How would YOU fix the economy?

Me? Two year tax holiday on 10 percent of all social security payroll taxes, offset by farm subsidies and cuts in the military budget. Let's avoid a deflationary crash.

Unemployment = Solved.

 
Edmundo Braverman:
See, I love the idea of eliminating the payroll tax, and I can even live with the idea of a VAT. The thing that scares me is how prone to gov't abuse the VAT can be. To make that really work, there has to be an inviolate VAT ceiling that gov't is never allowed to exceed under any circumstances.

See, I wouldn't go completely against a VAT, but I am too much of a pragmatist. The government is like a fat kid eating donuts, he promises to only eat 2 donuts, but will just sneak more and more, promising that this will be the last one until all of a sudden he has had 12.............The only way to save the fat kid is to make sure he doesn't get that first donut, and that's why I fight.

"Greed, in all of its forms; greed for life, for money, for love, for knowledge has marked the upward surge of mankind. And greed, you mark my words, will not only save Teldar Paper, but that other malfunctioning corporation called the USA."
 
monkeysama:
Me? cuts in the military budget. .

I think you're going to see this in the next 2-4 years to a larger degree than many expect.

If I had asked people what they wanted, they would have said faster horses - Henry Ford
 

1) Legalize MaryJane and tax it 2) Take the massive windfall and fix everything, namely adding about 400 more freeways in Socal so there isn't traffic at 5 in the damn AM 3) Take the remainder and lobby to legalize prostitution 4) Watch lobbying efforts pay off and America teeter on the brink of a moral meltdown 5) Win

 

I'm kind of against a VAT for two reasons 1) It's regressive since rich people spend far less of a fraction of their money on consumer spending 2) How do you tax internet sales?

Although it does cut down on tax dodging through IRS manipulation.

 
monkeysama:
I'm kind of against a VAT for two reasons 1) It's regressive since rich people spend far less of a fraction of their money on consumer spending 2) How do you tax internet sales?

Although it does cut down on tax dodging through IRS manipulation.

So you offer an exemption for food, medicine, and clothing, helping to make it a little more progressive.
 

A few points off the top of my head.

  1. I echo the sentiments of legalizing marijuana and taxing it.
  2. Reduce the military budget.
  3. Reduce capital gains tax, the estate tax, and federal income tax to revitalize incentives and draw foreign capital.
  4. Someone mentioned legalizing prostitution, and I agree too. Health standards would rise and crime and sex trafficking would decrease.
  5. Add a 5c tax on each bottle/can of beer.
 

Phase out social security. The scheme started with folks receiving who didn't pay in, so it will need to end with folks paying in but not receiving. A generation will have to get screwed over, and I'm happy to nominate mine if it would put an end to SS.

Do so slowly -- those who currently rely on it see no change. After 15 years, reduce the benefits by 1/3rd. 15 more years, another 1/3rd. 15 more, the final 1/3rd.

Alternatively, put a system in place that is mathematically sound. Track a person's lifetime SS contributions. Allow them to collect a maximum of 3/4th's their contributed amount. Once that number is hit, they are no longer eligible.

Also -- I'd like to see the tax code vastly simplified. Redeploy the IRS professionals into the private sector. Current private sector folks that have built careers related to the tax code -- tough luck. Lawyers, Tax Accountants, H&R Block -- time to find a new career.

(I recognize this approach might infuriate just a -few- people).

CompBanker’s Career Guidance Services: https://www.rossettiadvisors.com/
 
CompBanker:
Phase out social security. The scheme started with folks receiving who didn't pay in, so it will need to end with folks paying in but not receiving. A generation will have to get screwed over, and I'm happy to nominate mine if it would put an end to SS.

Do so slowly -- those who currently rely on it see no change. After 15 years, reduce the benefits by 1/3rd. 15 more years, another 1/3rd. 15 more, the final 1/3rd.

Alternatively, put a system in place that is mathematically sound. Track a person's lifetime SS contributions. Allow them to collect a maximum of 3/4th's their contributed amount. Once that number is hit, they are no longer eligible.

Also -- I'd like to see the tax code vastly simplified. Redeploy the IRS professionals into the private sector. Current private sector folks that have built careers related to the tax code -- tough luck. Lawyers, Tax Accountants, H&R Block -- time to find a new career.

(I recognize this approach might infuriate just a -few- people).

Love the SS idea but, much like 90% of the other good ideas that people suggest, its political suicide. As to your point about the simplified tax code, I think implementation of the Negative Income tax is a great way to both simplify the tax code and increase tax revenue. Again though, it would put hundreds of thousands of people out of work, some of which are powerful attorneys who can in turn higher powerful lobbyists so again, not gonna happen. I would also cap Welfare benefits to the current situation of the recipient (you have 2 kids when you starting getting it then that's how many kids you will get paid for. forever) this would limit the increases in the amount of money that would have to be paid out annually. Plus drug tests for welfare recipients and I only say this because I always say it when I talk about welfare...

