The truth about the economy

[IIIII]

Hey repukes if cutting taxes (supply side theory) equals more hiring then where the fuck are the jobs???

YouTube - The Truth About the Economy

YouTube - The Truth About the Economy
Video: click to display

[Haiti's Space Agency]

I agree. Where are the god damned jobs for fucks sake. Take all the fucking war money and invent a god damned job-fairy to come to my door and give me fucking jobs.

[sepht]

not to mention the massive loans that the rich were buying up then giving themselves huge bonuses with the money

when the credit bubble burst the bush sent out huge stimulus packages that the rich just pocketed and didnt do much to bail out the water from the sinking ship

http://www.imdb.com/title/tt1645089/

[Nitronick]

Taxes need to be cut on all levels and mass government intervention also has to stop before you get the huge employment levels again.
That socialist you just put on screen in completely wrong and misleading. He says the top tax rate used to be 70% now its 40~% and then goes on to say how now the top 20% has 40% of the wealth but he didn't say how much wealth they used to have, and besides it's ALWAYS been like that and always will be.

[Struwwelpeter]

The truth about the economy is that the Democrats destroyed it.

[crazzyass]

Originally Posted by Nitronick

Taxes need to be cut on all levels and mass government intervention also has to stop before you get the huge employment levels again.

How does deregulation create jobs?

That socialist you just put on screen in completely wrong and misleading. He says the top tax rate used to be 70% now its 40~% and then goes on to say how now the top 20% has 40% of the wealth but he didn't say how much wealth they used to have, and besides it's ALWAYS been like that and always will be.

He noted that their income doubled from 10% to 20%.

That is a shitty argument. That's how it's always been? How many other shitty things have "always been that way"?

I guess cancer has always been around so it isn't really a problem.

[ArmsMerchant]

Originally Posted by Jim "fuck latinos" Carrey

The truth about the economy is that the Republicans destroyed it.

Read some history.

The Shrub inherited a huge surplus.

Obama inherited a huge mess.

Nice try, though.

[Struwwelpeter]

Time and time again, anyone reading the mainstream news or reading articles on the Internet will read the claim that President Clinton not only balanced the budget, but had a surplus. This is then used as an argument to further highlight the fiscal irresponsibility of the federal government under the Bush administration.

The claim is generally made that Clinton had a surplus of $69 billion in FY1998, $123 billion in FY1999 and $230 billion in FY2000 . In that same link, Clinton claimed that the national debt had been reduced by $360 billion in the last three years, presumably FY1998, FY1999, and FY2000--though, interestingly, $360 billion is not the sum of the alleged surpluses of the three years in question ($69B + $123B + $230B = $422B, not $360B).

While not defending the increase of the federal debt under President Bush, it's curious to see Clinton's record promoted as having generated a surplus. It never happened. There was never a surplus and the facts support that position. In fact, far from a $360 billion reduction in the national debt in FY1998-FY2000, there was an increase of $281 billion.

Verifying this is as simple as accessing the U.S. Treasury (see note about this link below) website where the national debt is updated daily and a history of the debt since January 1993 can be obtained. Considering the government's fiscal year ends on the last day of September each year, and considering Clinton's budget proposal in 1993 took effect in October 1993 and concluded September 1994 (FY1994), here's the national debt at the end of each year of Clinton Budgets:

Fiscal
Year Year
Ending National Debt Deficit
FY1993 09/30/1993 $4.411488 trillion
FY1994 09/30/1994 $4.692749 trillion $281.26 billion
FY1995 09/29/1995 $4.973982 trillion $281.23 billion
FY1996 09/30/1996 $5.224810 trillion $250.83 billion
FY1997 09/30/1997 $5.413146 trillion $188.34 billion
FY1998 09/30/1998 $5.526193 trillion $113.05 billion
FY1999 09/30/1999 $5.656270 trillion $130.08 billion
FY2000 09/29/2000 $5.674178 trillion $17.91 billion
FY2001 09/28/2001 $5.807463 trillion $133.29 billion


As can clearly be seen, in no year did the national debt go down, nor did Clinton leave President Bush with a surplus that Bush subsequently turned into a deficit. Yes, the deficit was almost eliminated in FY2000 (ending in September 2000 with a deficit of "only" $17.9 billion), but it never reached zero--let alone a positive surplus number. And Clinton's last budget proposal for FY2001, which ended in September 2001, generated a $133.29 billion deficit. The growing deficits started in the year of the last Clinton budget, not in the first year of the Bush administration.

