In 1933, after a decade and a half of tumultuous politics that frequently turned into street violence, the German “Reichstag” (parliament) empaneled a cabinet led by Adolf Hitler to run things. Hitler’s “Nazi” party was not the biggest party in the Reichstag – they’d actually lost seats in the most recent round of elections – but they were in a strategic political position.
While the Nazis are (mostly mistakenly) called “far right”, the interesting thing is that the “Hitler Cabinet” had about as much support from Communists and Socialists as it did from the populist and “conservative” (which meant monarchists and Catholics, at the time) blocs in the Reichstag. Both sides – Communist and Monarchist – had the same reason to support the Nazis taking control of a coalition government; a bunch of populist extremists with a private army of thugs would drive the German middle to the Left or the Right. That is most extremists’ first goal; make the center untenable.
It backfired on the brilliant minds of the Reichstag, of course; Hitler, promising an end to divisive politics from all sides, forged “Unity” (by co-opting, neutralizing, exiling or killing the geniuses who’d put him in power); his cabinet led the entire world to war seven years later.
The only thing worse than “divisive” politics is no politics at all.
Keep that in mind when you see episodes like those last Saturday at the MN State Capitol, where masked thugs attacked Pro-Trump demonstrators, or two weeks ago at Berkeley, or…well, the list is going on and on and on, even now. I’ve seen more than a few people on social media, no doubt angry and frustrated, exclaim how they’d like to be at the next such rally, to break some heads (and I’ll confess, in my heart of hearts, the thought’s crossed my mind, at least for a moment before I chased it out).
Just like 85 years ago, that plays into the hands of the *real* extremists. Extremists are happiest when they’re creating more extremists – and it doesn’t even matter whose side those extremists are on. And then, when the vast middle gets sick of “politics”, and turn to someone who’ll just bring “order”…
…well, I’d say “we know where this leads”, but all too many Americans really really don’t.
Wall St for Main St welcome back Dr. Mark Thornton, who is a Austrian economist and Senior Fellow at the Mises Institute. In this podcast, we discussed the differences between Keynesian economic and Austrian economic on deflation, interest rates and the boom/bust cycle. Find out why the government and central banks fear and loathe deflation!
http://thenewsdoctors.com/dr-mark-thornton-why-keynesians-have-a-phobia-for-deflation-wall-street-for-main-street/
I highly suggest that you try understand every single word here.
http://www.zerohedge.com/news/2017-03-08/arizona-senate-committee-passes-bill-treat-gold-money-remove-capital-gains-tax
“Today, an Arizona Senate Committee passed a bill that would eliminate state capital gains taxes on gold and silver specie, and encourage its use as currency. Final approval of the legislation would help undermine the Federal Reserve’s monopoly on money.”
“Under current Arizona law, gold and silver are subject to capital gains tax when exchanged for Federal Reserve notes, or when used in barter transactions. If the purchasing power of the Federal Reserve note has decreased due to inflation, the metals’ nominal dollar value generally rises and that triggers a “gain.” In most cases, of course, the capital gain is purely fictional. But these “gains” are still taxed — thus unfairly punishing people using precious metals as money.”
What it comes down to is, central banks can’t affect the economy without legal tender laws–forcing you to use fiat money–and all Ruling Class theft and socialism is 100% dependent on it.
If you pay close attention to Larry Summers, Ken Rogoff, and Krugman (sort of) you can see they are actually, in reality, in total panic about this stuff. They are suggesting desperate measures and central planning ideas that Congress is too stupid to effect. Negative interest rates.
Here you can see a bunch of socialists try to rationalize and fix this crap. It can’t be done. https://twitter.com/dbrauer/status/838949870652157953
Central planning is toast.
I love this. https://twitter.com/Annrhefn/status/839761210404917248
Central banks are going to have to do embarrassing things pretty soon.
What happens these days is, consumer inflation and asset inflation has a more bifurcated effect than in the 70s.
