1 Where to go in a recession, other then ammo? Cheap land, etc.

2 Ace should think about formating his site's own library archive to facilitate retrieval of deemed significant topical posts, Monty.

Meanwhile, a weekend of suggestions for new headlines along DOOM...

3 A high-speed train departs Chicago, traveling at 42 mph and heading for DC at 7:30 CDT. At that same moment, the August unemployment report is released in DC.
Q: will the train's Snack Car be offering freshly-popped popcorn for sale?

4 I would like to know why my feet smell funny and taste like glue.

5 1) What is your Name?

2) What is your Quest?

3) What is the airspeed velocity of an unladen Sparrow?

6 A quick review of Reinhart and Rogoff's "this time is different" and Bernholtz's "monetary regimes and inflation" to allow people to put themselves in historical context.

7 I would like to know how to start a blog. One of the cool ones.

8 Based on record, not current hype, how does Perry stack up in Keynesian American economics to date, Monty?

9 Do I ned to know fhit about, like, computers or do I just wing it? I think I will wing it.

10 Hi Monty, Let's use the DJIA as an example. Just with hillbilly common sense, I theorize that the value is way lower than what we see on the ticker. First do you agree or disagree. and if you agree how much actual value to you think it has. Second, which props the market up more? Automatic payroll deductions from 401k's, or infusions of cash from the Government.

11 Jean,

I don't really give out investment advice. First, I'm not really competent to do it; and second, I don't have a fiduciary duty to you in the way that a financial adviser would. You'd do best to find a good local banker or financial adviser to give you some pointers on where to invest.

Where and how you invest depends heavily on many factors: where you live, how much money you have saved, your life situation, your age, your life-goals, your tolerance for risk, and so on. It's important to find someone you trust and make a plan. And it's never too late or too early to start planning.

12 I would like to know how to start a blog. One of the cool ones.

Get to know a few hot eastern European figure models, buy a camera and post the pics.  You'll get plenty of hits from the Moron Nation.

13

"Don't ask me, I don't know how the economy works."   -Homer Jay Simpson

14 Three questions Monty: 1) Do you think QE 3 is coming and if so how does the Dow/ Gold /Valu-Rite etc. react? 2) Do you think 401k's are safe? (see: Argentina) 3) Can I get a puppy? And thank u for the free Doom. I actually look forward to your cogent analysis everyday.

15 Yeah Monty. How come they don't jus make more moneys and give it to peoples that don't got moneys? Then errrbody wouldn't have to eworry bout puttin gas in they car or payin they mortgage.

16 What is a write off?

17 You know, people say money doesn't grow on trees.  But WHAT IF WE USED LEAVES FOR MONEY???

18 African or European Swallow?

19 I'm just a random Internet Person with a little knowledge about basic principles of economics. In most ways that count, I'm no smarter than any of you guys (in fact, probably much less so). We morons call that one Muad'Dib!

20 If I put a dead bird in the mailbox, will it go to heaven?

21 You know, people say money doesn't grow on trees. But WHAT IF WE USED LEAVES FOR MONEY??? That's what the Goldfrinchians did.. Then burned up all the other trees to make them richer..

22 Economics, like the law profession is made purposefully obtuse and veiled so you have to seek out so-called experts for advice.

Here is all you need to know about economics.

Don't spend more than you have.
Save as much money as possible.
Live within your means.

That is all.

23 Why do people think that economists know anything? Since the market is far too complicated and unpredictable, why would anyone esp the govt think they can manipulate it?

24 What do you think about staging a massive alien attack to stimulate the economy, Monty?

25 What, exactly is 'Fiat' money? Other than paper that has value because the government says it does?

26 If I had a hammer?

27

3) What is the airspeed velocity of an unladen Sparrow?

African?  Or European?

28 Since the market is far too complicated and unpredictable, why would anyone esp the govt think they can manipulate it? Posted by: dagny Hence the appeal for a strong, centralized, totalitarian government by the likes of Paul Krugman..

29 9 iron or pitching wedge?

30 You know, people say money doesn't grow on trees.  But WHAT IF WE USED LEAVES FOR MONEY??? Posted by: Truman North, TPT

An ancient empire used tree bark to print "money" for exchange based on gold in reserve.

Which empire? 

31 Rick Santelli is working up to another good rant right now on CNBC.

32 Is this the most corrupt government ever or only in the top ten?

33 Why do you never link me? is is because of this slut, Ann Outhouse?

34 the tree empire?

35 Monty, why does Mommy hit Daddy?  And what does a "stuttering clusterfuck of a miserable failure" mean?

36 What did you bastards do with my strawberries?

37

14 Can I get a puppy?

Do not get a puppy if you're also involved in cock-fighting - because then I will be forced to come by in my tank and kill the puppy and roosters.

 

38 If I put a dead bird in the mailbox, will it go to heaven?

For shame, delivering it to USPS hell.

39

zero jobs added in August.

 

Zero

40 25 What, exactly is 'Fiat' money? I can answer that one: When y ou do something "by fiat," you do it "at your will." In other words, to create money "by fiat" is to simply print more money if the cash drawer is full. Of course, the exact way the US Treasury introduces this money into the economy is a bit more complicated. Usually, they buy up existing issued US Treasuries with the new cash. And in the age of electronic transactions, that need not involve an actual printing press.

41 What are the chances we even make it to November 2012

42 do you really have a letter from robert e lee or was that really just an example?

43 No moron Dune fans, huh?

44 WTF, Monty? I mean.... just.... wow.... WTF??!!

45 One of the best sources to understand the economic effects of trade imbalances, deficits, mal-investment (all of which are crucial to our current--crappy--economic environment is here:

http://mpettis.com/

This blog is "China Financial Markets" but covers much, much more than just China.  The most recent post of predictions covers much of the world economy.  Read all his posts old and new if you want to understand what may happen, and why.

46 Zero. Zero jobs added. Wait till that gets revised down

47 did you know you can mail a banana? and a coconut?

48 Zero jobs added?  Is that even fucking possible?  Nobody in the whole goddamned country had a help wanted sign out the whole month?

49 41 What are the chances we even make it to November 2012 Posted by: MarkC at September 02, 2011 08:45 AM (yPPVC) Let's the odds are higher that by a staggering coincidence, a giant white whale falls through a wormhole in the space-time continuum right above your house and crashes through your ceiling, landing atop you just as you are about to finish singing the highlight of Nessum Dorma in nothing but a pair of Fruit of the Looms and Tom Cruise glasses.

50

Let's hear the MFM tell us again about this wonderful recovery that we're in

51 Hey, Monty, I have about 2$ to invest on the th at Pimlico this afternoon.  Who should I put it on?

52 In other words, to create money "by fiat" is to simply print more money if the cash drawer is full. Of course, the exact way the US Treasury introduces this money into the economy is a bit more complicated. Usually, they buy up existing issued US Treasuries with the new cash. And in the age of electronic transactions, that need not involve an actual printing press. That's what I thought.. Thanks.. This goes back to what I asked long ago.. Wouldn't of been cheaper-- instead of the Porkulus or Spendulus-- to have given every American a million bucks? Sure inflation would have hit the roof sooner than later but if spending money was the key, why not that?

53 46 Zero. Zero jobs added. Wait till that gets revised down Posted by: TheQuietMan at September 02, 2011 08:46 AM (1Jaio) Unexpectedly. Of course.

