"How to Solve the Economic Problem; and Why We're Not"

Discussion in 'Politics, Religion, Social Issues' started by thermodynamic, Sep 1, 2016.

  1. thermodynamic Suspended

    thermodynamic

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    #1
    http://bonddad.blogspot.com/2011/11/how-to-solve-economic-problem-and-why.html

    Article has a ton more, but here's a sample:

     
  2. citizenzen macrumors 65816

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    #2
    That's just bull ****.
     
  3. 1458279 Suspended

    1458279

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    #3
    I agree 100% with you. Democrats CAN lead.

    It's historic and I just posted about this:
    http://forums.macrumors.com/threads/the-race-is-on-historic-milestone-for-america.1991161/
    --- Post Merged, Sep 1, 2016 ---
    The story is about 6 years old and that's not a bad thing.

    Obama tried this:
    And it failed. Nobody can get things done because of regulation. Remember those "shovel ready jobs".

    Infrastructure is not only over regulated, but it creates temp jobs and it's very, very expensive. It's like trying to fix a $500 car with a $10.000 repair.

    If you create meaningful jobs and long term growth, you'll have the tax based to fund the repairs needed.
     
  4. citizenzen macrumors 65816

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    #4
    Why am I expecting some back-handed form of snark? I'm probably just too jaded. I'm sure you wouldn't resort to something like that.

    Democrats can lead and can govern. Republicans can lead and can govern.

    We HAVE to get past this idiocy where we vilify and obstruct the opposition and return to a point where we can compromise on solutions.
     
  5. 1458279 Suspended

    1458279

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    #5
    Correct again, either side can lead. It's an issue of which path will work.

    Compromise on solutions doesn't work, that's the problem, it can't work. We need to go down one path and see where it leads.

    Compromise would be like me saying:
    1+1 = 2
    and someone else saying:
    1+1 = 4
    Compromise to:
    1+1 = 3

    That's the problem, one side is Right and one side is Left.

    ObamaCare is a good example as it's from the Left and we can see how it's working. The Left needs to show their signature policy works. The Right needs to stand back and let them have their way with the system.

    We should go so far as to have no limits on it. The goal is to see if the plane flies or not. The same thing with gun control in Chicago and many other examples.

    Until then, we're stuck pointing fingers.
     
  6. citizenzen macrumors 65816

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    #6
    I reject your conclusion.

    Both sides work. Conservatism works. Liberalism works.

    And a compromise between the two works.
     
  7. Desertrat macrumors newbie

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    #7
    Our economic problems? Definitely bi-partisan, insofar as politicians have been involved.

    Deficit spending is part of it. In today's world, ZIRP is definitely a contributory factor. Include legislation/regulation which has made it more profitable to reduce industrial production here and import it from other countries. A high standard of living via debt is part of it. The inculcation of a sense of entitlement contributes.

    Bottom line: Nobody can kiss the ouchie and make it all better. Not Trump, not Hillary.
     
  8. 1458279 Suspended

    1458279

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    #8
    This is the problem. I have to wait for you to see the correct answer. The sooner you discover the right answer, the sooner we can move forward. This is the reason why ObamaCare is so important, it gives us a very important lesson. It's harsh, but it's what needs to be done.

    One of the hard parts about this is that neither side can come up with a "proof positive" test. We had no gauge for the War on Poverty or New Deal. Obama said the economy would be fixed in 3 years, then had to back off. We turn this into a left/right/left/right. This is the part that needs to stop.

    We are consuming important innovation. Innovation that has economic impact. When we reach the point of diminishing returns, it's all over. People won't be able to afford what the businesses create, game over.

    It's important to find the correct path before we reach that point. With the amount of debt most nations have now, we won't be able to "buy our way out" with more debt like we did last time. Remember how slow things were during the last recovery.
     
  9. Desertrat macrumors newbie

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    #9
    Sure, over-simplified, but what got the world in financial trouble back in 2007 was excessive debt--both public and private. So what to governments and central banks do? Increase indebtedness by more than the original debt. So how do the people whose methodology created the mess solve the problem? So far, the proposed solution is more of the same.

    Good luck with that.
     
  10. citizenzen macrumors 65816

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    #10
    The correct answer is that there are millions upon millions of people on either side of the political fence. Neither side is going away, and there will always be a need to cater to both sides.

