US Budget for Dummies....

[Jim Thompson]

US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )

* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s a household budget:

* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38.50


...Jim Thompson
--
| James E.Thompson, CTO | mens |
| Analog Innovations, Inc. | et |
| Analog/Mixed-Signal ASIC's and Discrete Systems | manus |
| Phoenix, Arizona 85048 Skype: Contacts Only | |
| Voice:(480)460-2350 Fax: Available upon request | Brass Rat |
| E-mail Icon at http://www.analog-innovations.com | 1962 |

I love to cook with wine. Sometimes I even put it in the food.

[Les Cargill]

Jim Thompson wrote:
> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>
> * U.S. Tax revenue: $2,170,000,000,000
> * Fed budget: $3,820,000,000,000
> * New debt: $ 1,650,000,000,000
> * National debt: $14,271,000,000,000
> * Recent budget cuts: $ 38,500,000,000
>
> Let’s now remove 8 zeros and pretend it’s a household budget:
>
> * Annual family income: $21,700
> * Money the family spent: $38,200
> * New debt on the credit card: $16,500
> * Outstanding balance on the credit card: $142,710
> * Total budget cuts so far: $38.50
>
>
> ...Jim Thompson
>

It's not a household budget.

Now what?

--
Les Cargill

[Jim Thompson]

Are you like Larkin, subject to Ron White's opinion ?:-)

Don't those numbers register ominously with you, or are you so left
that you're daft?

[hamilton]

On 12/28/2012 3:43 PM, Jim Thompson wrote:
> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>
> * U.S. Tax revenue: $2,170,000,000,000
> * Fed budget: $3,820,000,000,000
> * New debt: $ 1,650,000,000,000
> * National debt: $14,271,000,000,000
> * Recent budget cuts: $ 38,500,000,000
>
> Let’s now remove 8 zeros and pretend it’s a household budget:
>
> * Annual family income: $21,700
> * Money the family spent: $38,200
> * New debt on the credit card: $16,500
> * Outstanding balance on the credit card: $142,710
> * Total budget cuts so far: $38.50
>
>
> ...Jim Thompson
>

If it were that simple, W would not have insisted on a revenue cut,
and more spending on the "credit card".

Even his dad has to raise revenue, no its just politics.

hamilton

[Les Cargill]

Jim Thompson wrote:
> On Fri, 28 Dec 2012 16:54:48 -0600, Les Cargill
> <lcarg...@comcast.com> wrote:
>
>> Jim Thompson wrote:
>>> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>>>
>>> * U.S. Tax revenue: $2,170,000,000,000
>>> * Fed budget: $3,820,000,000,000
>>> * New debt: $ 1,650,000,000,000
>>> * National debt: $14,271,000,000,000
>>> * Recent budget cuts: $ 38,500,000,000
>>>
>>> Let’s now remove 8 zeros and pretend it’s a household budget:
>>>
>>> * Annual family income: $21,700
>>> * Money the family spent: $38,200
>>> * New debt on the credit card: $16,500
>>> * Outstanding balance on the credit card: $142,710
>>> * Total budget cuts so far: $38.50
>>>
>>>
>>> ...Jim Thompson
>>>
>>
>>
>> It's not a household budget.
>>
>> Now what?
>
> Are you like Larkin, subject to Ron White's opinion ?:-)
>

Ron White is an entertainer, last I checked.

> Don't those numbers register ominously with you, or are you so left
> that you're daft?
>

The curse-sobriquet "left" is not important here. This here's a matter
of identifying the right model.

If I had wheels, I'd be a bus. I'm not a bus.

Here's the current Federal funds rate:
http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm

The daily is a *blistering* 0.17%.

> ...Jim Thompson
>

--
Les Cargill

[Jim Thompson]

On Fri, 28 Dec 2012 17:31:39 -0600, Les Cargill

<lcarg...@comcast.com> wrote:

>Jim Thompson wrote:
>> On Fri, 28 Dec 2012 16:54:48 -0600, Les Cargill
>> <lcarg...@comcast.com> wrote:
>>
>>> Jim Thompson wrote:
>>>> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>>>>
>>>> * U.S. Tax revenue: $2,170,000,000,000
>>>> * Fed budget: $3,820,000,000,000
>>>> * New debt: $ 1,650,000,000,000
>>>> * National debt: $14,271,000,000,000
>>>> * Recent budget cuts: $ 38,500,000,000
>>>>
>>>> Let’s now remove 8 zeros and pretend it’s a household budget:
>>>>
>>>> * Annual family income: $21,700
>>>> * Money the family spent: $38,200
>>>> * New debt on the credit card: $16,500
>>>> * Outstanding balance on the credit card: $142,710
>>>> * Total budget cuts so far: $38.50
>>>>
>>>>
>>>> ...Jim Thompson
>>>>
>>>
>>>
>>> It's not a household budget.
>>>
>>> Now what?
>>
>> Are you like Larkin, subject to Ron White's opinion ?:-)
>>
>
>Ron White is an entertainer, last I checked.

Ron White is a philosopher and sage. Surely you've heard of the Texas
Sage ?:-}

>
>> Don't those numbers register ominously with you, or are you so left
>> that you're daft?
>>
>
>The curse-sobriquet "left" is not important here. This here's a matter
>of identifying the right model.
>
>If I had wheels, I'd be a bus. I'm not a bus.
>
>Here's the current Federal funds rate:
>http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm
>
>The daily is a *blistering* 0.17%.
>
>> ...Jim Thompson
>>

For the slow-minded, it was a RELATIVISTIC comparison.

Now I expect SLOWMAN to butt in here ;-)

[Charles]

"Jim Thompson" wrote in message
news:218sd89revd5tc8q9...@4ax.com...

US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )

* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s a household budget:

* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38.50

As I see it, the last item in the above 'household budget' is what most of
the discussion is about. Whose ox will be gored? All will be gored? Then
whose ox will be gored the most and who can most afford their ox to be gored
and who deserves their fat-ass ox to be gored and who needs their ox
desperately and whose ox is entitled ... tired of this shit. Just me.

[amdx]

Cut every program 4% every year for the next 5 years.
Yes every SS check, yes welfare, yes foodstamps, yes medicaid, yes military.
Cut every program.

Cut the amount spent last year by 4%, not the amount proposed to be spent.

Yes, I hope to be collecting a SS check. I know it will be smaller,
it's worth it, if it shrinks government.

Mikek

[Les Cargill]

But of course!

>>
>>> Don't those numbers register ominously with you, or are you so left
>>> that you're daft?
>>>
>>
>> The curse-sobriquet "left" is not important here. This here's a matter
>> of identifying the right model.
>>
>> If I had wheels, I'd be a bus. I'm not a bus.
>>
>> Here's the current Federal funds rate:
>> http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm
>>
>> The daily is a *blistering* 0.17%.
>>
>>> ...Jim Thompson
>>>
>
> For the slow-minded, it was a RELATIVISTIC comparison.
>

I had no idea we were going that fast! My bad.

> Now I expect SLOWMAN to butt in here ;-)
>
> ...Jim Thompson
>
--

Les Cargill

[Paul Hovnanian P.E.]

Jim Thompson wrote:

> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>
> * U.S. Tax revenue: $2,170,000,000,000
> * Fed budget: $3,820,000,000,000
> * New debt: $ 1,650,000,000,000
> * National debt: $14,271,000,000,000
> * Recent budget cuts: $ 38,500,000,000
>
> Let’s now remove 8 zeros and pretend it’s a household budget:
>
> * Annual family income: $21,700
> * Money the family spent: $38,200
> * New debt on the credit card: $16,500
> * Outstanding balance on the credit card: $142,710
> * Total budget cuts so far: $38.50

So far, it makes sense. But, unlike a household budget, the government has a
few things they can do about the first line item: Annual family income.

They can increase it across the board. And risk finding the other side of
the Laffer curve. They can plug loopholes, increasing the revenue from a
few sources that are relatively insensitive to tax rates and keep rates low
for economic activity that might otherwise disappear or move offshore.

Unlike a family, there's not much flexibility with the second item. Dad
might tell the kids that they aren't getting new shoes this year. And we'll
be eating more macaroni and cheese and less filet mignon. Nobody is going
to vote dad out of office.

That $142,710 isn't like credit card debt. Part of it is, but part of it is
like a car load or a mortgage. And in that sense, a $142K mortgage isn't
completely out of line with the families income.

Oh yeah. There is something we can do about the revenue as well as the
outstanding debt balance. We can print money and inflate our way out of the
mess. That $142,710 is fixed. If we print enough to bring spending and
income together, we can just give the middle finger to the people holding
the outstanding debt. Sure, no one will ever loan money to us again. Big
deal, we just print more. The dollar tanks? Great! That just makes our
exports look cheaper around the rest of the world.

So, in the final analysis, its a lot more complex than your hosehold budget.

--
Paul Hovnanian mailto:Pa...@Hovnanian.com
------------------------------------------------------------------
Yesterday upon the stair,
I met a man who wasn't there.
He wasn't there again today.
I think he's with the CIA.
-- apologies to Hughes Mearns

[Bill Bowden]

On Dec 28, 2:43 pm, Jim Thompson <To-Email-Use-The-Envelope-I...@On-My-

Web-Site.com> wrote:
> US Budget for Dummies....  (fromhttp://tinyurl.com/cv3wlwx)
>

>     * U.S. Tax revenue: $2,170,000,000,000
>     * Fed budget: $3,820,000,000,000
>     * New debt: $ 1,650,000,000,000
>     * National debt: $14,271,000,000,000
>     * Recent budget cuts: $ 38,500,000,000
>
>     Let’s now remove 8 zeros and pretend it’s a household budget:
>
>     * Annual family income: $21,700
>     * Money the family spent: $38,200
>     * New debt on the credit card: $16,500
>     * Outstanding balance on the credit card: $142,710
>     * Total budget cuts so far: $38.50
>
>                                         ...Jim Thompson
> --
> | James E.Thompson, CTO                            |    mens     |
> | Analog Innovations, Inc.                         |     et      |
> | Analog/Mixed-Signal ASIC's and Discrete Systems  |    manus    |
> | Phoenix, Arizona  85048    Skype: Contacts Only  |             |
> | Voice:(480)460-2350  Fax: Available upon request |  Brass Rat  |

> | E-mail Icon athttp://www.analog-innovations.com|    1962     |

>
> I love to cook with wine.     Sometimes I even put it in the food.

The difference is the family owing 142K on a credit card probably pays
a high interest rate of 10% or more, while the US government pays 2.5%
or less which is about 10% of the budget. Same for the family if they
could get 2.5% rates. The question is when will interest rates rise?

-Bill

[Nico Coesel]

Bill Bowden <bpe...@bowdenshobbycircuits.info> wrote:

>On Dec 28, 2:43=A0pm, Jim Thompson <To-Email-Use-The-Envelope-I...@On-My-
>Web-Site.com> wrote:
>> US Budget for Dummies.... =A0(fromhttp://tinyurl.com/cv3wlwx)
>>
>> =A0 =A0 * U.S. Tax revenue: $2,170,000,000,000
>> =A0 =A0 * Fed budget: $3,820,000,000,000
>> =A0 =A0 * New debt: $ 1,650,000,000,000
>> =A0 =A0 * National debt: $14,271,000,000,000
>> =A0 =A0 * Recent budget cuts: $ 38,500,000,000
>>
>> =A0 =A0 Let=92s now remove 8 zeros and pretend it=92s a household budget:
>>
>> =A0 =A0 * Annual family income: $21,700
>> =A0 =A0 * Money the family spent: $38,200
>> =A0 =A0 * New debt on the credit card: $16,500
>> =A0 =A0 * Outstanding balance on the credit card: $142,710
>> =A0 =A0 * Total budget cuts so far: $38.50
>>
>> =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =
>=A0 =A0 ...Jim Thompson
>> --
>> | James E.Thompson, CTO =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =
>=A0 =A0| =A0 =A0mens =A0 =A0 |
>> | Analog Innovations, Inc. =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =A0 =
>=A0 | =A0 =A0 et =A0 =A0 =A0|
>> | Analog/Mixed-Signal ASIC's and Discrete Systems =A0| =A0 =A0manus =A0 =
>=A0|
>> | Phoenix, Arizona =A085048 =A0 =A0Skype: Contacts Only =A0| =A0 =A0 =A0 =
>=A0 =A0 =A0 |
>> | Voice:(480)460-2350 =A0Fax: Available upon request | =A0Brass Rat =A0|
>> | E-mail Icon athttp://www.analog-innovations.com| =A0 =A01962 =A0 =A0 |
>>
>> I love to cook with wine. =A0 =A0 Sometimes I even put it in the food.

>
>The difference is the family owing 142K on a credit card probably pays
>a high interest rate of 10% or more, while the US government pays 2.5%
>or less which is about 10% of the budget. Same for the family if they
>could get 2.5% rates. The question is when will interest rates rise?

The latter is the real problem. A small rise in interest rate will
take a big chunk from the income. A rise of 1% on that 142k loan means
being able to spend $1420 less per year or 6.5% of the annual income.
See how quickly a big loan eats into your income when interest rates
only move a little bit?

Its all a bit academic because no sane credit card company or bank
would lend close to 7 times the annual income to someone.

--
Failure does not prove something is impossible, failure simply
indicates you are not using the right tools...
nico@nctdevpuntnl (punt=.)
--------------------------------------------------------------

[thumper]

On 12/28/2012 2:43 PM, Jim Thompson wrote:
> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>
> * U.S. Tax revenue: $2,170,000,000,000
> * Fed budget: $3,820,000,000,000
> * New debt: $ 1,650,000,000,000
> * National debt: $14,271,000,000,000
> * Recent budget cuts: $ 38,500,000,000
>
> Let’s now remove 8 zeros and pretend it’s a household budget:
>
> * Annual family income: $21,700
> * Money the family spent: $38,200
> * New debt on the credit card: $16,500
> * Outstanding balance on the credit card: $142,710
> * Total budget cuts so far: $38.50

Can the household print money?
Can the household borrow at .01%? (3 mo. T-bills)
What are the prospects for increasing revenue/income?
Do you think it's that simple?
Where have you been the last 30 years?
Fair enough though, you did say it was for dummies.

[Jasen Betts]

On 2012-12-29, Nico Coesel <ni...@puntnl.niks> wrote:

> Its all a bit academic because no sane credit card company or bank
> would lend close to 7 times the annual income to someone.

