There's Only One Way To Fix The Deficit — And Actually It's Totally Painless

[flopticalcube]

Originally Posted by Dmunjal

We've been doing a lot of QE recently!

I'll say!

[Eraserhead]

Surely if it was down to QE rather than Asian demand the US would merely have high inflation and commodity prices wouldn't be increasing in countries which hadn't performed any QE?

[throAU]

Originally Posted by Eraserhead

Surely if it was down to QE rather than Asian demand the US would merely have high inflation and commodity prices wouldn't be increasing in countries which hadn't performed any QE?

Except most commodities are PRICED IN US DOLLARS.

There's also 2 sides to it.

Because teh US is devaluing the dollar via QE, people are trying to get out of it and replace it with real tangible objects that can't be devalued by money printing.

Like gold, silver, physical assets.

So its a 2 edged sword. Commodities go up because USD goes down. And people get out of USD (BECAUSE it is going down) to protect their wealth - furthering it's decline.

[Zombie Acorn]

Originally Posted by Eraserhead

I agree that most of the developed needs to do that.

I still stand by my comment that the world as a whole (which also includes all the developing countries) is richer than at any previous time in its history.

When history is averaged out, isn't this always the case?

[Huntn]

One of the big problems is one of the U.S.'s prominent political parties pushing the notion that dropping taxes to minimal levels will stir growth so much as to over come our huge amount of debt. If they were right, the U.S. economy should be booming right now (look at the trend for the last 50 years). They are wrong and disingenuous regarding the subject. They have no place leading the country.

[skunk]

Originally Posted by Zombie Acorn

When history is averaged out, isn't this always the case?

What does this mean? Surpluses come and go.

[Eraserhead]

Originally Posted by throAU

Except most commodities are PRICED IN US DOLLARS.

If it was a problem with the US dollar, then the US would have high inflation, and/or other currencies would increase in value relative to the dollar.

In reality neither have happened - at least not to the degree required for it all to be down to QE.

Maybe it is down to QE AND higher Asian demand - that is possible.

[Bug-Creator]

Originally Posted by Huntn

If they were right, the U.S. economy should be booming right now (look at the trend for the last 50 years). They are wrong and disingenuous regarding the subject.

Actually they aren't really wrong (but also far from being right...). Without those lower-than-needed taxes (aka the goverment running a deficit) the economy would have been running much slower over the past decades.

In the end we (aka "the west") all need to back to that lower level and than find a way how that reduced wealth is distributed in a fair way.

The way there can either be a greek-style crash or smart politics that manage to stay ahead of the curve.
The reforms started in Germany under Schröder did us some breathing space (otherwise we would in a situation similar to France right now) but the are far away from being enough (and fail miserably on the "fair" part).

[Zombie Acorn]

Originally Posted by skunk

What does this mean? Surpluses come and go.

If being richer now than we were anytime in the past was some sort of proof that an economic plan has worked, then nearly everything we have done for the economy since we came out of the cave has "worked". Using slaves made us richer than we were before as well, doesn't mean that the system "worked".

[Dmunjal]

Originally Posted by Eraserhead

If it was a problem with the US dollar, then the US would have high inflation, and/or other currencies would increase in value relative to the dollar.

In reality neither have happened - at least not to the degree required for it all to be down to QE.

Maybe it is down to QE AND higher Asian demand - that is possible.

Think about it this way. When we print dollars to buy oil and stuff made in China (about $600B a year in trade deficit), those dollars are converted to local currency and stimulate more demand). We are creating inflation all over the world! Not just the US.

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Originally Posted by Huntn

One of the big problems is one of the U.S.'s prominent political parties pushing the notion that dropping taxes to minimal levels will stir growth so much as to over come our huge amount of debt. If they were right, the U.S. economy should be booming right now (look at the trend for the last 50 years). They are wrong and disingenuous regarding the subject. They have no place leading the country.

This is not just about Republicans. Both parties practice deficit spending. To not see this is disingenuous.

That's why I'm a Libertarian.

[citizenzen]

Originally Posted by Dmunjal

This is not just about Republicans. Both parties practice deficit spending. To not see this is disingenuous.

That's why I'm a Libertarian.

Why are you a Libertarian?

What would the Libertarian Party do differently?

It's pretty easy to imagine they have the solution when they've never actually had the responsibility to achieve one.

As far as I can tell, you're a Libertarian because you imagine they'd govern differently, though there's no proof that they'd actually do so.

[Dmunjal]

Originally Posted by citizenzen

Why are you a Libertarian?

