News Stories

[Ithekro]

Sounds like a business "loss" were they didn't make as much profit as they projected to make, yet made more money than the previous year. Similar style wording...different word and context. ("We had a loss of $1.5 million dollars this year"....made $18.5 million dollars in profit...expected to make $20 million in profit...up from the previous year were they made $17 million dollars in profit and expected $16.5 million...which was considered "record profits")

[Bri]

Originally Posted by GDB

Maybe there's a fault in this that I'm not seeing, but it looks relatively sound to me. At least, much more sound than anything else we've been hearing from Washington lately.

He is not counting inflation for one thing. On average nominal prices have increased with over 20% since 2004. (inflation is compounded)

Later on in the article he states the government is spending 35% more then 10 years ago in dollars. (not real value)

Inflation over ten years is has increased prices by almost 30%. So stating that current military capabilities, which apparently are simililar to those of 10 years ago, cost 35% more is quite factual if he adds that it's about nominal costs. However suggesting that there has been a massive increase in government size is based on those figures is very misleading.

Dammit Ron, you're a doctor, not an economist.

[Jinto]

Originally Posted by GDB

This seems pretty sensible to me.

http://thehill.com/blogs/congress-bl...t-is-not-a-cut

Maybe there's a fault in this that I'm not seeing, but it looks relatively sound to me. At least, much more sound than anything else we've been hearing from Washington lately.

There is the fault of assuming that the budget of 2004 has the same value in 2015. The problem is, that this article completely disregards the current economic situation by assuming 2004 == now, and also underestimates the inflation of the money (the official inflation rate is typically sugarcoated using some statistical tricks).
If you have less jobless people, you can easily safe some money. If you keep your military at home you can easily safe a lot more money. If you do not have to bail out banks you can safe a lot of money.
So what are you going to do?
Hey soldiers in Afgahnistan and Iraq.. sorry, but we cannot pay you extra for the extra risk. We also have to save on your equipement.
Hey jobless people who paid into the system for years. Bad luck for you, you've just chosen the wrong time to become jobless. We cannot afford to pay your social security until you can effort it to support yourself again, but you could try to sell everything you have. Oh sorry again real estate prices are at a record low, so you might not live "comfortably" for very long from the money you can get for selling your home.
Hey banks, we are sorry but you have to consolidate with your customers... ah customers... sorry people of the USA who have money in the bank accounts, this is all lost, we are really sorry.

I don't know, but there realy might be a flaw in this.

[GDB]

Yes, I suppose those would constitute flaws.

It's still more sensible than anything coming out of Washington lately, though!

[synaesthetic]

I'm just hoping that they leave the less-than-1% of the discretionary spending that pays my financial aid. If they fan leave that tiny bit alone, I won't have to go on a homicidal rampage.

If it gets cut though, or the default actually happens... and we don't get it, many students will be forced to drop out of college. I'm already twenty-seven years old. I can't really delay college any more, or I'll be too old to find a job when I graduate.

Hopefully they focus on the big money. Yeah, that's wishful thinking all right...

[Ithekro]

Of course that brings up a different question...why inflation at all?

[Bri]

The simple version: The economy needs a bit of inflation to guarantee investments and savings. The central bank uses interest rates and other instruments to gruadually expand the money supply over time to make sure inflation stays around 2% annually.

[DonQuigleone]

Originally Posted by Ithekro

Of course that brings up a different question...why inflation at all?

Well, a small steady amount of inflation has positive effects, like discouraging stockpiling of money to no use (IE encouraging investment) and other myriad things. In itself small inflation causes no problems.

As I see it Ron Paul has it the wrong way around, The economy has grown over the last 10 years (and inflation has taken place) but the US government is collecting the same amounts in tax. So logically taxes that were getting collected 10 years ago are not now. The tax situation 10 years ago was fine, so we should raise up taxes to those levels...