If I had asked people what they wanted, they would have said faster horses - Henry Ford
 

Combine compbanker's plan with all plans involving legalizing drugs. If we legalized the stuff, we could empty all the prisons of nonviolent offenders, cut back bloated police and court budgets, and tax the stuff.

And am I the only one here that thinks the third incarnation of our central bank should be audited and/or dismantled?

 
monkeysama:
Me? Two year tax holiday on 10 percent of all social security payroll taxes, offset by farm subsidies and cuts in the military budget.

Unemployment = Solved.

How would cutting farm subsidies and the defense budget solve unemployment problems? The defense budget keeps an enormous amount of people in this country employed, plus the towns that military bases or defense goods factories are economically dependent on the military-industrial complex (my friend's dad works in VC in San Diego - VC in San Diego funds a lot of defense related projects).

Farm subsidies, while I personally disagree with them, cannot be phased out without doing substantial damage to the employment backdrop as well. Again, this isn't because farmers would be out of work (they aren't even included in non-farm payrolls, obviously). However, an entire network of American businesses (DuPont, Monsanto, CAT, Deere, among others) would be adversely affected by a reduction in farm revenues.

Sure, the system sucks, but I don't think your proposals would undercut unemployment at all. In fact, I think they would make the situation much worse.

I agree with the above that we need a payroll tax holiday. This might work since employers wouldn't have to pay as much to add jobs. However, given uncertainty about healthcare costs, this might not work as well as it could (It would work a lot better in conjunction with more clarity over healthcare, despite the fact that a healthcare 'overhaul' was passed last year).

To be honest, I don't think much can be done at this point. In fact, I'd say its arrogant to think that anyone in Washington or New York can do anything to ease the pain that main street is feeling. Fact is, we have an output gap near 7% and 9.6% unemployment. This is a deflationary environment. The best thing to do would be to let this play out. Prices come down (on both assets like RE and equities and wages, but most importantly, on consumer goods). In addition, the amount of outstanding credit needs to (and currently is- if you take out federal student loans) come down as well. The fact is, we need to embrace the pain now in order to flush the system of everything toxic (from RE assets held by banks to underwater properties owned by consumers to businesses that aren't able to compete effectively). QE2 is a morphine injection, and it won't really stop the pain in the long run, but could easily kill us (or could create inflationary bubbles abroad, sending the global economy into abyss). I really think Midas Mulligan Magoo makes a great point when he talks about QE2 being an instrument of FOREIGN policy and not monetary policy. This is a whole new era.

Their is one thing that could really help alleviate the pain. That would be a five year plan to move our economy from a petrol based economy to a hydrogen based economy. That means converting most of our coal power plants (48% of electricity in this country is generated from coal) to natural gas based plants (which emit half the CO2) and developing fuel cell vehicles which can be "refueld" with natural gas right in your garage (most of the infrastructure is in place to do this). Plus, we are sitting on tons of natural gas. The coal we no longer use for electricity can be sold abroad, as could all the oil we produce (we currently produce 9 mmbd, and use 15 mmbd). By reducing oil imports and in fact exporting 1.5 times as much as we import, plus exporting tons of coal, we can significantly reduce the trade deficit. The trade deficit is (at least, in theory, though not totally sure about practice) supposed to be equal to a budget deficit. Thus, by selling energy abroad, we could boost exports, bring in more money, and thus pay down debt. Its a win-win-win for everyone at home (the environmentalists, the economists, the politicians, the American worker).

Of course, this is a politically difficult option (try fighting the coal lobby) and would require significant investment upfront, something that neither the private or public sector is currently ready to do. Not to mention, it would obviously take a few years to completely retool our energy infrastructure, and by that time we might be out of this (though I personally seriously doubt that).

looking for that pick-me-up to power through an all-nighter?
 

First of all - Front page Woot!

LIBOR - I mean to say use cuts in farm subsidies and the military budget to offset the cost of the SS tax holiday. I would also like to add that we need a ton more nuclear than we have - it's essentially free energy (and if we reprocess the LEAST pollution of all other sources) but people thinks it's scary.

Illiniprogrammer - That would just create a two class society of people who buy the cheapo non-tax ground beef and the people who can afford luxury Alaskan crab. With the iWhatever status craziness of the American people there would be open warfare on the streets within a fortnight.

I don't know about the rest of you, but I personally am looking forward to the time when you still pay into SS but can only pull out of it when you're 112. Ah the schadenfreude.