The first online mortgage calculator I tried offered me almost 8 times my
annual income.

--
⚂⚃ 100% natural

--- news://freenews.netfront.net/ - complaints: ne...@netfront.net ---

[amdx]

On 12/29/2012 3:03 AM, Jasen Betts wrote:
> On 2012-12-29, Nico Coesel <ni...@puntnl.niks> wrote:
>
>> Its all a bit academic because no sane credit card company or bank
>> would lend close to 7 times the annual income to someone.
>
> The first online mortgage calculator I tried offered me almost 8 times my
> annual income.
>

The 8 times loan is given with a house usually worth 125% of the loan
value as collateral.

Loans to the government have "Full faith and credit" and that's
getting weaker everyday. Remember Greece.


An individual can have a downturn go bankrupt with the US safety net
under it.
If the economy has a downturn affecting tax revenue, who's there to prop
up government.

That's why the Fed should not be so far in debt, like a family.

Failure affects hundreds of millions not just one family.

Mikek

[Mike Perkins]

On 28/12/2012 22:43, Jim Thompson wrote:
> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>
> * U.S. Tax revenue: $2,170,000,000,000
> * Fed budget: $3,820,000,000,000
> * New debt: $ 1,650,000,000,000
> * National debt: $14,271,000,000,000
> * Recent budget cuts: $ 38,500,000,000
>
> Let’s now remove 8 zeros and pretend it’s a household budget:
>
> * Annual family income: $21,700
> * Money the family spent: $38,200
> * New debt on the credit card: $16,500
> * Outstanding balance on the credit card: $142,710
> * Total budget cuts so far: $38.50
>
>
> ...Jim Thompson
>

Doesn't that preclude the possibility that this family may get its $100
printing press out. Or even a bit of quantitative easing?

--
Mike Perkins
Video Solutions Ltd
www.videosolutions.ltd.uk

[RipeCrisbies]

On Fri, 28 Dec 2012 16:54:48 -0600, Les Cargill wrote:

> Now what?

Less simplistic thinking?



--
M0WYM
www.radiowymsey.org

Sales @ radiowymsey
http://stores.ebay.co.uk/Sales-At-Radio-Wymsey/

[k...@attt.bizz]

Why should as long as the government is borrowing from itself. The
interest rate the government pays is artificial. The real interest
paid will be inflation.

[k...@attt.bizz]

On 29 Dec 2012 09:03:31 GMT, Jasen Betts <ja...@xnet.co.nz> wrote:

>On 2012-12-29, Nico Coesel <ni...@puntnl.niks> wrote:
>
>> Its all a bit academic because no sane credit card company or bank
>> would lend close to 7 times the annual income to someone.
>
>The first online mortgage calculator I tried offered me almost 8 times my
>annual income.

That's a secured loan and I'm sure you have AAA credit, neither of
which have anything to do with what we're discussing.

[UltimatePatriot]

Will be? Try has been for the last several decades.

Why do you think it takes multiple incomes to keep a household these
days for most of our so called "middle class" Americans?

[Mike Perkins]

Isn't that governed by personal aspirations essentially set by the media
and advertising?

[k...@attt.bizz]

On Sat, 29 Dec 2012 16:39:07 +0000, Mike Perkins <sp...@spam.com>
wrote:

The inflation rate has been quite low for four decades.

>> Why do you think it takes multiple incomes to keep a household these
>> days for most of our so called "middle class" Americans?
>>
>
>Isn't that governed by personal aspirations essentially set by the media
>and advertising?

Certainly.

[Tom Del Rosso]

Les Cargill wrote:
> Here's the current Federal funds rate:
> http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm
>
> The daily is a *blistering* 0.17%.

So what is the annual rate? Based on that alone it would be 85%.

If the annual rate on your credit card was 0.17% then would you consider
these numbers acceptable?

> * Annual family income: $21,700
> * Money the family spent: $38,200
> * New debt on the credit card: $16,500
> * Outstanding balance on the credit card: $142,710
> * Total budget cuts so far: $38.50

--

Reply in group, but if emailing add one more
zero, and remove the last word.

[Les Cargill]

RipeCrisbies wrote:
> On Fri, 28 Dec 2012 16:54:48 -0600, Les Cargill wrote:
>
>> Now what?
>
> Less simplistic thinking?
>
>
>

That would be nice.

--
Les Cargill

[Les Cargill]

Tom Del Rosso wrote:
> Les Cargill wrote:
>> Here's the current Federal funds rate:
>> http://www.newyorkfed.org/markets/omo/dmm/fedfundsdata.cfm
>>
>> The daily is a *blistering* 0.17%.
>
> So what is the annual rate? Based on that alone it would be 85%.
>

That is the annualized rate. It's just calculated daily.

> If the annual rate on your credit card was 0.17% then would you consider
> these numbers acceptable?
>
>> * Annual family income: $21,700
>> * Money the family spent: $38,200
>> * New debt on the credit card: $16,500
>> * Outstanding balance on the credit card: $142,710
>> * Total budget cuts so far: $38.50
>
>

My initial comment was that the Federal budget is fundamentally
different from a family budget. I like Dave Ramsey too, but he's
off base on this particular thing.

--
Les Cargill

[Jim Thompson]

Those on the dole always talk that way.

[Nico Coesel]

Jasen Betts <ja...@xnet.co.nz> wrote:

>On 2012-12-29, Nico Coesel <ni...@puntnl.niks> wrote:
>
>> Its all a bit academic because no sane credit card company or bank
>> would lend close to 7 times the annual income to someone.
>
>The first online mortgage calculator I tried offered me almost 8 times my
>annual income.

Those are just to trick potential customers to come over for a talk.
Try to GET that mortgage. Over here a safe limit for mortgages is
about 4 times the annual income.

[John Fields]

On Sat, 29 Dec 2012 22:47:57 GMT, ni...@puntnl.niks (Nico Coesel)
wrote:

>Jasen Betts <ja...@xnet.co.nz> wrote:
>
>>On 2012-12-29, Nico Coesel <ni...@puntnl.niks> wrote:
>>
>>> Its all a bit academic because no sane credit card company or bank
>>> would lend close to 7 times the annual income to someone.
>>
>>The first online mortgage calculator I tried offered me almost 8 times my
>>annual income.
>
>Those are just to trick potential customers to come over for a talk.
>Try to GET that mortgage. Over here a safe limit for mortgages is
>about 4 times the annual income.

---
The hidden cost is the payout which, at 6% for 30 years, amounts to
about 3 times the initial value of the mortgage.

--
JF

[dagmarg...@yahoo.com]

On Dec 28, 5:54 pm, Les Cargill <lcargil...@comcast.com> wrote:

> Jim Thompson wrote:
> > US Budget for Dummies....  (fromhttp://tinyurl.com/cv3wlwx)
>
> >      * U.S. Tax revenue: $2,170,000,000,000
> >      * Fed budget: $3,820,000,000,000
> >      * New debt: $ 1,650,000,000,000
> >      * National debt: $14,271,000,000,000
> >      * Recent budget cuts: $ 38,500,000,000
>
> >      Let’s now remove 8 zeros and pretend it’s a household budget:
>

> >      * Annual family income: $21,700
> >      * Money the family spent: $38,200
> >      * New debt on the credit card: $16,500
> >      * Outstanding balance on the credit card: $142,710
> >      * Total budget cuts so far: $38.50
>

> >                                          ...Jim Thompson
>
> It's not a household budget.
>
> Now what?
>

> --
> Les Cargill

It doesn't matter that it's not a household budget.

The last time we discussed this you cited a couple links to the effect
that governments have more ability to finance stuff. That actually
makes it worse--it lets them borrow even more than they should.

Jim's table still shows the government's finances in a perfectly
accurate, proportional way, and indicates how much we're spending in
relation to how much we actually have.

The only error I see is that that's using Obama's requested budget;
actual expenditures were somewhat less.

--
Cheers,
James Arthur

[k...@attt.bizz]

At eight times earnings, someone making 100K would be paying a
mortgage (forget taxes, insurance, PMI, or any of that) of
$4,800/month or about 58% of their pretax earnings. I highly doubt
*anyone* would actually make that loan, today (or ever).

At 3% interest, the payment goes down to $3,400 or 40% of the pretax
earnings, which is on the nearer side of insanity (still no tax or
insurance) but I'm sure someone would use it as a come on.

BTW, using the original numbers (and a 100K salary) I get an
amortization of $1.725M, way less than 3x the original $800K.

[Nico Coesel]

That is how the rich get richer and the poor get poorer :-)

[Bill Bowden]

Yes, but as you said, inflation has been low for 4 decades, and the
price of gold has dropped 12% over the last 18 months or so. So, the
question remains when interest rates will rise? All I want to know is
when to sell my low yielding bonds?

-Bill

[cameo]

On 12/30/2012 4:44 PM, dagmarg...@yahoo.com wrote:
>
> It doesn't matter that it's not a household budget.
>
> The last time we discussed this you cited a couple links to the effect
> that governments have more ability to finance stuff.

Plus they can pass on the cost of borrowing to future generations in
perpetuity. Individuals cannot do it.

[dagmarg...@yahoo.com]

On Dec 30, 9:59 pm, cameo <ca...@unreal.invalid> wrote:

They can only do that as long as there are suckers to loan them more
money, which we're running low on. The full costs fall on the
generation it all crashes down on, probably us. Then they default,
naturally.

It's all insanity, a thousand attempts to live beyond our means, and
make someone else pay.

James Arthur

[dagmarg...@yahoo.com]

On Dec 30, 9:47 pm, Bill Bowden <bper...@bowdenshobbycircuits.info>

Where did KRW say inflation has been low for 4 decades? Try charting
the price of silver, or some basic commodity.

No one knows exactly when to sell your low-yielding bonds. The
internet bubble kept running and running, coughed, then crashed.
Ditto the housing bubble, and the current multi-facted Obama bubble
(mortgages, banking, and deficit-spending / monetary).

Shorter term maturities and TIPS might make some sense, anyhow.

--
Cheers,
James Arthur

[k...@attt.bizz]

On Mon, 31 Dec 2012 02:18:51 GMT, ni...@puntnl.niks (Nico Coesel)

wrote:

>John Fields <jfi...@austininstruments.com> wrote:
>
>>On Sat, 29 Dec 2012 22:47:57 GMT, ni...@puntnl.niks (Nico Coesel)
>>wrote:
>>
>>>Jasen Betts <ja...@xnet.co.nz> wrote:
>>>
>>>>On 2012-12-29, Nico Coesel <ni...@puntnl.niks> wrote:
>>>>
>>>>> Its all a bit academic because no sane credit card company or bank
>>>>> would lend close to 7 times the annual income to someone.
>>>>
>>>>The first online mortgage calculator I tried offered me almost 8 times my
>>>>annual income.
>>>
>>>Those are just to trick potential customers to come over for a talk.
>>>Try to GET that mortgage. Over here a safe limit for mortgages is
>>>about 4 times the annual income.
>>
>>---
>>The hidden cost is the payout which, at 6% for 30 years, amounts to
>>about 3 times the initial value of the mortgage.
>
>That is how the rich get richer and the poor get poorer :-)

Aside from his numbers being wrong, the poor don't get poorer because
they borrow money. Rather the opposite; they never own anything with
real value.

[k...@attt.bizz]

As soon as the economy can draw a breath of air. So far, Obama has
managed to snuff out any breath it's attempted. As long as he
succeeds, the economy will play possum and inflation will remain low.
After, watch out!

[k...@attt.bizz]

On Sun, 30 Dec 2012 20:04:09 -0800 (PST), dagmarg...@yahoo.com
wrote:

It has, for everything needed to live. For decades, productivity held
the cost of consumables low. In the last half decade the economy and
unemployment have turned the trick.

[Les Cargill]

dagmarg...@yahoo.com wrote:
> On Dec 28, 5:54 pm, Les Cargill <lcargil...@comcast.com> wrote:
>> Jim Thompson wrote:
>>> US Budget for Dummies.... (fromhttp://tinyurl.com/cv3wlwx)
>>
>>> * U.S. Tax revenue: $2,170,000,000,000
>>> * Fed budget: $3,820,000,000,000
>>> * New debt: $ 1,650,000,000,000
>>> * National debt: $14,271,000,000,000
>>> * Recent budget cuts: $ 38,500,000,000
>>

>>> Let�s now remove 8 zeros and pretend it�s a household budget:

>>
>>> * Annual family income: $21,700
>>> * Money the family spent: $38,200
>>> * New debt on the credit card: $16,500
>>> * Outstanding balance on the credit card: $142,710
>>> * Total budget cuts so far: $38.50
>>
>>> ...Jim Thompson
>>
>> It's not a household budget.
>>
>> Now what?
>>
>> --
>> Les Cargill
>
> It doesn't matter that it's not a household budget.
>
> The last time we discussed this you cited a couple links to the effect
> that governments have more ability to finance stuff. That actually
> makes it worse--it lets them borrow even more than they should.
>

The difference is that a family which runs that kind of deficit will
very nearly certainly be bankrupt. A government - you cannot say
that. So it's fallacious.

So people *really* think the US government is going to go
broke? Really?

> Jim's table still shows the government's finances in a perfectly
> accurate, proportional way, and indicates how much we're spending in
> relation to how much we actually have.
>

That's true, and the table is not without it's uses. Our level of
indebtedness is appalling. but it does not imply that we're in desperate
straits.

Yet.

> The only error I see is that that's using Obama's requested budget;
> actual expenditures were somewhat less.
>
> --
> Cheers,
> James Arthur
>

--
Les Cargill

[Les Cargill]

It is everything you say except "insane"; 1.04 growth compounded over 30
years ( about a generation and a half ) is 324%. It's called
the GDP deflator and it's how this stuff works.

--
Les Cargill

[Tom Del Rosso]

Les Cargill wrote:
>
> My initial comment was that the Federal budget is fundamentally
> different from a family budget. I like Dave Ramsey too, but he's
> off base on this particular thing.

The difference is that a government can print money, and if that is done for
too long and there is a complete collapse then it can nationalize private
property.

But that is without doubt what some people want.

[cameo]

On 12/30/2012 9:16 PM, Les Cargill wrote:
> Our level of
> indebtedness is appalling. but it does not imply that we're in desperate
> straits.
>
> Yet.

Unfortunately there is no sign from the Democrats that they want to
reduce spending. Only to increase taxes. But that in itself could not
even come close to reducing the debt level. The best one can say is that
it would only decrease the rate of growth of indebtness. But it can also
increase it if the higher taxes reignite recession as many experts predict.