    The problem is you think there's only one answer, when the answer has to be the same as it's been throughout the history of this nation: both conservatism and liberalism have to find ways to compromise on solutions.
     
  11. steve knight macrumors 68020

    steve knight

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    #11
    this is so silly life is about compromise everything has compromises. you can't work 24/7 so you compromise work with play. you can'r play 24/7 you compromise
    so what happens if we do all the rights ideas and it does not work all the lefts don't work should we keep jumping around till we find who's ideas are good?
     
  12. vrDrew macrumors 65816

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    #12


    Government deficits, either in Europe or the US, had precisely nothing to do with the 2008 financial meltdown.

    Repeat after me: Government deficits had nothing to do with causing the 2008 crash.

    I will note that this fundamental misconception has been behind the rise of today's Republican budgetary and political idiocy. Everyone from the Tea Party to Donald Trump seem to be laboring under a notion that is fundamentally false. Until these people face up to reality, there is little hope they will play any realistic role in improving the economic prospects of the American people.
     
  13. 1458279 Suspended

    1458279

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    #13
    Both sides move around. It's not like either side hasn't changed over time. The basics of economics hasn't changed.

    If we took the same approach to medical research, we would never find the correct answer for things like how to treat a certain condition.

    We rarely get one party that has enough control to enact big plans. New Deal, war on poverty, and ObamaCare are rare. They offer us insight into how these plans turn out. Just as much as when new treatments for medical conditions, we learn from them.

    The two economic theories are polar opposites and the two parties change there solutions around. This is why ObamaCare is so important. It show one sides solution in play, we get to see exactly how it's going to work out.

    There's no evidence that mixing two polar opposite theories will produce the best results. We're mixing oil and water and socialism is always a one way street.

    If your theory were correct, then the economy would be doing great right now. ObamaCare proves that socialism will always need more to work. That's why the war on poverty is still in play today, it's a drag on a capitalism and hasn't produced the expected results.
     
  14. bent christian, Sep 2, 2016
    Last edited: Sep 2, 2016

    bent christian Suspended

    bent christian

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    #14
    Where economics are concerned, you are talking about the same things here. Economic liberalism and fiscal conservatism both describe the classic Republican model. Democrats edge closer and closer every year.

    Let's not forget that "Liberalism", it's root word being liberal, simply means to allow many things. On the social side, that means acceptance and the freedom to engage different lifestyle choices, on the economic side, it means "free" markets and unrestricted capitalism.

    In that way, Liberalism = Centrism.
     
  15. 1458279 Suspended

    1458279

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    #15
    We need to learn from each solution that goes forward. Just as much as car companies learn from the design of different cars and make improvements over time. We see new tech come out all the time and we learn from this.

    We've learned a few things from the 08 meltdown about people qualifying for homes and banks selling trash securities.
     
  16. citizenzen macrumors 65816

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    #16
    o_O Economic ups and downs have occurred throughout history. Why would you assume otherwise?
     
  17. 1458279 Suspended

    1458279

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    #17
    I'm not assuming that economic cycles don't happen. This is about looking at the results of policy. Suggesting the no policy can be evaluated because we have economic cycles means that we'll never be able to question the outcome of policy.
     
  18. Desertrat macrumors newbie

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    #18
    vrDrew, the housing bubble came from the effects of the way-low Federal Reserve rate which led to the phony home loans and the bond tranches to be repaid from mortgages. In part, the interest rate for the interest payments on the national debt contributed to the motives for the low rates. That debt derived from deficits.

    IOW, more than one cause with varying degrees of importance. Carter's CRA. Repeal of Glass/Steagall. NINJA loans. And more...

    Now we have even more debt because of ZIRP. Worse, here comes NIRP; $14 trillion in such bonds already.

    No way any real-world solution can be painless. Worse, the US is beginning to lose its status as the world reserve currency, courtesy of the hostility of G20 nations against our foolishness. September should prove to be quite interesting.

    It doesn't matter what Trump says or what Hillary says. Their ideas won't work. His ideas are good-hearted; hers are just more and larger efforts at what has not worked.
     
  19. citizenzen macrumors 65816

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    #19
    If you think tha I've suggested that no policy can be evaluated, then I'd like to assure you that any plan can be evaluated.