 
  1. Legalize weed and tax it.
  2. Legalize Adderral and tax it.
  3. Tax obesity.
  4. Extend the Bush tax cuts, but only until the ship is right again. Then re-instate the tax bracket on the top 2% (while I'm a republican and generally fiscally conservative... I still think it's the smart move)
  5. Increase retirement age to 70
  6. 3 year holiday on payroll tax
  7. Increase spending / subsidies in military R&D as well as other R&D
  8. open up America's borders to well-educated immigrants from places like India, China and Israel who are willing and able to PAY $50,000 for US citizenship
 
  1. Cut every dime of point less spending. Medicare fraud may be as high as 180 billion dollars per year. Instead of sending federal government employees after marijuana growers, send them after Medicare criminals. This won't directly create jobs, but you can easily fund any new program with the savings from cutting waste in military spending, social security, discretionary spending and Medicare.
  2. Reform healthcare, make it competitive, ration care, increase the number of doctors, end all special deals with pharmaceutical companies, 50% of every dime we spend on healthcare is linked to obesity.
  3. Infrastructure investment:: New roads, bridges, electricity grid.
  4. Energy investment; the coal industry puts very few people to work. Only 80 thousand Americans actually work in coal extraction since it relies heavily on machinery. Train these people to work in nuclear power plants. We need decommission all coal plants and replace them with nuclear power plants. All new plants will use nuclear waste instead of fresh uranium so there will be very little variable costs.
  5. End the achievement gap: Fire useless teachers, any school that has less than a 75% graduation rate should be closed. Make parents accountable. Either make them pay when their kid fails.
  6. Sterilize all inmates who have more than 2 convictions for violent crime or 4 convictions for nonviolent crime. They should not be able to burden the rest of us with their children.
I am not cocky, I am confident, and when you tell me I am the best it is a compliment. -Styles P
 
  1. Throw out all congressmen and replace with investment bankers. Analysts take the House. Associates take the Senate. VP's and MD's take higher up positions and Lloyd Blankfein becomes President with Jamie Dimon as VP.

  2. Dominate the entire world financially.

  3. Exploit other countries and create an elite class where 6 billion people work slave labor wages and hours for the good of 300 million americans who get to lounge around driving lambo's and eating luxurious food all day with 2 hour workdays (mostly managing and directing the slaves).

 
Midas Mulligan Magoo:
You're all a bunch of liberal nerds.

KILL ANYONE WHO CAN'T GET LAID (heterosexually, off course) in next 24 hrs.

SB to anyone who can guess what this dude is about to do...

If I had asked people what they wanted, they would have said faster horses - Henry Ford
 

i don't see too many problems with legalising and taxing pot

@gekko21 I see your point. But Aus implemented a 10% VAT ten or so years ago, and it's stayed 10%. I don't know what your faith in US party politics is, but sticking to "two donuts" can be done

@monkeysama You can prevent it being regressive by making unprocessed foods and other essentials VAT-free, once again, like in Aus

And I argued somewhere on WSO before that the US should consolidate it's alphabet-soup of a financial regulatory system, which should save tens of billions a year

 

Legalize Mary and tax it Legalize prostitution w/ tax Abolish unions (they were only useful in the Rockefeller days) Tax the life out of imports Get rid of payroll tax Cut wages drastically across government jobs Let illegal immigrants work in factories for periods at a time (killing all factory jobs overseas) Beef up national cyber security While cutting all other defense drastically Print more dollars to have more tourism

Throw our middle finger in the air to the rest of the world.

"The higher up the mountain, the more treacherous the path" -Frank Underwood
 

Step 1:

--Build a time machine

Step 2:

--Go back in time and ensure that Glass-Steagall isn't repealed (in other words, kill Phil Gramm and don't pass the Gramm–Leach–Bliley Act)

Step 3:

--Travel to the year 2000 and ensure that the Commodity Futures Modernization Act of 2000 isn't passed.

Step 4: Travel 200 years into the past and kill my ancestors...

.....TIME PARADOX

 

The economy is a being on it's own (slight reference to South Park). Just plain leave the citizens alone, get out of their lives, stop taxing us, and deregulate. Unless the government does something artificial (stimulus, TARP), the economy will "fix" itself. Or maybe we are supposed to have 9% unemployment, who the fuck knows.

 

stop big govenment.

"Major in economics; use your economics degree to get an analyst job on Wall Street; use your analyst job to get into Harvard or Stanford Business School; and worry about the rest of your life later"
 

Off the top of my head...