[hamilton]

On 12/31/2012 12:42 AM, Tom Del Rosso wrote:
> Les Cargill wrote:
>>
>> My initial comment was that the Federal budget is fundamentally
>> different from a family budget. I like Dave Ramsey too, but he's
>> off base on this particular thing.
>
> The difference is that a government can print money, and if that is done for

Please eplain, how do they print money, then pay interest on it ?

[Charlie E.]

On Fri, 28 Dec 2012 15:43:06 -0700, Jim Thompson
<To-Email-Use-Th...@On-My-Web-Site.com> wrote:

>US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>
> * U.S. Tax revenue: $2,170,000,000,000
> * Fed budget: $3,820,000,000,000
> * New debt: $ 1,650,000,000,000
> * National debt: $14,271,000,000,000
> * Recent budget cuts: $ 38,500,000,000
>

> Let’s now remove 8 zeros and pretend it’s a household budget:

>
> * Annual family income: $21,700
> * Money the family spent: $38,200
> * New debt on the credit card: $16,500
> * Outstanding balance on the credit card: $142,710
> * Total budget cuts so far: $38.50
>
>
> ...Jim Thompson

Ok, say a recent interview on this that might shine some light on
where the libs minds are.

The government has the ability to print money. If they liked, they
could just go out tomorrow and print enough money (actually, it is all
electronic, so lets change that) they could just credit all their
debtors with payments that would pay off their debt. And what would
happen? Would inflation immediately result? Not necessarily. You
see, you have to look at who OWNS all that debt.

The large amount is held BY THE US GOVERNMENT! (that is the SS trust
fund that gets bandied about...)

The majority is held by US Banks! When they get excess cash, they
just loan it to uncle sam. They have to do something with it. Wait,
I said cash. Sorry, I meant 'When they have excess credits on their
computers.' No real money ever changes hands at this level.

So, how about the Chinese and Eurobanks and others? Well, they had
excess dollars on their computers too, so to do something with it
(they couldn't just buy US PRODUCTS not could they!) They loaned it
to the US government.

So, really, why doesn't the Fed just declare all debts paid, and we
can all quit worrying? It is all about CONTROL! They use that debt
and the ability to tax, not because they need the money (they can
create that by the magic of computers!) No, they need taxes and debt
as a way to control and influence the populace and these other
nations.

the real problems is that they are cowards. They are afraid to try
and 'balance' the budget, because that would draw out too many funds
from the economy, but they are also afraid of just decaring the whole
charade over because then they loose all that nice control of people
that they have!

[k...@attt.bizz]

On Mon, 31 Dec 2012 10:56:44 -0800, cameo <ca...@unreal.invalid>
wrote:

Or it gives them an excuse to spend even more, as anyone with a brain
would predict.

[hamilton]

So, "Print more money" is not a true statement, right ??

[cameo]

Charley, that's pretty radical. Actually, sometimes I wonder who is
in charge of our money: the government of the Federal Reserve that is
supposedly independent of the government.

[dagmarg...@yahoo.com]

On Dec 31, 12:16 am, Les Cargill <lcargil...@comcast.com> wrote:

> dagmargoodb...@yahoo.com wrote:
> > On Dec 28, 5:54 pm, Les Cargill <lcargil...@comcast.com> wrote:
> >> Jim Thompson wrote:
> >>> US Budget for Dummies....  (fromhttp://tinyurl.com/cv3wlwx)
>
> >>>       * U.S. Tax revenue: $2,170,000,000,000
> >>>       * Fed budget: $3,820,000,000,000
> >>>       * New debt: $ 1,650,000,000,000
> >>>       * National debt: $14,271,000,000,000
> >>>       * Recent budget cuts: $ 38,500,000,000
>

> >>>       Let’s now remove 8 zeros and pretend it’s a household budget:

>
> >>>       * Annual family income: $21,700
> >>>       * Money the family spent: $38,200
> >>>       * New debt on the credit card: $16,500
> >>>       * Outstanding balance on the credit card: $142,710
> >>>       * Total budget cuts so far: $38.50
>
> >>>                                           ...Jim Thompson
>
> >> It's not a household budget.
>
> >> Now what?
>
> >> --
> >> Les Cargill
>
> > It doesn't matter that it's not a household budget.
>
> > The last time we discussed this you cited a couple links to the effect
> > that governments have more ability to finance stuff.  That actually
> > makes it worse--it lets them borrow even more than they should.
>
> The difference is that a family which runs that kind of deficit will
> very nearly certainly be bankrupt.

> A government - you cannot say
> that. So it's fallacious.

Of course we can say that. It applies as well to governments as to
any other debtor--they have expenses, income, and a certain, finite
ability to pay. When you have more debt than you can repay, that's
bankruptcy.

> So people *really* think the US government is going to go
> broke? Really?

Sure, absolutely. Either that, or cheat all the people it's promised
to repay. Or both.

> > Jim's table still shows the government's finances in a perfectly
> > accurate, proportional way, and indicates how much we're spending in
> > relation to how much we actually have.
>
> That's true, and the table is not without it's uses. Our level of
> indebtedness is appalling. but it does not imply that we're in desperate
> straits.
>
> Yet.

Well, by your notion there's no problem at all--if debt doesn't
matter, than print, print, then print some more. Of course if you do
that money has no value, and the economy collapses.

The whole point of money is that it's supposed to represent someone's
hard work, something someone made and wants to trade. If it's just a
coupon printed and handed out for nothing, it's valueless.

I measure the urgency of America's situation by weighing our expenses
against our ability to pay, noting that we're borrowing today every
month just to make our current payments, and considering what's likely
to happen in the near future.

At normal interest rates, for example, we'd need another 3% x $16T =
$480 billion /per year/, just in interest payments. We don't have
it. If interest rates go to Jimmy Carter-levels, all the worse.

> > The only error I see is that that's using Obama's requested budget;
> > actual expenditures were somewhat less.

Oh, and the debt figure is outdated--we're up to $16.4 trillion.

--
Cheers,
James Arthur

[dagmarg...@yahoo.com]

On Dec 31, 12:18 am, Les Cargill <lcargil...@comcast.com> wrote:

> dagmargoodb...@yahoo.com wrote:
> > On Dec 30, 9:59 pm, cameo <ca...@unreal.invalid> wrote:
> >> On 12/30/2012 4:44 PM, dagmargoodb...@yahoo.com wrote:
>
> >>> It doesn't matter that it's not a household budget.
>
> >>> The last time we discussed this you cited a couple links to the effect
> >>> that governments have more ability to finance stuff.
>
> >> Plus they can pass on the cost of borrowing to future generations in
> >> perpetuity. Individuals cannot do it.
>
> > They can only do that as long as there are suckers to loan them more
> > money, which we're running low on.  The full costs fall on the
> > generation it all crashes down on, probably us.  Then they default,
> > naturally.
>
> > It's all insanity, a thousand attempts to live beyond our means, and
> > make someone else pay.
>
>

> It is everything you say except "insane"; 1.04 growth compounded over 30
> years ( about a generation and a half ) is 324%. It's called
> the GDP deflator and it's how this stuff works.

Looking back to the 1930's, we've never had much over 20% of GDP in
tax collections, even when the top tax rates were 90%.

We've recently gone from spending 19% of GDP to 24%. So, that
guarantees a deficit of ~4-5% of GDP, on top of what Bush had. That's
insane.

"It's how this stuff works?" That's doesn't make it better. That's
what the pilot said to the co-pilot just before impact.

--
Cheers,
James Arthur

[cameo]

On 12/31/2012 3:31 PM, cameo wrote:
> Charley, that's pretty radical. Actually, sometimes I wonder who is
> in charge of our money: the government of the Federal Reserve that is
> supposedly independent of the government.

Oops, a typo there. The "of" in the middle of the 2nd line was supposed
to be "or", making it "government or ..."

[Les Cargill]

dagmarg...@yahoo.com wrote:
> On Dec 31, 12:18 am, Les Cargill <lcargil...@comcast.com> wrote:
>> dagmargoodb...@yahoo.com wrote:
>>> On Dec 30, 9:59 pm, cameo <ca...@unreal.invalid> wrote:
>>>> On 12/30/2012 4:44 PM, dagmargoodb...@yahoo.com wrote:
>>
>>>>> It doesn't matter that it's not a household budget.
>>
>>>>> The last time we discussed this you cited a couple links to the effect
>>>>> that governments have more ability to finance stuff.
>>
>>>> Plus they can pass on the cost of borrowing to future generations in
>>>> perpetuity. Individuals cannot do it.
>>
>>> They can only do that as long as there are suckers to loan them more
>>> money, which we're running low on. The full costs fall on the
>>> generation it all crashes down on, probably us. Then they default,
>>> naturally.
>>
>>> It's all insanity, a thousand attempts to live beyond our means, and
>>> make someone else pay.
>>
>>
>> It is everything you say except "insane"; 1.04 growth compounded over 30
>> years ( about a generation and a half ) is 324%. It's called
>> the GDP deflator and it's how this stuff works.
>
> Looking back to the 1930's, we've never had much over 20% of GDP in
> tax collections, even when the top tax rates were 90%.
>

We had "OH F*CK" levels of deficits during WWII, mostly bonds and all.
but this is nothing like a war economy. No ration books,
that sort of thing.

> We've recently gone from spending 19% of GDP to 24%. So, that
> guarantees a deficit of ~4-5% of GDP, on top of what Bush had. That's
> insane.
>

It's certainly uncomfortable. But we're behind the 8-ball on GDP growth
for a while now - how long is arguable, but I'd take it back to 1999
anyway.

> "It's how this stuff works?" That's doesn't make it better.

Not when we have .... cancer-patient levels of GDP growth it
doesn't.

> That's
> what the pilot said to the co-pilot just before impact.
>

So what happened to all the adults, anyway?

See also the term "kludgeocracy". That's what we have.

[dagmarg...@yahoo.com]

Well, that was for a (world) war, wasn't it, a temporary condition
that eventually stops?

Today it's for nothing, not survival, and we're building these drags
on success into the daily cost of government. That's permanent.
There's no world war that's going to end some day and suddenly reduce
this new impairment, or remove it as a permanent damper on economic
activity.

At bottom, Obama's thesis is that yelling at people and taking more of
their stuff makes them work harder and produce more, faster, rather
than discourages them.

> > We've recently gone from spending 19% of GDP to 24%.  So, that
> > guarantees a deficit of ~4-5% of GDP, on top of what Bush had.  That's
> > insane.
>
> It's certainly uncomfortable. But we're behind the 8-ball on GDP growth
> for a while now - how long is arguable, but I'd take it back to 1999
> anyway.
>
> > "It's how this stuff works?" That's doesn't make it better.
>
> Not when we have .... cancer-patient levels of GDP growth it
> doesn't.
>
> >  That's
> > what the pilot said to the co-pilot just before impact.
>
> So what happened to all the adults, anyway?

Well, they just waved their hands around faster and faster, threw out
a bunch of fashionable half-baked phrases, made it more and more and
more complicated, and that made it all better. Goods magically
appeared, no one had to produce them, and the people who'd traded
their craft for paper were able to trade their paper for the magical
goods.

--
Cheers,
James Arthur

[dagmarg...@yahoo.com]

On Jan 1, 3:13 am, flipper <flip...@fish.net> wrote:

> On Mon, 31 Dec 2012 12:02:50 -0800, Charlie E. <edmond...@ieee.org>
> wrote:


> > They use that debt
> >and the ability to tax, not because they need the money (they can
> >create that by the magic of computers!)
>

> Nonsense.
>
> 'Money' has no intrinsic value but 'represents' the 'value' of goods
> people are willing to exchange. 'Real money' is simply 'book keeping'.
> I.E. before money if you wanted a cow you exchanged 3 pigs (or
> whatever the 'going rate' was [free market]) for it. But that's a
> problem if you have shoes to exchange and no pigs. You have to then
> find someone who has some pigs and wants shoes, so you can exchange,
> and then take the pigs over to get the cow. It would be a lot more
> convenient if people would agree to some kind of 'exchange medium'.
> Then a cow might 'cost' 3 credits, a pig 1 credit, and a pair of shoes
> 1/2 credit. That's the same 'value', because it still boils down to
> the cow, pigs, and shoes, but since we agree to the medium of exchange
> we can use that to facilitate the exchanges.
>
> Let's see, we're going to need some way to keep track of these
> 'credits' so how about we print some paper 'notes', each one
> representing 'one credit'. Now, when we want a cow we give the guy 3
> 'paper credits' and he's willing to take them because he knows he can
> take them to a pig store and get 1 pig for a 'paper credit', buy two
> pairs of shoes with another 'paper credit', and save the third 'for a
> rainy day'.
>
> We call these 'paper credits' "money" but it doesn't matter what
> they're made of, nor how we account for the 'credits' (even if only a
> 'bank statement' or 'a computer'), as long as everyone agrees to use
> them as a medium of exchange. But, remember, the 'value' is based on
> the cow, pigs, and shoes.
>
> Now, given the nature of human beings we clearly have one huge gaping
> problem with our 'medium of exchange' plan since, sooner or later,
> some wisenheimer is going to get the bright idea of simply printing
> his own 'credits' rather than going through all the 'work' of creating
> value by raising his own cows, pigs, or making shoes. THAT is one of
> the legitimate roles of government: the fair and equitable enforcement
> of 'agreements', including contracts and our 'medium of exchange'.
> (this is also why you don't mind putting your 'real money' in the bank
> because if they don't give you back what's 'recorded' when you ask for
> it their ass goes to jail).
>
> It's not legal to steal 'paper credits' any more than it's legal to
> steal the cow, pig, or shoes because the paper credit is simply an
> agreed to stand in for them. If you raise a cow, though, then you've
> 'earned' that value and are entitled to exchange it for 3 credits, the
> going rate of exchange, but it's not 'legal' to print your own credits
> either, instead of creating the value they are based on, because
> that's equivalent to stealing. I.E. you'd be trying to obtain
> something of value for nothing, because there was no 'value' created
> by you simply printing credits.
>
> The PROBLEM is when government, which is supposed to be enforcing the
> agreement, becomes the criminal.

>
> > No, they need taxes and debt
> >as a way to control and influence the populace and these other
> >nations.
>

> Being massively in debt does not 'help' you 'control' anyone.