Keep in mind that President Bush took office in January 2001 and his first budget took effect October 1, 2001 for the year ending September 30, 2002 (FY2002). So the $133.29 billion deficit in the year ending September 2001 was Clinton's. Granted, Bush supported a tax refund where taxpayers received checks in 2001. However, the total amount refunded to taxpayers was only $38 billion . So even if we assume that $38 billion of the FY2001 deficit was due to Bush's tax refunds which were not part of Clinton's last budget, that still means that Clinton's last budget produced a deficit of 133.29 - 38 = $95.29 billion.

Clinton clearly did not achieve a surplus and he didn't leave President Bush with a surplus.

So why do they say he had a surplus?

As is usually the case in claims such as this, it has to do with Washington doublespeak and political smoke and mirrors.

Understanding what happened requires understanding two concepts of what makes up the national debt. The national debt is made up of public debt and intragovernmental holdings. The public debt is debt held by the public, normally including things such as treasury bills, savings bonds, and other instruments the public can purchase from the government. Intragovernmental holdings, on the other hand, is when the government borrows money from itself--mostly borrowing money from social security.

Looking at the makeup of the national debt and the claimed surpluses for the last 4 Clinton fiscal years, we have the following table:

Fiscal
Year End
Date Claimed
Surplus Public
Debt Intra-gov
Holdings Total National
Debt
FY1997 09/30/1997 $3.789667T $1.623478T $5.413146T
FY1998 09/30/1998 $69.2B $3.733864T $55.8B $1.792328T $168.9B $5.526193T $113B
FY1999 09/30/1999 $122.7B $3.636104T $97.8B $2.020166T $227.8B $5.656270T $130.1B
FY2000 09/29/2000 $230.0B $3.405303T $230.8B $2.268874T $248.7B $5.674178T $17.9B
FY2001 09/28/2001 $3.339310T $66.0B $2.468153T $199.3B $5.807463T $133.3B


Notice that while the public debt went down in each of those four years, the intragovernmental holdings went up each year by a far greater amount--and, in turn, the total national debt (which is public debt + intragovernmental holdings) went up. Therein lies the discrepancy.

When it is claimed that Clinton paid down the national debt, that is patently false--as can be seen, the national debt went up every single year. What Clinton did do was pay down the public debt--notice that the claimed surplus is relatively close to the decrease in the public debt for those years. But he paid down the public debt by borrowing far more money in the form of intragovernmental holdings (mostly Social Security).
Update 3/31/2009: The following quote from an article at CBS confirms my explanation of the Myth of the Clinton Surplus, and the entire article essentially substantiates what I wrote.
"Over the past 25 years, the government has gotten used to the fact that Social Security is providing free money to make the rest of the deficit look smaller," said Andrew Biggs, a resident scholar at the American Enterprise Institute.

Interestingly, this most likely was not even a conscious decision by Clinton. The Social Security Administration is legally required to take all its surpluses and buy U.S. Government securities, and the U.S. Government readily sells those securities--which automatically and immediately becomes intragovernmental holdings. The economy was doing well due to the dot-com bubble and people were earning a lot of money and paying a lot into Social Security. Since Social Security had more money coming in than it had to pay in benefits to retired persons, all that extra money was immediately used to buy U.S. Government securities. The government was still running deficits, but since there was so much money coming from excess Social Security contributions there was no need to borrow more money directly from the public. As such, the public debt went down while intragovernmental holdings continued to skyrocket.

The net effect was that the national debt most definitely did not get paid down because we did not have a surplus. The government just covered its deficit by borrowing money from Social Security rather than the public.

Consider the following quotes (and accompanying links) that demonstrate how people have known this for years:

In the late 1990s, the government was running what it -- and a largely unquestioning Washington press corps -- called budget "surpluses." But the national debt still increased in every single one of those years because the government was borrowing money to create the "surpluses."
So the table itself, according to the figures issued yesterday, showed the Federal Government ran a surplus. Absolutely false. This reporter ought to do his work. This crowd never has asked for or kept up with or checked the facts. Eric Planin--all he has to do is not spread rumors or get into the political message. Both Democrats and Republicans are all running this year and next and saying surplus, surplus. Look what we have done. It is false. The actual figures show that from the beginning of the fiscal year until now we had to borrow $127,800,000,000. - Democratic Senator Ernest Hollings, October 28, 1999
An overall "downsizing" of government and a virtual end to the arms race have contributed to the surplus, but the vast majority is coming from excess Social Security taxes being paid by the workforce in an attempt to keep Social Security benefit checks coming once the "baby-boomers" start to retire.
Of the $142 billion surplus projected by the end of 2000, $137 billion will come from excess Social Security taxes.
When these unified budget numbers are separated into Social Security and non-Social Security components, however, it becomes evident that all of the projected surplus throughout this period is attributable to Social Security. The remainder of the budget will remain in deficit throughout the next decade.
Despite a revenue shortfall, full benefits are expected to be paid out between 2017 and 2041. The system will draw on its trust fund, a collection of special-issue bonds from the government, which borrowed prodigiously from the program's surplus over the years. But since the country is already running a deficit, the government will have to borrow more money to pay back its debt to Social Security. That's a little like giving with one hand and taking away with the other.
The surplus deception is clearly discernible in the statistics of national debt. While the spenders are boasting about surpluses, the national debt is rising year after year. In 1998, the first year of the legerdemain surplus, it rose from $5.413 trillion to $5.526 trillion, due to a deficit of $112.9 billion... The federal government spends Social Security money and other trust funds which constitute obligations to present and future recipients. It consumes them and thereby incurs obligations as binding as those to the owners of savings bonds. Yet, the Treasury treats them as revenue and hails them for generating surpluses. If a private banker were to treat trust fund deposits as income and profit, he would face criminal charges.


Are intragovernmental holdings really debt?

Yes, intragovernmental debt is every bit as real as the public debt. It's not "a wash" simply because the government owes the money to "itself."

As I explained in a previous article, Social Security is legally required to use all its surpluses to buy U.S. Government securities. From Social Security's standpoint, it has a multi-trillion dollar reserve in the form of U.S. Government securities. When the Social Security system starts to falter due to insufficient contributions to pay for all the benefits of retiring baby-boomers, probably around 2017, it will start cashing those securities and will expect the U.S. Government to pay it back, with interest. The problem is, the government doesn't have the money. The money has already been spent--in part, effectively, to pay down the public debt under Clinton.

Update 3/31/2009: The Social Security "surplus"--which has been borrowed by the Federal Government every year, including under Clinton to generate the "surplus"--is now expected to evaporate within a year (2009 or 2010) rather than the 2017 mentioned above. The following quote also provides additional evidence that the "surplus" was indeed borrowed from Social Security "for decades."

With unemployment rising, the payroll tax revenue that finances Social Security benefits for nearly 51 million retirees and other recipients is falling, according to a report from the Congressional Budget Office. As a result, the trust fund's annual surplus is forecast to all but vanish next year -- nearly a decade ahead of schedule -- and deprive the government of billions of dollars it had been counting on to help balance the nation's books....

The Treasury Department has for decades borrowed money from the Social Security trust fund to finance government operations. If it is no longer able to do so, it could be forced to borrow an additional $700 billion over the next decade from China, Japan and other investors. And at some point, perhaps as early as 2017, according to the CBO, the Treasury would have to start repaying the billions it has borrowed from the trust fund over the past 25 years, driving the nation further into debt or forcing Congress to raise taxes.


The Federal Government cannot just wave a magic wand and somehow "write off" the intragovernmental debt. Essentially, citizens invested money in Social Security and Social Security invested that money in the Federal Government. Now Social Security effectively owes you money (in the form of future retirement benefits) and won't be able to pay you that money if the Federal Government just cancels the intragovernmental debt. The only way the Federal Government can "write off" intragovernmental debt is if it simultaneously eliminates the Social Security system. That might very well be a good idea, but it isn't likely. And Social Security will start running out of money in about 2017 if the Federal Government doesn't honor those intragovernmental holdings as real debt.

In short, if the government doesn't pay back intragovernmental holdings, other government agencies (like Social Security) will fail. Since allowing Social Security to fail is not a politically viable option, the debt represented by intragovernmental holdings is just as real as the public debt. It can't just be eliminated by some fancy accounting trick or political maneuvering. If it were possible, believe me, politicians would have done it already and taken credit for reducing the national debt by trillions of dollars.