  1. Throw out the current tax code and implement a flat tax.

  2. Fire the bottom 20% of teachers who are underperforming, tie salaries to performance for the rest, eliminate tenure.

  3. Allow healthcare insurance providers to compete across state lines.

  4. Allow drilling in ANWR.

  5. Raise Social Security age to 75.

  6. Kick everyone in Congress out of office.

Metal. Music. Life. www.headofmetal.com
 
  1. Reform tax code to a 15% flat tax while eliminating all deductions and AMT
  2. Cut military spending by relocating all military to US soil. 3.Repeal Obama care
  3. Privatize social security and eliminate medicare
  4. Legalize gambling and prostitution nationwide
  5. Eliminate capital gains tax
  6. Simplify government regulations to solely fraud protection
  7. Get rid of federal government employee unions and cut government workforce by eliminating unnecessary departments.
  8. Eliminate payroll tax
  9. Replace Federal Reserve with commodity standard (gold or silver) to preserve purchasing power and encourage savings
 

-Bring the troops home from Iraq, Afghanistan, and everywhere else. Dismantle the American Empire and let Europe pay for their own defense. -End the "War on Drugs" -End farm subsidies

-Use the trillions in savings to repeal the income tax entirely

...i have plenty more such as abolishing the Fed's role as "lender of last resort" but the four above would be a good start...

 

I agree with all those points except the Fed one (besides the point I used to work there). The Fed's role as lender of last resort is important to prevent bank runs. The "buck stops here" has to be at Uncle Sam cause BoA can't cash that check.

 
monkeysama:
I agree with all those points except the Fed one (besides the point I used to work there). The Fed's role as lender of last resort is important to prevent bank runs. The "buck stops here" has to be at Uncle Sam cause BoA can't cash that check.

"preventing bank runs" is not an inherent good in my mind. Empowering a (quasi) government agency with the power to print money and bail out private institutions is unfair and the root cause of much of the moral hazard in the banking system. Let banks sink or swim on their own and let consumers know that they need to evaluate banks based on their saftey not based on some notion that you are garaunteed not to lose money.

 

It's a fact that if it were not for the Federal Reserve the US banking system would have completely collapsed and odds are high that there would have been a global depression. Preventing this is not an inherent good? I think you may be a little ill informed. The fact that the bailing out of the banking sector helped pick winners and losers is an unfortunate inevitability, but the alternatives were far, far worse.

 
monkeysama:
It's a fact that if it were not for the Federal Reserve the US banking system would have completely collapsed and odds are high that there would have been a global depression. Preventing this is not an inherent good? I think you may be a little ill informed. The fact that the bailing out of the banking sector helped pick winners and losers is an unfortunate inevitability, but the alternatives were far, far worse.

So do you think that a permanently guaranteed banking system leads to more or less risk in the system? The World did not begin in 2008, so how do you think we got to the point where we needed to "pick winners and losers"? Are there any other industries that in your mind deserve a permanent and public "lender of last resort" that steps in to ensure profitability is maintained no matter how stupid the business decisions made are?

I suggest we try free markets instead of allowing the banks to own a federal agency whose sole task is to make sure they remain profitable....it's not fair and it does nothing to ensure stability.

 
monkeysama:
It's a fact that if it were not for the Federal Reserve the US banking system would have completely collapsed and odds are high that there would have been a global depression. Preventing this is not an inherent good? I think you may be a little ill informed. The fact that the bailing out of the banking sector helped pick winners and losers is an unfortunate inevitability, but the alternatives were far, far worse.

without the fed we would not have had a credit bubble in the first place. I think a free banking system would be an excellent replacement

looking for that pick-me-up to power through an all-nighter?
 
monkeysama:
It's a fact that if it were not for the Federal Reserve the US banking system would have completely collapsed and odds are high that there would have been a global depression. Preventing this is not an inherent good? I think you may be a little ill informed. The fact that the bailing out of the banking sector helped pick winners and losers is an unfortunate inevitability, but the alternatives were far, far worse.

Normally I wouldn't publish a spoiler right before a new episode of NSFW, but after reading this comment you really need to read this book:

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America

Seriously. Stop what you're doing right now and go read it. Now. Go.

 
Edmundo Braverman:
monkeysama:
It's a fact that if it were not for the Federal Reserve the US banking system would have completely collapsed and odds are high that there would have been a global depression. Preventing this is not an inherent good? I think you may be a little ill informed. The fact that the bailing out of the banking sector helped pick winners and losers is an unfortunate inevitability, but the alternatives were far, far worse.

Normally I wouldn't publish a spoiler right before a new episode of NSFW, but after reading this comment you really need to read this book:

Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America

Seriously. Stop what you're doing right now and go read it. Now. Go.

That sounds like a pretty interesting book actually. I rather like Matt Taibbi - he seems like one of the few credible investigative journalists left in the country. I have to disagree with you in one respect though - it seems that you are implying that a fixed exchange rate regime is a GOOD thing. Bretton Woods had some very good outcomes (establishing the IMF and encouraging international economic negotiation), but it also meant that the world's most powerful countries get to set the exchange rate for the entire world in back room political intrigues. Floating exchange rates are much much better and help, overtime, to stabilize current account deficits.