>
> >the real problems is that they are cowards. They are afraid to try
> >and 'balance' the budget, because that would draw out too many funds
> >from the economy,
>

> Exactly the opposite. Racking up massive debt takes money OUT of the
> economy.

>
> > but they are also afraid of just decaring the whole
> >charade over because then they loose all that nice control of people
> >that they have!
>

> I hope you know how to raise cows and pigs because when 'the whole
> charade is over' that's the only thing the shoe maker is going to take
> in exchange.

Comrade Flipper, it's truly concerning to see such backward counter-
revolutionary thought-crime as one of the first postings in this first
day of this first year of moving FORWARD.

Let us presume to instill some korrect thinking while dial your local
FEMA camp, to refer you for some much-needed re-edukation in class-
struggle.

It's entirely krass and regressive to suggest that our omnipotent
ruling gods, by printing their own credits, are effectively making
claim to our pigs, our goats, our cows, and our sheep. Viewed
korrectly, when our thoughtful intrepid leaders in Washington post
more imaginary digits in their computers, why this is the very act of
plenty that provides for us--pigs, cows, goats and sheep all spring
into existence, fully-formed, and ready for consumption. This is how
masses are produced for the masses, this is how we all become
progressively richer. Soon the country will be awash in such bounty
as never seen before.

And, if it doesn't work at once, this is due to reactionary elements
thwarting the immaculate plan of The People Who Know Better. We must
purge these elements, persevere, then double and redouble our spending
until we've spent our way to prosperity; our coffers shall overflow
with riches.

Henceforth may your beet ration be reduced by half, and vodka by two-
thirds until you see the error of your miskalculations.

--
Happy New Year,
James Arthur

[Frithiof Andreas Jensen]

Den 28-12-2012 23:43, Jim Thompson skrev:
> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>

No matter - The USA is going to default on the debt anyway, which means
that the rational policy is to run up as much debt as possible and use
it to aquire assets and influence before the inevitable default!

Defaults happen all the time - about 200 times from 1900 to 2000.

[Frithiof Andreas Jensen]

Cannot happen.The price of money is not left to "The Market" to decide.
Interest rates are openly managed centrally by the FED (The process is
quite similar to those 5-year plans of the old USSR).

[Michael A. Terrell]

dagmarg...@yahoo.com wrote:
>
> Well, that was for a (world) war, wasn't it, a temporary condition
> that eventually stops?
>
> Today it's for nothing, not survival, and we're building these drags
> on success into the daily cost of government. That's permanent.
> There's no world war that's going to end some day and suddenly reduce
> this new impairment, or remove it as a permanent damper on economic
> activity.
>
> At bottom, Obama's thesis is that yelling at people and taking more of
> their stuff makes them work harder and produce more, faster, rather
> than discourages them.

While he takes vacations that cost the taxpayers millions, and plays
golf and damns Congress for not doing their job.

[Les Cargill]

dagmarg...@yahoo.com wrote:
> On Jan 1, 1:42 am, Les Cargill <lcargil...@comcast.com> wrote:
>> dagmargoodb...@yahoo.com wrote:
>>> On Dec 31, 12:18 am, Les Cargill <lcargil...@comcast.com> wrote:

<snip>

>
> Well, that was for a (world) war, wasn't it, a temporary condition
> that eventually stops?
>

Has it stopped? I'm no peacenik, but we've managed to maintain a
pretty high level of military force-availability since the end of
WWII.

When I see it, it looks a lot like Bismarck.

> Today it's for nothing, not survival, and we're building these drags
> on success into the daily cost of government. That's permanent.

We're still successful, though. SFAIK, we just have a temporary
demographic phenomenon. By, say 2040, that will have passed. And
so will I, so...

> There's no world war that's going to end some day and suddenly reduce
> this new impairment, or remove it as a permanent damper on economic
> activity.
>

There's not a great deal of evidence to support it being

a permanent damper on economic activity.

I've looked, and the thing that's sagging seems to be
still just plain old demand. Survey data show that
individual shop owners count top line as *the* problem,
not taxes nor regulation.

For what you're saying to be true, government spending would have to
crowd out wages. If you can defend that idea in the open air,
there's a Nobel in it for you, because... nobody else seems to
be able to make a go of it.

> At bottom, Obama's thesis is that yelling at people and taking more of
> their stuff makes them work harder and produce more, faster, rather
> than discourages them.
>

Heh. No, I think like most Progressives, he just thinks it falls from
the sky, or doesn't think about it.

Trouble is, it's not that insane a position. The marginal product of
labor in absolute terms keeps going up. We just don't have any place
to put what *is* produced at capacity.

>>> We've recently gone from spending 19% of GDP to 24%. So, that
>>> guarantees a deficit of ~4-5% of GDP, on top of what Bush had. That's
>>> insane.

We're probably well past making sense at this point :), but either
some or a lot of the 4-5% (and perhaps more) is just banking system
stuff that will not hit anybody's bottom line. The rest is revenue
shortfall from Der Recession.

Er, I follow Menzie Chinn on Econbrowser, and (s)he does a pretty
thorough analysis of pieces of this concept and it doesn't look like
it's any of it real.

I find that we can even disagree about this despair inducing. You
get the feeling the people who write about these things work backwards
from a conclusion. I'd rather read Menzie's material because at least
it's numerate. I figure (s)he's too much of a nerd to have much
political agenda...

>>
>> It's certainly uncomfortable. But we're behind the 8-ball on GDP growth
>> for a while now - how long is arguable, but I'd take it back to 1999
>> anyway.
>>
>>> "It's how this stuff works?" That's doesn't make it better.

I was trying to introduce the GDP deflator as the keystone of
government debt.... People conflate real columns in the Great
Tableau with shadow columns all the time.

>>
>> Not when we have .... cancer-patient levels of GDP growth it
>> doesn't.
>>
>>> That's
>>> what the pilot said to the co-pilot just before impact.
>>
>> So what happened to all the adults, anyway?
>
> Well, they just waved their hands around faster and faster, threw out
> a bunch of fashionable half-baked phrases, made it more and more and
> more complicated, and that made it all better. Goods magically
> appeared, no one had to produce them, and the people who'd traded
> their craft for paper were able to trade their paper for the magical
> goods.
>

But the sequence of events looks like "nobody has to produce them",
as labor as a marginal input into production declines. So you can't
really blame them for the error, if it is an error.

The problem with the "buh Obama!" thing is that it looks too electoral;
it looks like campaign rhetoric. I was far too disappointed in the
"buh Clinton!" thing from the '90s and the "buh Bush!" thing from the
last ten years.

Obama says one thing and does another. The thing he says is "Hope and
Change"; the thing he does is ... not that. It's "cut".

Besides, if the problem is SS and Medicare, then that's FDR and LBJ,
and they're both no longer with us.... *general* government spending
outside the security apparatus is very low...

[Robert Baer]

HEY!!!
Do you want a ONE HUNDRED TRILLION DOLLAR bill?

[josephkk]

On Sun, 30 Dec 2012 23:18:55 -0600, Les Cargill <lcarg...@comcast.com>
wrote:

Not that i am trying to be picky, but how does 1.04 growth compounded over
30 years ever catch up with 1.83 spending over the same time? 1.83
compounded over 30 years is 74,736,489%. Get the picture?

?-)

[josephkk]

On Sun, 30 Dec 2012 23:16:29 -0600, Les Cargill <lcarg...@comcast.com>
wrote:

>

>The difference is that a family which runs that kind of deficit will
>very nearly certainly be bankrupt. A government - you cannot say
>that. So it's fallacious.

So exactly how is a government really any different? Remember Greece and
PIIGS? Remeber that nobody, including the whole rest of the world is near
big enough to really prop up the US like Greece was. And Greece had lots
of riots over the required austerity and other cutbacks.

>
>So people *really* think the US government is going to go
>broke? Really?
>
>> Jim's table still shows the government's finances in a perfectly
>> accurate, proportional way, and indicates how much we're spending in
>> relation to how much we actually have.
>>
>
>That's true, and the table is not without it's uses. Our level of
>indebtedness is appalling. but it does not imply that we're in desperate
>straits.
>
>Yet.

I strongly disagree with that "yet".

One last reminder, the US initiated great depression took the whole
civilized world with it. If the US collapses again, we will take the
whole world with us again. Bait that tiger all you want.

?-)

[Jim Thompson]

Let it happen.

...Jim Thompson
--
| James E.Thompson, CTO | mens |
| Analog Innovations, Inc. | et |
| Analog/Mixed-Signal ASIC's and Discrete Systems | manus |
| Phoenix, Arizona 85048 Skype: Contacts Only | |
| Voice:(480)460-2350 Fax: Available upon request | Brass Rat |
| E-mail Icon at http://www.analog-innovations.com | 1962 |

I love to cook with wine. Sometimes I even put it in the food.

[dagmarg...@yahoo.com]

On Jan 1, 11:40 am, Frithiof Andreas Jensen
<frithiof.jen...@diespammerdie.karoshi.dk> wrote:

The market used to set the rates back when we borrowed from real
people. Now we just borrow from ourselves, and charge it to the
credit card. Sweet.

But, our 5-year plans are *much* better than those clunky Russkie
plans ever were. We've taken all the benefits, taxed away all the
costs, and combined the 5-year plan concept with a Great Leap
Forward. This is gonna be great.

--
Cheers,
James Arthur

[k...@attt.bizz]

On Tue, 01 Jan 2013 17:59:59 -0800, josephkk
<joseph_...@sbcglobal.net> wrote:

>On Sun, 30 Dec 2012 23:16:29 -0600, Les Cargill <lcarg...@comcast.com>
>wrote:
>
>>
>>The difference is that a family which runs that kind of deficit will
>>very nearly certainly be bankrupt. A government - you cannot say
>>that. So it's fallacious.
>
>So exactly how is a government really any different? Remember Greece and
>PIIGS? Remeber that nobody, including the whole rest of the world is near
>big enough to really prop up the US like Greece was. And Greece had lots
>of riots over the required austerity and other cutbacks.

Weimar republic, anyone? That sure was a fun time for everyone.

>>So people *really* think the US government is going to go
>>broke? Really?
>>
>>> Jim's table still shows the government's finances in a perfectly
>>> accurate, proportional way, and indicates how much we're spending in
>>> relation to how much we actually have.
>>>
>>
>>That's true, and the table is not without it's uses. Our level of
>>indebtedness is appalling. but it does not imply that we're in desperate
>>straits.
>>
>>Yet.
>
>I strongly disagree with that "yet".

"Yet" turned past tense a decade back.

[Les Cargill]

dagmarg...@yahoo.com wrote:
> On Dec 31, 12:16 am, Les Cargill <lcargil...@comcast.com> wrote:
>> dagmargoodb...@yahoo.com wrote:

<snip>

>
>> A government - you cannot say
>> that. So it's fallacious.
>
> Of course we can say that. It applies as well to governments as to
> any other debtor--they have expenses, income, and a certain, finite
> ability to pay. When you have more debt than you can repay, that's
> bankruptcy.
>

So when is that exactly*? I'll pull some money out of CDs, we can short it.

Oops. No we can't.

See the difference yet?

*I'm not being *that* smartarse; but you should be able to predict a
rough region when it fails if you think that model holds. And don't say
"buy gold", I'm not *even* gonna respond to that.

>> So people *really* think the US government is going to go
>> broke? Really?
>
> Sure, absolutely. Either that, or cheat all the people it's promised
> to repay. Or both.
>

Or none of the above. In the abstract, I get your point, but I am
completely and totally incredulous. Sure, interest rates *could* rise,
but then the fed can still backstop a significant quantity of debt,
and at that point, the political sea changes radically.

That's much more likely if there's widespread regime failure overseas
than purely because of US government debt.

>>> Jim's table still shows the government's finances in a perfectly
>>> accurate, proportional way, and indicates how much we're spending in
>>> relation to how much we actually have.
>>
>> That's true, and the table is not without it's uses. Our level of
>> indebtedness is appalling. but it does not imply that we're in desperate
>> straits.
>>
>> Yet.
>
> Well, by your notion there's no problem at all

Eep. it's not that I think there's no problem at *all*, it is that
there's not a crisis. There's a difference. The primary problem is
lack of GDP growth. There's no demonstrable mechanism for government
spending to drive out general productive effort under the present
set of conditions. That's a basic science fiction story that doesn't
hold up very well.

>--if debt doesn't
> matter, than print, print, then print some more. Of course if you do
> that money has no value, and the economy collapses.
>
> The whole point of money is that it's supposed to represent someone's
> hard work, something someone made and wants to trade. If it's just a
> coupon printed and handed out for nothing, it's valueless.
>

Money isn't supposed to *represent* *ANYTHING*. It's just a medium of
exchange or account. If I may as gently as possible, this
is the basic seat of our disagreement. Money only means that you
have a reasonable hope of exchange with it.

> I measure the urgency of America's situation by weighing our expenses
> against our ability to pay, noting that we're borrowing today every
> month just to make our current payments, and considering what's likely
> to happen in the near future.
>

but I don't think that this is clearly understood here. That's a policy
choice, under assumptions I don't agree with, but still nothing
pernicious. I'd be a lot happier of we'd managed to pay
down a lot of the debt during the Bush years, but them's breaks.

> At normal interest rates, for example, we'd need another 3% x $16T =
> $480 billion /per year/, just in interest payments. We don't have
> it. If interest rates go to Jimmy Carter-levels, all the worse.
>

But we don't accelerate to Jimmy Carter levels overnight. There are
several intermediate steps. We'd have to get back to normal first, then
there would be some sort of run on the dollar. First, a run to what? The
Euro? Heh. No. To the Swiss Franc? Not enough of 'em.

You end up doing this long laundry list of options and realize it's a
lot harder that it looks. It'd represent something like a *global*
currency collapse.

And don't say "but Weimar"; not a comparable situation. A precipitous
drop in the value of the dollar would most likely result in significant
increases in exports, for one thing - assuming trade doesn't just stop
completely.

>>> The only error I see is that that's using Obama's requested budget;
>>> actual expenditures were somewhat less.
>
> Oh, and the debt figure is outdated--we're up to $16.4 trillion.
>

Wooo hoo!

[Les Cargill]

josephkk wrote:
> On Sun, 30 Dec 2012 23:16:29 -0600, Les Cargill <lcarg...@comcast.com>
> wrote:
>
>>
>> The difference is that a family which runs that kind of deficit will
>> very nearly certainly be bankrupt. A government - you cannot say
>> that. So it's fallacious.
>
> So exactly how is a government really any different? Remember Greece and
> PIIGS? Remeber that nobody, including the whole rest of the world is near
> big enough to really prop up the US like Greece was. And Greece had lots
> of riots over the required austerity and other cutbacks.
>

The PPIGS are nation-states that cannot control their own currency.

