Is the other shoe about to drop?

[4est_4est_Gump]

And now, the Fed cannot seem to figure out a way to break the cycle...

 

[4est_4est_Gump]

Anyone reading the regular Federal Open Market Committee press releases can easily envision Chairman Yellen and the Federal Reserve team at the economic controls, carefully adjusting the economy’s price level and employment numbers. The dashboard of macroeconomic data is vigilantly monitored while the monetary switches, accelerators, and other devices are constantly tweaked, all in order to “foster maximum employment and price stability.”[1] The Federal Reserve believes increasing the money supply spurs economic growth, and that such growth, if too strong, will in turn cause price inflation. But if the monetary expansion slows, economic growth may stall and unemployment will rise. So the dilemma can only be solved with a constant iterative process: monetary growth is continuously adjusted until a delicate balance exists between price inflation and unemployment. This faulty reasoning finds its empirical justification in the Phillips curve. Like many Keynesian artifacts, its legacy governs policy long after it has been rendered defunct.

...

The first dent in the Phillips curve came from Chicago-School economist Milton Friedman (as well as, independently, Edmund Phelps) who suggested it was more temporary than timeless, more illusion than illustration. Friedman’s “fooling model” posited that price inflation fooled workers into accepting employment at “higher” wage rates despite lower real rates as measured after the impact of price inflation. Once they realized the difference between “real” and “nominal” wages (the fools!), they would demand higher nominal rates as compensation. As inflation rose, unemployment declined, but only temporarily until a new equilibrium was achieved. This simple insight created quite a stir and troubled noted econo-sadist Paul Krugman: “when I was in grad school, I remember lunchtime conversations that went something like this; ‘I just don’t buy the ... stuff — it’s not remotely realistic.’ ‘But these people have been right so far, how can you be sure they aren’t right now?’”[4]

The Friedman criticism was somewhat clever, but unnecessary, minor, and misguided, for cold data was far more damaging than Chicago doctrine....

More money cheapens its value and the price of goods and services accordingly rise in terms of money — hence price inflation. More money lowers interest rates which induce malinvestments (including the hiring of workers) which (who) are eventually liquidated (terminated) in a recession — hence unemployment. While both phenomena largely share a common origin, the timing of their manifestations may be quite different and heavily dependent upon other variables, including fiscal policy.

The death of the Phillips curve will eventually be served not from Chicago School gimmicks, not from the experience of the 1970s, but from greater acceptance of the Austrian School’s explanations of price inflation and business cycles. Unfortunately, in the interim, the monetary policies promoted by the Phillips curve have moved from 1970s lunchtime academic discussion to official government policy. In the hands of the Federal Reserve, the Phillips curve becomes weaponized Keynesianism.

Due to its unjustified acceptance of the Phillips curve and its related misconceptions about price inflation and business cycles, the Federal Reserve will never be able to trade higher price inflation for lower unemployment. Nor can it sacrifice higher unemployment for lower price inflation. But it can, and likely will, generate high levels of both. If the Federal Reserve’s economic controls appear broken, it is because they never really worked in the first place.

Christopher P. Casey, Mises.org

 

[miles]

It's fascinating that the same people attempting to debate query about basic economics are by and large Obama supporters and liberals (same thing). Their lack of knowledge on so many basic subjects isn't a coincidence. It makes me wonder how they make their way through life at all.

 

[Ishmael]

And now, the Fed cannot seem to figure out a way to break the cycle...

*chuckle* They're beginning to understand that the liberal mantra of "throwing more money at it' just doesn't work. Can wage and price controls be on the horizon...............again?

Ishmael

 

[4est_4est_Gump]

We are seeing a growing cacophony of demand for wage floors to remedy that which their dreams have already wrought.



They are going to have to price-ceiling energy now thanks to radical Environmentalism...

(And Mental is as good a root in that word as anything else.)

 

[4est_4est_Gump]

It's fascinating that the same people attempting to debate query about basic economics are by and large Obama supporters and liberals (same thing). Their lack of knowledge on so many basic subjects isn't a coincidence. It makes me wonder how they make their way through life at all.

There are always going to be economists out there, the children of the Socialists of the Chair, who are going to validate their economic views and as we have repeatedly pointed out over the years, when these economies do not bear fruit when planted, the proclivity is to blame someone else whose refusal to get on board and embrace Socialism (especially with Capital) is the root cause of the failure.