54 @53: Youre welcome; however, I meant to say, "if the cash drawer is EMPTY."

55 What, exactly is 'Fiat' money?

In a commodity-money based regime (like a gold or silver standard), paper currency is actually a certificate redeemable for an amount of gold or silver equal to the face denomination of the bill. So you can (in theory) never have more currency in circulation than you have commodity money in reserve somewhere (like Fort Knox).

However, "fiat" money isn't backed by anything other than the say-so of the sovereign. It is much more like a very short-term zero-coupon bearer-bond (a debt instrument).

56

At this house I'm sitting for, there is a container on the kitchen counter labelled "Human Cookies". 

 

Dare I...?

57 Where is the best place to win "the lotto"?

58 why would anyone esp the govt think they can manipulate it? Because you can. That's what the technical traders do, and it's why I hate them. Candlestick charting analysis is some real chicken-entrails shit. And it's self-reinforcing when you have hundreds of thousands of traders all taking profits or making entries based on the same signals. That's why you see the market trending sideways. It goes up fifty, in goes down fifty. Over and over. The underlying values of the equities being traded hasn't changed, but enough players agreeing to abide by the same fantasies can move the market up or down enough to keep you making money constantly. When you have huge fundamental shifts: systemic bank failures, the Japanese earthquake, public admissions by Obama that we're going to keep spending more than we earn, etc. That's when you see 1,000 point slides.

59 Hey, Monty, I have about 2$ to invest on the th at Pimlico this afternoon.  Who should I put it on?

Nobody, they're racing at Timonium today.

60 Will my NFL picks be a complete failure?

61

simplification of the tax code that Democrats would be OK with:

1. Take a postcard and write down how much money you make.

2. Send it in.

62 My Uncle Vito died of Timonium.

63 Back in the old country. Very sad.

64 Moron Nation would like to know about economics terms or concepts.


Yes, is the economic iconography fuck-fucked synonymous with the plebeian argot doom?

65 Should I fake my orgasms? Even when I'm alone?

66 48 Zero jobs added?  Is that even fucking possible?  Nobody in the whole goddamned country had a help wanted sign out the whole month?Posted by: Truman North, TPT at September 02, 2011 08:47 AM (+gfwN)

+17K in private sector, -17K in public sector; net: 0

67 My Uncle Vito died of Timonium.

They have a vaccine for it now.

68

It seems like every article I peruse, regarding the current state of the economy have the same words. I would like you define in moron terms the following :

Unexpectedly

Revised downward

top ecomomists polled

cusp of recession.

There is a constant theme ther, I just can't pick up on it.

 

69 62
simplification of the tax code that Democrats would be OK with:
1. Take a postcard and write down how much money you make.
2. Send it in.
Posted by: Truman North, TPT at September 02, 2011 08:52 AM (+gfwN)

No ...
1. Your employer sends your salary / wages to the Feral IRS
2. The Feral IRS decides what you need (a pittance sounds about right) and sends that to you

Earlier this year there was talk of them doing just this very thing in the UK.

70 Good Morning Monty,

I think perhaps it would be interesting to get your opinion on the appearence that Helicopter Ben Bukakke is a one trick pony.....

look forward to it, we should perhaps also teach the Moron nation about "base purchasing power" also known by its alternate title.....

"Why minimum Wage is retarded or Hey brother why is it that 3 bucks in 1966 was worth more than 12 an hour today?"

All the best,
sven

71 1 Jean,

what is your tolerance to cold?

72 well... +17k -27k, that's at least a scoche better.

73 er... I know it was a dead heat.  stupid keyboard.

74 Why in the heck don't the "expert economist" EVER admit their policies might not be working and advise trying the other side's ideas???? I will NEVER understand this thinking.

75 Monty - I don't really give out investment advice. First, I'm not really competent to do it; and second, I don't have a fiduciary duty to you in the way that a financial adviser would. You'd do best to find a good local banker or financial adviser to give you some pointers on where to invest. I've got that, all the conventional stuff covered, I find their advice to be repetitive - index funds, more index funds, maybe an annuity. I ask about IBonds, direct commodity buys small in oil/gas operations, or land - and I get blank stares. They also seem to forget about inflation, its been so low forever - but I'm seeing close to 10% increase in my personal expenses (QB is great for this) despite cutting back all over.

76 71 No Whining,

reminds me of a joke an economics prof at wright State told me when I was a precocious 9 year old prodigy taking up ten minutes of his time.....

"We could do what LBJ and Carter wanted and follow the UK's lead in taxing everyone 105% of their wage and putting everyone not royalty on welfare...why do you think john lennon lives in NYC?"

77 Reading some of the idiotic comments on Yahoo's front page of this story. They usually say, No one could fix all of the mess that Bush created and now the Tea Party is trying to destroy all of the great work that Barry has done. If anyone truly believes that they ought to be in a padded cell unfortunately they are sitting in newsrooms across the country

78 76 NYLynch,

You really want to know?


Ok what made uncle Milty rather exceptional was his integrity in analyzing the failure of the New deal and FDR's actions and recalibrating his philosophy to Hayek style Supply Side Austrian School theory.....

Economics is a science no less prone to religious zeal than Climatology....

if reality doesn't match the models keep throwing shit numbers at the models

79 hey monty.  as regards student loans.  Why do they refuse to give you a payoff price?

As regards credit.  How do you get your credit score up?  One of my friends payed off all her credit cards, faithfully pays her student loans.  cancelled all her cards but two and it's been two months and her credit score hasn't moved.  she was our groups "test case".  the fact that nothing happened makes us all uneasy. oh yeah, she got her credit scores by applying for a credit card and they don't show or say anything bad so this is freaking her and us out.

80 sven - very high, I'll be in Northern Canada again this winter working on some my sensors on the oil works.

81 Two weeks ago, HR hired a woman named "Skeeter." Actual legal name. Today she quit without notice. What a fucking shocker. I have since requested to have shredded all resumés submitted by people named Cooter, Shawty, Scooter, Blinky, Tiny, Tank and Steve.

82 56 Monty,

heh

Fiat money was how the allies in WW1 tried to con the US into arming them for free.....

the UK trying to get off the fiat money crack addiction by getting a discounted rate on resumption of specie backed by the Strong led Fed was one of the triggers of the Great Depression

83 Does the Apocalypse come when debt service exceeds GDP or a lot sooner?

The latter I'd expect but when is the question.

I just read 'After America.' I was a nervous wreck going in (serious anxiety attacks making me wonder if my heart had quit) and didn't feel any better going out. The only respite was that much of it was material that had appeared elsewhere and was already contributing to my condition.

I cannot imagine how this ends without the world sinking into a new dark age or some radical shocks inflicted by someone every bit as insane as the mullahs and willing to sacrifice immense numbers of people to set things to his version of 'right.'

84

Monty,

 

I'm thinking of getting a reverse mortgage so I can invest in time shares. Thoughts?

 

Seriously though, can you explain the bond market?

85 83 Jean,

with your skill set, likely wage, and tolerance I'd look into Calgary or Edmonton....

Canada is very serious about having an energy boom.

Regards,
sven

86 I an seeing such terms as "rentier" and "rent seeking" in my desultory readings but am too lazy to research, just wondering if you can give me the hi-ho..