They can only borrow on open nmarkets. So when the CDO tranches went
South, they were stuck paying for them the old fashioned way. We had a
lot of similar things when bonds from places like Mississippi went south
in the early 19th Century ( not the John Law Missisippi Bubble, these
were later ).

>>
>> So people *really* think the US government is going to go
>> broke? Really?
>>
>>> Jim's table still shows the government's finances in a perfectly
>>> accurate, proportional way, and indicates how much we're spending in
>>> relation to how much we actually have.
>>>
>>
>> That's true, and the table is not without it's uses. Our level of
>> indebtedness is appalling. but it does not imply that we're in desperate
>> straits.
>>
>> Yet.
>
> I strongly disagree with that "yet".
>

I understand. I am not saying you're wrong. I am syaing
it's not clear that you're right.

> One last reminder, the US initiated great depression took the whole
> civilized world with it.

mmmmm.... maybe it wasn't US initiated. People are still writing about
it. the Depression was a lot more about the gold standard, really.

http://www.voxeu.org/article/did-france-cause-great-depression

> If the US collapses again, we will take the
> whole world with us again. Bait that tiger all you want.
>

I *doubt* there'll be a big collapse. That's kind of my point...

Bond-swaps between Treasury and the Fed are about... I'm
gonna say $10T, and the fed can remit interest payments back
to the Treasury. That's bad form, but it's always a possibility.

> ?-)
>

--
Les Cargill

[Les Cargill]

k...@attt.bizz wrote:
> On Tue, 01 Jan 2013 17:59:59 -0800, josephkk
> <joseph_...@sbcglobal.net> wrote:
>
>> On Sun, 30 Dec 2012 23:16:29 -0600, Les Cargill <lcarg...@comcast.com>
>> wrote:
>>
>>>
>>> The difference is that a family which runs that kind of deficit will
>>> very nearly certainly be bankrupt. A government - you cannot say
>>> that. So it's fallacious.
>>
>> So exactly how is a government really any different? Remember Greece and
>> PIIGS? Remeber that nobody, including the whole rest of the world is near
>> big enough to really prop up the US like Greece was. And Greece had lots
>> of riots over the required austerity and other cutbacks.
>
> Weimar republic, anyone? That sure was a fun time for everyone.
>

Bad analogy. They use Hungary because Weimar always ends up getting
people upset:

http://www.theatlantic.com/business/archive/2012/03/the-hyperinflation-hype-why-the-us-can-never-be-weimar/254715/

Money shot:

"Let me unpack these one by one. Right now getting the markets to buy
our debt isn't the problem. Getting enough debt for the markets to buy
is the problem. Investors are so crazy to load up on Treasuries that
they're actually paying us to borrow, taking inflation into account.
But while we're currently getting free money from investors, Hungary
circa 1945 was getting no money. It was an investment pariah. If
Hungary wanted to rebuild its economy, its only recourse was the
printing press.

Second, the United States isn't really printing money. At least not
like post-war Hungary. Quantitative easing is usually described as
"money-printing" but it's not really. QE involves the Fed buying
longer-term bonds from banks. It simply swaps one asset for another --
in this case, cash for longer-term bonds. Unlike Hungary, the Fed isn't
directly paying the Treasury's bills. This is a hugely important
distinction. "

>>> So people *really* think the US government is going to go
>>> broke? Really?
>>>
>>>> Jim's table still shows the government's finances in a perfectly
>>>> accurate, proportional way, and indicates how much we're spending in
>>>> relation to how much we actually have.
>>>>
>>>
>>> That's true, and the table is not without it's uses. Our level of
>>> indebtedness is appalling. but it does not imply that we're in desperate
>>> straits.
>>>
>>> Yet.
>>
>> I strongly disagree with that "yet".
>
> "Yet" turned past tense a decade back.
>

Heh. No.

>> One last reminder, the US initiated great depression took the whole
>> civilized world with it. If the US collapses again, we will take the
>> whole world with us again. Bait that tiger all you want.

--
Les Cargill

[dagmarg...@yahoo.com]

On Jan 1, 12:36 pm, "Michael A. Terrell" <mike.terr...@earthlink.net>
wrote:

Yep. Whenever there's work afoot writing bills and proposals, he
flies the coop. With the exception of this last budget deal--to his
credit, he flew back.

James Arthur

[dagmarg...@yahoo.com]

On Jan 1, 12:38 pm, Les Cargill <lcargil...@comcast.com> wrote:
> dagmargoodb...@yahoo.com wrote:
> > On Jan 1, 1:42 am, Les Cargill <lcargil...@comcast.com> wrote:
> >> dagmargoodb...@yahoo.com wrote:
> >>> On Dec 31, 12:18 am, Les Cargill <lcargil...@comcast.com> wrote:
> <snip>
>
> > Well, that was for a (world) war, wasn't it, a temporary condition
> > that eventually stops?
>
> Has it stopped? I'm no peacenik, but we've managed to maintain a
> pretty high level of military force-availability since the end of
> WWII.
>
> When I see it, it looks a lot like Bismarck.

Well that's silly--of course it's stopped. Our car companies are
making cars, not tanks, we're not cranking out Liberty ships daily and
planes 24/7, we have far fewer men under arms, and in fewer places,
etc.

> > Today it's for nothing, not survival, and we're building these drags
> > on success into the daily cost of government. That's permanent.
>
> We're still successful, though. SFAIK, we just have a temporary
> demographic phenomenon. By, say 2040, that will have passed. And
> so will I, so...

The immediate situation is little to do with demographics, but a set
of permanent inefficiencies.

> > There's no world war that's going to end some day and suddenly reduce
> > this new impairment, or remove it as a permanent damper on economic
> > activity.
>
> There's not a great deal of evidence to support it being
> a permanent damper on economic activity.

Well, if you don't understand the theoretical basis that's certainly
the empirical fact, that's why we're growing so slowly, and ready to
sink slower. How can that not be? When the gov't increases its
burden on the people by ~25%, that makes a difference.

2/3rds of the federal budget is "direct payments to individuals,"
which perforce reallocates capital inefficiently all by itself.

> I've looked, and the thing that's sagging seems to be
> still just plain old demand. Survey data show that
> individual shop owners count top line as *the* problem,
> not taxes nor regulation.
>
> For what you're saying to be true, government spending would have to
> crowd out wages. If you can defend that idea in the open air,
> there's a Nobel in it for you, because... nobody else seems to
> be able to make a go of it.

You don't seem to have any appreciation for how distressed the people
are, despite the administration's continual, Orwellian saturation-
level advertisements of all their new "benefits." The lurch toward
socialism has terrified a client of mine--an escapee from same--
petrified, looking to leave the US, as we go through the progressive
suspension of economic and civil freedoms he went through decades ago.

Everyone seems either under, or afraid of some attack, even of basic,
First Amendment freedoms. Just look at Hobby Lobby, for example.
Tremendous effort is being devoted to hunkering down, ordinary people
trying to protect themselves from their government.

But, mood aside, lots more things have been centralized in Washington
D.C., in the hands of people who are far less efficient. That's the
nature of centralized, top-down, inflexible, intolerant control--it's
inefficient. It invests foolishly.

> > At bottom, Obama's thesis is that yelling at people and taking more of
> > their stuff makes them work harder and produce more, faster, rather
> > than discourages them.
>
> Heh. No, I think like most Progressives, he just thinks it falls from
> the sky, or doesn't think about it.
>
> Trouble is, it's not that insane a position. The marginal product of
> labor in absolute terms keeps going up. We just don't have any place
> to put what *is* produced at capacity.

The marginal product of labor does not go up passively, of its own
accord--you're extrapolating from a history that no longer applies.
It goes up from people investing, innovating, and taking chances that
they aren't taking today, thanks to hope and change.

> >>> We've recently gone from spending 19% of GDP to 24%. So, that
> >>> guarantees a deficit of ~4-5% of GDP, on top of what Bush had. That's
> >>> insane.
>
> We're probably well past making sense at this point :), but either
> some or a lot of the 4-5% (and perhaps more) is just banking system
> stuff that will not hit anybody's bottom line.

I believe that's an error that you're repeating here. It's real
money, money the federal government has spent, and now plans to spend
in perpetuity. The notion that it's all a financial shell game of no
consequence, I don't understand how you get there. If that's the
case, all governments should print quadrillions, everything's free,
and no one has to make anything.

> The rest is revenue
> shortfall from Der Recession.
>
> Er, I follow Menzie Chinn on Econbrowser, and (s)he does a pretty
> thorough analysis of pieces of this concept and it doesn't look like
> it's any of it real.
>
> I find that we can even disagree about this despair inducing.

Prepare to despair further--you have the causality absolutely
backwards. Numerically, we went from spending $2.7T in 2007 to $3.5T
in 2009, a 30% jump--we're spending a fortune.

Those policies, in turn, are /causing/ the extended recession, sucking
money from innovation and investment, terrifying risk-takers,
suppressing tax collections, jobs, and growth.

[...]

> The problem with the "buh Obama!" thing is that it looks too electoral;
> it looks like campaign rhetoric. I was far too disappointed in the
> "buh Clinton!" thing from the '90s and the "buh Bush!" thing from the
> last ten years.

That seems unreasonable. Which one of those other guys just
negotiated a tax increase (on top of Obamacare taxes), no cuts, and
even more spending, on top of trillion-dollar deficits? In the
campaign Obama spoke of $4 in cuts per $1 in new taxes--to reduce the
deficit--but the action he just took is to increase spending, increase
the deficit, and increase taxes. And, he wanted to spend even more.

Nor do I remember the other guys dogmatically insisting on class-
warfare, or that hiking rates on a few would pay for the whole, when
it's not even vaguely true.

http://www.cato.org/publications/commentary/obama-tax-rich
"Yet President Obama is seeking an additional $3.9 trillion in new
taxes over ten years, above the projected revenue growth discussed
above, and these new taxes still wouldn’t balance the budget.

Why not?

Because the president wants to increase spending even faster than he
wants to increase taxes. "

> Obama says one thing and does another. The thing he says is "Hope and
> Change"; the thing he does is ... not that. It's "cut".
>
> Besides, if the problem is SS and Medicare, then that's FDR and LBJ,
> and they're both no longer with us.... *general* government spending
> outside the security apparatus is very low...

I don't know what you mean by "security apparatus." It's social
programs that take up ~2/3rds of the budget, not infrastructure, not
defense.

For all the verbiage above it's not that complicated. We're growing
slower because there are new substantial, real, added financial and
regulatory burdens--and even threats--on everyone. All that bleeds out
of growth and investment, affecting jobs, and everything else. You
can't climb as quickly with an extra 10kg in your rucksack.

--
Best,
James Arthur

[dagmarg...@yahoo.com]

On Jan 1, 8:46 pm, josephkk <joseph_barr...@sbcglobal.net> wrote:
> On Sun, 30 Dec 2012 23:18:55 -0600, Les Cargill <lcargil...@comcast.com>
> wrote:

> >dagmargoodb...@yahoo.com wrote:
> >> On Dec 30, 9:59 pm, cameo <ca...@unreal.invalid> wrote:
> >>> On 12/30/2012 4:44 PM, dagmargoodb...@yahoo.com wrote:
>
> >>>> It doesn't matter that it's not a household budget.
>
> >>>> The last time we discussed this you cited a couple links to the effect
> >>>> that governments have more ability to finance stuff.
>
> >>> Plus they can pass on the cost of borrowing to future generations in
> >>> perpetuity. Individuals cannot do it.
>
> >> They can only do that as long as there are suckers to loan them more
> >> money, which we're running low on. The full costs fall on the
> >> generation it all crashes down on, probably us. Then they default,
> >> naturally.
>
> >> It's all insanity, a thousand attempts to live beyond our means, and
> >> make someone else pay.
>
>

> >It is everything you say except "insane"; 1.04 growth compounded over 30
> >years ( about a generation and a half ) is 324%. It's called
> >the GDP deflator and it's how this stuff works.
>
> Not that i am trying to be picky, but how does 1.04 growth compounded over
> 30 years ever catch up with 1.83 spending over the same time? 1.83
> compounded over 30 years is 74,736,489%. Get the picture?

It's not *that* bad. We're spending ~1.84x our income so far this
year, that's true, but our spending is not compounding at that rate.

The worst of it comes from a quantum leap in spending during the
stimulus--+30% in two years--and Obama's subsequent struggle to
maintain and add to it.

Since the 2010 elections, spending is growing much more slowly--4%
last year, 5% (est) this year. That's still outpacing GDP though, of
course, which means gov't is still growing.

--
Cheers,
James Arthur

[Daniel Pitts]

On 12/31/12 11:33 AM, hamilton wrote:
> On 12/31/2012 12:42 AM, Tom Del Rosso wrote:
>> Les Cargill wrote:
>>>
>>> My initial comment was that the Federal budget is fundamentally
>>> different from a family budget. I like Dave Ramsey too, but he's
>>> off base on this particular thing.
>>
>> The difference is that a government can print money, and if that is
>> done for
>
> Please eplain, how do they print money, then pay interest on it ?

The new printed money devalues existing money. This is called inflation.
At a base level, inflation is good for debt holders as it decreases the
magnitude of their debt. It is bad for savers, and it decreases the
magnitude of their assets. It is also bad for the working class,
because wages don't typically increase along side it, and they are
usually in debt with an interest rate far higher than inflation.


The fed uses inflation as a tool to lessen the amount of debt they have,
but the interest is still paid.

However, the net effect is that those entities with assets in USD are
having their cash's value transferred to those with debts in USD. One
argument for having inflation is that it encourages "savers" to become
"investors" and cause a positive feedback into the economy.
Unfortunately it also encourages people to become over leveraged and we
have the Housing Crises and other issues.

Just my 2 cents (adjusted for inflation).

[cameo]

On 1/2/2013 12:05 PM, Daniel Pitts wrote:

> The new printed money devalues existing money. This is called inflation.
> At a base level, inflation is good for debt holders as it decreases the
> magnitude of their debt. It is bad for savers, and it decreases the
> magnitude of their assets. It is also bad for the working class,
> because wages don't typically increase along side it, and they are
> usually in debt with an interest rate far higher than inflation.