    I'm very pro evaluation of any government policy.

    My apologies for giving you any other impression.
     
  20. 1458279 Suspended

    1458279

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    #20
    Ok, wait. I understand the ZIRP/NIRP and the effect that has, but I didn't follow the $14T in bonds. Can you explain that?

    I'm guessing it's the bonds that were purchased at the lower rates, vs if those bonds were sold at higher rates.

    So if a someone buys bonds, they are stuck with the lower rates of return. If they need a higher rate, they have to look elsewhere and incur higher risk.

    Is that what you mean?
     
  21. Desertrat macrumors newbie

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    #21
    So far, it's mostly in Europe. Central banks have been selling bonds which if held to maturity pay less than the purchase price. The idea is that the buyer is assured of a return of most of his capital, rather than the normal return on his capital. It's all part of the ongoing currency wars, with so many nations trying to depreciate the buying power of their currencies in order to maintain or increase exports.

    NIRP has been good for the sales of individual safes for at-home security of cash money and precious metals. Demand is exceeding supply in Japan, and sales are high in Europe. There's a relatively slow run on banks as people withdraw their money in order to not lose purchasing power.

    Recommended reading: EverBank.com's "Daily Pfennig", a free daily newsletter on ForEx. Anything by Bill Bonner, Doug Casey, Nomi Prinz, Peter Schiff and Jim Rickards. I call them "counter-culture" analysts; they have far better track records this century for prognostication than the usual Keynesian "experts". They predicted the 2008 crash while Greenspan and Bernanke et al did not. (So did Soros, for all that I despise his politics. Moneywise, he's razor sharp.)
     
  22. vrDrew macrumors 65816

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    #22


    That argument fails the most basic principle of economics: Supply & Demand.

    If the level of US Government debt was too high, it would have led to a situation where the demand for investors to buy US Govt. bonds and notes would have exceeded the available supply of investable cash. That would have led to a situation where the price (i.e. interest rate) the Government had to pat would have gone up.

    Instead the opposite happened. The amount of investable cash worldwide increased massively between 2003 and 2008: From around $17 trillion in 2003 to more than #70 trillion in 2008. The problem, such as it was, was there were insufficient high-quality investment options available, which led investors to buy increasingly risky financial instruments in search of higher yields. (The reasons for this are complicated, but mainly have to do with the growth of economies in places such as China during the same period.)

    Now, if you want to argue that the Federal Reserve contributed by keeping its rate too low during the early 2000s you can make a reasonable case. But that was a mistake of Government monetary policy. Not fiscal policy - which is what the deficit (and ultimately debt) is all about.


    Again, repeat after me: Government Debt was in no way the cause of the Great Recession.
     
  23. 1458279 Suspended

    1458279

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    #23
    I get that banks want ZIRP/NIRP to force banks to lend and get the money flowing, but I don't see why anyone would buy bonds or even hold too much cash. Bonds are effectively no different in that it's a government's promise to pay. Money is only slightly different in that it has exchange rates, inflation/deflation. I know this has pushed investments, which has created a bubble.

    In fact, the whole thing is really looking like a bubble as people look for something solid.
    --- Post Merged, Sep 2, 2016 ---
    Wouldn't that investment cash be from those that are looking for anything stable. The US is considered one (if not thee) most stable larger nations. Investor have been in a "flight to safety" for a while.

    There's been a huge push out of China to invest in anything outside of China. They've created wealth and don't want it to stay there. The US has the benefit of being something of a nation of laws and viewed as a safe place to be.

    As far as the debt being the cause, no, it was the solution. A fake solution that helps to kick the can down the road by making money cheap. Problem is that it didn't create the growth, the fed has no ammo left, and we have heavier debt.

    Debt can be one of the causes of the next problem, in fact it can be the killer problem as unfunded mandates have skyrocketed.
     
  24. DearthnVader macrumors 6502

    DearthnVader

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    #24
    True, Government debt had nothing to do with the Great Recession, however the response to the Great Recession was to blow up the biggest Government debt bubble ever.

    What goes up..............
     
  25. Desertrat macrumors newbie

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    #25
    Naw, vrDrew, it doesn't fail Eco 101. Low interest rates incentivize purchases, particularly houses. Ties in with the US dream of "a house of my own" and US government tax policy favoring home ownership over renting.
     

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