[patientrenter]

I enjoyed the post and the ripost in the form of a story. Very helpful. Thanks to you both.

One argument is that the wealthy 10th man is going to stop playing the game if he’s taxed too much. The other argument is that no one will stop playing the game because no one really has a choice, an alternative. I think the truth is somewhere in between, because of widespread tax evasion amongst people who work for themselves. If tax rates are low enough, they declare more of their income. If tax rates are high, they hide more income. They are a politically powerful group, so the tax evasion is widely tolerated.

[patientrenter]

I enjoyed the post and the ripost in the form of a story. Very helpful. Thanks to you both.

One argument is that the wealthy 10th man is going to stop playing the game if he’s taxed too much. The other argument is that no one will stop playing the game because no one really has a choice, an alternative. I think the truth is somewhere in between, because of widespread tax evasion amongst people who work for themselves. If tax rates are low enough, they declare more of their income. If tax rates are high, they hide more income. They are a politically powerful group, so the tax evasion is widely tolerated.

[patientrenter]

I enjoyed the post and the ripost in the form of a story. Very helpful. Thanks to you both.

One argument is that the wealthy 10th man is going to stop playing the game if he’s taxed too much. The other argument is that no one will stop playing the game because no one really has a choice, an alternative. I think the truth is somewhere in between, because of widespread tax evasion amongst people who work for themselves. If tax rates are low enough, they declare more of their income. If tax rates are high, they hide more income. They are a politically powerful group, so the tax evasion is widely tolerated.

[patientrenter]

I enjoyed the post and the ripost in the form of a story. Very helpful. Thanks to you both.

One argument is that the wealthy 10th man is going to stop playing the game if he’s taxed too much. The other argument is that no one will stop playing the game because no one really has a choice, an alternative. I think the truth is somewhere in between, because of widespread tax evasion amongst people who work for themselves. If tax rates are low enough, they declare more of their income. If tax rates are high, they hide more income. They are a politically powerful group, so the tax evasion is widely tolerated.

[patientrenter]

I think there is a real difference between the time of the Great Depression and now. Amongst our nation’s economic and political leaders, there is little reluctance to print and spend more money, in huge amounts if necessary, in response to recession. Back in the early 1930’s, many were reluctant.

Ultimately, we need real changes that cannot be avoided:

1) Greater US resources devoted to producing goods and services that the rest of the world wants.

2) Lower US consumption of foreign goods and greater US savings rates

But we can certainly avoid, by printing and spending money, large-scale unemployment and GDP declines as in the Great Depression. The people employed may be digging and filling holes in the ground, producing little or no real economic value, but they will be “employed” and the GDP will appear to be higher as a result than it would otherwise be. (It won’t really be, of course.) It might well lead to more real economic waste, because it will give less incentive for people to get any job they can in export or import-substitute activities, but politically-driven intervention is like a tax on the real economy, and we will have to pay some of that tax one way or another.

[patientrenter]

I think there is a real difference between the time of the Great Depression and now. Amongst our nation’s economic and political leaders, there is little reluctance to print and spend more money, in huge amounts if necessary, in response to recession. Back in the early 1930’s, many were reluctant.

Ultimately, we need real changes that cannot be avoided:

1) Greater US resources devoted to producing goods and services that the rest of the world wants.

2) Lower US consumption of foreign goods and greater US savings rates

But we can certainly avoid, by printing and spending money, large-scale unemployment and GDP declines as in the Great Depression. The people employed may be digging and filling holes in the ground, producing little or no real economic value, but they will be “employed” and the GDP will appear to be higher as a result than it would otherwise be. (It won’t really be, of course.) It might well lead to more real economic waste, because it will give less incentive for people to get any job they can in export or import-substitute activities, but politically-driven intervention is like a tax on the real economy, and we will have to pay some of that tax one way or another.

[patientrenter]

I think there is a real difference between the time of the Great Depression and now. Amongst our nation’s economic and political leaders, there is little reluctance to print and spend more money, in huge amounts if necessary, in response to recession. Back in the early 1930’s, many were reluctant.

Ultimately, we need real changes that cannot be avoided:

1) Greater US resources devoted to producing goods and services that the rest of the world wants.

2) Lower US consumption of foreign goods and greater US savings rates

But we can certainly avoid, by printing and spending money, large-scale unemployment and GDP declines as in the Great Depression. The people employed may be digging and filling holes in the ground, producing little or no real economic value, but they will be “employed” and the GDP will appear to be higher as a result than it would otherwise be. (It won’t really be, of course.) It might well lead to more real economic waste, because it will give less incentive for people to get any job they can in export or import-substitute activities, but politically-driven intervention is like a tax on the real economy, and we will have to pay some of that tax one way or another.

[patientrenter]

I think there is a real difference between the time of the Great Depression and now. Amongst our nation’s economic and political leaders, there is little reluctance to print and spend more money, in huge amounts if necessary, in response to recession. Back in the early 1930’s, many were reluctant.

Ultimately, we need real changes that cannot be avoided:

1) Greater US resources devoted to producing goods and services that the rest of the world wants.