 

[miles]

The time is ripe for The Fraud to start flapping his lips about executive salaries. His supporters find it irresistible. It's a combination of class envy, anti-capitalism, and income inequality.

 

[Ishmael]

We are seeing a growing cacophony of demand for wage floors to remedy that which their dreams have already wrought.



They are going to have to price-ceiling energy now thanks to radical Environmentalism...

(And Mental is as good a root in that word as anything else.)

Rather than price ceilings I would expect to see subsidies ala "Shuck&JiveCare." Price ceilings do not sufficiently reinforce the notion of government dependence that this administration so desperately craves to impress on the public.

Ishmael

 

[4est_4est_Gump]

Rather than price ceilings I would expect to see subsidies ala "Shuck&JiveCare." Price ceilings do not sufficiently reinforce the notion of government dependence that this administration so desperately craves to impress on the public.

Ishmael

Somewhat of a reverse price ceiling.

 

[Que]

Yeah, that has been a common theme of recent, things are just getting worse for the Middle Class. We try to tell them why and they tell us we're idiots, we do not get it, economics is something they truly understand and if Republicans would just go away, then they could fix everything, but as, I think you pointed out, when they had the Republicans out of the way, economics and the economy were the furthest thing from their minds unless it was to tell us what a bon the ACA would be to our economy and how Republicans would never, ever again control any aspect of government outside of the South.

It isn't that they haven't been exposed to the field of economics, if only (obviously) skin deep. It is that what little they know is wrong, with the wrong foundational assumption about human nature, and the way people adapt to changing economic conditions.

Some of it is just silly. I understand why they want the laffer curve to be wrong, for example...but to argue that you can infinitely raise marginal rates and continue to gain revenue makes no sense. It isn't as if they are not vocal about the lengths that the evil rich go to to not pay even more of their so-called fair share...what makes them think LESS of that happens at higher marginal rates?

Can a grocer double his profit on apples by applying (current margin)(2)+(Cost)?

Basic things they argue.

A liberal friend of mine before his passing was always arguing economics with me on Facebook. It mattered not to him that his twin brother concurred with me. His brother by the way is (still) employed as an economist.

He came to liberalism by way hating Reagen. He was ex-navy, and a staunch union man, He married the daughter of a hurrrah for the NEA teacher. He was (fairly benignly) racist (if one can be such a thing) and I challenged him on that when it crept into our private conversations. So he would grin at me when in a discussion with some pro-obama people I got tossed the race card. HE didn't like that aspect of the president but it amused him that a (fill in the blank) was yankin' Republicans chains so well.

He, like his brother and I, was good at back of envelope numbers as I call it. I would lead him along, show him the actual fallacies (not ones of semantics or rhetorical style crowed about on this board) and he would follow along until he could see defeat of the concept on the horizon and begin deflection.

Some CAN get it and refuse to acknowledge, but most believe the econ101 books with their flawed Keynesian base. Of course "higher" education that is either whole funded by in some cases or at least made possible by loan guarantees thinks that gov't (mal)"investment" is wonderful. It enables their salaries in fields that would not even be offered if they had to produce a finished student that could actually pay back the loan

Advanced students can see the gaping holes, but after a while the bright ones recognize the futility of arguing with the professor. The less bright ones become professors. The bright ones go into forecasting where it makes a financial difference if you are wrong.

 

[JAMESBJOHNSON]

Actually von Mises, in The Theory of Money and Credit, shows that it does have value.

It makes a poor fire and toilet paper. Let the transfer system fail and see what good paper currency does. It makes government parasites possible.

What we've done is flood parasites with paper so they can steal real property and toil.

 

[4est_4est_Gump]

"He came to liberalism by way hating Reagen. He was ex-navy, and a staunch union man, He married the daughter of a hurrrah for the NEA teacher. He was (fairly benignly) racist (if one can be such a thing) and I challenged him on that when it crept into our private conversations. So he would grin at me when in a discussion with some pro-obama people I got tossed the race card. HE didn't like that aspect of the president but it amused him that a (fill in the blank) was yankin' Republicans chains so well."

I used to hate Reagan...

 

[4est_4est_Gump]

It makes a poor fire and toilet paper. Let the transfer system fail and see what good paper currency does. It makes government parasites possible.

What we've done is flood parasites with paper so they can steal real property and toil.

I cannot disagree.

 

[4est_4est_Gump]

"Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose."
John Maynard Keynes

 

[JAMESBJOHNSON]

It isn't that they haven't been exposed to the field of economics, if only (obviously) skin deep. It is that what little they know is wrong, with the wrong foundational assumption about human nature, and the way people adapt to changing economic conditions.