What would the Libertarian Party do differently?

It's pretty easy to imagine they have the solution when they've never actually had the responsibility to achieve one.

As far as I can tell, you're a Libertarian because you imagine they'd govern differently, though there's no proof that they'd actually do so.

You're right. There are very few successful Libertarian politicians and I would say that they would likely fail as well given the current system. I'm not really talking about politics but more about policy.

I started out as a Democrat. Went to Berkeley and voted for Clinton twice and Gore as well. But I learned how economics worked after the dotcom bust and realized how deficit spending and the Federal Reserve are the cause of many of our problems.

The Republicans are no better with their social intolerance and love for war.

Libertarians are fiscal conservatives yet very tolerant socially (see Gary Johnson). Don't get confused by how the Tea Party is portrayed by the media. They started out as Libertarians before they were coopted by the Republicans.

[throAU]

Originally Posted by Eraserhead

If it was a problem with the US dollar, then the US would have high inflation, and/or other currencies would increase in value relative to the dollar.

In reality neither have happened - at least not to the degree required for it all to be down to QE.

Maybe it is down to QE AND higher Asian demand - that is possible.

Well, if you compare to the AU dollar (for example), it has happened - Even though our government has devalued our currency as well. Just not to the same extent. Back in 2006 or previous, our dollar was hovering around 60 US c from memory (and had been for YEARS, it was even down at 48c in the late 90s/early 2000s), now it is above parity.

Other currencies have been doing the same as the US to an extent (print their way out of trouble) so they've been devalued at a similar rate. China's yuan is pegged to the US dollar at a fixed rate of exchange, which has prevented their currency from exploding in value relative to the US. As soon as they un-peg - watch out.

It's what they call a "race to the bottom" If the US prints/devalues the dollar, others try to print to keep up, so that their wages are pushed down in real terms and exports (to the US or in competition with US companies) are price competitive.

..
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Originally Posted by Eraserhead

How does QE benefit the rich? Surely it dilutes their (usually large) savings more than the poor, who don't have any savings?
.

You think "the rich" have most of their wealth in actual currency? Holding the bulk of your wealth in currency is retarded.

Most of it will be tied up in assets.

QE benefits anyone who is borrowing money against an asset. The asset's real value remains relatively stable. QE means the dollars you borrow today can be paid with less valuable dollars in the future.


edit:
clarified my post above too. QE hits dollar value in 2 ways- it devalues the dollar directly. Also indirectly, it makes people more wary about holding dollars (after seeing the direct hit to it's value), encouraging them to get out and exchange them for something else. Which further devalues the dollar.

[miloblithe]

Originally Posted by classicaliberal

Most middle-class Americans are already paying well over 50% of their income in taxes, be it in the form of income tax, property tax, sales tax, or price increases passed along to reflect corporate tax. We don't have a revenue problem, we have a major spending problem

Can you provide a source for this? I don't believe anyone pays more than 50% of their income in taxes.

This source places total taxes at 25.2% for middle income earners (40th to 60th percentile) and just over 30% for the highest taxed groups (90th to 99th percentile)

http://ctj.org/images/taxday2012table.jpg

[ericrwalker]

Originally Posted by miloblithe

Can you provide a source for this? I don't believe anyone pays more than 50% of their income in taxes.

This source places total taxes at 25.2% for middle income earners (40th to 60th percentile) and just over 30% for the highest taxed groups (90th to 99th percentile)

http://ctj.org/images/taxday2012table.jpg

Image

I think he's going beyond that, there is sales tax that's around 8% for most people, not to mention property and school taxes, car registration and gas taxes.

[miloblithe]

Originally Posted by ericrwalker

I think he's going beyond that, there is sales tax that's around 8% for most people, not to mention property and school taxes, car registration and gas taxes.

The table above includes those taxes. See the footnote at the bottom.

Think about it, it total tax revenues as a percentage of GDP are about 30%

http://www.oecd.org/newsroom/41498733.pdf

then obviously the average person is not paying 50% of their income in taxes.

[ericrwalker]

Originally Posted by miloblithe

The table above includes those taxes. See the footnote at the bottom.

Gotcha, damn footnotes.

[Eraserhead]

Originally Posted by throAU

You think "the rich" have most of their wealth in actual currency? Holding the bulk of your wealth in currency is retarded.

Most of it will be tied up in assets.

To be fair the poor will have all of their wealth tied up in assets .

[throAU]

Originally Posted by Eraserhead

To be fair the poor will have all of their wealth tied up in assets .

The poor don't have assets. Possessions aren't assets...