I just posted this on a pay wall site on an interview of Dr. Pippa Malmgren
“We haven’t practiced capitalism since the Fed started. If central banks do anything except back up banks in a punitive way, bad things happen, and people try to make up for it with government and voting. Rent seeking and dependency. Woodrow Wilson centralized the government into a system of statist inflationism. it quit “working” do to the wage deflation from technology and globalized labor. Our Rulers have to have inflation so they can tax it. So most will get screwed. A slightly deflationary economy with a naturally small government is the only humane way to live. Trump is just a natural manifestation of the collapse of the old, dumb system. That is what young people need to know. I hope RV can interview David Stockman about this subject.”
Her Dad is Harold Malmgren. Look him up. His twitter feed is brilliant.
Maybe one of you can help me understand how Liberals think about government debt. I don’t get it.
I mentioned to a guy that Social Security was going broke and he denied it. The cash-flow goes negative in three years when more Baby Boomers are retired than paying in, but the administrators of the Social Security Fund hold Promissory Notes issued by the General Fund so from an accounting perspective, the books balance.
I told him: Yes, but the General Fund can’t afford to repay those notes. If you use “mark to market” valuation, they’re worthless, nobody would buy them. The General Fund borrows from the Social Security Fund and even so, it still runs short hundreds of millions of dollars each year. We’ve racked up 20 Trillion in debt by running short so many years in a row. When it comes time to pay those Promissory Notes back to the Social Security Fund, the General Fund will be even more broke, will have to borrow even more money, will increase our national debt even higher until it all collapses and the nation is bankrupt.
His response: that’s not going to happen. The government can borrow endlessly, it never has to repay the principal, nobody outside the country can call those notes and there’s no consequence if they don’t get paid. We simply keep borrowing and it doesn’t matter.
?!?!?!?!?!?!?!
Liberals don’t fear government debt, don’t fear
“His response: that’s not going to happen. The government can borrow endlessly, it never has to repay the principal, nobody outside the country can call those notes and there’s no consequence if they don’t get paid. We simply keep borrowing and it doesn’t matter.”
We’ve been robbing future GDP for 100 years.
Now we are getting older and we slowed down procreating FICA slaves around 1970. the geopolitical situation also helped until about 1990. The real economy is over regulated and congress is just making it worse with bad Fed and finance regulation.
Real Vision is coming out with a free podcast soon. Do not even think about not subscribing. Their video service is good, but probably half of it is too technical for most people. If you want to get a free pass I can tell you what to watch that’s easy.
Joe Doakes said:
“Maybe one of you can help me understand how Liberals think about government debt. I don’t get it.”
Democratic administration = bad debt
Republican administration = deficits don’t matter
“Republican administration = deficits don’t matter”
Supply side economics works, but the GOP is just a bunch of short term thinking, vote buying whores.
Ronald Reagan really was just like all of them except he had more debt and interest rate runway than we have now. Once the USSR fell, we needed to go full Austrian-Libertartian. Too late now.
Republican administration = deficits don’t matter
Who ran up highest deficits, EVER? Was it s a Republican? The tool is getting duller, I see.
There is your answer JD. It is whatever the current talking points say.
Emery, you’re the closest thing we have to a Liberal around here. Maybe you can explain how they think, so I can understand it.
We plan to spend more than we take it, filling the gap by borrowing and thereby increasing the total debt. How are we going to pay off that debt?
Right now, it’s only $20 Trillion but if we keep stacking it up by endless borrowing, how are we even going to make the minimum monthly payments on the debt?
I guess what I’m asking is: what’s the end game? How does this scheme not result in a world-wide economic collapse?
The problem is, since the Fed policy is not “hard” and is ***discretionary*** and since we have a very highly centralized government with criminal actuarial processes ***built in*** it is literally impossible for the aggregate Congress, POTUS etc. to spend sensibly.
Medicare Part D was a 9 trillion INSTANT unfunded liability dreamed up by Karl Rove to reelect Bush. Everything is like that.
I mean all spending, too, not just actuarial stuff.