Some of it is just silly. I understand why they want the laffer curve to be wrong, for example...but to argue that you can infinitely raise marginal rates and continue to gain revenue makes no sense. It isn't as if they are not vocal about the lengths that the evil rich go to to not pay even more of their so-called fair share...what makes them think LESS of that happens at higher marginal rates?

Can a grocer double his profit on apples by applying (current margin)(2)+(Cost)?

Basic things they argue.

A liberal friend of mine before his passing was always arguing economics with me on Facebook. It mattered not to him that his twin brother concurred with me. His brother by the way is (still) employed as an economist.

He came to liberalism by way hating Reagen. He was ex-navy, and a staunch union man, He married the daughter of a hurrrah for the NEA teacher. He was (fairly benignly) racist (if one can be such a thing) and I challenged him on that when it crept into our private conversations. So he would grin at me when in a discussion with some pro-obama people I got tossed the race card. HE didn't like that aspect of the president but it amused him that a (fill in the blank) was yankin' Republicans chains so well.

He, like his brother and I, was good at back of envelope numbers as I call it. I would lead him along, show him the actual fallacies (not ones of semantics or rhetorical style crowed about on this board) and he would follow along until he could see defeat of the concept on the horizon and begin deflection.

Some CAN get it and refuse to acknowledge, but most believe the econ101 books with their flawed Keynesian base. Of course "higher" education that is either whole funded by in some cases or at least made possible by loan guarantees thinks that gov't (mal)"investment" is wonderful. It enables their salaries in fields that would not even be offered if they had to produce a finished student that could actually pay back the loan

Advanced students can see the gaping holes, but after a while the bright ones recognize the futility of arguing with the professor. The less bright ones become professors. The bright ones go into forecasting where it makes a financial difference if you are wrong.

All of my children were caring liberals until they started working and understood that their taxes paid for vacations and a life of ease for our lesbian neighbors on disability. That is they cant keep jobs because theyre antisocial assholes.

 

[RobDownSouth]

It isn't that they haven't been exposed to the field of economics, if only (obviously) skin deep. It is that what little they know is wrong, with the wrong foundational assumption about human nature, and the way people adapt to changing economic conditions.

Some of it is just silly. I understand why they want the laffer curve to be wrong, for example...but to argue that you can infinitely raise marginal rates and continue to gain revenue makes no sense.

It makes perfect sense when you realize that nobody is advocating this, it's a strawman on your part. A schmott guy like you should have realized this.

Another thing a schmott guy should remember is that America won a war against the Nazis with a marginal tax rate as high as 94% (on all income over $200,000, equivalent of 2.5 million in 2012 dollars)

Of course, schmott guys like you routinely refuse to acknowledge "inconvenient facts" that run contrary to your cherished TAXES BAD platform.

 

[Que]

It makes perfect sense when you realize that nobody is advocating this, it's a strawman on your part. A schmott guy like you should have realized this.

Another thing a schmott guy should remember is that America won a war against the Nazis with a marginal tax rate as high as 94% (on all income over $200,000, equivalent of 2.5 million in 2012 dollars)

Of course, schmott guys like you routinely refuse to acknowledge "inconvenient facts" that run contrary to your cherished TAXES BAD platform.

How is it a "straw man" when you, yourself are implying that the 94% rate was effective in raising revenue beyond what a more sane marginal rate would be?

Alleging a fallacy is not the same as demonstrating the fallacy of an argument. Instead of tossing around rhetorical argument terms like you are scoring a debate, make your case. Which you haven't.

No one paid the 94% rate on all of the increase that could have been termed income.

Taxes at some rate may be a necessary evil, but only an absolute clown would suggest that "TAXES GOOD!"

Thanks for demonstrating as I said that liberals will argue (incorrectly) the very most basic things about what drives economic behavior.

 

[Que]

All of my children were caring liberals until they started working and understood that their taxes paid for vacations and a life of ease for our lesbian neighbors on disability. That is they cant keep jobs because theyre antisocial assholes.

There are always more liberals under 30 than over 40. Each new "class" of liberals seems to think that unlike the last batch of 20-30 somethings this time they really DO know something the old and the senile don't.

If you were not liberal in your youth, you had no heart (I never led with mine)...If you are not conservative in your maturity you have no brain.