87 80 Reading some of the idiotic comments on Yahoo's front page of this story. They usually say, No one could fix all of the mess that Bush created and now the Tea Party is trying to destroy all of the great work that Barry has done. If anyone truly believes that they ought to be in a padded cell unfortunately they are sitting in newsrooms across the country
Posted by: TheQuietMan at September 02, 2011 09:04 AM (1Jaio)

Ask the enlightened masses to specify - specify, mind you - what constitutes the "mess that Bush created", but wear your haz-mat suit before posting. After all, there are old troll baiters and there are bold troll baiters, but there are no old, bold troll baiters.

88 87 ben,

not Monty but the bond market is the basis for what % of a national state or local budget is borrowed.....

you voluntarily surrender your purchasing power and draw interest....

when you hear the excuses for why we are gimmicking the prime rate low to "save our payments as a % of national debt" that is what they are discussing....

the downgrade was a risk evaluation and revaluation made by the major banking houses

sven

89 Monty, theoretically, how would a president of a country in the crapper get elected for a second term when everyone is starting to catch on that I, I mean he, is incompetent? Your pal, Barry

90 90 No Whining,

also be certain to ask why 5.1 UE3 was "the worst economy since the great depression!" five years ago but 9.2% and climbing is "awesome work by team bambi"....

their heads'll explode and you'll be calling yahoo out

91 84 Posted by: Empire of Jeff at September 02, 2011 09:07 AM (0yt4x)

Reminds me of an episode in Deadliest Catch where Cap'n Keith of the Wizard was going through resumes in order to hire a new deck hand. He had a good laugh when one applicant's references were his bail bondsman and his parole officer ... and then he tossed the application in the trash.

92 it's been two months and her credit score hasn't moved

Two months is way too short to see much improvement. You may see some improvement year-over-year, but it takes a long time to repair bad credit. You have to show a long-term pattern of good credit behavior -- and the worse your credit is, the longer that process takes.

93 86

The economy will stagflate at about 46-54% service load....get much past 85% and it is over....

that is the bench for the third world....

with our entitlement bomb I am thinking our top is gonna be 62% and you'll have marches on Washington demanding the feds give up some of the 60% of arable land in the US they 'own'....

assholes

94 Monty, Should we, in actual practice, "Always Bet on Black?"

95 95 monty,

you have any hard numbers on how different the cheat sheet got after the credit calculation reset last year?

I've been out of the loop?

96 Obama is a stuttering clusterf*ck of a miserable failure.

97 Monty, how do automobile dealerships and other retail firms make money by loaning you money at 0% interest in order to make a purchase?

98 Posted by: at September 02, 2011 09:06 AM (k1rwm)

Weren't you asked to fuck off, troll?

99 Here's my question on economics?How much economic damage has Obama,the stuttering clusterfuck of a miserable failure done to our economy?

100 "Free Trade" and "Global Economy"...

I understand the basics of free markets, I think.

But we (the USA) seem to be the only ones practicing free trade.. and I'll bet even we protect some goods.

So questions:

1. Why do conservatives have such a violent knee-jerk reaction to protectionism?  Especially in light of the fact that none of our trading partners truly practice free trade and allow our goods into their market unfettered by tariffs or restrictions?

2.  Would some protectionism be all that bad?  And, what would be the effects?

101 Where's the beef??

102 Monty, how do automobile dealerships and other retail firms make money by loaning you money at 0% interest in order to make a purchase?

Because the principal amount is still greater than their cost. They can buy (say) a couch at wholesale for $250, sell it to you at zero percent interest for $400, and still make a nice profit on the deal even if payments are spread out over a year. (The retailer actually doesn't get the interest payments on the loan anyway; the bank that issued the credit-line does.)

103 sven, I'm doing work up there already -- I'm looking to talk about where to park money, if not invest it, in a recession/depression. Traditionally, you go gold - but gold has got up and went. Cheap real estate might work, getting the location right is a lot of work. I've got the retirement basics covered, already decided the kids are on their own for college, and have a bunch of stock options/warrents in things I know alot about. I really don't trust the stock market at all - I'm basically out except for stuff that pays dividends, I thought bonds were "safe" - now I'm afraid they could be worthless - I'm a small sailor looking for a harbor in a storm.

104 102 Steevy,

immeasurable damage....

the US ceded its industrial leadership in the easy industries long ago but the world viewed us as the most stable large low risk stable volume dump inthe western world....

when barack sues Deutschbank for Fannie andFreddie he'll do about 25 years of damage to our reputation as a safe bet for hedge managers worldwide.....

tell the mules Keep the fuc*ing change fella

105 Weren't you asked to fuck off, troll?

Posted by: Waterhouse at September 02, 2011 09:16 AM (OK/vv)

I like how, in keeping with the spirit of the thread, you posted it in the form of a question.  Well done.

106 106 jean,
in my non-professional opinion your instincts are good my ONLY fear on gold is I can see the Kenyan king trying to out FDR FDR and make gold illegal again and pay pennies for hijacking your hedge....

You want a damn near bullet proof cash dump that wwill gain you better than US bbank interest look into investing in the Bank of canada as an "investor class" permanent resident applicant and dump the minimum for "head of the line" status....it fluctuates between 75,000 and 210,000

then buy land that has great access to underground wells drawn from rivers....

fracking takes a lot of water...

my grandpa made money on uranium in BC basck in the day

107

What else would you like to know?

I've got an artesian well on my property, and the water pressure is lousy-- any suggestions?

108 103 Chi-Town Jerry,

Protectionism is a mutual suicide pact....

it is the political class playing games with proper valuation of wage level for a task and price level for a good....

the market will ALWAYS find the balance.....

think of it as a subsidy for stupid slothful inefficiency....

also we can't just whistle up 40 years of lost manufacturing ability overnight

109 Monty, how do automobile dealerships and other retail firms make money by loaning you money at 0% interest in order to make a purchase?

This raises another issue: when you buy stuff with a "store" credit card, the store itself is not loaning you money. A bank is behind the scenes and actually provides the loan -- the store just acts as a conduit. It's not like a layaway plan.

Store cards are also horrible, as a rule, because they can legally charge up to 21% annual interest (or the maximum the state will allow). Those "zero percent" deals often contain a codicil that if you miss even one payment, the interest shoots right up to the maximum.

Car dealers are a bit different in that many of them have their own financing arms (or used to, before the crash). GM had GMAC, Chrysler had Chrysler Financial, etc. Nowadays some car dealerships have deals with third-party banks, though, so this is somewhat less common than it used to be.

110 110 GoY,

pay the nearest university geology department to give you a hard report on volume down there.....then invest in capitalizing a solar powered high pressure pump for burst use.....

and thank the heavens you already have your water

111 sven - all our partners practice it, though.. so the playing field is not even.

112 Monty, how do automobile dealerships and other retail firms make money by loaning you money at 0% interest in order to make a purchase? Stores like Best Buy and Sears offer the no interest for 12/18 months a lot in the hopes that you don't pay off the balance in the allotted time.. In that case, many of them will hit you with a high interest rate retro actively..

113 114 Chi-Town Jerry,

yes it is....

look you have to decide whether the short term satisfaction of a trade war outstrips the immediate benefit of an efficiency check on your national economy.....

the problem with free trade not working here is you have the NLRB, EPA, and OSHA conspiring to make the price of doing business here ungodly for foreign investors to ponder....

the world loves American workers....

study what Fwance expect in holiday time and bennies and get back to me....

