The Way Out?

Official TSP Center polls.

Moderator: Aitrus

In times of economic contraction, a nation is often led out of trouble by:

Big banks willing to take measured risk
3
6%
Small business and individuals assuming new risks
18
33%
Government easing taxes
8
15%
Government lowering interest rates
7
13%
War
18
33%
 
Total votes: 54

User avatar
kucheka
Posts: 158
Joined: Mon Dec 20, 2010 10:22 am

Re: The Way Out?

Post by kucheka »

"Unfortunately we don't deleverage when in times of growth.............."

Image

User avatar
Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

Re: The Way Out?

Post by Jahbulon »

Oh, I'm sorry. I was not aware we had no debt all those years. I guess this is part of "The Big Lie".

But you seem to really be irritated by the poll question and want to make a point, but are having trouble getting there. So what is the point of all this? What is bothering you? What is REALLY bothering you with this poll question?

TECH1
Posts: 25
Joined: Tue Oct 18, 2011 8:01 pm

Re: The Way Out?

Post by TECH1 »

Jahbulon, it seems that you have some sort of inferiority/bully complex where if ANYONE challenges your philosophy or disagrees with your mantra, you get upset and attack them. Whats the real problem, open up, speak to us of your pain.

User avatar
Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

Re: The Way Out?

Post by Jahbulon »

But how have I attacked? kucheka obviously wants to say something, so I'm trying to figure it out?

I posted a poll question from a high school econimics book and people are getting spun up? What gives? There is no way on earth I was able to slant this poll - or at least I don't see one.

User avatar
Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

Re: The Way Out?

Post by Jahbulon »

I guess I dont understand the challenge that I am attacking over?

User avatar
kucheka
Posts: 158
Joined: Mon Dec 20, 2010 10:22 am

Re: The Way Out?

Post by kucheka »

Errr...am I getting spun up? My point is that it makes no sense to argue that "risk-taking" by individuals and businesses gets us out of a situation in which "risk-taking" behavior is structurally inhibited. Furthermore, you claimed that "we don't deleverage when in times of growth," which is wrong--we only have to go back 12 years to see that. It is a myth born out of the massive PR campaign released by the banks (and other corporate interests) after they nearly sent us into a depression (i.e., "Deficits caused the recession.").

If that textbook has some empirical examples, I'd love to hear them and compare those contexts to our current situation.
Last edited by kucheka on Wed Nov 16, 2011 2:47 pm, edited 1 time in total.

User avatar
Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

Re: The Way Out?

Post by Jahbulon »

Ok. If that is your opinion, fine.

So then, historically, in times of economic contraction, a nation is often led out of trouble by.......?

Reese99
Posts: 142
Joined: Tue Jul 20, 2010 3:26 pm

Re: The Way Out?

Post by Reese99 »

To address an earlier point about outsourcing of jobs, we had a similar gloominess about the outsourcing of jobs to Japan in the 1980's. Everyone was afraid that we were paying Japan to buy up America. But what happened is we raised the standard of living in Japan to the point that paying for their labor eventually equalized with the cost of paying domestic labor and not paying to ship products and materials overseas.

The same will eventually happen with India and China, and there are already signs of this. Programmers during the '90's and '00's were primarily from India and are now largely from former-Soviet nations.

Another related point is, it's difficult to force businesses to use domestic labor without harming the free market. You can use trade tarrifs, but then you risk a trade war with the nation you're levying tarrifs against. You can provide tax incentives for domestic labor (we already do), but these would need to be substantial enough to negate the cost savings of using foreign labor, and right now, foreign labor is very cheap.

The best way for government to ensure domestic jobs are available is to create a tax structure that encourages people to start businesses, allows for businesses to grow, and encourages the creation of businesses which cannot outsource their jobs. Some prime examples of such businesses are energy sector industries. You can't outsource domestic mining to foreign labor. You can't outsource domestic construction to foreign labor. You can't (or at least, shouldn't) outsource the oversight and operations of power plants to foreign labor.