[RandySyler]

Originally Posted by DonQuigleone

As I see it Ron Paul has it the wrong way around, The economy has grown over the last 10 years (and inflation has taken place) but the US government is collecting the same amounts in tax. So logically taxes that were getting collected 10 years ago are not now. The tax situation 10 years ago was fine, so we should raise up taxes to those levels...

Well, when was the last time that Ron Paul have something the right way around?

[synaesthetic]

Originally Posted by DonQuigleone

As I see it Ron Paul has it the wrong way around, The economy has grown over the last 10 years (and inflation has taken place) but the US government is collecting the same amounts in tax. So logically taxes that were getting collected 10 years ago are not now. The tax situation 10 years ago was fine, so we should raise up taxes to those levels...

If we had done this, we wouldn't be in the hole we're in now. Thanks Republicans!

[SaintessHeart]

Originally Posted by GDB

This seems pretty sensible to me.

http://thehill.com/blogs/congress-bl...t-is-not-a-cut

Maybe there's a fault in this that I'm not seeing, but it looks relatively sound to me. At least, much more sound than anything else we've been hearing from Washington lately.

Utter rubbish. What about inflation? At 3.6%, freezing the budget would mean a bill payment shortfall in the future!

This isn't a "corporate sense" where spending cuts and budget reduction, combined with increased turnover (read : sacking staff) will stabilise the financials of the company. There are stuff that needs to be spent on, like military and social infrastructure, but the components and materials don't get cheaper everyday; they are running A STATE, not A BUSINESS.

And you can't sack your citizens and revoke their citizenship like the way you fire workers. Solely spending cuts won't work because it will not only reduce government jobs available and increase unemployment, but also thanks to the goddamn Keynesian economics ingrained around the world, the perceived lack of potential growth will drive investors away.

[Ithekro]

Potential growth only happens:
When something is stable
When one is skilled
Or when one lives in the early version of "Railroad Tychoon" (when you hit negataive $32 million or so the negative turned into a positive for no reason, then your stocks split two for one two years in a row because you just made $64 million in quarter)

[SaintessHeart]

Originally Posted by Ithekro

Potential growth only happens:
When something is stable
When one is skilled
Or when one lives in the early version of "Railroad Tychoon" (when you hit negataive $32 million or so the negative turned into a positive for no reason, then your stocks split two for one two years in a row because you just made $64 million in quarter)

Exactly. When the government reduces spending, people will think that "oh, their reserves are running low". Even businessmen will think twice about the reduced cost of setting up businesses there because the government just might hike corporate tax to fill their coffers again, since their citizens are out of work and can't pay tax.

[ganbaru]

China's shortcut to Wall Street
http://www.reuters.com/article/2011/...7702S520110801

[GundamFan0083]

Originally Posted by DonQuigleone

As I see it Ron Paul has it the wrong way around, The economy has grown over the last 10 years (and inflation has taken place) but the US government is collecting the same amounts in tax. So logically taxes that were getting collected 10 years ago are not now. The tax situation 10 years ago was fine, so we should raise up taxes to those levels...

I disagree.
I think he makes sense:

[flying ^]

Originally Posted by synaesthetic

I'm just hoping that they leave the less-than-1% of the discretionary spending that pays my financial aid. If they fan leave that tiny bit alone, I won't have to go on a homicidal rampage.

If it gets cut though, or the default actually happens... and we don't get it, many students will be forced to drop out of college. I'm already twenty-seven years old. I can't really delay college any more, or I'll be too old to find a job when I graduate.

Hopefully they focus on the big money. Yeah, that's wishful thinking all right...

have u considered this instead of going homicidal?

http://www.huffingtonpost.com/2011/0...73.html?page=1

[synaesthetic]

I'd rather grind glass shards covered in mercuric oxide into my eyes.

[Jinto]

Originally Posted by flying ^

have u considered this instead of going homicidal?

http://www.huffingtonpost.com/2011/0...73.html?page=1

Not exactly a role model of a "service" oriented economy. But it shows nicely the hypocricy that is going on in certain parts of society - on one side there is a fuss over an uncensored nipple on TV, and at the same time a considerable number of college students is basically forced into prostitution and nobody really cares.