Barry and the neo-Luddites and Tree Priests are the ones fucking us not the Chinese or Koreans

114 115 dave C,

usually 2-5% over a platinum card to start and the fine print sometimes has it over the entire amount of the loan not the balance....fuck the big box shops

115 112 Monty,

Usually HSBC...and they have all the ethics of Captain BEdward teach and all the charm of Jabba the hutt

116 Hmmm...anyone know where I can find good quality butt welded pipe fittings?

117 sven - make gold illegal I don't any gld stock only bullion (coins). I used to buy one Krugerrand or maple leaf a month in the 90's; sold some - getting an itchy finger on the rest. Been considering something like that "investor" class account in Singapore vs Canada; the entry barrier is lower in Singapore. I'd bury a coffee can in the back yard, but I see inflation as inevitable.

118 Q: why aren't the architects of the subprime disaster in jail, along with all of those who shorted stocks on these failed finacial instruments? This is more of a national security than economic question. Cheers

119 110 - penstock?

120 I guess no one here subscribes to Elliot Wave theory.  Markets are NOT influenced by external forces but by social mood. Right now the mood is turning negative from a very high level. Look for deflation.

121 122 sven - make gold illegal I don't any gld stock only bullion (coins). I used to buy one Krugerrand or maple leaf a month in the 90's; sold some - getting an itchy finger on the rest. Been considering something like that "investor" class account in Singapore vs Canada; the entry barrier is lower in Singapore. I'd bury a coffee can in the back yard, but I see inflation as inevitable.

Gold is a hedge, I'd hold on to it unless you need the cash.

122 122 jean,

not talking down to you....study the term "de-kulakization"....Barry made his political theory forming bones around a guy who jerks off to the notion of murdering 25 million capitalists...

that's a fact not a slur....

Bullion is awesome so long as it is enough to carry and no more...I'd view it as an inflation safe refugee rainy day fund....

I have a Friend who goes by the handle "culican mexico" who is an "investor class" in thailand, singapore, and egypt....

of the three I'd go sinngapore...but I'd still look hard at canada....that is where most of the right thinking people will flee if this place gets bad enough and Canada will *boom*

123 Monty,

I do appreciate your posts, and your patience. Here's my question:

If you could recommend one book on economics for an intelligent, inquisitive young person, what would it be?

Thanks much!

124 Along the lines of 123, why hasn't the IRS gone after the taxes associated with all of the CDS if the titles weren't clear. They were essentially tax shelters, and the robo-signing scandal should have blown the roof off of them.

125 126 TRD,

I'd hold on to it unless you absolutely need the purchasing power to make a life altering manuever right now....

it'll take three quarters or so strong growth before it starts megashedding and has hedgers looking to make a real investment....don't fear the top of the peak or desire the bottom of the valley so perfectly you panic....

profit is profit

126 IÂ’m certainly willing to do so, but RandyÂ’s request got me wondering what else the Moron Nation would like to know about economics terms or concepts. IÂ’m not the greatest expert in the world on this stuff, but given that Teh Krugman has a Nobel Prize in Economics and heÂ’s a complete dunderhead, I feel confident that I can answer some of the questions you might haveÂ…and in a AoS Moron-friendly way.

Heh.

I still remember militating to have that "Monty" chap who explained CDS's in terms of guitars and mandolines become a cob-logger when I wuz a reg'lar Pay-Pal donor.

Back in the day...

Before all of the DOOM.

As it turns out, the Pay Pal link still works.

Jest sayin'....

(But if Ace won't even bother  to set up 
a fucking Amazon link I'm gonna start to get PO'ed)

127 125 TRD,

ordinarily I'd agree but the downgrade and printing press economics makes me think that the inflation we are already feeling in survival items is coming for real

128 123 Stevo,

it is also a matter of fact that they are or own the politicians the nation rewwarded back in '08....

the electorate makes their choice and pays the price always

129 Ask me questions about economics, and I will try to answer themÂ….

Fucking economics, how do they work?

130 Monty, with home values generally in the crapper for several years running, challenging the valuation for local and school taxes' purpose on one's dwelling would seem to be in order. Apart from the usual, "oh, horrors, what would that do to the children!" rejoinders from the MBM and public school sycophants, why haven't homeowners been beating down their local tax assessment offices demanding a downward adjustment that reflects market reality?

131 I have a Friend who goes by the handle "culican mexico" who is an "investor class" in thailand, singapore, and egypt.... in Egypt, I've spent enough time there to not even want to leave footprints. I've have enough kids that they can be like a mule train for bullion.

132 why haven't homeowners been beating down their local tax assessment offices demanding a downward adjustment that reflects market reality My mortgage firm got upset when I did it, eff'em. I think I will pass out the paperwork on how to do it at the first PTO meeting for my kids Catholic school.

133 I think a quick synopsis of how the banking system works would be valuable. Something of a summary of Rothbard's "Mystery of Banking," perhaps. People fairly well assume that TARP and the bailouts were bad, but don't fully understand just how egregious it really was because they don't understand the banking system itself, and how much money the people at the top of the pyramid really made off of TARP.

134

why haven't homeowners been beating down their local tax assessment offices demanding a downward adjustment that reflects market reality?

They have been.

There's been plenty of tax reassessments, wherever such a thing is possible, bet your ass.

However, they don't have much leverage.

Your houses are assessed by the village or county that collects your taxes. You can't really 'beat them down', what you can do is ask them to consider taking less.

Ultimately if you want to live where you live, you have to pay them what they want, or else move.

Or else stop paying and watch them sieze your house and auction it off for backtaxes.

135 If you track you finances in something like QBooks, run a report by expense class/month for recurring stuff like fuel, insurance, and groceries to see your personal inflation rate over a year - then compare to the CPI

136 138 paul, Tarp prevented the mrket from teaching the kamkkaze banker class the right leson

137 If you could recommend one book on economics for an intelligent, inquisitive young person, what would it be?

That's an easy one: Economics in One Lesson by Henry Hazlitt. The best introductory econ text ever written, in my opinion. A short, easy read.

138 Something of a summary of Rothbard's "Mystery of Banking," perhaps.

That's actually my own go-to text on banking, but it does (inevitably) tend towards the Austrian view of what banking should be, rather than what banking really is in the real world.

Economists of the Austrian school are not terribly fond of fractional-reserve banking, but it needs to be explained in a neutral way rather than presented as an absolute evil -- it's a fact of life, after all, and however much I dislike the practice, it isn't going away any time soon.

