Does debt deflation plus monetary inflation equal goldilocks?

[Wild Style]

Re: Does debt deflation plus monetary inflation equal goldilocks?

I'm not an economist, I'm an entrepreneur - - and I am as a big a supporter of the ideal of free enterprise as anyone you're likely to meet - - but your statement strikes me as absurd.

Bridges, dams, roads - these things were all produced under the auspices of the WPA, and are valuable and productive assets - some even still in use today.

As someone was saying upthread, it's important to remember that *people* build things, and the form of organization they happen to use to coordinate their efforts does not seem to me to be the determinant of whether or not real value is created in the process - - personally, I'd rather see 1 million people employed building the next generation infrastructure for our country (and making us wealthier as a result) than employed contriving and selling each other "financial innovations" of little real-world value.

Just to add on to this. I work in the university system and have a birds eye view of how it works. The government also throws millions and millions of dollars toward research which produces things (internet, A.I.D.S research, nuke energy etc.). This also helps to employ tons of people. One research project a school with in the university I work is doing employs something like 30 people and pulls in 30 million or something close to that. All government funded. Depending on the schools you can have a hundred or so teams doing various research projects. If Obama plans to pull a manhattan project style energy solution out of his hat, you best believe he is going to be throwing money to the unis as well.

[grapejelly]

Re: Does debt deflation plus monetary inflation equal goldilocks?

Just to add on to this. I work in the university system and have a birds eye view of how it works. The government also throws millions and millions of dollars toward research which produces things (internet, A.I.D.S research, nuke energy etc.). This also helps to employ tons of people. One research project a school with in the university I work is doing employs something like 30 people and pulls in 30 million or something close to that. All government funded. Depending on the schools you can have a hundred or so teams doing various research projects. If Obama plans to pull a manhattan project style energy solution out of his hat, you best believe he is going to be throwing money to the unis as well.

the jobs that government "creates" at unis are visible.

The jobs it kills, in far greater numbers, are invisible.

All the government people care about is what is visible today. They are not interested in tomorrow or next week because they'll be gone by then and someone else will have that problem.

One of the few economists to talk any sense is Robert Mundell who suggested recently a reduction in corporate taxes or even a business tax holiday for a year, then a reduced rate.

The private sector is the only one to produce real wealth. The government can spend the private sector's money, but we are all poorer as a result. That's because the act of taking money and spending it is involuntary and results in a winner and many losers.

Private commerce results in only winners.

The solution to today's problems is to restore capitalism:

1. No taxes on dividends

2. No taxes on business income

3. No taxes on interest income

4. No taxes on capital gains

[Wild Style]

Re: Does debt deflation plus monetary inflation equal goldilocks?

the jobs that government "creates" at unis are visible.

The jobs it kills, in far greater numbers, are invisible.

All the government people care about is what is visible today. They are not interested in tomorrow or next week because they'll be gone by then and someone else will have that problem.

One of the few economists to talk any sense is Robert Mundell who suggested recently a reduction in corporate taxes or even a business tax holiday for a year, then a reduced rate.

The private sector is the only one to produce real wealth. The government can spend the private sector's money, but we are all poorer as a result. That's because the act of taking money and spending it is involuntary and results in a winner and many losers.

Private commerce results in only winners.

The solution to today's problems is to restore capitalism:

1. No taxes on dividends

2. No taxes on business income

3. No taxes on interest income

4. No taxes on capital gains

grape

I read what you and others posted answering ant's post AFTER I posted mine. I agree with you guys 100%.

Can you explain what you mean by visible and invisible though?

Also what do you mean that private commerce produces only winners?

[The Outback Oracle]

Re: Does debt deflation plus monetary inflation equal goldilocks?

the jobs that government "creates" at unis are visible.

The jobs it kills, in far greater numbers, are invisible.

All the government people care about is what is visible today. They are not interested in tomorrow or next week because they'll be gone by then and someone else will have that problem.

One of the few economists to talk any sense is Robert Mundell who suggested recently a reduction in corporate taxes or even a business tax holiday for a year, then a reduced rate.

The private sector is the only one to produce real wealth. The government can spend the private sector's money, but we are all poorer as a result. That's because the act of taking money and spending it is involuntary and results in a winner and many losers.

Private commerce results in only winners.

The solution to today's problems is to restore capitalism:

1. No taxes on dividends

2. No taxes on business income

3. No taxes on interest income

4. No taxes on capital gains

GJ

I normally agree wholeheartedly with your arguments and tend towards the view that the less governments interfere in people's lives in any form the better off we all are. However i'd probably argue with you about the notion that private commerce, always and everywhere, spends money more efficiently than Governments.
It's a confused issue i know in that Government is very much responsible for many of the distortions in our economies. However it occurs to me, that, for whatever reason, private commerce has not been particularly efficient at producing wealth in the last 40 to 50 years. There are a great many distortios. For example
The size of modern corporations who act much the same as governments rather than as private individuals
The overemphasis of consumption which has been created by the great brain-washing machine television.
If one had time I reckon i could make up a fair list.

The final proof of the argument is....Elect me dictator! I'll get this damned mess straightened out no matter what!!!"

[grapejelly]

Re: Does debt deflation plus monetary inflation equal goldilocks?