It's also good for the government because the inflation and the
subsequent wage adjustments put more people into higher progessive
income tax brackets and the gov. can collect capital gains taxes on
transactions where the gains are purely due to inflation.

[josephkk]

On Wed, 2 Jan 2013 06:12:20 -0800 (PST), dagmarg...@yahoo.com wrote:

>On Jan 1, 8:46 pm, josephkk <joseph_barr...@sbcglobal.net> wrote:
>> On Sun, 30 Dec 2012 23:18:55 -0600, Les Cargill <lcargil...@comcast.com>
>> wrote:

<snip>

>> Not that i am trying to be picky, but how does 1.04 growth compounded over
>> 30 years ever catch up with 1.83 spending over the same time? 1.83
>> compounded over 30 years is 74,736,489%. Get the picture?
>
>It's not *that* bad. We're spending ~1.84x our income so far this
>year, that's true, but our spending is not compounding at that rate.
>
>The worst of it comes from a quantum leap in spending during the
>stimulus--+30% in two years--and Obama's subsequent struggle to
>maintain and add to it.
>
>Since the 2010 elections, spending is growing much more slowly--4%
>last year, 5% (est) this year. That's still outpacing GDP though, of
>course, which means gov't is still growing.

Aw. I was trying to shock LC out of his spending complacency. Having him
defend might have done it.

?-)

[josephkk]

On Wed, 02 Jan 2013 00:39:15 -0600, Les Cargill <lcarg...@comcast.com>
wrote:

>

>>> That's true, and the table is not without it's uses. Our level of
>>> indebtedness is appalling. but it does not imply that we're in desperate
>>> straits.
>>>
>>> Yet.
>>
>> I strongly disagree with that "yet".
>>
>
>I understand. I am not saying you're wrong. I am syaing
>it's not clear that you're right.
>
>> One last reminder, the US initiated great depression took the whole
>> civilized world with it.
>
>mmmmm.... maybe it wasn't US initiated. People are still writing about
>it. the Depression was a lot more about the gold standard, really.
>
>http://www.voxeu.org/article/did-france-cause-great-depression
>
>> If the US collapses again, we will take the
>> whole world with us again. Bait that tiger all you want.
>>
>
>I *doubt* there'll be a big collapse. That's kind of my point...
>
>Bond-swaps between Treasury and the Fed are about... I'm
>gonna say $10T, and the fed can remit interest payments back
>to the Treasury. That's bad form, but it's always a possibility.

Bong! This is the funky loan game that caused the housing meltdown being
played all over again, this time for governments. BOHICA.

?-(((

[Frithiof Andreas Jensen]

Den 02-01-2013 02:44, flipper skrev:

> On Tue, 01 Jan 2013 17:31:39 +0100, Frithiof Andreas Jensen
> <frithio...@diespammerdie.karoshi.dk> wrote:
>
>> Den 28-12-2012 23:43, Jim Thompson skrev:
>>> US Budget for Dummies.... (from http://tinyurl.com/cv3wlwx )
>>>
>> No matter - The USA is going to default on the debt anyway, which means
>> that the rational policy is to run up as much debt as possible and use
>> it to aquire assets and influence before the inevitable default!
>

> You must think people are complete morons. Tell me, if you're "going
> to default... anyway" then why in the world would I loan you money?

"People" a.k.a. countries actually, have little choice: The US Dollar is
what Buyeth The Oil! People, who trade Oil outside of the reserve
currency, gets some "trade embargo", "arab spring" and "humanitarian
intervention" coming to their way soon enough.

*Everybody*, with the possible exception of Europe, knows exactly what
the gig is: But life & trade has to go on nevertheless! "The world as it
is" and all that.

But there are portents.

Russian wheat and Chinese rare earths are becoming hard to buy with USD.
These trade restrictions are coming as a consequence of "people" knowing
that "the US will default somehow, so maybe we don't want to exchange
all our good stuff for not-so-good money". The US have trade
restrictions the "other way" too. "People" holding trillions of USD
cannot freely buy companies inside the US - the decent ones are always
"of strategic importance". The US has erected a barrier against the
flood of money it creates.

>
> Practice what you preach. Loan me a million. I guarantee I won't pay
> it back but I want it, so 'loan' it to me. Wait, make that a billion.
> You might as well 'loan' me a lot since it's never coming back.

States are different to people - If you owe me, I can eventually send
the boys round to sort the matter out. With a strong state, there is
nothing the investors can really do except reach a settlement. With a
weak and corrupt state the creditors may even use the government to
extract as much value as possible until "the revolution"(tm) happens.
This is indeed how it goes, there is a lot of propaganda on the subject
because it would be pretty bad for "investor confidence" if enough
people to matter at elections found out how easy it is for a nation
state to default compared to an individual situation. BASEL II even
assumes that government debt is as good as cash - which means that
banks, like f.ex. Deutsche Bank, can legally pledge Greek bonds as
reserve capital and leverage them 50 times!

f.ex.
Turkey went bust in the 'noughties - 2001 - I think. One great thing for
the Turks was that they had just bought new telecom networks from
Ericsson and Motorola. Nobody came and repo'ed that while Ericsson had
to sack 30% of the workforce (Motorola was bailed by the US government).

Now Greece and Ireland are being sucked dry, being what economists call
"responsible", while Iceland (irresponsible, default) is recovering fast.

>> Defaults happen all the time - about 200 times from 1900 to 2000.
>

> If you want to live in a bankrupt third world economy then why don't
> you move to one of them?
>
Like Detroit? Nah, it's wasted effort - the third world is moving here
already and their economy is following ;-)

[cameo]

On 1/5/2013 7:50 AM, flipper wrote:
> First let's change to the more accurate euphemism "create money"
> rather than limiting ourselves to a printing press since the vast
> majority of 'money' is not in actual printed or coin form.
>
> So, how is money 'created'. Money is created by debt. Say you put
> $1,000 (never mind, for the moment, where that came from) into a bank.
> The bank can then loan 90% of it (10% is, by banking laws, required to
> be held in reserve). You, of course, say you have $1,000 "in the bank"
> and the person who borrowed $900 has, well, $900 so the 'money supply'
> is now $1900. The same thing goes for business borrowing and, indeed,
> all borrowing.
>
> And therein lies how the government, in the original euphemism,
> 'prints money'. Actually, the government doesn't; the Federal Reserve
> System (Fed) does. The Fed was expressly created by Congress to
> 'manage the money', including the money 'supply', but is considered an
> independent entity, albeit supposedly under Congressional 'oversight'.
> So, as far as 'creating money', the 'government', per see, is not
> doing it. The government issues bonds on the 'open market' and if the
> FED decides the money supply should be increased then it purchases
> some and the government owes interest on those just like if anyone
> else had purchased them (which answers your question).
>
> So where did the FED get the money to 'buy' the bonds? No where. It
> comes from 'thin air', poof. The FED simply writes in it's books that
> it 'has' X dollars and then uses them to buy bonds (or any other
> financial instrument).
>
> As for the *actual* 'printing', the Treasury prints them but those are
> 'purchased' by the FED for 2 cents per note, regardless of
> denomination, and then 'circulated' only to the extent the FED
> determines there's is a need for 'physical dollars'. But the
> 'printing' of physical notes is merely a convenience for 'small
> transactions' and irrelevant to money creation. They're just a
> 'physical representation' of a 'thin air' entry in the Fed records and
> have nothing 'backing' them, such as gold or silver, other than, as
> the saying goes "the full faith and credit of the U.S. Government."
>
> The organization of the Fed is rather complex combination of
> government appointees and officers elected by private (member) banks
> with the 'primary' power arguably on the government appointee side.
> They operate under the laws and regulations as set forth by Congress
> but exercise 'their judgment' in fulfilling statutory goals. Their
> 'independence' comes from an idea similar to how the Judiciary is
> allegedly 'independent'. I.E. the government appointee terms are
> staggered and for 14 years, allegedly isolating them from the whims of
> a particular administration.
>
> The 'problem' we find ourselves in, then, comes from two sources.
> First is massive borrowing by the Federal government and the second is
> how the Fed is 'managing' the money supply. And while allegedly
> 'independent' (debatable) the Fed obviously has a 'stake' in seeing
> it's 'creator', I.E. the government, survive so irresponsibility in
> one can induce wacky decisions in the other, even if the latter were
> sane to begin with.
>
> That's the 'sales brochure' picture so now let me give you some scary
> but real examples. The Federal government 'fabricates' most of the
> 'economic indicators' everyone uses to make decisions with. Yes,
> really. Everyone probably knows, by now, they underestimate
> unemployment by not counting people so discouraged that they've given
> up active job seeking (or even simpler, fell off the unemployment
> insurance rolls). See? The unemployment problem would be 'solved' if
> those persistent bastards would just give up looking for work, which
> was why they changed that calculation back in the Kennedy
> Administration. They wanted 'full employment' and, as governments love
> to so, the simple solution was to just stop counting the 'problem'
> and, voile, 'problem' solved.
>
> But that's just the beginning. The government also misrepresents
> inflation by not counting, believe it or not, food and energy costs.
> Really now, you don't 'need' to eat, do you? On top of that, they
> 'deflate' the cost of things they think have 'gotten better'. Like,
> they'll see a $300 TV but note it has a 'better display' than last
> years $300 TV and decide it's really only $200 in 'equivalent' value
> to the previous year, so the price 'went down' despite you having to
> pay $300 for one. A new telephone, with fancy features, will be
> discounted but the fact it's life might be only 4 years, as opposed to
> an old time rotary that lasted, say, 30 years 'doesn't matter'. Only
> calculations that make things 'look good' are used because, well,
> that's the 'purpose' of it. After all, that's what people vote for,
> 'imaginary good feelings' like "yes we can."
>
> That's just the tip of it and if those haven't made your eye bug out
> yet this one will. When prices on a thing go 'up' the government has
> decided that people will then 'substitute' something cheaper, so they
> don't count the thing that went up but the cheaper 'substitute'. So,
> you see, if you used to eat steak but, with prices the way they were,
> moved down to rump roast, then hamburger, and are now on baloney
> sandwiches then, congratulations, there has been no inflation of food
> prices. And whether you did or not the government 'decided' you did,
> so there.
>
> Along the same bizarre logic, if prices go up on a category of things,
> like healthcare, the government has divined that people will use less
> of it so they 'discount' how much of that 'increase' goes into the
> inflation calculation. For example, healthcare is around 17% of the
> economy but when used for calculating inflation it is weighted at only
> 6%, so the 'impact' of rising healthcare costs is cut to 1/3 of
> actual. You do that too, right? Like, decide to not get sick this flu
> season because health costs have increased. You'll just use less, so
> says Uncle Sam.
>
> These 'rosy' (arguably falsified) calculation methods were 'invented'
> by the Clinton Administration because, like those before, he wanted to
> 'look good' too.
>
> Getting pissed yet?
>
> Well, they do the same thing with GDP. Basically, they fabricate a
> number better than reality using bizarre logic like the inflation
> numbers. For example, do you have a 'free' checking account? Well,
> they decided that a checking account should actually 'cost' something
> so that you get one for 'free' is counted in GDP despite there being
> no transaction of any kind involved. And they do the 'reverse' of
> inflation for equipment. Where they 'discounted', in inflation
> calculations, what they deem to be 'better features' they inflate
> their economic impact since those 'better features' are divined to
> have 'more value' than what was paid for them. That's cool, eh? A
> $1000 computer might be only $600 for inflation but $1400 for GDP.
> Remember, it's all about 'looking good' and that keeps inflation low,
> good stuff, and GDP high. What could be 'better'?
>
> And people wonder why none of the numbers ever seem to make sense.
> Well, they're not 'confused', they're right.
>
> Btw, these 'fuzzy numbers' might make you wonder about one of the
> 'proposed solutions' to Social Security, which is to 'adjust' the CPI
> (inflation) calculation to an allegedly 'more accurate' number
> reflecting 'actual' inflation. No, what they mean is one that is in
> line with the rosy 'fuzzy number' fabrication they now use.
>
> Even the, so called, 'national debt' you hear tossed around ad
> infinitum these days is a fabrication gratis the Johnson
> Administration, which created the "unified budget": a 'nice sounding'
> name for pretending that money borrowed from the Social Security trust
> fund wasn't borrowed. That was to hide the cost of the Vietnam war and
> works thusly. Social Security was running a surplus but since that is
> a separate trust fund it showed up there and when the general fund
> borrowed money from the trust fund it showed as general fund debt, as
> it should. What he did with the 'unified' budget was include SS along
> with the general fund so a SS surplus went into the debt calculation
> as a surplus and, then, when we borrowed money from SS that surplus
> simply went back to 0. I.E. we took X million into SS, the general
> fund borrowed X million and the debt increase is 0 because we just
> tossed it all into the same bucket, despite it being a separate
> bucket. All the surplus is spent, but shows as 'nothing happened', and
> there are a bunch of IOUs, in the form of government bonds (debt),
> that shows up no where in the budget calculations (just in the trust
> fund). See? That LOOKS GOOD. We get to spend X million more dollars
> without showing one red cent of borrowing or of increasing the 'debt'.
> So the money that has been 'saved' in the trust fund to pay for future
> obligations, meaning NOW that the baby boomers are retiring, are to be
> paid by government bonds they never reported as debt, but are there
> anyway. This, btw, is how you get the seeming contradictory statements
> about SS 'solvency' yet there is this mysterious 20 trillion of
> unfunded liabilities. That's the money SS 'saved', so their books show
> they have it (currently solvent), but it was 'never reported' by the
> government as money borrowed (unfunded liability). Of course, ever
> increasing payments 'to' Social Security, which can be nothing but
> general fund deficit spending, will not 'look good' at all now that
> the general fund has to pay off those bonds they never reported as
> debt so it will be interesting to see what they fabricate for that
> one.
>
> In short, just about everything our government reports is fabricated
> nonsense and then the Fed makes 'wise decisions' (sic) on how to
> manage the money supply based on these economic fabrications, plus the
> fabrications they come up with because, after all, they want to 'look
> good' too.
>
> So the people complaining that the federal budget is 'not like' a
> family budget are correct, but just not in the way they meant. It's
> 'different' because they can lie their ass off, and get away with it,
> with the only consequence being whoever comes up with the next 'good
> sounding' lie gets elected because no one wants to hear 'bad news'.
> "Yes we can." Yes we can, what? Don't ask.
>
> Think I'm kidding? Okay, let's imagine we elected, today, someone who
> 'tells the truth'. The debt is 16 trillion and the next day he
> truthfully 'corrects' it for SS debt to 36 trillion. Do you think he's
> going to survive to the third day in office to correct for the
> Medicare Trust Fund's unfunded liabilities? If he does the debt will
> then be 76 trillion so give me odds on the 4'th day. If so and he
> truthfully corrects for federal government employee pensions the debt
> will be 100 trillion. Give me odds on the 5'th day.
>
> Don't take those as 'actuals' because I may be off 10 trillion here
> and there but, hey, we're not counting any of it anyway so no big
> deal.