139 TARP was a bait and switch fraud.
Look at it this way:
We were told that TARP (Troubled Asset Relief Plan) HAD to pass or there was no way to get all the bad debt (much of it non-performing CMO's of bundled sub-prime mortgages thru Fannie & Freddie) out of the banking system where the losses risked erasing the capital bases of the banks and shutting them down.
We were sold a story that in a RTC-style fashion, the Treasury & Fed would work to "buy" the bad paper from the banks, then re-sell it at losses to willing buyers.
Again, they sold it as the RTC model from the 1980's S&L crisis.
Instead, once the got the $700B, they realized that they could exert much more control over the banking industry by INVESTING DIRECTLY INTO THE BANKS THEMSELVES WITH SPECIALLY CREATED PFD STOCKS.
They forced even the healthy banks to let the government invest. Wells Fargo tried to pass on the whole deal and were told they have no choice.
This 'investment' then allowed Treasury political appointees to "regulate" the banks in ways they never had before (wage and bonus controls, hiring quotas, etc.)
BUT, what about the bad paper that was still eroding the banks capital bases?
That's where QE1 & QE2 came in!!!
The Fed's Balance sheet in 2008 was about $800B, today it approaches $3T!!
Why?
Because the Fed allows the banks to present bonds as collateral for short terms cash loans from the Fed. Historically, the Fed only accepted US Treasury Bills & Bonds as collateral.
NOW, the Fed accepts virtually any paper, including all those worthless CMO's, and lend the banks cash, that the banks then turn around and give back to the Fed in the form of Excess Reserves, on which the Fed pays them .25 bps of interest.
So, all the 'bad paper', is now on the Fed's balance sheet, and how they eventually sell that off is the $3T question.
Lastly, the worst part about this is that IF TARP had been done RTC-style, there would have been transparency about prices paid and who the end buyers were.
The Fed has no such transparency requirements.

That's why TARP was a giant fraud that never even tried to do what we were told it would do.

FWIW   
 
 

140

Monte,

I fully expect that, whenever we finally start seeing real job growth, we'll move almost instantly into a extended period of hyperinflation.  Do you expect the same, and if so what actions could even be taken at this late stage to manage it?

141

"Should we, in actual practice, "Always Bet on Black?""

Oh come on, have you been paying attention at all since 2008?

142 Fellas the implosion in '08 was Carter's parting gift made good. The commintay reinvestment act was the last phase of the bribe made by the donks to get blacks that the new deal and the great society started. The CRA made lending houses the political classes "partner" likme bar owner was to big paulie in goodfellas, and Tarp was a LOT like the endinh of the sting film

143 Fellas the implosion in '08 was Carter's parting gift made good. The commintay reinvestment act was the last phase of the bribe made by the donks to get blacks that the new deal and the great society started. The CRA made lending houses the political classes "partner" likme bar owner was to big paulie in goodfellas, and Tarp was a LOT like the ending of the sting film

144 I haven't read the whole thread and perhaps this has already been mentioned Monty, but if I could read just one thing that simply, and I mean simply, explained credit default swaps/derivatives in such a way as someone with AADD
could understand, with an eye toward why they could do such devastating damage to the economy should they implode, I'd be happy.

145 Stolen from Jones, Scott, author of dilbert  —Make a will —Pay off your credit cards —Get term life insurance if you have a family to support —Fund your 401k to the maximum —Fund your IRA to the maximum —Buy a house if you want to live in a house and can afford it —Put six months worth of expenses in a money-market account —Take whatever money is left over and invest 70% in a stock index fund and 30% in a bond fund through any discount broker and never touch it until retirement —If any of this confuses you, or you have something special going on (retirement, college planning, tax issues), hire a fee-based financial planner, not one who charges a percentage of your portfolio

146 Credit Default Swaps are essentially insurance policies.
An owner of a company bond or government debt can "buy" insurance, a CDS, that guarantees that the owner will be made whole by the CDS seller if that bond or gov't debt doesn't pay off.
The problem is, almost any bank, broker, hedge fund or insurance company was writing CDS's against a whole variety of instruments.
Think of it as the ability to buy life insurance, many time over, ON YOUR NEIGHBOR. And if he dies, the sellers of those policies have to pay off.

As long as the neighbor lives, the buyer is just out his premiums. But if the neighbor dies, there's an enormous liability created and serious money changes hands.

Now imagine you were AIG or Goldman Sachs and realized that the CMO game had become total fraud, and began buying insurance that would pay them when it all blew up. And bought it over and over, creating massive liabilities to the sellers. And, unlike actual insurance, the sellers weren't required BY GOV'T REGULATORS to have to set aside reserves against those potential liabilities.
That's what AIG did.....sold massive amounts of CDS, betting that everything would be OK. They were wrong, and the massive liabilities sunk them.

Would the buyers (GS, etc) then have an incentive to help push the game to fall apart once they were loaded up with CDS's?

Of course they would.......

147 What else would you like to know?

Who's gonna pay for my gas?

Who's gonna pay my rent?

148 Personally, I have a feeling we're going to for the long suckh. Consequently, I'd be interested in knowing more about Japan's lost decade, and how it can/ can't be related to the current US situation. And not just the easy stuff like "they are savers in Japan and we are not."

If you feel so motivated of course.

149 102 Here's my question on economics?How much economic damage has Obama,the stuttering clusterfuck of a miserable failure done to our economy?

Posted by: steevy at September 02, 2011 09:18 AM (1Nzoh)

---------------

That....is the most sobering question right now.

So much depends on 'confidence' in the realm of economics, and by putting a Marxist at the helm of our country......the world is looking sideways at us now, and is wondering if we have lost our minds.

The best thing we can do to right ourselves and begin to correct the damage, is to elect the most badass capitalist we can next year.

And.....I hope you get your power back soon, steevy. Had to be on generator-power for over two weeks after an ice storm once. It sucks bigtime.

150

If the charitable contribution tax deduction is ended, will more money pour into PAC's and other political coffers instead?

Political contributions are not tax deductible anyway.

151 Khan Academy has a lot of terrific videos on economics and finance. This is an example: http://youtu.be/XBI7DqttyOQ

152 148 Fellas the implosion in '08 was Carter's parting gift made good.

The commintay reinvestment act was the last phase of the bribe made by the donks to get blacks that the new deal and the great society started.

The CRA made lending houses the political classes "partner" likme bar owner was to big paulie in goodfellas, and Tarp was a LOT like the ending of the sting film

Posted by: sven10077 at September 02, 2011 10:42 AM (d85Bj)

-------------

Thank you, sven.

Absolutely. TARP was simply: "Since We caused this damage to the banks by forcing them to make bad loans, we must now bail them out".

What boggles my mind is how Obama's role in the timeline of it all has been largely ignored..... Barry sued Citibank back in '95 on behalf of Acorn, and made an example out of Citi: "Make bad loans to minorities, or you will be sued to death".....The message was loud and clear, and caused shock waves throughout the banking industry.

153 One, If the theory of comparative advantage is accepted wisdom, then why aren't we buying sugar/ethanol from places where they are growing it (i.e. Brazil)? Even if the U.S. were super competitive in the sugar business, which I don't believe, then we should still buy their product, because they suck at more complex production. Two, If the problem with the economy is lack of demand, then the problem with the economy is that the Chinese are not spending their trade surplus and thus are damping demand. If China would just dump $1000 on each person in the country rather than make more empty buildings, demand would return to normal levels, and the economy would have a happy ending. Right?

154 Fund your 401k to the maximum —Fund your IRA to the maximum

As with Social Security (or even ObamaCare), funds will likely be raided/spent by the Federal Gov. before you'll ever get any back.

155 My Exchanges with Fed Chairmen

156

maverick muse at September 02, 2011 12:25 PM (lpWVn)

I saw what you did there!