Trust Funds = Intragovernmental Debt

Social Security isn't the only trust fund in the federal budget. There are a number of others including the civil service retirement fund, federal supplementary medical insurance trust fund, unemployment trust fund, military retirement trust fund, etc. All of these trust funds, like Social Security, invest their surpluses in U.S. government bonds and increase intragovernmental debt. And like Social Security, their surpluses really shouldn't count toward a "surplus" because the excess money they contribute to federal coffers actually has to be borrowed by the government from the trust funds.

When the government declared a $236 billion surplus in fiscal year 2000, it literally borrowed $248 billion from trust funds and considered that borrowed money "income" which it counted towards a "surplus."

For a more detailed explanation of how the government borrowed from trust funds and used the borrowed money to count towards an alleged surplus, please read this follow-up article which goes into more detail on the subject of government accounting.

The reality of the national debt

The only debt that matters is the total national debt. You can have a surplus and a debt at the same time, but you can't have a surplus if the amount of debt is going up each year. And the national debt went up every single year under Clinton. Had Clinton really had a surplus the national debt would have gone down. It didn't go down precisely because Clinton had a deficit every single year. The U.S. Treasury's historical record of the national debt verifies this.

A balanced budget or a budget surplus is a great thing, but it's only relevant if the budget surplus turns into a real surplus at the end of the fiscal year. In Clinton's case, it never did.

COMMON RESPONSES TO THIS ARTICLE
Since this article has become a popular reference for people debunking the myth of the Clinton surplus, I have seen a number of responses made by those that cannot seem to accept the fact that there was never a surplus. Some of those responses are listed here and I explain why the responses are invalid.

Adjusting the National Debt for Inflation or as % of GDP

A common tactic used by those that cling to the myth of the Clinton surplus seems to be showing a bar graph of the total national debt adjusted for inflation, or depicted as a percentage of GDP. When you adjust for inflation or show the debt as a percentage of GDP, it looks like the national debt went down for a year or two under Clinton. However, that does not mean Clinton had a surplus, it simply means inflation was increasing faster than the national debt or the economy was expanding faster than the national debt. That does not change the fact that Clinton never had a surplus.

Explained another way, adjusting the national debt for inflation is valid for comparing the debt load of the federal government but it has absolutely nothing to do with whether or not the federal government had a surplus a given year. If you spend more than you take in in a given year, you have a deficit even if your relative debt load went down because of inflation. Explained numerically, let's say you owe $50,000, earn $30,000, and spend $31,000 (debt load=50,000/30,000=167%)--that leaves you with a deficit of $1000 so that the following year you owe $51,000. The next year inflation is 5% so you now earn $31,500 and spend $32,550 with a deficit of $1,050. $31,500 in earnings with a $51,000 debt is a 162% debt load--so your relative debt load went down thanks entirely to inflation but you still had a deficit of $1,050 that year and your debt continued to grow.

It wouldn't be accurate to claim that you had a surplus because your debt load went down even though you spent more than you earned. That's what people are saying when they try to adjust the national debt for inflation to claim a surplus.

The bottom line is that the national debt going down as adjusted for inflation or as a percentage of GDP is a valid metric for evaluating the debt load of the government but it says nothing about whether or not there was a surplus. If the total national debt went up, there was a deficit. Those that think a decrease in the debt load of the federal government as a percentage of GDP or adjusted for inflation is equivalent to a same-year surplus don't understand the definitions and purposes of each of these terms.

Congressional Budget Office (CBO) vs. These "Partisan" Numbers

Another common response to the above explanation of the myth of the Clinton surplus is that the budget surpluses are based on the numbers produced by the non-partisan Congressional Budget Office (CBO). Indeed if you access the CBO's "historic budget data" document , on the fist page you will see that 1998 shows a surplus of $69 billion, 1999 shows $126 billion, 2000 shows $236 billion--the same surpluses claimed by Clinton and CNN in the article mentioned at the top of this page.

However, further analysis of the document should make it very clear that important information is missing from the CBO document--specifically focusing on the last two columns of the table on page 1. If you take the $3,772.3 billion debt held by the public at the end of 1997 and subtract the "total" $69.3 billion surplus stated for 1998, you would expect to see the debt go down by 69.3 billion to $3,703 billion. Instead, the debt indicated for 1998 is $3,721.1 billion--suggesting a surplus of only $51.2 billion. This alone should tell you that the CBO numbers aren't telling the whole story because they don't add up--and the story they aren't telling is intragovernmental holdings.