This post is a clasic! I better save it because I've never seen the
current situation explained as well as this.

My main beef is with the Fed that to my understanding was established
with the primary goal of maintaining the value of the Dollar. But look
what happened since they removed the gold backing of the $. The value of
today's $ is nowhere near what it was in years past except in the mind
of IRS when they compute capital gains and taxes owed on that.
Stimulating the economy with money supply is not and should not be the
job of the Fed. But maybe I'm wrong. What do you think.

[Bill Bowden]

On Jan 5, 7:50 am, flipper <flip...@fish.net> wrote:

> On Mon, 31 Dec 2012 12:33:14 -0700, hamilton <hamil...@nothere.com>
> wrote:

> >Please eplain, how do they print money, then pay interest on it ?
>

> First let's change to the more accurate euphemism "create money"
> rather than limiting ourselves to a printing press since the vast
> majority of 'money' is not in actual printed or coin form.
>
> So, how is money 'created'. Money is created by debt. Say you put
> $1,000 (never mind, for the moment, where that came from) into a bank.
> The bank can then loan 90% of it (10% is, by banking laws, required to
> be held in reserve). You, of course, say you have $1,000 "in the bank"
> and the person who borrowed $900 has, well, $900 so the 'money supply'
> is now $1900. The same thing goes for business borrowing and, indeed,
> all borrowing.
>

Good post, but isn't it all risk adjusted? If I borrow 100K from the
bank to build a 200K house and pay it back when the house is sold,
isn't the money supply increased 100K without printing any money? In a
gold standard economy, the opposite would occur. If I was a buyer, and
knew the prices of houses are declining since there will be more of
them with a limited supply of gold, I would wait for prices to fall
before buying the house. Not good for the economy.

-Bill

[Les Cargill]

Bill Bowden wrote:
> On Jan 5, 7:50 am, flipper <flip...@fish.net> wrote:
>
>> On Mon, 31 Dec 2012 12:33:14 -0700, hamilton <hamil...@nothere.com>
>> wrote:
>
>>> Please eplain, how do they print money, then pay interest on it ?
>>
>
>> First let's change to the more accurate euphemism "create money"
>> rather than limiting ourselves to a printing press since the vast
>> majority of 'money' is not in actual printed or coin form.
>>
>> So, how is money 'created'. Money is created by debt. Say you put
>> $1,000 (never mind, for the moment, where that came from) into a bank.
>> The bank can then loan 90% of it (10% is, by banking laws, required to
>> be held in reserve). You, of course, say you have $1,000 "in the bank"
>> and the person who borrowed $900 has, well, $900 so the 'money supply'
>> is now $1900. The same thing goes for business borrowing and, indeed,
>> all borrowing.
>>
>
> Good post, but isn't it all risk adjusted? If I borrow 100K from the
> bank to build a 200K house and pay it back when the house is sold,
> isn't the money supply increased 100K without printing any money?

The $100K is created when the loan issues. Then a house worth $200K is
created, a total increase of $300K. When you pay off the $100K, it's
still there plus interest at the bank.

> In a
> gold standard economy, the opposite would occur.

No, same thing. The only difference is that an authoritative entity
publishes a fixed exchange rate between gold and the currency in a
gold standard system.

There was still fractional reserve banking under the gold standard, and
at different reserve requirements. You get just as many panics and
failures with gold as with pure paper currency. if gold worked, we'd
still be doing it.

> If I was a buyer, and
> knew the prices of houses are declining since there will be more of
> them with a limited supply of gold, I would wait for prices to fall
> before buying the house. Not good for the economy.
>
> -Bill
>

--
Les Cargill

[Les Cargill]

cameo wrote:
<snip>

>
> This post is a clasic! I better save it because I've never seen the
> current situation explained as well as this.
>
> My main beef is with the Fed that to my understanding was established
> with the primary goal of maintaining the value of the Dollar.

The Fed has a dual mandate - price stability and reducing
unemployment. The second mandate was from the Humphrey Hawkins bill
of 1978 ( 1977? one of those).

> But look
> what happened since they removed the gold backing of the $. The value of
> today's $ is nowhere near what it was in years past except in the mind
> of IRS when they compute capital gains and taxes owed on that.

It's messier than that. In parts of the economy, a dollar still buys
the same, but in other parts, no. you/I mainly see that because of
oil shocks and either entitlements or commodities that are under
subsidy that are indexed to inflation - and some other stuff.

The "other stuff" includes real estate, education, medical care
and government. Real estate now, not so much. Each of these things
has regulated supply ( not necessarily government regulated ) and
rising demand because of GDP growth and population increase.

A great deal of stuff gets cheaper year by year, when measured by labor
needed to buy something. Even subsidized commodities get cheaper.
Even automobiles have, adjusted for improvements, stayed a lot the same
for the last 20ish years in pure dollar terms. There's been like 1 or
2% annual increase in price, even though the offerings are usually
better ( have air bags, ABS, better engine control , other stuff ).

> Stimulating the economy with money supply is not and should not be the
> job of the Fed. But maybe I'm wrong. What do you think.
>

It is part of the job of the Fed. Inadequate money supply causes
deflation - the overall goods and services go up due to
GDP growth, population goes up. The money supply has to adjust to
accommodate that growth.

Inflation is painful; but deflation can threaten the basic fabric
of society. If the value of a dollar *goes up* ( which would happen
even if the amount of currency,credit & specie were merely fixed )
then people are incented to hold currency rather than let it at
interest, and economic activity plummets.

The question is how to regulate and govern the money supply. It is
not clear that economists know how to do this; indeed, it's nearly
clear that they don't . There are at least two camps and neither of
the two main ones seems to work.

Our central banks are made up of ... bankers, and they have biases.

--
Les Cargill

[hamilton]

On 1/6/2013 11:48 AM, Les Cargill wrote:
> cameo wrote:
> <snip>
>>
>> This post is a clasic! I better save it because I've never seen the
>> current situation explained as well as this.
>>
>> My main beef is with the Fed that to my understanding was established
>> with the primary goal of maintaining the value of the Dollar.
>
> The Fed has a dual mandate - price stability and reducing
> unemployment. The second mandate was from the Humphrey Hawkins bill
> of 1978 ( 1977? one of those).

http://en.wikipedia.org/wiki/Humphrey%E2%80%93Hawkins_Full_Employment_Act

There seems to be two type of bankers.

Ones that are interested in the economy and people who use it

and

"other" that want a profit no matter who gets hurt.

Glass�Steagall "fixed" the economy in 1933 from the "other bankers", and
"Phil" Gramm stole it back for them.

hamilton

[cameo]

On 1/5/2013 11:35 PM, flipper wrote:

> Despite the seeming simplicity that's a complex question.
>
> First, one needs to look at the preceding history, which is rather
> long, but, to summarize, the nation had no 'central bank' and
> experienced numerous economic 'crashes' with the 'final straw' being
> the panic of 1907. J.P Morgan pledged large sums of his own money to
> shore up the banking system (for the second time after saving the US
> Treasury in 1895). The Fed was established in 1913 with the bill
> stating it was:
>
> "An Act To provide for the establishment of Federal reserve banks, to
> furnish an elastic currency, to afford means of rediscounting
> commercial paper, to establish a more effective supervision of banking
> in the United States, and for other purposes."
>
> For our purposes the salient point is "to furnish an elastic
> currency." In simplistic terms the idea was to stabilize the economy
> by making 'credit' available to banks during a run (as J.P. Morgan
> had), or other economic crisis, and then, ostensibly, shrink the money
> supply back to 'normal' once the crisis had passed (the 'elasticity').
> This also includes 'regulating' the banks for the obvious reason you
> don't want them being 'irresponsible' and then coming to you for a
> bailout. (sound familiar?)
>
> Well, then there was 1929, arguably a rather bad thing since we call
> it "The Great Depression," and, nostalgia notwithstanding, the post
> war period wasn't exactly 'ideal' either. In the early 70s things got
> SO bad that both inflation and unemployment hit, hold onto your hat,
> 6% or so (and you think 8% is bad). This was so catastrophic, on a
> plagues of locusts biblical scale, that President Nixon instituted
> wage and price controls in "the land of the free." Clearly, something
> needed to be done.
>
> At any rate, since 1977 the Fed has had a, so called, "dual mandate,"
> which is actually a triple mandate as written in the act: "The Board
> of Governors of the Federal Reserve System and the Federal Open Market
> Committee shall maintain long run growth of the monetary and credit
> aggregates commensurate with the economy's long run potential to
> increase production, so as to promote effectively the goals of
> ----------------> maximum employment, stable prices and moderate
> long-term interest rates.<----------------" (emphasis added).
>
> No matter how one would like to 'interpret' those goals they can only
> be done by 'manipulating the economy' and the Fed's mechanisms for
> doing so are various manipulations of the money supply.
>
> Fortunately this 'solved' everything except for, well, the savings and
> loan crisis of the 1980s the dot-com bubble and, of course, the
> Subprime mortgage crisis with the current 7.8% unemployment rate (not
> counting those who've given up but, if you did, it's upwards to 14%),
> to name a few.
>
> Since you brought up the 'gold standard' we should observe it's no
> panacea either and the reason we 'went off' the gold standard was
> simply that it crashed. In fact, just about everyone else had already
> left it and we were 'last' but there simply wasn't enough gold to do
> the job. FDR took 'circulating money' off gold because the treasury
> couldn't back it all up and Nixon took the 'country', I.E.
> international transactions, off it for the same reason. (France did a
> 'run' on treasury gold reserves)
>
> The problem with gold (or any other 'commodity' currency) is that
> you're at the mercy of whoever finds however much of it, but the
> economy is not so constrained. By that I mean people build houses and
> not necessarily at the same rate someone just 'happens' to mine gold.
> So, lets say the gold supply is increasing 2% a year but houses are
> increasing at 5% a year (I mean 'real' increase in that there are 5%
> more physical structure representing 'real' property and, so, 'real'
> value). Your house prices are deflating because you have more and more
> real property being 'bought' by less gold (per house). This may not
> seem like a 'bad thing' but what happens is people 'defer' buying
> because it will be 'cheaper' later (since 'house per gold' is
> dropping) and that stifles the economy.

I didn't write I wanted the gold standard back, only that the value of
the $ for noticeably worse since then. The Germans were not on the gold
standard, either, yet they were able to maintain the value of their DM
much better than we do with the $. They pretty much keep the value of
the Euro, too, despite the unique problems of the Euro zone. Our
politicians keep clamoring for ever cheaper $ to help our exports, yet
the Germans don't have export problems with their stronger currency. I
would settle for a Fed policy similar to the German central Bank.

[Bill Bowden]

On Jan 5, 10:04 pm, Les Cargill <lcargil...@comcast.com> wrote:

> BillBowdenwrote:

> > On Jan 5, 7:50 am, flipper <flip...@fish.net> wrote:
>

> >> On Mon, 31 Dec 2012 12:33:14 -0700, hamilton <hamil...@nothere.com>
> >> wrote:
>
> >>> Please eplain, how do they print money, then pay interest on it ?
>
> >> First let's change to the more accurate euphemism "create money"
> >> rather than limiting ourselves to a printing press since the vast
> >> majority of 'money' is not in actual printed or coin form.
>
> >> So, how is money 'created'. Money is created by debt. Say you put
> >> $1,000 (never mind, for the moment, where that came from) into a bank.
> >> The bank can then loan 90% of it (10% is, by banking laws, required to
> >> be held in reserve). You, of course, say you have $1,000 "in the bank"
> >> and the person who borrowed $900 has, well, $900 so the 'money supply'
> >> is now $1900. The same thing goes for business borrowing and, indeed,
> >> all borrowing.
>

> > Good post, but isn't it all risk adjusted? If I borrow 100K from the
> > bank to build a 200K house and pay it back when the house is sold,
> > isn't the money supply increased 100K without printing any money?
>

> The $100K is created when the loan issues. Then a house worth $200K is
> created, a total increase of $300K. When you pay off the $100K, it's
> still there plus interest at the bank.
>

It's still a bit confusing. When the 100K loan is created, how does it
show up on the books? An asset or a liability? When the loan is payed
off, you say the money is still there. Who has title to the money? How
much profit was made by the bank?

-Bill

[Les Cargill]

One each. That's why I used the term "created". The regulating
agent is reserves, not assets nor liabilities.

> When the loan is payed
> off, you say the money is still there. Who has title to the money?

The new equilibrium* is the same as the old equilibrium plus the
interest paid, minus costs.

*after the loan was struck, then paid off.

We're a bit off course already - it's ultimately about various ratios
in the accounting of the bank, not so much absolute figures. It's
a bit complex, but not too bad.

http://wfhummel.cnchost.com/bankingbasics.html

Please notice how T-bills get used in the story at the link. And
that would be for a small, community bank, not a big commercial or
iBank. Also note how the income statement works.

> How
> much profit was made by the bank?
>

interest paid minus costs. The $100K is not shown as profit.

> -Bill
>

--
Les Cargill

[cameo]

On 1/7/2013 4:27 AM, flipper wrote:

> Well, I'm not sure what, or when, you mean by "the Germans were."
> After WWII, per the Brenton Woods Agreement, most counties pegged
> their currency to the dollar, which was backed by gold, and, so, by
> extension, so was theirs. This produced what's called the "Triffin
> dilemma" which, in a nutshell, says that 'for things to work right'
> the U.S. would have to simultaneously run a balance of payments
> current account deficit and surplus: an impossibility.
>
> The 'peg' system collapsed November 1968, which led to the final
> 'Nixon Shock" of 1971 when gold convertibility completely ended.

A ment the period after the 1 $ = 4 DM did not hold any longer, but
before the Euro came in. But even later, the German Dentral Bank with
its major influence was able to maintain the value of the Euro much
better then our Fed was able to do with the $.

> I have enough problems figuring out what the hell we're doing without
> trying to decipher German or Euro policy too however one of Germany's
> 'advantages' is the Euro itself because this 'one size fits all'
> currency favors Germany.

