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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: combjelly who wrote (353479)	10/3/2007 4:25:23 PM
From: Tenchusatsu	Read Replies (2) \| Respond to of 1572813

CJ, > Personally, I am baffled why we are hell bent on revisiting that scenario. Me too. Thanks for the detailed response, by the way. Hamilton once said, "A national debt is a national blessing," but I don't think he had close to $10 trillion in mind ... Tenchusatsu

To: combjelly who wrote (353479)	10/3/2007 4:52:56 PM
From: bentway	Read Replies (1) \| Respond to of 1572813

"But if we belly flop again, we can't put wifey to work, she is already there." There's always the kids. They haven't pulled their weight ever since those damned child labor laws were passed early last century..

To: combjelly who wrote (353479)	10/12/2007 7:36:08 AM
From: Joe NYC	Read Replies (1) \| Respond to of 1572813

cj, I remember it. The value of the dollar was dropping because the gold standard had imploded. High deficit spending led to the government selling bonds to cover it... While you have many anecdotes in your post, it seems you don't see the causes and effects of the issues you mention, major one being the pursuit of Keynesian ecomonic policies. The deficit didn't just happen. Keynes advocated deficit spending as a valid fiscal policy. Inflation didn't just happen, it was caused by Keynes inspired monetary policy. The central theme of Keynesian economics is stimulation of demand (one reason why Keynesian economics is called demand side economics). While it may seem preposterous today, Keynes saw a root cause of all economic problems in insufficient demand. Fiscal policies were to stimulate demand, monetary policies were to con people out of their savings (amonng other things). Oh yeah, "excess savings" was another major problem, according to Keynes. By increasing demand, full employment was to be achieved. Monetary policy became a tool for a primary purpose of achieving full employment, inflation be damned. Resulting glut of dollars chasing slow growing supply of goods and services lead to high commodity prices (including oil and gold). Now the point when Keynesian economics ran into trouble was when people learned not to be pawns, and started thinking for themselves. The inflation and ever shrinking value of their nominal dollars lead to inflation expectations. That's when inflationary monetary policies lost their effect, and could no longer fool people. Next was first a minor technicality, imperfection in the tax code, that the tax brackets were not inflation adjusted. This (combined with high inflation) caused tax payers into ever higher tax bracket. Not because their wages were higher in real terms, they were only higher in nominal terms. Every taxpayer faced a tax increase year after year as a result. Of course, this gradually reduced incentives to work harder to produce more, because more production, more earnings resulted in ever higher tax penalty. So this is where rubber met the road. The Ivory Tower Keynesian economics come to a complete collision with "real" economics, started (or should I say recognized) by classical, neoclassical and later supply side economists. Which is that thing on the micro level matter a lot more. It matters how an individual acts, and what makes him act - or not act. Restoring incentives for people to work, to create supply of goods and services was the central theme of Supply side economics. BTW, you mentioned income inequality, and it being low in Keynesian times, higher in supply site times. Well, think about it. If you are facing 70% marginal tax rate (federal tax alone), would you work an extra hour for 30 cents on the dollar? Does it make sense for the wife to go to work for 30 cents on the dollar, rather than stay with kids? People in upper middle income can ask these questions, because they are not starving in the first place. It is discretionary for them to work extra hour, or for the wife to work. So they have a choice. Now, suppose they asked you the same question at marginal rate of, say 28%. While it may make no sense to hire a baby sitter or pay for day care if wife is going to make 30 cents on the dollar, the math looks a lot different when she is going to make 72 cents on the dollar. So when you have incentive to work, increasing income inequality is a logical conclusion. Joe