The reality is that the federal government and politicians use a form of accounting that would get most accountants thrown in jail. As USA Today wrote in 2007 , special rules used by the federal government allowed it to report a $248 billion deficit in 2006 rather than $1.3 trillion if it had used corporate-style accounting.

While the CBO may be non-partisan, that does not mean the CBO is non-political nor that their numbers are honest or transparent.

Update 4/26/2009: Please read this note where President Obama, too, is trying to get certain government expenditures not "counted" in the official CBO deficit even though they'll cost billions of dollars and increase the national debt. As this paragraph has explained, CBO numbers are not to be trusted as an accurate reflection of reality.


The fact remains that the total national debt, as explained above, is the only real measure of what we owe. We can discuss the meaning of the different columns of the CBO documents and what they do and don't include, and we can argue about the accounting tricks that the federal government uses for political reasons. But the fact remains that the Bureau of the Public Debt is responsible for the daily reporting of the total national debt. Regardless of how politicians play with the budget numbers, the current national debt reported by the Bureau of the Public Debt is what we owe. If, at the end of each year, we owe more than we did the previous year, politicians can call it a surplus until the cows come home--but the fact remains that we owed more money than we did the previous year. Playing accounting and political games to call it a "surplus" doesn't change the fact that we're even more in debt than we were the year before.

During the Clinton years, the total national debt increased every year. Only in Washington D.C. would that somehow be considered a "surplus."

There was a Surplus Not Counting Interest and "Off-Budget" Items

It is sometimes claimed that there was a surplus but the national debt didn't go down because of interest payments on the existing debt, or because of "off-budget" items. Anyone that makes this claim is just buying into twisted Washington accounting games that are convenient for their argument.

The reality is that "off-budget" items and interest payments on the debt are real government expenditures just like any other. Off-budget items are declared as such by the stroke of a pen specifically for political reasons but it does not change the fact that they are part of government expenses.

To demonstrate the fallacy of this argument, consider this: We have a budget surplus right now, too, if we declare the department of Health and Human Services to be "off-budget." After all, Congress and the president can do that with the stroke of a pen. Presto, we now have a surplus!

Of course, we wouldn't really have a surplus. And neither did Clinton. It's just a matter of saying that some expenses don't "count" even though they do.

There Was a Surplus But It Wasn't Used to Pay Down The Debt

Some people claim that there was a surplus but it wasn't used to pay down the debt. They claim that one issue is whether or not you have a surplus and another issue is what you do with it; hence they also claim that you can have a surplus and not have the national debt go down.

However, this is not true.

If there was a surplus and it wasn't used to pay down the debt, then that means it was spent--which means even if there could have been a surplus, it evaporated the moment it was spent. During the Clinton years, not only was it spent--the government borrowed even more! Every year!

It's like earning $30k in a year and only having $29k in expenses--so you have a $1000 surplus. To celebrate, you then go out and spend $2000 on a new LCD TV. All the sudden you earned $30k and spent $31k and what originally looked like a $1000 surplus is now a $1000 deficit and you're even further in debt. You almost had your financial house in order but then you went out and spent the "extra" money rather than saving it or paying off some of your existing debt.

In short, if the government had a surplus and spent it on anything other than paying down the national debt, there was no longer a surplus the moment the money was spent on something else.

Comparing National Debt on January 1st

Some have responded by saying that Clinton had a surplus and paid down the debt because, when they compare the national debt from one January 1st to the next, the debt does show a decrease. This may be an honest mistake, but the government's fiscal year is from October 1st through September 30th. All government and budgetary activities are based on that fiscal year so it is necessary to do debt comparisons using that same fiscal year. As a result, all comparisons should be made either on September 30th or October 1st... not January 1st.

FactCheck.org Says Clinton Had a Surplus

FactCheck.org repeats and uses the same government numbers that this article illustrates to be misleading. Further information on why the CBO's numbers (and FactCheck's numbers) are misleading is explained in my follow-up article here

The Link Provided Above is Allegedly False

Some people have claimed that the link I provided (http://www.treasurydirect.gov/NP/BPD...application=np) is an illegitimate or fraudulent site that provides false numbers. I don't know where that accusation comes from or why people think that, but I've seen at least some comments that criticize the link because it doesn't point to http://www.ustreas.gov/. To verify that my link is to a valid government information source, please follow these steps:

Go to the U.S. Treasury website: http://www.ustreas.gov/
Click on "Bureaus": Takes you to http://www.ustreas.gov/bureaus/
Click on "Bureau of the Public Debt": Takes you to http://www.publicdebt.treas.gov/
Scroll down to the section "The U.S. Public Debt" and click on "See the U.S. Public Debt to the Penny."
This takes you to the link I originally provided: http://www.treasurydirect.gov/NP/BPD...application=np

The assertion that my article points people to a fraudulent website is incorrect. I am providing a direct link to the U.S. Treasury, Bureau of the Public Debt, National Debt to the Penny website. This is the official website that the U.S. government provides which allows the public to track the debt.

http://www.craigsteiner.us/articles/16

[Former FBI Agent]

OP you've to wait until the money *dum dum dummmmmmm* TRICKLES DOWN!!

[Trix Are For Kids]

The answer to any "economic problem" is to take money and resources and power from those who have it and give it to those that need it more. That's the only way to fix the end, no matter the means.

There's not enough stuff in the world to go around. There is still stuff going around, but now different people have it.

The bottom line reasons for American economic collapse, in no particular order:

1. Growing population in country or out. There will be less stuff to go around.

2. Unequal distribution of wealth whether globally or just nationally.

Six billion people cannot all live comfortably on this planet. Well they could, but never will, because everybody's out to get their own because nobody wants to compromise and work together.

[Anders Hoveland]

what a surprise! all those tax cuts, outsourcing of labor, and importation of cheap immigrant labor, and the economy did not improve! [sarcasm]

The Economist magazine was advocating for all three of these things, and it is widely read by both british and american business people, lawyers, and doctors. President Bush even read it on his presidential plane!

[Nitronick]

Originally Posted by crazzyass

How does deregulation create jobs?



He noted that their income doubled from 10% to 20%.

That is a shitty argument. That's how it's always been? How many other shitty things have "always been that way"?

I guess cancer has always been around so it isn't really a problem.

De-regulation creates jobs for these reasons;
1) Start up

2) Fold up

3) Employ people

4) Fire/Sack People
a) Making it easier to get rid of un-productive employees
b) Making it easier for hard working people to find work

5) Less paper work and bureaucracy= More productivity

Cancer kills people. Just because 20% of a population is more wealthy than the rest doesnt mean people are dying in droves on the street of famine.
It isn't a problem as you say it is. The real problem comes when the other 80% is in true poverty and I can guarantee when that happens it is because of some form of government intervention.

"Their income doubled" Everyones income has skyrocketed in the last few decades, not just the people at the top.

[crazzyass]

First off, thanks for your answer. Not many people respond.

Originally Posted by Nitronick

De-regulation creates jobs for these reasons;
1) Start up

I don't see the connection between deregulation and starting a business. I understand that in theory it makes sense that with less paperwork it is easier to run a business, but in practice five, ten, twenty minutes of paperwork isn't going to stop an entrepreneur from starting a company.

I understand that there can be extremely punitive regulations that do harm businesses, but the kinds of financial regulations most people are talking about are nothing like that.

2) Fold up

3) Employ people

4) Fire/Sack People
a) Making it easier to get rid of un-productive employees
b) Making it easier for hard working people to find work


5) Less paper work and bureaucracy= More productivity

Everything I said above applies to this point. I don't know if you have much experience in the workforce, but it's pretty fucking easy to fire someone for any reason you feel like. In some states, like mine, you aren't required to provide a reason.

Also, paperwork isn't that much of a killer in exchange for properly collecting taxes and making sure health/safety regulations are followed. If you can't handle that, then you're business will probably fail anyways.

Cancer kills people. Just because 20% of a population is more wealthy than the rest doesnt mean people are dying in droves on the street of famine.
It isn't a problem as you say it is. The real problem comes when the other 80% is in true poverty and I can guarantee when that happens it is because of some form of government intervention.

That's not the point I was making. Someone said that inequality has always been around, as if that justifies something. And I said that cancer has also been around; does that make it a good thing?

I can similarly guarantee that you can't remotely prove a statement like that.

"Their income doubled" Everyones income has skyrocketed in the last few decades, not just the people at the top.

Actually, I'm pretty damn sure the wealth gap has been steadily increasing over the years. This trend is something that creates extreme instability in the economy.

[Duelist]

The United States was built by slaves and manufacturing, now both of those things are gone. Its good we have abolished slavery, but without a manufacturing base where is the production coming from? How are we generating revenue? i'm afraid we have become too fat as a nation and too lazy, and we really only care about ourselves. For these reasons we are doomed.