2) Lower US consumption of foreign goods and greater US savings rates

But we can certainly avoid, by printing and spending money, large-scale unemployment and GDP declines as in the Great Depression. The people employed may be digging and filling holes in the ground, producing little or no real economic value, but they will be “employed” and the GDP will appear to be higher as a result than it would otherwise be. (It won’t really be, of course.) It might well lead to more real economic waste, because it will give less incentive for people to get any job they can in export or import-substitute activities, but politically-driven intervention is like a tax on the real economy, and we will have to pay some of that tax one way or another.

[patientrenter]

I think there is a real difference between the time of the Great Depression and now. Amongst our nation’s economic and political leaders, there is little reluctance to print and spend more money, in huge amounts if necessary, in response to recession. Back in the early 1930’s, many were reluctant.

Ultimately, we need real changes that cannot be avoided:

1) Greater US resources devoted to producing goods and services that the rest of the world wants.

2) Lower US consumption of foreign goods and greater US savings rates

But we can certainly avoid, by printing and spending money, large-scale unemployment and GDP declines as in the Great Depression. The people employed may be digging and filling holes in the ground, producing little or no real economic value, but they will be “employed” and the GDP will appear to be higher as a result than it would otherwise be. (It won’t really be, of course.) It might well lead to more real economic waste, because it will give less incentive for people to get any job they can in export or import-substitute activities, but politically-driven intervention is like a tax on the real economy, and we will have to pay some of that tax one way or another.

[patientrenter]

stockstrader,

I don’t think a lack of domestic consumption is the reason for Europe’s recent bank problems. So cutting their interest rates a year ago probably would not have helped much.

In the US, there was a major reliance on increasing asset prices, and almost the entire population built its economic plans around that. Lots of real economic resources were allocated inefficiently as a result.

In Europe, there was also some reliance on increasing asset prices, but it was less pervasive and less extreme. It certainly occurred in Ireland, Spain, the UK, and to a lesser extent in several other countries. It didn’t happen much in Germany. Note that the Hypo Bank problems are caused by non-German assets. So they will certainly have problems, but they will be a little less severe than the US.

[patientrenter]

stockstrader,

I don’t think a lack of domestic consumption is the reason for Europe’s recent bank problems. So cutting their interest rates a year ago probably would not have helped much.

In the US, there was a major reliance on increasing asset prices, and almost the entire population built its economic plans around that. Lots of real economic resources were allocated inefficiently as a result.

In Europe, there was also some reliance on increasing asset prices, but it was less pervasive and less extreme. It certainly occurred in Ireland, Spain, the UK, and to a lesser extent in several other countries. It didn’t happen much in Germany. Note that the Hypo Bank problems are caused by non-German assets. So they will certainly have problems, but they will be a little less severe than the US.

[patientrenter]

stockstrader,

I don’t think a lack of domestic consumption is the reason for Europe’s recent bank problems. So cutting their interest rates a year ago probably would not have helped much.

In the US, there was a major reliance on increasing asset prices, and almost the entire population built its economic plans around that. Lots of real economic resources were allocated inefficiently as a result.

In Europe, there was also some reliance on increasing asset prices, but it was less pervasive and less extreme. It certainly occurred in Ireland, Spain, the UK, and to a lesser extent in several other countries. It didn’t happen much in Germany. Note that the Hypo Bank problems are caused by non-German assets. So they will certainly have problems, but they will be a little less severe than the US.

[patientrenter]

stockstrader,

I don’t think a lack of domestic consumption is the reason for Europe’s recent bank problems. So cutting their interest rates a year ago probably would not have helped much.

In the US, there was a major reliance on increasing asset prices, and almost the entire population built its economic plans around that. Lots of real economic resources were allocated inefficiently as a result.

In Europe, there was also some reliance on increasing asset prices, but it was less pervasive and less extreme. It certainly occurred in Ireland, Spain, the UK, and to a lesser extent in several other countries. It didn’t happen much in Germany. Note that the Hypo Bank problems are caused by non-German assets. So they will certainly have problems, but they will be a little less severe than the US.

[patientrenter]

stockstrader,

I don’t think a lack of domestic consumption is the reason for Europe’s recent bank problems. So cutting their interest rates a year ago probably would not have helped much.

In the US, there was a major reliance on increasing asset prices, and almost the entire population built its economic plans around that. Lots of real economic resources were allocated inefficiently as a result.

In Europe, there was also some reliance on increasing asset prices, but it was less pervasive and less extreme. It certainly occurred in Ireland, Spain, the UK, and to a lesser extent in several other countries. It didn’t happen much in Germany. Note that the Hypo Bank problems are caused by non-German assets. So they will certainly have problems, but they will be a little less severe than the US.

[patientrenter]

arraya,

I agree that the management of our money supply and credit has been irresponsible for many years now. But what you are seeing there is a projection of the wishes of the Congress, mainly.

If Congress wants to have cheap and easy credit, then they can make it happen, because they have the legislative power. Everyone in govt, or organizations that live or die at the pleasure of the govt, knows that. You don’t think the CEO of Fannie Mae, in its day, made a move without chatting with Chris and Barney first? Same for the Fed. It’s convenient for Congress to allow the Fed to ‘get out in front’ on issues opposed by most voters, but if the Fed were to actually act against Congress’s real wishes, Bernanke would be humiliated or re-chartered in a flash.

[Author]

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