157 If this $241 Trillion unfunded liabilities number is true, is it too late? (can't find it)

158 It has been obvious that, for a long time, the U.S. government has been cooking the financial books in such a manner, that it is difficult to find out what actually is going on. For example: during 5 years of the Clinton administration, it is generally believed that we actually had a surplus. However, this surplus was the budget surplus, and didn't actually contain off-budget items and emergency spending. Such that there has been no years in recent memory wherein the U.S. hasn't gone further into debt. Could we discuss this and get an idea on what the real spending is please? BTW, when you call Krugman a dunderhead, is that an upgrade, downgrade or zerograde?

159 159 Maverick muse,

why do you think one of Tedster's last causes aided by bawney fwank was trying to pressure the Swiss into reporting American investments there?

160 163 FB,

the hard truth is that you are correct the Klintonian "super doubleplusgood surplus" was ONLY there by raiding SS and medicare like all modern budgets since '68.....

the 214 trillion or so can ONLY be met if the feds start liquidating their real estate holdings and allow resource exploitation to be leased en masse.....

care to lay a bet on how likely that is?

161 I'm such a dunderhead on economics that I don't even know what questions to ask about it.  I do have a broad, generalized grasp of how things work; Hayekian vs. Keynesian, supply-side vs. demand-side, etc.  What mystifies me is how anyone -- anyone at all -- can understand the basic premise of Keynesian theory and still think it's workable as a way to run an economy.

I can understand the allure in economic times like these, when money is tight on the macro-level and people feel the need to "prime the pump".  I don't think it's the proper way to address it, but I also don't think a person would be completely insane to think it's an effective stop-gap.  But, it's my impression that most people who buy into the Keynesian model buy into it all the time -- that it's simply the best way to run a large scale economy in good times and in bad.

I can only assume that people think there's a good-faith argument to be made for it, since it's actually been subject to debate for so long.  So, what the hell is the distilled argument from the Keynesians that is so appealing that it makes otherwise intelligent-seeming people reject the obvious-on-its-face merits of the Austrian model?

That's what makes it most difficult for me to discuss economics.  To me, it's not like arguing with someone who speaks a different language, but rather someone from a completely different plane of reality; where even the laws of physics don't apply.  What is the sensible-seeming premise of Keynesianism that makes it so enduring?

162 Guns, or Butter?

163

the 214 trillion or so can ONLY be met if the feds start liquidating their real estate holdings and allow resource exploitation to be leased en masse.....care to lay a bet on how likely that is?

conspiracy helmet ON:

So, this is the future (deliberately created) 'crisis' --in which We The People, after being forced to switch to inefficient green energy/technology, are then told:

"Gee, that green stuff isn't working after all, and it's too expensive to continue.  We've got to Do Something Right Now! and our enemies these foreign investors are conveniently ready, after years of sucking money from us willing to assist us by purchasing our national lands, to extract even more wealth providing development funding for the purpose of enslaving the American public to them exploiting our own energy resources.

/conspiracy helmet OFF

164 The idea that the Keynsians regard ramming the debt ever forward and ever growing is not just the best way to "dig out" it should be the baseline...... I am on my droid when I get home I have an epic post that will make you ponder if the welfare state is not a vqcuum designed to steal the middle class' mobility and drive prices through the roof to aid the self proclaimed "new aristocracy"..... Brb

165

Even though this thread is now gasping for breath, I'll be back to read your theory, sven....please do post it. 

166

Monty, if you're still around--

Has there been any recent official talk of gov't GREs replacing IRAs & 401(k)s?  (thinking back to commie Teresa Ghilarducci's idea circa 2007 or 2008, I believe)

167 OOps--"GRA"s I meant....

168 Hey, Monty, why do you contend that Illinois is #1 in the US for self-bonage?

Um .... never mind

169

131 But if Ace won't even bother to set up a f*****g Amazon link I'm gonna start to get PO'ed.

Good idea. I buy a lot of Kindle books and other stuff from Amazon, including a Canon T3 and assorted lenses last year. I'd like to pass some of those dollars along to Ace.

170 The welfare state is a tool used by the political class to control the poor up to the lower upper middle class of the populace.  They achieve this by granting artificial purchasing power to an ever increasing portion of the electorate that drive up costs.  The top 15% of earners can weather this with ease and aplomb and maintain their standard of living. (case in point Warren "tax us more morons! Buffet table)

Price is the maximized profitability point for a good or service or commodity matching supply demand and controlling profit margin the market pays.  The Politician who slings welfare moonshine takes the wealth of the taxpaying public and boosts the competitive ability of the poor allowing the poor to pay a higher price to meet their survival needs.  Markets get filled, the poor did not starve en mass prior to 1933 in this nation they did not eat what the top 15% did or in the volume they may have wanted but there were cuts of meat at the store that were targeted to the poor.  Butchers would sell late shelf life foood for low cost to the working poor, they ate more wheat and rye bread than the higher classes but they ate bread etc etc  The materials needed to cook have always been indexed to quality quite reasonable in this nation there are differing grades and qualities of eggs, flour, produce and on and on.

Enter "help".....

When you grant a person a subsidy on food they make decisions that were once beyond their reach and are most definitely shielded from the feedback loop of bad economic behavior....

Welfare states face a concrete inescapable problem: The level of production needed to sustain a welfare state cannot be sustained by a welfare state. This is created by policies that encourage the redistribution and consumption of wealth while discouraging its creation. The distortion of these skewed incentives mandate that living standards must fall even though temporarily they may be maintained through borrowing. The paradox is not unique to Greece, California, Illinois nor is it a function of who is in charge. It is a basic ingredient of the recipe inherent in the internal contradictions of the welfare state itself.

A welfare state cannot avoid this math anymore than an internal combustion engine can maintain operation without access to oxygen no matter how much "will for justice" the engine wants.

The term “welfare state” is defined here as a polity that assumes primary responsibility for the care of a good number of its citizens, providing such benefits as public housing, health care, education, minimum wage rates, unemployment insurance, and financial support for the poor, elderly, disabled, and politically favored institutions, businesses, and industries.

The material well-being of any societyÂ’s people rests on the quantity and quality of goods and services they produce. All goods and services consumed by the unproductive members of society must be taken from and bought by the productive. Welfare state policies ensure that the ranks of the unproductive will grow and those of the productive population will shrink, and that the productivity of the dwindling number of producers will fall. As a result, the quantity and quality of goods and services available will drop and poverty will rise. The mechanics of this decline are both straightforward and predictable.  A nation can stall this for a time through fiat currency, exploitation of state controlled natural resources at bargain prices for a duration or the threat of force.....there ARE no other options.

Welfare state policies discourage saving. When government helps pay for its citizensÂ’ big-ticket items, citizens have little need to save for the future. Banks will therefore have less money to lend, leading to lower capital investment and lower economic growth. The taxes needed to pay for public benefits reduce the ability of, and incentives for, businesses to maintain and expand production facilities. To the extent that taxes are paid by consumers, or passed on to them through higher prices, they will have less money to save, further reducing private capital.

The pursuit of capital is as much a competition in a healthy economy as the pursuit of goods or services.  The bank has a % of its cash reserve set aside for loans of various risks, in the old days business had to bargain for its interest rate on a loan and offer up some form of collateral.  The bank gave individual customers a higher % of the profit from these loans because there was a finite monetary supply so there was competition not collusion between banks on rate of return.

The new deal started the rapid dismantling of genuine competition and ushered in an era of enforced and government mandated defacto collusion in the name of "stabilization".  The political dream of stabilization is a bane to a healthy economy as the booms and busts are the reward and punishment for decisions made in the course of the business cycle.  When a person is investing their own earned capital they are risking the rewards for their goods or service in the hope of grabbing a portion of the profit flow of a well ran operation.