[Nitronick]

Originally Posted by crazzyass

First off, thanks for your answer. Not many people respond.



I don't see the connection between deregulation and starting a business. I understand that in theory it makes sense that with less paperwork it is easier to run a business, but in practice five, ten, twenty minutes of paperwork isn't going to stop an entrepreneur from starting a company.

I understand that there can be extremely punitive regulations that do harm businesses, but the kinds of financial regulations most people are talking about are nothing like that.



Everything I said above applies to this point. I don't know if you have much experience in the workforce, but it's pretty fucking easy to fire someone for any reason you feel like. In some states, like mine, you aren't required to provide a reason.

Also, paperwork isn't that much of a killer in exchange for properly collecting taxes and making sure health/safety regulations are followed. If you can't handle that, then you're business will probably fail anyways.



That's not the point I was making. Someone said that inequality has always been around, as if that justifies something. And I said that cancer has also been around; does that make it a good thing?

I can similarly guarantee that you can't remotely prove a statement like that.



Actually, I'm pretty damn sure the wealth gap has been steadily increasing over the years. This trend is something that creates extreme instability in the economy.

Well ok I should explain I live in the UK and we are much further down the socialist road to hell than you guys.
You have to get all kinds of different liscences and permits to start a business plus everything you would have to do normaly. And of course the taxpayer has to pay for this kind of thing (government pen pushers and all that).

The wealth gap is nonsense. What proof is there that it creates instability and just because someone is richer than someone else it doesn't indicate an unfair society and people on the bottom are all driving cars and have tvs and all kinds of luxuries.

Economies are always unstable anyway, that fact only becomes dangerous when the government starts to mess around with it.

[crazzyass]

Originally Posted by Nitronick

Well ok I should explain I live in the UK and we are much further down the socialist road to hell than you guys.
You have to get all kinds of different liscences and permits to start a business plus everything you would have to do normaly. And of course the taxpayer has to pay for this kind of thing (government pen pushers and all that).

Ah, I see. Well it's not too bad in the United States.


The wealth gap is nonsense. What proof is there that it creates instability and just because someone is richer than someone else it doesn't indicate an unfair society and people on the bottom are all driving cars and have tvs and all kinds of luxuries.

Economies are always unstable anyway, that fact only becomes dangerous when the government starts to mess around with it.[/quote]

Well, in the United States anyways consumer spending composes 2/3 of the economy. The result is that as more and more wealth concentrates at the top and less and less money is available for people to spend, the wealthy have all of these investments and assets that stagnate as people stop being able to afford products.

This hits companies, causing them to lay off. The resulting rise in unemployment reduces company revenue by even more, and this cycle continues indefinitely. Demand shrinks which increases unemployment which then shrinks demand even more.

[Nitronick]

I see were you are coming from there. However just because the top 20% are far more richer than the other 80% it doesn't actually mean that the 80% are poorer because of that. Wealth isn't a pie chart where certain sections get a piece and thats that. Wealth is too fluid and fluctuating for that. If the poor are getting poorer it's NOT because the rich are getting richer.

A consumer based economy is extremely dangerous (The UK is more reliant on consumption than the US. Alot more) and, to add to that fact, the government policy has been to make banks give out unsafe loans to people(that may not be able to pay back or high risk of bankruptcy) to stimulate this consumption. It encourages people to just spend and spend instead of saving. There is no fiscal responsibility in people anymore and everytime something goes wrong people want the government to do something about it, when it was the governments fault that they are in that mess.

[crazzyass]

Originally Posted by Nitronick

I see were you are coming from there. However just because the top 20% are far more richer than the other 80% it doesn't actually mean that the 80% are poorer because of that. Wealth isn't a pie chart where certain sections get a piece and thats that. Wealth is too fluid and fluctuating for that. If the poor are getting poorer it's NOT because the rich are getting richer.

That is very true. I'm not saying it's a causation relationship. The wealthy are getting wealthier and the middle class/poor are getting poorer. That doesn't mean either one is causing that at all. My point is that capitalism, unrestrained, naturally results in that which is why it is so inherently unstable. And our tax policy is currently very open to that issue happening.

A consumer based economy is extremely dangerous (The UK is more reliant on consumption than the US. Alot more) and, to add to that fact, the government policy has been to make banks give out unsafe loans to people(that may not be able to pay back or high risk of bankruptcy) to stimulate this consumption. It encourages people to just spend and spend instead of saving. There is no fiscal responsibility in people anymore and everytime something goes wrong people want the government to do something about it, when it was the governments fault that they are in that mess.

