however. Anyone who believes this is causation is the
type who believes who wins the super bowl determines returns in stock
market simply because bull markets are correlated with the AFC winning
the superbowl.

Rubbish.

The Trucker fails to realize their is a myriad of variables at play.

No! Liar! The Trucker does not believe that there were no other "factors"
in play. There is no such thing as a test lab for economics. It will
NEVER ever be done that way. Once a particular path is chosen the others
are forgone and there is no way to control the environment to eliminate
all other factors. But the detractors should be called upon to show some
additional contributing factors that can be substantiated. I can't find
any, but that doesn't mean they aren't there. It's your dead skunk. You
go sniff it out.

Changes in the money supply affect how the economy "grows" in the
short run.

Interest rates were slowly falling in the period because inflation was
_GONE_. But the inflation was gone because the _real_ economy was working
properly WITH THE TAX INCREASES. You will not be selling the bull*** line
that the Fed was causing the economic improvement. The economic
improvement was ALLOWING the Fed to let up on the interest rates.

Changes in investment demand, changes in desired
consumption, government expenditures, and terms of trade with other
nations all have effects on whether there is a recession or expansion
not just taxes. Failing to control for these other factors is a recipe
to find spurious correlation.

The claim that I have made encompasses all of that. It is exceedingly
simply: When taxes on interest and rents and the like are a lot higher
than taxes on capital gains then the people which money invest for capital
gains as opposed to just sucking on T-Bills. That is the actual claim.
You just keep trying to make up some crap that I didn't claim.

I have no problem with the Trucker saying Republican zealots were
wrong when they said the higher taxes would lead to a recession. This
was a misunderstanding of economic principles and a statement made
with no knowledge of where the US was in the business cycle.

There ISN'T a magical "business cycle". The @#($&$%^ "business cycle" is
_CAUSED_ by inappropriate fiscal and monetary policies.

However,
just because they were wrong does not mean he is right in that somehow
increased taxes and decreased spending stimulated short run growth.

AGAIN! The purposeful distortion of my position (this time by omission of
the critical component).

The data and the rationality both say
that progressive tax increases are _GOOD_ for the economy, yet you will
not abandon your religious position.


The data say nothing of the sort. In fact there is no data you have
posted that even begins to isolate the effect of a progressive tax
system. This is false cause. That is assuming one event caused the
other simply because they occurred at the same time.

I also can't prove that the tides are caused by the moon. They simply are
"coincidental".

If highly progressive tax systems are always good for the economy why
did their imposition not cure the great depression?

1. Have you ever heard of the ##$()$#&^%$* Dust Bowel.
2. Where was the special tax treatment for investing in the tax hikes?
3. And the data show that the GDP improved steadily after the initial
tax increase and UNTIL the LAST tax hike with no investment loopholes.

Now, boys and girls, I want you to notice the difference between
Lysander's "claims" about other factors and mine. I actually cite the
other factors as opposed to just imagining some unknown booger man or
Good Fairy into existence to account for data I don't like.

Why do we see much
lower growth rates in the 1970's when the tax system was more
progressive for the 1990's? If you answer because there were other
factors you might start to see my point.

There were very H_U_G_E_ differences in the two periods. The inflation
rate in the 1970's was rather high to say the least and interest rates
were likewise heading up for ONE IMPORTANT DIFFERENCE. There was also too
much special treatment of real estate and tax shelters based primarily on
real estate. The inflation INVITES, correction, DEMANDS real estate rent
seeking as opposed to actual capital investment. Capital gains rates were
increased in the 70's and no adjustment to the top income tax rate
occurred until 1981. There was ALSO AN INCREASE IN FICA TAXES in the
70's. That is the worst possible thing to do for AD. Taxing lower incomes
is the kiss of death. We already covered this.

The data do not indicate a more progressive tax system more growth.

See above... Now lets see you come up with something concerning the
period for which I have supplied the data -- The 1990's.

The tax system was much less progressive from 1993 to today than the
1930's to the 1980's yet by your argument we see higher short term
growth than the 1930's to 1980's. Sorry but this blows your cherry
picked hypothesis right out of the water and indicates something else
is causing this.

There is no reason to continue to waste any more of my time on this.
Lysander is a lying distortion artist that will forever dance around every
shred of logic, reason, or data and continue to lie about my position and
to lie about the actual data.

--
"I know no safe depository of the ultimate powers
of society but the people themselves; and
if we think them not enlightened enough to
exercise their control with a wholesome
discretion, the remedy is not to take it from
them, but to inform their discretion by
education." - Thomas Jefferson
http://GreaterVoice.org/extend

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