 

[Ulaven_Demorte]

How many years are we supposed to wait for this recession we've been hearing was just around the corner since before President Obama took office?

We've been waiting for 6 years now.............

Just keep moving that corner.

Tomorrow!
Tomorrow!
I love ya tomorrow!
You're only a day away!
<repeat ad nauseum>

 

[Que]

How many years are we supposed to wait for this recession we've been hearing was just around the corner since before President Obama took office?

We've been waiting for 6 years now.............

Just keep moving that corner.

Tomorrow!
Tomorrow!
I love ya tomorrow!
You're only a day away!
<repeat ad nauseum>

How many more "Summer of Recovery(s)" must we endure.

With our head underwater, trading water is not progress.

How many more (minor) successes will be heralded with great fanfare after (slightly) positive numbers only to be quietly revised two months later?

If this is a serious question, you can place your bets with Rob the Economist. He is accepting bets in either black or red for the next quarter. Put your money down now.

 

[unregistered]

 

[RobDownSouth]

There are always more liberals under 30 than over 40. Each new "class" of liberals seems to think that unlike the last batch of 20-30 somethings this time they really DO know something the old and the senile don't.

If you were not liberal in your youth, you had no heart (I never led with mine)...If you are not conservative in your maturity you have no brain.

Disproving the cherished conservative myth that people get more conservative as they age

#derp

 

[RobDownSouth]

How is it a "straw man" when you, yourself are implying that the 94% rate was effective in raising revenue beyond what a more sane marginal rate would be?

The key word in your fallacy was "infinitely"....to my knowledge, no one on earth has suggested this. I challenge you to prove otherwise.

Alleging a fallacy is not the same as demonstrating the fallacy of an argument. Instead of tossing around rhetorical argument terms like you are scoring a debate, make your case. Which you haven't.

I pointed out that America has "survived" a marginal tax rate of 94%...and won a major war while doing so. That's called a factual rebuttal, as opposed to your whiny retort.

No one paid the 94% rate on all of the increase that could have been termed income.

Irrelevant. The law was on the books, as are the current tax rate laws. Your unsubstantiated conjecture that "no one paid" cannot be proven or disproven in any event.

Taxes at some rate may be a necessary evil, but only an absolute clown would suggest that "TAXES GOOD!"

Unlike you, I do not assign a moral value of "good" or "evil" to taxes. Taxes are simply a requirement for the function of an orderly society.

Thanks for demonstrating as I said that liberals will argue (incorrectly) the very most basic things about what drives economic behavior.

I've provided concrete facts to back up my position. You provide whining and butthurt to support your own. Declaring "victory" unilaterally makes you look childish.

 

[Que]

The key word in your fallacy was "infinitely"....to my knowledge, no one on earth has suggested this. I challenge you to prove otherwise.


I pointed out that America has "survived" a marginal tax rate of 94%...and won a major war while doing so. That's called a factual rebuttal, as opposed to your whiny retort.


Irrelevant. The law was on the books, as are the current tax rate laws. Your unsubstantiated conjecture that "no one paid" cannot be proven or disproven in any event.


Unlike you, I do not assign a moral value of "good" or "evil" to taxes. Taxes are simply a requirement for the function of an orderly society.


I've provided concrete facts to back up my position. You provide whining and butthurt to support your own. Declaring "victory" unilaterally makes you look childish.

I stand corrected, your position is that raising tax rates within 6% of "infinity" have the effect of increasing revenue collected.

Since figures for GDP and for net receipts to the treasury are known and a simple calculation can be done doing this thing called arithmetic, it can, in fact, be proven or dis proven whether (admittedly on average) "no one paid" anything close to 94%

You are also correct that there might be one of the few rich guy making the equivalent of $2,908,858.90 in 1942 who simply wrote a check for the equivalent of $2,734,327.37. Maybe he felt it his patriotic duty, maybe he was unaware of the existence of accountants. Maybe he ignored all of the allowed deductions under that 94% marginal rate.

Of course for that to be true the collections representing that they collected 20% of GDP meant that most "millionaires" of that time validated the Laffer Curve to an even greater degree to skew the average down even after the one altruistic person simply wrote a check.

And of course you do. Making a judgment call by ascribing a value judgement of your opponents as saying in caveman fashion "taxes bad" as the sum total of their argument on the economic impact of tax policy on society assigns you the opposite judgement.

Thanks for the continued validation.

 

[Ulaven_Demorte]

94% is 6% less than infinity?

I guess Harvard didn't teach math.