Well, apparently you are quite familiar with it and would love to
hear some of the German or other European contributors here to comment
on it. I just want to add that your comments on the German VAT tax could
be misleading without mentioning that they still have a hefty income tax
as well. I don't think Americans would put up with that kind of tax load
without another Boston Tea Party. But this may change as more and more
people are getting used to getting freebies from the government. Obama's
re-election maybe a signal in that direction.

[Bill Bowden]

That makes sense. The small bank basically just manages the loan
guaranteed by big brother fed? So, there are no assets or liabilities,
just interest payments and expenses. Interesting link you provided.
Haven't studied it all but bookmarked it for reference.

-Bill

> > When the loan is payed
> > off, you say the money is still there. Who has title to the money?
>
> The new equilibrium* is the same as the old equilibrium plus the
> interest paid, minus costs.
>
> *after the loan was struck, then paid off.
>

Thanks for the link, I bookmarked it. Makes it a bit clearer. Seems
big brother (the fed) loans the small bank the 100K to manage the loan
and make profits from interest minus costs. So, all you do as a small
bank is manage the feds unlimited supply of money? I haven't studied
the link in detail, but bookmarked it for reference. Still confusing
how the 100K turns into 300K.

-Bill

[Les Cargill]

Bill Bowden wrote:
> On Jan 6, 11:14 pm, Les Cargill <lcargil...@comcast.com> wrote:

<snip>

>>
>
>> One each. That's why I used the term "created". The regulating
>> agent is reserves, not assets nor liabilities.
>>
>
> That makes sense. The small bank basically just manages the loan
> guaranteed by big brother fed?

Nope. It just has a pool of loans balanced by reserves. The FDIC
is the only guarantor and it protects only depositors. The Fed
does not underwrite anything.

the "too big to fail " banks were bet-making iBanks like
Goldman Sachs, not depository institutions. That was a fiat
of Federal power, not the norm.

> So, there are no assets or liabilities, just interest payments and
> expenses.

There *are* assets and liabilities, but there is other stuff too. It's
all of a piece. Yes, you darn near need a whiteboard to understand it.

Management of a bank is management of the proportions between certain
numbers on instruments in their books.

> Interesting link you provided. Haven't studied it all but bookmarked
> it for reference.
>

It is one of the best things I have found on the Web. For that matter,
I cannot find a book to replace it. Take your time with it; there's a
lot there ( er, that worked for me anyway ).

> -Bill
>
>
>>> When the loan is payed off, you say the money is still there.
>>> Who has title to the money?
>>
>> The new equilibrium* is the same as the old equilibrium plus the
>> interest paid, minus costs.
>>
>> *after the loan was struck, then paid off.
>>
>
> Thanks for the link, I bookmarked it. Makes it a bit clearer. Seems
> big brother (the fed) loans the small bank the 100K to manage the
> loan and make profits from interest minus costs. So, all you do as a
> small bank is manage the feds unlimited supply of money?

It is limited - you only get so much at a time,
and have to make enough interest on it to prove you're worthy of
more. It's not a bad system when it's used properly.

If you make too many loans, the regulators visit you. When they visit
too much, you lose your... charter, or whatever the founding document of
bank is.

> I haven't studied the link in detail, but bookmarked it for
> reference. Still confusing how the 100K turns into 300K.
>

We're presuming a $200K house has been created by the activity enabled
by the loan. The $100K for land, labor and materials is expended ( but
still exist, captured in the house itself ). For sale of an existing
house, nothing is really created.

So if you can build a house for $100K that would sell for $200K,
that's profit - but it still exists. You will be assessed for it as an
asset by the tax bureau. It's an oversimplified textbook example, but
you get my drift.

There may be a way of looking at it that means I am double counting one
$100K, but I believe at this writing that all three actually exist. IOW,
that might be a "bug" but I haven't found it yet. My accounting
could be off - I am totaling all possible assets created by the full
transaction. But only the original $100K is "mobile" money.


> -Bill
<snip>
--
Les Cargill

[dagmarg...@yahoo.com]

On Jan 5, 11:18 pm, Bill Bowden <bper...@bowdenshobbycircuits.info>
wrote:

> On Jan 5, 7:50 am, flipper <flip...@fish.net> wrote:
>
>
> > On Mon, 31 Dec 2012 12:33:14 -0700, hamilton <hamil...@nothere.com>
> > wrote:
> > >Please eplain, how do they print money, then pay interest on it ?
>
> > First let's change to the more accurate euphemism "create money"
> > rather than limiting ourselves to a printing press since the vast
> > majority of 'money' is not in actual printed or coin form.
>
> > So, how is money 'created'. Money is created by debt. Say you put
> > $1,000 (never mind, for the moment, where that came from) into a bank.
> > The bank can then loan 90% of it (10% is, by banking laws, required to
> > be held in reserve). You, of course, say you have $1,000 "in the bank"
> > and the person who borrowed $900 has, well, $900 so the 'money supply'
> > is now $1900. The same thing goes for business borrowing and, indeed,
> > all borrowing.
>
> Good post, but isn't it all risk adjusted? If I borrow 100K from the
> bank to build a 200K house and pay it back when the house is sold,
> isn't the money supply increased 100K without printing any money?

Nope. You're confusing wealth (or 'value') with money supply. At a
poker game, changing the number of chips on the table doesn't change
the total amount in the players' wallets.

Money is just poker chips. By value, each dollar represents roughly
[The value of the United States] / [total number of dollars].

If you increase the net worth of the US by adding something valuable,
like a house, you've just increased the theoretical value of a
dollar. Don't worry, the fed makes more dollars, wiping that out.
You didn't create money, the fed did.

> In a
> gold standard economy, the opposite would occur. If I was a buyer, and
> knew the prices of houses are declining since there will be more of
> them with a limited supply of gold, I would wait for prices to fall
> before buying the house.

The price of computers has been falling for 50 years, and they keep
getting better, yet people keep buying them.

> Not good for the economy.

If the dollar doesn't hold its value people use something else.
That's not good for the economy. For example, they stop saving. And,
they won't loan, since they'll get back less.


--
Cheers,
James Arthur

[dagmarg...@yahoo.com]

On Jan 12, 6:01 am, flipper <flip...@fish.net> wrote:
> On Sat, 5 Jan 2013 20:18:33 -0800 (PST), Bill Bowden

> > If I was a buyer, and
> >knew the prices of houses are declining since there will be more of
> >them with a limited supply of gold, I would wait for prices to fall
> >before buying the house. Not good for the economy.
>

> That's exactly one of the criticisms of the gold standard and
> deflation was one of the 'disasters' of The Great Depression. It does
> tend to depress the economy for the precise reason you mention and it
> helped ensure than an economy in free fall would continue to free
> fall, or so the argument goes.
>
> One of FDR's economic 'plans' was to deliberately create inflation and
> there were PSA's made 'explaining' the 'economic miracle' of doing so
> (TCM aired it quite a while back and I watched it then). Basically it
> went that the shoe maker will have 'more money to spend', because his
> price is more (inflation) and, so, he can buy more goods, increasing
> the economy, but the stupid thing completely ignored that everything
> he bought would also cost more so nothing is gained.
>
> The other 'advantage', done in Simon Legree style, was that debtors
> (farmers) would get the joy of SCREWING the evil lenders since they'd
> be paying back with CHEAP dollars, yeah baby! But it neglected to
> mention you'd either never get another loan, especially if you
> bankrupted the lender, or REALLY pay through the nose next time.
>
> It really was pitiful watching alleged 'brilliant economists' speaking
> such gibberish.
>
> Btw, another argument is that the Fed royally screwed up in
> contracting the money supply to 'fight inflation' that wasn't
> happening, driving the economy, which had recovered 90% of the crash,
> into the ditch.

The principal advantage of the gold standard is that it keeps the egg-
headed gods at the fed from twiddling all the knobs and wrecking the
predictability of value (for the common good, of course).

Those knobs have nothing to do with it. It's Obama. It's the
spending. The fed's enabling it--financing the unfinanceable,
covering Obama's tail with trickery--not fixing it. I overhead some
people talking at the gas station yesterday for crying out loud--
they're scared stiff.

Lots of O-voters are stunned and surprised their checks have gone down
over the reinstatement of their Social Security tax rate. They're
going ape over that measly 2% increase. They simply have /no/ idea
what's ahead.

But hey, let's raise the debt ceiling while we take away everyone's
right to self-defense, shall we? That'll distract 'em. Wheeeee!

James Arthur

[Les Cargill]

Actually, *banks* create money through issuing debt. During the period
in which the Scots Free Banks existed, the banks used fractional
reserve banking to create money through debt and repayment. No
government had anything to do with it outside of any suits brought
in court.

What the central bank is supposed to do is maintain a constant
value of the dollar against a rising stock of value. If value is
created against a fixed (or inadequate ) stock of dollars, that is
deflation. This is part of what happened during the Great Depression.

From 1983ish to the present, we haven't had many periods of
real inflation; it's hard to say exactly *what* that was. it
was, unfortunately, reported as inflation even though it's really a
shoddy model called the CPI.

It means that people can choose a strategy of simply holding
dollars rather than investing them. In other words,
they can short the entire economy. As Scott Sumner puts it,
money can be a medium of account or a medium of exchange.
We ( whoever "we" are :) "want" the role of exchange to be primary,
because then we'll be able to sell more stuff.

All the Fed does is run a sort of "traffic light" system to signal
how much debt money banks should create.

>> In a gold standard economy, the opposite would occur. If I was a
>> buyer, and knew the prices of houses are declining since there will
>> be more of them with a limited supply of gold, I would wait for
>> prices to fall before buying the house.
>
> The price of computers has been falling for 50 years, and they keep
> getting better, yet people keep buying them.
>
>> Not good for the economy.
>
> If the dollar doesn't hold its value people use something else.

Yes. That's the whole idea. We don't *want* people to hold
dollars. We want them to be used in a flow to create more real
value.

If dollars are the value, then that's something like reifying the
symbol and it confuses people, there are less goods ( even though
capacity is high ) and people suffer needlessly. Eventually
capacity declines.

> That's not good for the economy. For example, they stop saving.
> And, they won't loan, since they'll get back less.
>

I am not making this up - yeah, they actually will.

>
> -- Cheers, James Arthur
>


--
Les Cargill

[Les Cargill]

flipper wrote:
> On Sat, 5 Jan 2013 20:18:33 -0800 (PST), Bill Bowden

> <bpe...@bowdenshobbycircuits.info> wrote:
<snip>
> Note that, even with the 'gold standard', we still have 'paper money'
> in that the depositor has nothing but a ledger entry saying the bank
> will give him back X dollars (in gold). Back in 'the good old days'
> banks would issue 'bank (promissory) notes', rather than just a ledger
> entry, which were 'redeemable' for the deposit and people could trade
> those as money, as long as they all had 'faith' the bank could
> actually pay off the note. But that's the same as the ledger entry.
>
> The 'difference' seems to be in how new, shall we call it, 'base'
> money gets into the system. By that I mean, take the gold case.
> Someone 'finds' new gold, gets rich, and the gold in circulation (or a
> vault somewhere) is increased because our rich dude spends it. 'Debt'
> is not needed. Fiat money gets 'into the system' by debt.
>

It is possible to have fractional reserve banking and a gold
standard simultaneously. Debt may not be needed but it certainly
exists - there is no other way to boot up productive enterprise.

The gold standard doesn't work because countries can hold more gold
than they issue paper, resulting in a deflation elsewhere. This is in
fact what happened during the Depression ( and may well have been the
actual cause of it ).

What the meaning of gold vs. paper is varies with time.

<snip>

>
> The other 'advantage', done in Simon Legree style, was that debtors
> (farmers) would get the joy of SCREWING the evil lenders since they'd
> be paying back with CHEAP dollars, yeah baby! But it neglected to
> mention you'd either never get another loan, especially if you
> bankrupted the lender, or REALLY pay through the nose next time.
>

This is always a dynamic political tension between creditors and
debtors. The book "Nation of Deadbeats" takes an interesting
slant on it. Generally, there's a political crisis following
a panic, but panics are often caused by politics.

<snip>

>
> Btw, another argument is that the Fed royally screwed up in
> contracting the money supply to 'fight inflation' that wasn't
> happening, driving the economy, which had recovered 90% of the crash,
> into the ditch.
>

It's also thought that the Fed tightened causing the crash to begin
with. The crash was really caused by Bear Stearns not being able to get
overnight repo financing. That should have caused a short sharp
recession, but it hasn't and the present "control the money supply by
measuring inflation" mechanism is under severe scrutiny.

>> -Bill

--
Les Cargill

[Les Cargill]

dagmarg...@yahoo.com wrote:
> On Jan 12, 6:01 am, flipper <flip...@fish.net> wrote:

<snip>

>> Btw, another argument is that the Fed royally screwed up in
>> contracting the money supply to 'fight inflation' that wasn't
>> happening, driving the economy, which had recovered 90% of the crash,
>> into the ditch.
>
> The principal advantage of the gold standard is that it keeps the egg-
> headed gods at the fed from twiddling all the knobs and wrecking the
> predictability of value (for the common good, of course).
>

That's the theory, but in practice, it's just as flawed as fiat
money.

> Those knobs have nothing to do with it. It's Obama. It's the
> spending.

It's not *just* Obama; this has been going on since the 1980s.
Just saying - had Romney been elected, we'd be in the same boat.
Ditto McCain.

Bush43 got sold to; so did Reagan. Choice of POTUS is pretty
insignificant.

Trying to say election results can fix this is silly.

> The fed's enabling it--financing the unfinanceable,
> covering Obama's tail with trickery--not fixing it. I overhead some
> people talking at the gas station yesterday for crying out loud--
> they're scared stiff.
>

The fear comes first, then it attaches to Something. I don't
know exactly where the fear comes from - probably just
the general entertainment climate, fatigue from willingly
suspending disbelief.

> Lots of O-voters are stunned and surprised their checks have gone down
> over the reinstatement of their Social Security tax rate. They're
> going ape over that measly 2% increase. They simply have /no/ idea
> what's ahead.
>

Clueless louts are nothing new.

> But hey, let's raise the debt ceiling while we take away everyone's
> right to self-defense, shall we? That'll distract 'em. Wheeeee!
>

The Dem party knows you know this. Outside of a few Congrefs perthons,
the rank and file will pull back on the gun front - guaranteed.