When you have a ***centralized government*** producing ***non-public goods*** under a ***discretionary central bank regime***, the overriding dynamic is to use voting to rob from from the future and each other. Woodrow Wilson started this crap.
Whenever a Democrat is in the White House, the Republicans talk incessantly about deficits and debt and demand that every single dollar of spending be offset by cuts. Whenever a Republican is in office, that goes right out the window and we get higher spending and massive tax cuts, exploding the deficit. And Trump is going to do it again.
I agree with Trump’s position that borrowing money at very low cost to invest in infrastructure is a good idea, but if you do that at the same time you cut taxes on the wealthy to the tune of trillions of dollars, guess what happens? Bigger deficits and a larger debt. The very things Republicans claim to care about, but only when a Democrat is in office.
“…borrowing money at very low cost to invest in infrastructure is a good idea,…”
It’s not going to work. We have too much debt for the goosing effect of the borrowing to work and little of that will actually improve GDP with productivity. Congress is too stupid to figure out what those things are, in any case. We need GPS air traffic control for example. Privatizing some infrastructure would help.
One of things that really raises the hair on the back of my neck is when the effort is made to identify and cut pork and ear mark spending and frivolous spending on this or that program. You always hear the statement that it would only amount to a “drop in the bucket” for overall monies spent by government. Nothing ever seems to get done. If we can’t get the small stuff done how in hell are we going to be able to tackle the larger issues. As a country we better pull our heads out of backsides and accept the small hits now because the really BIG one is just around the corner.
I’d love to say there’s a longer term plan but I think politics means you think short-term. The short–term strategy to take power is not rational over the long–term but. We’ve seen from history that circumstances often favor very bad ideas in the short term
“I’d love to say there’s a longer term plan but I think politics means you think short-term. The short–term strategy to take power is not rational over the long–term but. We’ve seen from history that circumstances often favor very bad ideas in the short term”
The Founders set up a good system to mitigate this. Abraham Lincoln and Woodrow Wilson undid it. Now we pay.
Regarding the amount of debt to have for a “goosing” program to work, it’s worth noting that a dollar borrowed by the government for an infrastructure program is simultaneously a dollar not invested in capital formation in the private sector. Think about it a moment. So the idea that somehow, miraculously, a dollar spent by government does more work than a dollar spent in the private sector–though it goes through the same banks, buys the same commodities, and the like–is nonsense.
For additional government spending to help the economy, we must conclude that we would need to demonstrate a reasonable ROI–say an annual return of 15% or more. Not that it will pay itself off in 50 years, but an annual return.
that’s not going to happen. The government can borrow endlessly, it never has to repay the principal, nobody outside the country can call those notes and there’s no consequence if they don’t get paid. We simply keep borrowing and it doesn’t matter.
Damn I barely got past econ101 in college but holy shit this makes my brain hurt that an adult could actually think this
POD, the scary thing is that I’ve seen people writing that with earned doctorates in economics, ignoring the fact that interest cost does, in fact, matter. One has to wonder if they’re living in efficiency apartments because they never clued in that maxing out all their credit cards would suck them dry.
the Republicans talk incessantly about deficits and debt and demand that every single dollar of spending be offset by cuts. Whenever a Republican is in office, that goes right out the window and we get higher spending and massive tax cuts, exploding the deficit. And Trump is going to do it again.
sTrumpet had not made any cuts? Already? There goes your narrative, again! More of that talking point/alternate fact diet, I see.
I don’t want to hear partisan finger-pointing. I don’t care who’s the bigger poopy head. What I want to know is, are they right?
How is the United States’ government debt different from other nations’ debts so that their countries might collapse, but ours will not?
How is the United States’ government debt different from private debt so that an individual might go bankrupt but the nation will not?
Here’s the ultimate question: if running endless deficits doesn’t matter because we can pile up endless debt and nothing bad will ever happen, then why do I pay taxes? Why not cut all taxes to zero, borrow the entire amount of the federal budget, and add the new loan to the pile of existing debt?