Enforced "stability" shielding people from maximized fruit of their risk and any and all pain from that risk denies the business cycle its corrective mechanism.

Minimum wage laws, unemployment insurance, employer mandates, and governmental fiat regulations that make it difficult to fire workers all drive up the cost of employment, resulting in less of it. High corporate taxes will drive some businesses out of the country and others into bankruptcy, further adding to unemployment rolls. Demands for protectionist legislation will become more insistent as jobless rates rise. If these demands are met, even more jobs will be lost as foreign commerce collapses amid escalating trade wars. the international market is a market and protectionism prevents a genuine correction mechanism in internal trade as well as foreign trade.

Inefficiency in research and development is protected from harming the investor because he has a defacto captive market, the consumer is prevented from rewarding the operation that produces a good or service most efficiently.  In the competition between an open and closed market nation the protection will result in the loss of any technological, procedural, or economy of scale edge giving a flase sense of security as regards the efficiency of an operation.

As benefits and benefit recipients multiply, and as the number of taxpayers declines, the latter will be less and less able to bear the ever-growing burden. Many of the most productive and adaptable will move to countries that allow them to keep more of their earnings.  It should scare the hell out of everyone that less than half the nation even pays income tax anymore, and a large portion of the public in fact gets 10-25% of its annual income as "credits" which are in fact direct cash transfers FROM THE TAX SYSTEM ITSELF.

This activity denies the recipient of charity from properly acknowledging and showing thanks to the individuals and organizations that are engaging in said charity.  Instead of the average lower middle class and below citizen saying "hey I gave at the office" the organizations and individuals are forced to say, "hey the office already gave to you".

While productivity increases can help offset falling production due to a declining workforce, any such increase requires either capital investments or innovative process improvements. As previously explained, however, welfare states discourage capital formation by discouraging savings. Innovation is similarly discouraged by taxes that reduce or eliminate any profits that such innovation might generate.

*more to come*

171 Monty,

I would really like to read a post about the history and advantages/disadvantages around being on the gold standard. I read you comment on a fiat currency and get that, but what does or did all that really mean for our economy? I hear people claim they want to see us go back to the gold standard, but is that sort of like going back to real lambskin rubbers or what?

Thanks...

172

I'd like info on the methods used in business accounting and how they impact how business gets done.  I followed the links from one of your DOOM posts to some great Forbes articles on radical management/agile recently and would like more of the same. 

I'm convinced short-term thinking and accounting tricks go hand in hand and contribute greatly to the inability of many of our companies to perform in the real world rather than just on the balance sheet.

173

As the population of unproductive citizens increases, either through job loss or through aging, or illegal immigration government bureaucracies will also grow to meet this rising need. Higher taxes are levied to pay for the bureaucracies and the programs they administer, government tax collection agencies expand as well. This depletes the ranks of the productive, channeling them away from producing wealth to merely redistributing it. Civil servants are typically paid more than their private-sector counterparts and are generally able to retire earlier and on more generous pensions than employees in the private sector adding to the burdens of productive workers. Moreover, the growing ranks of public employees form a powerful voting bloc strongly favoring increased government spending and more government control over the economy donating to a bloc of politicians who have the power to enforce these laws if necessary with the threat of force or outright economic destruction of an individuals' accumulated wealth.

Institutions will grow up around the welfare state, increasing the number of people with a stake in its continuation and growth further sapping the ranks of the productive by shielding these groups from the lessons success and failure at finding your place in an economy generates. For example, advocacy groups and law firms will form to help people obtain government benefits and to demand more of such benefits. Service providers, such as tax accountants, will spring up to help people deal with increasing bureaucratic complexity.

Watch the TV stations at midday and count the number of times you see a commerical like bender/Bender intoning you to "get on Social Security disability" we GET results!

This would not have occured a generation ago as a populace taught by the great depression to work their asses off would have scoffed at the idea of trying to overrule a medical examiner and Federal benefits administrator.

Special interest groups like AARP will funnel campaign funds and votes to pliable politicians. They combine with government agencies in symbiotic, mutually reinforcing alliances and in many cases unholy business partnerships.(remember AARP was hot for BarryCre even though the rank and file hate it with even more fury than the younger voter this was because Ogabecare raids the Medicare war chest by about a trillion dollars in direct conflict with the members' best interest but the feds bought off AARP's assent with a business partnership with the AARP's insurance company) Elected officials can garner votes by acting as advocates for constituents forced to deal with unresponsive public agencies.(Charles Schumer and most Chicago pols are legendary for this) Government departments, wishing to expand their “customer base,” will work to make government support easier to obtain and available to more people.

Job loss, unpleasant in a free-market economy, is softened by government-provided unemployment insurance in a welfare state. Some will find paid unemployment agreeable and will delay their return to work, perhaps indefinitely. As more parents become wards of the State, more and more children will come to see this as normal, and generations of families living on welfare will become commonplace.

The loss of the competition between these voluntary members of the Federal Human Zoo project deny a corrective mechanism to set the proper valuation of labor.  There is no feedback loop for business to gague how competitive they are in a distorted job market.

(like say a business that got half a billion bucks to make solar panels that can't compete)

Advocacy groups and government agencies charged with providing benefits will work to reduce the stigma associated with receiving public aid and to justify taking from those who work to give to those who do not. Poverty must, therefore, be portrayed not as a consequence of self-defeating actions or poor choices—and certainly not of government action—but as the result of bad luck or oppression.($uper je$$e Jack$on to the red courtesy phone, evil airplane flying rich guys not named Barry Soetoro to the multi colored concourse!) Conversely, wealth must come to be seen not as the outcome of hard work and perseverance, but good luck or greed and exploitation. The very concept of virtue must be questioned and stood on its head as the Tenth Commandment morphs from “Thou shalt not covet thy neighbor’s goods” to “Thou shalt not have goods thy neighbors covet.”(which is vital survival advice in the event of a total collapse as happened in Argentina because yes people who feel enobled and entitled by their poverty will HAPPILY murder you for a loaf of bread)

Imagine how dangerous the world would be for a person without the ability to feel pain (as happens with certain forms of leprosy). Such a person could hurt himself terribly by continuing to walk on a badly sprained ankle or putting his hand on a hot stove without knowing it.(this is why multiple cortisone shots are discouraged in military medical theory the federal government while wanting to distort the feedback loop in the business cycle understands its necessity in its highly skilled workforces) Government largess and "generosity" can create a sort of moral leprosy by weakening or even destroying feedback loops linking cause and effect. As the consequences of self-destructive actions (such as dropping out of school, having children out of wedlock, or drug and alcohol abuse) are increasingly borne by others, the incidence of such behavior will rise. At the same time, as the benefits of hard work, perseverance, and integrity fall, such virtues can be expected to fade.

It takes a dedicated well raised honest fool to beat their head into a wall to keep one of his coins to each three he must give to guy on the hammock....the good/bad news is we are ONLY cue mocking laughter at the point where he must often surrender 'just two".