Right now, we've got a tax code so labyrinthine that several entire industries exist just to support the overhead of any business' legal obligations to pay those taxes. In point of fact, the overhead most domestic businesses pay for the preparation, recording and legal defense of their taxes is greater than the actual amount of taxes they pay. That is to say, businesses are forced to pay so many middlemen in order to be compliant with their tax obligations that they spend more on that than they do on the taxes themselves. This problem is only compounded for smaller businesses which typically have to perform these duties using staff that isn't specialized to do it, cutting into their actual job of producing goods and services that they trade for capital. This, in turn, reduces their capital, and therefore reduces the amount they pay in taxes. It also, of course, limits their ability to grow.

To get back to the topic of the thread, though, it seems problematic to me that the Prime lending rate is, and has been for a very long time, right around 0%. Banks are using these intraday funds to buy low-yield but safe investments, like treasuries, instead of using the money for what it is supposed to be used for, which is making credit available to business. Essentially, you've got the Fed giving money to banks for free, and the paying those same banks interest on the treasuries the banks are buying with the Fed's money. It's a wonderful cycle that serves to enrich the big banks and milk the taxpayer, with no end, or limit, in sight.

User avatar
Jahbulon
Posts: 3901
Joined: Wed Nov 17, 2010 1:22 pm

Re: The Way Out?

Post by Jahbulon »

Great points all the way around!

User avatar
flight23
Posts: 1342
Joined: Mon Jul 26, 2010 10:47 am

Re: The Way Out?

Post by flight23 »

kucheka he is right we do not deleverage during times of growth. The chart you posted shows one example of the US debt decreasing over all of those years, the last 2 years of Clinton. The problem is we never reduce total debt, we just shift between public and private sector and overall continue to increase. For example the past few years private sector debt has decreased considerably while public sector debt has skyrocketed.
@GlobalCollapse on Twitter
http://twitter.com/#!/GlobalCollapse

User avatar
kucheka
Posts: 158
Joined: Mon Dec 20, 2010 10:22 am

Re: The Way Out?

Post by kucheka »

"The problem is we never reduce total debt, we just shift between public and private sector and overall continue to increase." My impression was that the comment was, as it is most of the time, directed at the supposed inherent inability of government to run a surplus.

User avatar
flight23
Posts: 1342
Joined: Mon Jul 26, 2010 10:47 am

Re: The Way Out?

Post by flight23 »

He might have been, Im not sure. In the end it comes down to a balance of trade, government surplus/deficit, and private sector surplus/deficit.

If we have a negative trade balance (ie sending money out of the country) then even if we run a government surplus (which is rare in itself) then if the surplus is less than the amount of trade imbalance the difference comes from either savings or increased leverage of the private sector, or printing of money which is essentially flat taxation and reduces savings across the board.
@GlobalCollapse on Twitter
http://twitter.com/#!/GlobalCollapse

User avatar
kucheka
Posts: 158
Joined: Mon Dec 20, 2010 10:22 am

Re: The Way Out?

Post by kucheka »

Word.

Post Reply

Fund Prices2022-08-18

FundPriceDayYTD
G $17.00 0.01% 1.56%
F $19.04 0.12% -8.83%
C $65.31 0.24% -9.23%
S $70.24 0.46% -15.82%
I $33.59 -0.29% -14.83%
L2065 $13.10 0.09% -11.96%
L2060 $13.10 0.09% -11.95%
L2055 $13.11 0.09% -11.94%
L2050 $26.96 0.08% -10.22%
L2045 $12.37 0.08% -9.53%
L2040 $45.43 0.07% -8.77%
L2035 $12.08 0.07% -7.94%
L2030 $40.50 0.06% -7.05%
L2025 $11.67 0.05% -4.74%
Linc $23.00 0.03% -2.07%

Live Charts

Pending Allocations

Under development. For now, you may view Pending Allocations by going to "fantasy TSP" and selecting "Leaderboard sort" of "Pending Allocations".