Why am I still paying taxes to minimize the deficit to minimize the debt, when none of that matters?
Joe: You are getting at stuff that is sort of esoteric. It has to do with having the reserve currency, the petro dollar, dominating military, decent rule of law, Wall Street etc.
The problem is, in an inflationary economy you are constantly misallocating capital, which forces GDP down. Also, our unfunded Medicare and Social Security given the bad GDP actually puts us in a bad geopolitical position where the global financial system gets overhauled in a way that we lose our ability to borrow without end. The Grant Williams video about mining talks about this. He based that on a guy that just got interviewed on Real Vision and it was disturbing as hell.
What they have to do is reform Medicare and THEN drop the Fed discretion. The path we are on, 5% annual INCREASES in Medicare and SS outlays, currently has to be monetized by the Fed. There is no other mathematical option. Our enemies know this, so they are buying gold like crazy and are trying to get around trading in the dollar to force us off the dollar hegemony. We have a ton of gold ourselves, so that helps and obviously China and Russia have their problems too. Ruling Class oppression and screwing up is everywhere.
This is war and I’m dead serious.
“Why not cut all taxes to zero, borrow the entire amount of the federal budget, and add the new loan to the pile of existing debt?”
Legal tender laws. They force you to use the dollar so the Fed can mess with the economy.
Theoretically the Fed could buy everything and they could control inflation with taxes.
The whole system is designed for oppression and centralized power.
Joe: the other thing there is this MMT thing that the far left thinks we can print our way out of this. Look at it but it will hurt your head. There are other versions of this, but we are ruled by people that are too stupid and corrupt to pull it off.
Only tax consumption.
The central bank just backs up banks in a punitive way.
Government does NOTHING with pensions or insurance.
This is more vague, but don’t centralize government.
Those are the lessons.
Don’t produce non-public goods.
http://www.zerohedge.com/news/2017-03-09/it-took-4-new-debt-create-1-gdp
Joe: the simple answer is, FDR created the petrodollar. Saudi forced oil purchases in dollars and in exchange we protect them ***no matter what***. This forces demand for our bonds because ALL TRADE effectively has to be done in dollars now.
They have no choice but to buy our debt. But this system is breaking down now.
They have to store their dollars from trade in our debt to be clear.
Fed, it sounds as if you’re saying the Liberals are correct – the United States can never fail, no matter how much debt we have, because all the other nations cannot let us fail if they want us to buy their oil.
Great, so why am I paying taxes? Let those bastards carry the entire load, not just the accumulated deficits.
No, no, no.
The ever bad GDP is making our interest unaffordable at some point since we continue to accumulate debt and Medicare compounding bills—actual human needs that are contracted for.
The system has to blow up at some point. The government will run out of money. I just can’t tell you what year this happens.
The debt has to be defaulted on at some point.
I should say that bond investors will collectively freakout about our fiscal position and bonds will sell off-interest rates will increase. The government is literally broke when the ten year hits 4% thanks to Obama and the Fed. ***4%***
Thinking the government can be run like a business is a rookie mistake. Government and business have vastly different goals, constraints and stakeholders; thinking both can be operated in the same manner is simple folly.
I wonder if the dollar index is rising because of Republican future deficits. They’ll need to be financed.
Emery, is that supposed to be a refutation of what I’m saying? Because it isn’t.
The reserve currency status allows us to be profligate and wasteful and we are.
No. I wasn’t clear; I was referring to Trump. My apologies.
I do think both sides in Congress should drop their conditions and hammer out a stand-alone corporate-tax reform that reduces the rate and broadens the base.
OK
Taxing business activity is 1000% worthless and counterproductive as long as they aren’t growing retained earnings to just shelter income.
Trump is an inflationist that makes deals and markets his brand. Not a productivity guy.