The philosophy underlying the welfare state, “From each according to his ability, to each according to his need,” leads people to display minimum ability and maximum need. To the extent this philosophy is actually followed—more often, wealth flows from the politically weak to the politically strong—people will band together along ethnic, gender, religious, and other lines to compete to be seen as the most needy and therefore the most worthy of a larger share of an ever-shrinking pie. This downward spiral of competitive self-destruction may well create a permanent underclass that carefully avoids success and embraces failure—that is, which acts sensibly in the face of perverse incentives. This competition for tax dollars may create deep, irreparable fissures between recipient groups and between recipients and taxpayers.

Tribalization is not a bug in the democrats' dream world it is a feature friends.

As government grows it will increasingly be seen as the answer to any and all difficulties, and people will demand government solutions to increasingly minor inconveniences. Legislatures will respond by enacting ever-more-stringent regulations on individuals and industry, further reducing adaptability, independent and entrepreneurial thought, risk-taking, and productivity. Centralized, bureaucratic rule will erode peopleÂ’s self-reliance, initiative, and sense of local community.

When government begins providing people with goods and services they can provide for themselves, it launches a self-reinforcing trend that will eventually become unsustainable. Once the practice of taking from one citizen to give to another becomes established, politicians will be unable to resist the urge to bribe voters with their own tax dollars. As legislatorsÂ’ rewards for spending other peopleÂ’s money grow, spending will grow.

The time it will take a country to spend itself into bankruptcy depends on its initial economic strength and the strength of its culture. But whether it takes one generation or ten, unless the trends reverse, bankruptcy must come. Time can be gained by borrowing or printing money, but other countries will eventually stop accepting the nation’s debt—whether it is in the form of government bonds or in the form of fiat currency.

In the case of the United States, the country is not yet bankrupt, but bankruptcy will soon be in sight if current policies are not changed. Social Security will go into the red this year and Medicare will shortly follow with even larger deficits. Current estimates of U.S. debt are on the order of $13–14 trillion, an amount equal to the country’s entire gross domestic product. As monumental as that number is, it pales in comparison to the present value of the unfunded liabilities of Social Security and Medicare, which total $107 trillion.

Of all the changes wrought by the welfare state, a degraded, dependent culture will have the deadliest impact and will be the hardest to reverse. Yet the culture must be changed. This can occur only if government-created incentives that encourage people to live at the expense of others are replaced by market-created incentives encouraging the production of goods and services that people want. Creative marketplace competition to produce more and better products must supplant political competition for an ever-dwindling pool of tax dollars extracted from an ever-dwindling pool of productive workers.

Barack Obama does not mean what you think he means when he intones "we must win the future" what he is saying is "me and the oligarchs are well on our way to doing so"

174 177 Societyis2Blame,

as I say in my posts above....

the quick buck artist accounting tricks are a form of math leprosy that screws with the feedback loop....

175

175 & 178---

**APPLAUSE**

Bravo, sven10077!  Perfect!

But, what can the average "little guy" do besides cry...and drink...?

176 180 stillwater, Fght here through labor, profit, and education as long as we can.......try our best to keep the productive states going and if/when the day comes seperate from the moochers or raly in a new place to begin anew. No need for us to wave the bloody shirt and storm the barricades, we sew the shirt, and built the barricades

177 Monty,

A serious inquiry:

Explain the claim that Food Stamps usage has a multiplier effect on the economy.

Where I come from, if someone comes into my store, and gives me a dollar, and if on the other side of my flow down (my costs) from that dollar, it adds up to more than a buck, I'm going out of business. Same goes for every other person below me on that chain, they are all less than the original amount to begin with.

So, where's the magic multiplier?

PS - Love your work. You rank right up there in the top folk I read for financial honesty (not many).

178 Thank you for the good writeup. It in fact was a amusement account it. Look advanced to more added agreeable from you! However, how could we communicate?

179 (hope I didn't wait too long...) How Is Wealth Created? Assume you have $100 and open a lemonade stand. You buy stuff, sell stuff and make a profit of $10 a day. At what point has wealth been created and how much? I thinking that the only wealth created by this business is the value of the business itself. Before you opened the stand there was nothing except $100. Now there is stand with assets worth $xxx and, since it makes $10 a day, a value as an ongoing business that could be sold. But I'm not clear on this. So a post on How Wealth Is Created Would be nice.

180 187 CA,

ah that is the beautiful part...

wealth was created for the suppliers the minute you started generating the capital pool to start your business they just had not harvested it yet....because YOU had made the decision to use your capital and purchasing power to pick the best materials for your purpose and as such your vendors will get income.....

they will operate with that and improve their infrastructure for operations....

YOU start generating wealth with the first sale for your flow because you have engaged in the voluntary exchange of purchasing power for a good so long as you continue to capitalize your operation and seek higher efficiency through method you are increasing potential sale of your assets indexed to revenue potential....


your lemonade is so good that people cause traffic jams so an investor buys stock and you move into an abandoned starbucks remodeling it to your liking and hiring help....taking the assets to a 4 figure number in valuation.....

that's "wealth"


see Money is the agent of exchange of perceived value for goods and services....

people have really forgotten that money in a free market is an IOU towards someone else's past labor.....

Bob the Builder couldn't do a job for you but he made 5 other people a hundred bucks satisfied each....

so Bob decides to treat himself to two of your lemonades....

him handing you the money is a money transfer the stream of money from the exchange of goods and services is "earned income" the accumaltion of purchasing power from investment is "unearned income" in most cases

your acquisition of professional and personal materials creating a lifestyle that can sustain you with that cash flow is "wealth".....

using the income stream to buy a 14 gigawatt blender is using cash to acquire wealth....

this distinction is VITAL by the way....

fiat currency inherently plays games with price and wage.....

in my admittedly overlong two posts above I was trying to highlight that the welfare state used subsidizing the poor to force the middle class to liquidate wealth to maintain lifestyle via inflation.....

it ALWAYS takes a cycle or two for wage to catch up with inflation.....

the #1 cause of runaway inflation in the scenario we are discussing is voluntary printing press economics that greatly reduces the % of generated currency that is backed by cash in hand bonds from investors in the government.

That is why helicopter ben Bukake is going to have us paying 4 bucks a loaf for bread by the end of the decade.

Wealth is the secured cash and materials you have to engage in the business and lifestyle you bargain for with the fruit of your labor or  production or investment.

sorry if I am not making sense tonight I am very tired all the sudden I'll be back tomorrow and monty can probably translate "svenese" to english if need be


He really is a hell of an econ instructor...


here's a link

http://preview.tinyurl.com/4237p82

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182

Monty, I love the Doom posts, and never take the time to say so.  Your posts and all the links are "must reads" for my daily depression maintenance.  I do have one question although it is probably too late:

For safekeeping of my wealth, which currently consists of loose change from the bottom of my purse, I'm going to put it in a coffee can instead of leaving it out in a pretty hammered-aluminum bowl on the piano.  The question is:  should I bury the coffee can under perrenials or under annuals?

183 How long do you think it is gonna take for the Big Boyz to unwind / deleverage from the synthetic derivatives debacle? 5-7 yrs? 10 -20 yrz? Do you think that's the only thing keeping the Markets [DJIA, etc] afloat?

184 191 Running Hobo,

like a car approaching a cliff the printing press TARP based dow surge will need to take its foot off the Tarp accelerator and stop then investors will have to exercise good confident judgement....

I am thinking with O'bozo in charge it will be "Barack gone +2" so 3-9 years minimum assuming he is held in check from doing another QE orgasm

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