Unfortunately, we're already at a consumer based economy. And I agree that the issue has led to unsafe loans to keep up demand. That's why more financial regulation is needed in regards to loan.

No, the government didn't lead to the risky loans exclusively though the policy was open to it. More regulation is need to prevent those toxic loans.

[Nitronick]

I am fairly certain that the governments have been pushing the banks to give out these loans. There was some act passed because people were moaning that banks wouldn't give them loans and mortages etc, it was the cause for the entire housing boom and bust. Banks,if left alone, would never ever give banks to people who they thought wouldn't be able to pay back.

I disagree with you on the point of Capitalism having the natural state of the poor getting poorer and the rich getting richer. In a free (far from anything that exists now) capitalist society everyone that is willing to work is able to get money and climb the ladder save and invest.

I would also retort that in every case communism and socialism has made the poor poorer, the rich poorer and merely created a new 20% of rich people.

[crazzyass]

Originally Posted by Nitronick

I am fairly certain that the governments have been pushing the banks to give out these loans. There was some act passed because people were moaning that banks wouldn't give them loans and mortages etc, it was the cause for the entire housing boom and bust. Banks,if left alone, would never ever give banks to people who they thought wouldn't be able to pay back.

Can you find a source for that? I'm asking sincerely, I don't know solid details on any of that.

I disagree with you on the point of Capitalism having the natural state of the poor getting poorer and the rich getting richer. In a free (far from anything that exists now) capitalist society everyone that is willing to work is able to get money and climb the ladder save and invest.

I would also retort that in every case communism and socialism has made the poor poorer, the rich poorer and merely created a new 20% of rich people.

The problem is that it is really not possible to climb the ladder, especially in a truly capitalist society. Minimum wage is the only thing protecting many workers from shittier conditions than they are already deal with. Capitalism leads to that natural imbalance. We've seen it happen over and over again if you track the history of recessions. And the more regulations passed, the more stable the economy has become. Until the Bush administration repealed several regulatory measured the economy had had stable growth for decades, barring the occasional hiccup recession, which is unavoidable given corrections.

[Struwwelpeter]

Originally Posted by Nitronick

I would also retort that in every case communism and socialism has made the poor poorer, the rich poorer and merely created a new 20% of rich people.

Unfortunately no Communists are willing to admit that a Communist society has ever existed in the past 100 years. This is because every Communist society that ever existed exhibited the same exact social and economic faults that Leftists always blame on Capitalism. So the Communists on this forum are most probably going to retort that Communism and Socialism have never existed before.

[Nitronick]

Originally Posted by crazzyass

Can you find a source for that? I'm asking sincerely, I don't know solid details on any of that.



The problem is that it is really not possible to climb the ladder, especially in a truly capitalist society. Minimum wage is the only thing protecting many workers from shittier conditions than they are already deal with. Capitalism leads to that natural imbalance. We've seen it happen over and over again if you track the history of recessions. And the more regulations passed, the more stable the economy has become. Until the Bush administration repealed several regulatory measured the economy had had stable growth for decades, barring the occasional hiccup recession, which is unavoidable given corrections.

It's the community reinvestment act in the US I believe.
If you track the history of recessions you will find that they don't even affect the working man until he has to bail out some fat cats with a government bailout or the government intervenes with regulations. The depression, for example, in the US you had single figure unemployment ,even though it was supposedly a disaster, until about 6 months in or something. So the government decided to try and do something and then boom unemployment spikes and then it does turn into a real disaster.

Minimum wage is whole different set of arguments which I will debate in another thread and another time. However working conditions are not that bad for anybody anymore minimum wage or not.

[ChargerCarl]

the CRA only affected only a small % of toxic loans and is nothing more than a scapegoat. 80% of subprime loans were made by institutions not subject to federal oversight

http://www.traigerlaw.com/publicatio...udy_1-7-08.pdf

[Anders Hoveland]

Excellent complaints about what is going on in the USA, with the government sacrificing jobs and living standards for wealthy investors.

http://www.globalresearch.ca/index.p...t=va&aid=18393

[Snoopy]

The power of credit only streches as far as the length of the barrel forcing you to pay back your debt. What's to stop people from lending money and not giving it back? OG ballers don't pay back "debt".