Not hardly. It’s rising because foreigners want in to a stronger economy and are bidding up the currency. Look at the EU, would you want invest in a place with negative returns on bonds of similar quality (ignore Italy, Greece, and Spain as those are junk status)? How about China, with its notoriously unstable business environment, massive corruption, and hidden banking system ready to collapse? Even the Chinese are trying to move their money overseas and have been doing wild gymnastics to get around the capital flight rules the government has put in place the last six months, like bidding insane amounts for American companies in an effort to get the hell out of China.
The US is the healthiest economy right now, and as TFS says, much of that is due to its role as the reserve currency in which trade is conducted. Back that out and we’d be in poorer shape, although still better than most of the competition.
What’s driving the flight of global capital to the US is the same basic impulse as the rush to US stocks by savers: it may be overvalued, it may even be in a bubble, but it’s the only place you can get real returns these days. And Trump has to this point been a non-politician: he’s actually kept his promises. So there might be a real hope of loosening regulations to the point where the economy might sputter back to life after clearing the “progressive” detritus clogging the system, and the smart money wants in on that chance.
nerdbert is right. We just have the cleanest dirty shirt in the laundry. It distorts our reality.
Either I’m too stupid to understand your comments, or all of you are dodging my question.
Does ever-accumulating government debt matter, or not?
If not, why not?
If so, what’s the end game, how do we fix it?
Yes.
it’s the debt to GDP. You can’t afford it at some point.
They have to ***force*** inflation and possibly some kind of debt jubilee FOR THE STATE’S DEBTS i.e. wealth taxation of debt holders. Death panels for Medicare.
The global monetary system gets overhauled.
If they means test Medicare and SS is that wealth taxation?
Why do people believe in government? When you add up the tally in a few years it’s going to amount to net destruction.
They have killed the GDP and concentrated the income and assets in the wealthy and government workers / rent seekers.
They keep stacking up the debt, killing the GDP, underfunding Medicare, underfunding state pensions by 4 trillion…
This is a kleptocracy.
http://bit.ly/2kULVCC
The Left lies and lies and forces dependency until single payer is the only option.
40% of America isn’t liquid for $2000 in under one month.
Where am I wrong?
“Large, sustained deficits would at some point undermine the financial credibility of the United States government and bring higher interest rates. The argument is about the length of the rope, not about whether the rope has an end. While I find Professor Krugman’s rhetorical viciousness off-putting, he is correct that we deficit hawks should be more circumspect. But that does not change the underlying economic reality.”
“Deficit spending causes a wealth transfer from taxpayers and government beneficiaries to investors and financial institutions. Even at our current low interest rates, every $1 in federal benefits costs $1.20 if financed on a ten-year note. Which is to say, for every $1 in benefits they fund, taxpayers pay 20 cents to a bank, a mutual fund, an insurance company, Caribbean offshore havens (the 14th-largest holder of Treasury debt), the oil-exporting nations, or our dear friends in Beijing.”
“But if interest rates should rise to that level again — and there is no reason to believe that such a thing is impossible — then interest on the publicly held portion of the debt would far exceed both personal and corporate income taxes, and in fact would take up 80 percent of all federal revenue. And the debt is growing every day. The politics of that sort of development would be worrisome, to say the least. One of the least attractive features of life in the Obama era is that class-warfare politics is well and truly off the leash, and economic resentment has been harnessed as a political force to an extent not seen since the days of Huey Long. If the regressive nature of deficit spending should be unveiled in some particularly dramatic way — if 80 cents out of every $1 paid in taxes represented a direct wealth transfer from struggling taxpayers to relatively well-off investors — default would move from an unthinkable outcome to a politically viable option.”
http://bit.ly/2msi4Fk
Tax Cuts + Increased Spending and Military Budgets = Deficit Spending. 2+2≠5
Both a strong job report today and rate hike next week are virtually guaranteed. It’ll be more interesting to see market reaction. It is Friday, some options expire and it may bring higher intraday volatility.
https://twitter.com/PerBylund/status/839887259084075008
Tax credits show up in the budget. A minimum wage is a hidden tax on business.
Some local and state governments seems more than willing to commit bad economics for good aesthetics.