 

I don't think the Fed's bailout is much laudable. What special genius or insight does it take to print money to cover bad bets by busted-out gamblers? Yes, in some sense they "saved" the global banking system, but by directly transferring value from the pockets of (1) savers and (2) persons with fixed incomes to any party that has first dibs on the debauched currency and gets to spend it on stuff at the pre-inflationary price level before all the goosed-up liquidity hits the real economy and starts pushing prices up.

They could have achieved the same effect by deducting 10% out of everyone's 401(k) and IRA plans, bank accounts, Social Security checks, pension checks, etc. The way they are doing it is just a lot sneakier and underhanded.

Pox on them!

 

I'm really not sure how to explain this. It's like it's so far removed from reality that I have to start at "so we all agree that water is wet, right?"

Bondarb - I really like your "the world did not begin in 2008". Well it didn't begin in 1908 either. Read up on this:

http://en.wikipedia.org/wiki/Panic_of_1907

Not having a central bank was tried before; it didn't go well. It really is sort of like democracy - the worst possible system excepting all others. This is not to say that I think that the principle banks should have gotten off as lightly as they did. I would have made the bailouts mandatory and fired and barred responsible executives at those firms from ever working in finance again.

I have an uncle that is absolutely convinced we need to go back to the gold standard and I'm just agog at him. Normally really bright guy too. Oh well.

 
monkeysama:
I'm really not sure how to explain this. It's like it's so far removed from reality that I have to start at "so we all agree that water is wet, right?"

Bondarb - I really like your "the world did not begin in 2008". Well it didn't begin in 1908 either. Read up on this:

http://en.wikipedia.org/wiki/Panic_of_1907

Not having a central bank was tried before; it didn't go well. It really is sort of like democracy - the worst possible system excepting all others. This is not to say that I think that the principle banks should have gotten off as lightly as they did. I would have made the bailouts mandatory and fired and barred responsible executives at those firms from ever working in finance again.

I have an uncle that is absolutely convinced we need to go back to the gold standard and I'm just agog at him. Normally really bright guy too. Oh well.

The fact that we had crashes before the Fed and we have had had crashes since the Fed was established isnt evidence for its effectiveness. The great Depression happened after the Fed's creation and we have had 2 booms and busts in the last decade so the Fed obviously didnt stop panics and crashes which still occur quite regularly. And in fact the panic of 1907 was quite fast and painless when compared to the Depression and this most recent crash. There is a good book on the subject called "The Panic of 1907"...probably better then reading a wikipedia entry and assuming you know it all and comparing me to your crazy uncle.

Bottom line is that borrowing and lending has been going on for literally millennia and the Fed has been around since 1914, so maybe its not quite as obvious as "water is wet". Instead of just telling me that "its obvious" and that I'm "misinformed" why dont you show me some real evidence that the Fed has contributed to stability?

I can also tell you that since the market is my day-to-day life and a big part of my job involves studying the Fed I am hardly "removed from reality" on this subject and don't need to hear about what constitutes reality from a college student or recent graduate.

 

Even before the first, second and third central banks of the USA, there have been effectively fiat currencies in ancient Rome, Greece and Song Dynasty China. They all resulted in the same terminal problem: overspending by the state leading to hyperinflation and chaos. Fiat currencies have been tried, and have caused disaster many times in historical experience.

There is another insidious aspect of fiat money not touched upon. Before fiat money, if a particular head of state wished to wage war, he would actually have to tax his people or borrow from a banker to pay for it. No money, no war. Now, it is very simple to run wars on deficit financing alone. If you are a peacenik, you ought to consider joining forces with the Ron Paul crowd because returning to a commodity-currency standard would overnight make us the most pacifist country on earth!

 
ivoteforthatguy:
Even before the first, second and third central banks of the USA, there have been effectively fiat currencies in ancient Rome, Greece and Song Dynasty China. They all resulted in the same terminal problem: overspending by the state leading to hyperinflation and chaos. Fiat currencies have been tried, and have caused disaster many times in historical experience.

There is another insidious aspect of fiat money not touched upon. Before fiat money, if a particular head of state wished to wage war, he would actually have to tax his people or borrow from a banker to pay for it. No money, no war. Now, it is very simple to run wars on deficit financing alone. If you are a peacenik, you ought to consider joining forces with the Ron Paul crowd because returning to a commodity-currency standard would overnight make us the most pacifist country on earth!

If you want a non-fiat currency you are free to buy and hold gold and cash out every six months for beer money. The greenback is just a slowly degrading note on the solvency of the united states - but we should have it because not having it doesn't add anything.

 
monkeysama:
ivoteforthatguy:
Even before the first, second and third central banks of the USA, there have been effectively fiat currencies in ancient Rome, Greece and Song Dynasty China. They all resulted in the same terminal problem: overspending by the state leading to hyperinflation and chaos. Fiat currencies have been tried, and have caused disaster many times in historical experience.