GJ

I normally agree wholeheartedly with your arguments and tend towards the view that the less governments interfere in people's lives in any form the better off we all are. However i'd probably argue with you about the notion that private commerce, always and everywhere, spends money more efficiently than Governments.
It's a confused issue i know in that Government is very much responsible for many of the distortions in our economies. However it occurs to me, that, for whatever reason, private commerce has not been particularly efficient at producing wealth in the last 40 to 50 years. There are a great many distortios. For example
The size of modern corporations who act much the same as governments rather than as private individuals
The overemphasis of consumption which has been created by the great brain-washing machine television.
If one had time I reckon i could make up a fair list.

The final proof of the argument is....Elect me dictator! I'll get this damned mess straightened out no matter what!!!"

The last 40 or 50 years we have been subject to fiat money and runaway creation of money for the FIRE economy. The wealth that has been created has been in finance and related areas, and to fuel consumption.

But that is not due to the private sector's failings. That is due to the public sector's distortions.

Banks can create unlimited amounts of cash under a fiat regime. This money gets tapped and pyramided into malinvestments.

Consumption has been rewarded by government policy as something virtuous. Why? To encourage more borrowing by the consumer, more fiat money creation.

You have to look deeper to see this. It is so popular to blame the private sector for what the public sector hath wrought.

The private sector generates all the wealth and all the productivity. Government always is a consumer, a parasite. That doesn't mean government money is always spent on things that don't bring good. Of course sometimes they bring good. But the government is a parasite nonetheless.

All productivity gains come from voluntary transactions leaving both buyer and seller better off. Government transactions create winners and losers. But it is to the benefit of government to educate people on the visible few winners, and ignore the losers.

[kingcopper]

Re: Does debt deflation plus monetary inflation equal goldilocks?

The last 40 or 50 years we have been subject to fiat money and runaway creation of money for the FIRE economy. The wealth that has been created has been in finance and related areas, and to fuel consumption.

But that is not due to the private sector's failings. That is due to the public sector's distortions.

Banks can create unlimited amounts of cash under a fiat regime. This money gets tapped and pyramided into malinvestments.

Consumption has been rewarded by government policy as something virtuous. Why? To encourage more borrowing by the consumer, more fiat money creation.

You have to look deeper to see this. It is so popular to blame the private sector for what the public sector hath wrought.

The private sector generates all the wealth and all the productivity. Government always is a consumer, a parasite. That doesn't mean government money is always spent on things that don't bring good. Of course sometimes they bring good. But the government is a parasite nonetheless.

All productivity gains come from voluntary transactions leaving both buyer and seller better off. Government transactions create winners and losers. But it is to the benefit of government to educate people on the visible few winners, and ignore the losers.

Indeed Grapejelly. I believe that the IRS is there to penalize non-consumers via a bitter tool known as the AUDIT!

[LinusK]

Re: Does debt deflation plus monetary inflation equal goldilocks?

Government taking that money and spending it is inefficient and makes only one party better off. Any jobs that government "creates" are at the expense of a greater number of private jobs that are invisibly lost when private actors were engaging in commerce.

Why do you say government spending makes only one party better off?

Isn't the interstate highways system an example of government spending that makes lots of people better off?

What about police? Aren't most people, other than criminals, better off because government employs cops?

National defense? Public education? Courts of law? National parks?

And if the jobs lost in the private sector are invisible, how do you know they're a greater number?

Don't a far greater number of jobs rely on things like roads, and police, and education?

Isn't one of the great differences between the US, and, say, Somalia, that we've invested in public safety, and roads and education, and they have not?

What's the value, to a private corporation, of doing business in a country with a literate population, a functioning transportation system, and a society in which you DON'T need a team of body guards to go down the street?

[LargoWinch]

Re: Does debt deflation plus monetary inflation equal goldilocks?

Depends on what you mean by "wealth," I suppose.

Because I'm not an economist, I use the highly simplified definition of "stuff people want" (I got this from an essay I read in an econ class some years back.)

Bridges, dams, and roads (to use my original examples) are all absolutely "stuff that people want" - - i.e. wealth.

Just because the effort was funded by tax dollars does not mean that no net wealth was created; that seems to be the tacit assumption of your comment.

I agree, infrastructure is wealth. However, have you ever asked yourself who paid for it?

Also, why would the government send out $600 checks (or whatever the amount was) to its citizen and not $6,000? Why not $60,000 or even $600,000?


Put it simply via an example;

a) Joe mines oil. He created wealth through is labor.

b) The government taxes Joe oil.

c) Joe has less oil, government now has oil. There is the same amount of oil or wealth in the economy.

d) The government now exchange the oil for a bridge; still same wealth but in a different form or if you want "reallocated".


As such, the statement that government can only "reallocate" capital in the economy is true, that it creates it is incorrect since government's capital is earned from taxation.

[LinusK]

Re: Does debt deflation plus monetary inflation equal goldilocks?

Not if the bridge is worth more than the oil. It's the nature of investment that the finished product is worth more than the cost of creating it.

Government investment works best where a lot of people benefit, but trying to charge all of them is difficult, or inefficient.

For example, there was a time when fire-fighting was a private business. If you didn't pay your monthly dues, they might show up at your house, but they wouldn't put the fire out. That's inefficient, especially if the fire spreads to other homes.