Originally Posted by GundamFan0083

I disagree.
I think he makes sense:

Well it makes sense, when you disregard the taxation principles of the republicans. The problem is home grown with ever declining taxes, you'ld technically had to decrease state funded services. However, that did not happen at the same speed as taxes were cut.
With the dollar as a lead currency you actually can do this for a long period of time without consequences. Technically the USA would have to be downgraded to AA several years ago, but having a lead currency gives you a certain advantage - your bonds are equal to the prefered currency in the world (hence investors think you cannot do much wrong by investing in it).
There is however a limit in this scheme. And reaching this limit was at large parts a result of the actions that were taken by the government under GWB (though I don't want to blame a specific party here...).
In Keynesian economics, it is actually good to have a certain amount of national debt. Because that way you can stay competitive with countries who have a higher inflation (which translates into more dynamic and flexible salaries in the work force... your economy goes sour => inflation => wages stay down => net value of wage goes down => your exported goods become cheaper in less inflating countries => export goes up => economy rebounds => wages rise....)
However, in Keynesian economics this model demands that a currency can devalue effectively. In the case of for example Greece it cannot effectively devalue in the same rate as the debt piles up, because it is shared with stronger nations that strengthen it.
The same applies somewhat for the dollar. Whats a blessing when you have moderate debt - less effective inflation, becomes a nightmare when you have lots of debt... since the dollar (and american bonds) are then massively held in foreign countries, the dollar projects some of its strength (or rather weakness) to these foreign currencies. Because of the massive exposure of the dollar (that comes with a higher debt aka handing out ever more bonds), it can inflate whatever it wants, the other currencies will inflate with it. This is not the beneficial inflation that gives you an advantage over other countries' economies. It just makes the situation at home worse.
The real problem is, that the USA spends a lot of money on things that it actually cannot effort... (no country in the world can effort a military apperatus like the USA, unsurprisingly the USA can't either, but thats just an example). Instead of spending in a better education and infrastructure (things that actually make your economy benefit), money is wasted with things like tax cuts. These tax cuts, cause more and more of the money to be parked in a system that generates no real economic value. Its just about money (value) bubbles that simply shift money from one side to another, often actually hurting the real economy in the process.

However, the process is kinda interesting though, because for example China is becoming more like the USA while at the same time the USA is becoming more like China. And if things remain this way, then Europe will follow this trend. This equalizes living conditions around the world like it was never seen before.

[SaintessHeart]

Special Report: China's shortcut to Wall Street

After reading the article, I wonder if the annual reports of many Chinese companies are actually filled with black ink that is used to replace red.

If so, we are f***ed.

[DonQuigleone]

Originally Posted by GundamFan0083

I disagree.
I think he makes sense:

I give Ron Paul credit for consistency, and always holding to his principles. But I think his principles are a bit incorrect. I think his aversion to raising taxes (and his overall ideas for taxation) are wrong. Taxation is a tool to be used by the state, and it shouldn't be something anyone should rule out on principle. There are other anti-tax right wing parties around the world, but I don't know a single one that completely bars the possibility of raising taxes. Look at the conservative party in the UK, they've been hiking taxes since they came into office, and they were correct to do so (though some might argue with the timing).

Government should in a sense be run like a business. A business is always looking at it's profit margin, and a business knows there's 2 ways to increase that margin: cut expenditure, or raise revenue. Most businesses are loath to cut expenditure, so they always try and raise their revenue. Likewise the government is loath to cut it's own expenditures. So like a good business, they should try and make their operation more efficient (cut wasteful spending), and should also seek new ways to raise more revenue. In the case of the US government, that can only mean raising taxes, in one way or another.

The US won't be able to get itself out of this mess without raising taxes, anyone who thinks so is living in cloudcuckooland. The US can't cut enough spending without ravaging it's already weak welfare programs that many are dependent on, and who would need to resort to crime otherwise.