There is another insidious aspect of fiat money not touched upon. Before fiat money, if a particular head of state wished to wage war, he would actually have to tax his people or borrow from a banker to pay for it. No money, no war. Now, it is very simple to run wars on deficit financing alone. If you are a peacenik, you ought to consider joining forces with the Ron Paul crowd because returning to a commodity-currency standard would overnight make us the most pacifist country on earth!

If you want a non-fiat currency you are free to buy and hold gold and cash out every six months for beer money. The greenback is just a slowly degrading note on the solvency of the united states - but we should have it because not having it doesn't add anything.

We can indeed gain something if we go off fiat currency. First, it would force us to live within our means and operate balanced budgets. Second, we would have a restraint against military adventurism because we really have to PAY for the war in real-time (war bonds in WWII meant: you actually have to consume less now so the military can get the economic produce to support their operations).

The reason we went off the controlled peg of the Bretton Woods system in 1971 was that the French started making noise about our ability to pay for guns and butter in the 1960s. That started the gold run that caused Nixon to close the gold window, which is an effective declaration of bankruptcy because we unilaterally declared that we would no longer honor our obligations under the 1944 accord because we did indeed want to pay for lavish social programs and a very expensive war at the same time. Ditching all the restraints of a gold standard, we launched on a trajectory of out of control entitlement spending (with LBJ's Medicare leading the way at 5x the size of the Social Security colossus) and the military-security complex which gobbles up another 5% of GDP.

In more ways than financial the fiat currency experiment of 1913 has been disastrous.

 

I find it interesting that Mark Cuban's take is to simply tax small businesses (20 people or less) virtually next to nothing. This would encourage them to hire, and spur innovation.

www.wallstinsiders.com www.facebook.com/WallStreetInsiders
 

I actually fixed the economy today by solving the deficit:

http://www.nytimes.com/interactive/2010/11/13/weekinreview/deficits-gra…

My plan in a nutshell:

  • Raise Social Security retirement age and Medicare eligibility age to 68
  • Bring the troops home right fucking now
  • Reduce government
  • Eliminate Congressional earmarks and farm subsidies
  • Eliminate tax loopholes and lower tax rates across the board
  • Tax the shit out of Too Big To Fail banks

By clicking on the link, you can erase my plan and create your own.

 

Even powerful countries cannot game the Bretton Woods system indefinitely if their balance of payments are too out of sync with the exchange rates. This is exactly what happened to the US pre-1971, which resulted in a massive gold flight and our inability to maintain the peg.

In a highly similar vein: James Carville once said “I used to think if there was reincarnation, I wanted to come back as the president or the pope or a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”

 

Return to the gold standard. End fractional reserve banking. Cut all taxes, then introduce the smallest tax possible to enforce property rights and contracts. Slash the defence budget until slashing it anymore affects secuirty against direct attacks.

 

cut the military budget, loosen TARP fund employment restrictions (TARP recievers can't hire foreigners) since best talent=best results, NOT try to put a cap on bonuses, NOT bitch about how much bankers are making and demonizing them...heck, they're the ones running 40%+ of the economy! Why isn't anybody bitching about spine surgeons? they make a bit ($1 Million+) for waay fewer hours.

Greed is Good.
 

....hopefully a nice wake-up call to jesus freaks that there's more at stake than abortions, gays, and teaching evolution in schools. they should all read 'What's Wrong with Kansas"

...and then start voting rationally

 

um ok. you're basically talking about crashing the financial system...which is something the global economy cannot function without. i see a couple of problems with that idea.

--- man made the money, money never made the man
 

So people stop paying their mortgages, banks with MBS still on their balance sheets are on the verge of bankruptcy, the govt steps in and props up these too big to fail actors, all the while seeing the MBS it bought from banks being marked down to 0 and further heightening the load on the American taxpayer, whom paralyzed by the crashing stock market and nearly negative yields on govies starts stashing cash in his mattress. Eventually, Cali and Illinois default and these states are deemed too big to fail and the govt steps in yet again. Somebody at Moody's, suspecting that Congress plans on axing credit rating agencies, decides to downgrade the U.S. China gets jittery and attempts to dump trillions of treasuries, sending treasury yields sky high and making the entire world afraid of purchasing or selling anything with paper currency. The gold bulls are filled with glee until getting shot in the face by people with less gold. Eventually, someone in the Russian Mafia tires of all this and uses his prized nuclear weapon to wipe out the eastern seaboard. Whatever gold is left is used to fund thermonuclear war and the destruction of our planet.

Yeah, we should all stop paying our mortgages. Or at least make troll posts funny. Sorry you're having trouble making payments dude.

 
GoodBread:
So people stop paying their mortgages, banks with MBS still on their balance sheets are on the verge of bankruptcy, the govt steps in and props up these too big to fail actors, all the while seeing the MBS it bought from banks being marked down to 0 and further heightening the load on the American taxpayer, whom paralyzed by the crashing stock market and nearly negative yields on govies starts stashing cash in his mattress. Eventually, Cali and Illinois default and these states are deemed too big to fail and the govt steps in yet again. Somebody at Moody's, suspecting that Congress plans on axing credit rating agencies, decides to downgrade the U.S. China gets jittery and attempts to dump trillions of treasuries, sending treasury yields sky high and making the entire world afraid of purchasing or selling anything with paper currency. The gold bulls are filled with glee until getting shot in the face by people with less gold. Eventually, someone in the Russian Mafia tires of all this and uses his prized nuclear weapon to wipe out the eastern seaboard. Whatever gold is left is used to fund thermonuclear war and the destruction of our planet.

Funny what happens when you build a house of cards economy out of fraud and fiat.

I like where your head's at, Cmoss.

 

also on a another note, the cost of organzing that kind of coordination would be insane.

Think about it this way... if you stop paying, someone else is. and if everyone is doing that, then everyone is paying...

kind of like saying if we all stop paying our tax... IRS can't get to everyone!

interesting thought though!

 

OR the government can just put together an 11 digit "stimulus package" and pay off half of every mortgage out there and that would maintain your precious banks balance sheets.

 
Cmoss:
OR the government can just put together an 11 digit "stimulus package" and pay off half of every mortgage out there and that would maintain your precious banks balance sheets.
But where would that money come from? The government has to come up with that money from somewhere. If it issues debt, somebody has to buy that debt. The Federal Reserve could hypothetically buy that debt by increasing the money supply to do so (quantitative easing). But then what happens after all that money goes to pay off mortgages and banks are holding it again? Cash is a liability to a bank, they don't want to have a ton of it, they don't make any money off of holding cash. They want to lend it, as that is how a bank makes money. You would have a zero percent interest rate (price of borrowing) because of the excessive supply of money. Think about your IS-LM model. You've printed a bunch of money, but haven't created any demand for it. Inflation, the nominal price of a good, will go up, but you don't change the real value of anything. Yes you may have paid off everybody's mortgage but now the price of everything else is higher because of the rapid inflation that would occur so they end up paying for it in the long run. You haven't really solved anything, all you've done is made a short-term transfer and created a whole new set of long-term problems.

I'm an avid reader of Peter Schiff. Here is an article that further discusses the issue of inflation and debt: http://www.europac.net/commentaries/krugman_strikes_again

 

We are really stuck here.

However, I think credibility is most important. We want to be the bastion of safety as people flee Europe / Japan. We don't want to be the next one in line.

I agree with Bernanke on this one. There is not much left for the FED to do.

Also, Paul Krugman's personality annoys the hell out of me, so there's that too. A first rate economist, but he has an ego and an axe to grind like no other.

 

I love this notion that raising inflation fears is the solution, or even a positive. That's like suggesting to a struggling store owner that he should jack up all his prices 20% and announce that they're going up another 50% next week. Economics, unlike what many are lead to believe, is actually very simple. If a proposed solution sounds weird, it probably is.

OP you're asking what would be a better solution to our problems, monetary policy or fiscal policy? How about neither. How about we return to what made this country great; limited government, no taxes, sound money, stable rule of law. How easily we've forgotten all those things.

Bernanke is clueless (See pre-07 interviews), Krugman is dishonest beyond belief, why people even talk about them anymore I'll never understand.

 
JeffSkilling:
I love this notion that raising inflation fears is the solution, or even a positive. That's like suggesting to a struggling store owner that he should jack up all his prices 20% and announce that they're going up another 50% next week.

I don't think that's a good analogy. QE -> lower interest rates + raised inflation expectations -> increased borrowing -> increased spending (ie. increased demand) -> increased revenue for "struggling store owners" and increased prices due to the higher demand. Inflation doesn't mean that store prices are jacking up prices for the hell of it.

JeffSkilling:
How about we return to what made this country great; limited government, no taxes, sound money, stable rule of law.

How the fuck can you have a government without taxes?

 
chabo11:
  • Krugman says: Inflation would lead people to spend faster to beat rising prices, thus boosting demand and reducing unemployment.
  • Corporations are sitting on a large hoard of cash. Inflation would act as a spur to investment by giving businesses and consumers less incentive to sit on their money.
  • This is the stupidest thing I've ever read.

     
    evilbyaccident:
    chabo11:
  • Krugman says: Inflation would lead people to spend faster to beat rising prices, thus boosting demand and reducing unemployment.
  • Corporations are sitting on a large hoard of cash. Inflation would act as a spur to investment by giving businesses and consumers less incentive to sit on their money.
  • This is the stupidest thing I've ever read.

    Uh...do you actually have an argument to refute those points? This is basic econ 101.

     

    Corporations obviously have options for how and where they invest their money, I was simply pointing out Krugman's argument to contrast it with Bernanke's. Not saying I necessarily agree with it wholeheartedly or that there aren't exceptions out there, but you also can't say that inflation hasn't had that effect on at least some consumers in the past.

    See my WSO blog "The only thing that interferes with my learning is my education." Albert Einstein
     

    Another great example of why we don't need a Fed. Abdel has sold me. Allow the economy to heal and the market to fix itself.

    Government causes the problem and then lies to us and tells us it is the solution. Less government = less costs and more money for all Americans.

     

    JDawg I would encourage you to explore the world outside of what your Keynesian professors have taught you. You're right, the argument Krugman is making is basic econ 101, the only problem is that it's completely wrong. Keynesianism is a failed ideology and it's just a matter of time before it becomes a thing of the past. Just like people were convinced the earth was the center of the universe, and that the world was flat, people will eventually look back on the notion that government spending/inflation/taxation can stimulate an economy and laugh.

    The whole basis for Krugman's argument is that you need to stimulate demand, to get more spending. First of all, we do have a spending problem, but the issue is we spend too much, not too little. Most Americans spend everything they make, and then some going into credit card debt. We are the most indebted country in the world and have a savings rate even after the crisis of like 4%. Spending (Just as is obvious to any 5 year old) does not create growth. Growth comes from underconsumption, from delayed gratification, from savings, and from investment. Also, it's totally wrong to try and stimulate demand through inflation. We do not have a demand problem, demand is endless. Think about it, everyone wants everything. I want a new 60 inch plasma, a new car, and a new house right now. The only reason I don't buy those things are that they are too expensive. Deflation is a very good thing. The reason you, I, and everyone we know owns cell phones is thanks to inflation. What do you think would have happened if the first cell phone was $1,000 and then just got progressively higher after that? Inflation is nothing but a hidden confiscation of wealth from the public to government and the power elite (Greenspan's words, not mine). Deflation is the byproduct of a healthy economy that is growing it's productive capacity.

    The sooner liars like Krugman and puppets like Bernanke are forgotten from the pages of history humanity will be better off.

     
    JeffSkilling:
    JDawg I would encourage you to explore the world outside of what your Keynesian professors have taught you. You're right, the argument Krugman is making is basic econ 101, the only problem is that it's completely wrong. Keynesianism is a failed ideology and it's just a matter of time before it becomes a thing of the past. Just like people were convinced the earth was the center of the universe, and that the world was flat, people will eventually look back on the notion that government spending/inflation/taxation can stimulate an economy and laugh.

    The whole basis for Krugman's argument is that you need to stimulate demand, to get more spending. First of all, we do have a spending problem, but the issue is we spend too much, not too little. Most Americans spend everything they make, and then some going into credit card debt. We are the most indebted country in the world and have a savings rate even after the crisis of like 4%. Spending (Just as is obvious to any 5 year old) does not create growth. Growth comes from underconsumption, from delayed gratification, from savings, and from investment. Also, it's totally wrong to try and stimulate demand through inflation. We do not have a demand problem, demand is endless. Think about it, everyone wants everything. I want a new 60 inch plasma, a new car, and a new house right now. The only reason I don't buy those things are that they are too expensive.

    You're confusing demand with wanting something. And the point of stimulus isn't to get people to buy 60 inch plasma TVs, it's to get people/businesses to invest (which you said leads to growth).

    Deflation is a very good thing. The reason you, I, and everyone we know owns cell phones is thanks to inflation. What do you think would have happened if the first cell phone was $1,000 and then just got progressively higher after that? Inflation is nothing but a hidden confiscation of wealth from the public to government and the power elite (Greenspan's words, not mine). Deflation is the byproduct of a healthy economy that is growing it's productive capacity.

    Lmao that quote is literally propaganda. Inflation redistributes wealth from creditors to debtors, thus encouraging borrowing.

    Deflation coupled with economic growth is a good thing. The problem is when there's deflation and no economic growth. I'm sure you've heard of the term "deflationary spiral". See the Great Depression and Japan's Lost Decade.

    Lol do you have any idea how bubbles are created or where the business cycle comes from? All that magical lending and savings you're talking about is nothing but cheap credit from the Fed, it's not backed up by any real savings. Therein lies the problem.

    I'm not saying that the Fed hasn't helped fuel bubbles, but you're not depicting the entire picture. The whole concept of fractional reserve banking means that banks create money out of thin air. Even if there was no Fed, bubbles and "magical lending not backed up by any real savings" would still happen as long as we have a system of fractional reserve banking.

    Who needs government?

    You an anarchist bro? I'm sure you're not, but I'm tired of seeing all this generic ideological "the government is bad" shit. Free-market Laissez-Faire capitalism has its flaws (externalities and monopolies).

     

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