Who knows? It’s out of control. It’s amazing how fast an institution can spend other people’s money. — NOS4A2

Neoliberalism put those institutions at the center of the world's economy.

Hey, you didn't explain what caused the Great Depression.

Did you move to the Arctic Circle yet?

There is so much government intervention in the way that no one could ever know. — NOS4A2

That government intervention is done at the behest of the 1%, the corporations, the MIC, and the capitalists who use it to limit competition and line their pockets. If they would only pay true cost like a real capitalist would, then we'd at least have a handle on it. But they've convinced their sheep that they did it all in spite of government, instead of through the ownership thereof.

I’m not an economist. I have no theory as to what caused the Great Depression.

It’s amazing how fast an institution can spend other people’s money. — NOS4A2

Not fast enough, apparently. Musk made some $36 billion in one day. Only a sap would think it was "his" money and that the markets and invisible hand really exist.

I have no theory as to what caused the Great Depression. — NOS4A2

Same thing that caused the tank in the 1890s.

The government is taking our money!

I don’t care who it’s for. It’s done because others have given them the power to do it.

I’m not an economist. I have no theory as to what caused the Great Depression. — NOS4A2

Wait, you signified otherwise before, about people paying prices for their sins.

Gyp!

For it to be stagflation GDP growth needs to be flat with inflation. But GDP growth is the highest in decades, 6.7%. Plus, a good deal of that inflation is rebound inflation. Recall oil having a negative price back in 2020? The year over year % increase is misleading because the year you're comparing to had huge deflationary pressures. Same for GDP growth. We only have China levels of growth because the economy contracted last year. It'd basically two years of growth and inflation at once. Averaging from 2019, things look much less extreme.

Real wages, so controlling for inflation, are rising for the bottom 50% faster than any time since the 1990s. Median checking account balances are up a whopping 50% since 2019. Inflation going into a spiral is a very, very real risk, but the initial bump has more to do with supply chain shocks (e.g. used cars up 40% on chip shortages for new cars, gas going from super low to 2019 levels). We had Great Depression level unemployment as the entire service sector dumped its staff and now they are all trying to hire back at once. Is it any wonder they have trouble filling spots? But if employee leverage causes wage increases that increase prices, a spiral can still start from the initial shock.



Defense spending to GDP has fallen by almost a third since 2010. 3.5% of GDP is not particularly high. Comparisons to Europe are somewhat unfair because they benefit from US protection, but even there the gap has shrunk. In the 1950s, when economic equality and growth was way better, defense spending was 11.5% of GDP. It was over 5% as recently as the 1980s.

Deficits are being driven by repeated cuts to revenue and transfer payments to seniors. That's where all the huge shifts are. Three rafts of large tax cuts since Reagan are probably the key issue.

Transfers to seniors (SS and universal healthcare through Medicare) are 38% of the budget. Interest on the debt, also a transfer to seniors since it's stuff they got in earlier years that younger generations will pay for, is another 8%, so 46% goes to seniors. The next largest group is transfers to low income people. 8% for non health welfare, 10.2% is healthcare for low income folks.

Defense is 11% and falling. Almost 15% of defense spending is on services and transfers for veterans, which could fall under pensions and health sliced another way.

The idea that America can fund things like universal healthcare out of the defense budget just doesn't make sense. Our super high medical spending/GDP from the private system does way more harm to deficits than defense spending.

Comparisons to other countries are also spurious because of unique ways in which the US operates. Healthcare is private so defense, and everything else, grows as a share of the budget since healthcare isn't a national expense. Most of the day to day stuff the government does is done by state and local government, roads, K-12 education, etc. Those expenses almost equal Federal ones (pre-stimulus).

So comparisons of the Department of Education and DoD budget is disingenuous as a talking point. States run colleges, counties or cities rub K-12, and they spend far more than the DoD.

The idea that America can fund things like universal healthcare out of the defense budget just doesn't make sense. Our super high medical spending/GDP from the private system does way more harm to deficits than defense spending. — Count Timothy von Icarus

But I wonder how much of that is bureaucracy and paying CEOs. I think the whole thing needs to be overhauled.

Can you explain the stagflation of the 1970s?

Thanks for the explanation.

Yeah, let's just tax more, like the 90% marginal rate I heard we had when the U.S. was in it's prime. Of course there was a raft of exemptions but it doesn't help when we reduce the rate and leave the exemptions. Also, one question I've always had is this: If defense spending can be defended because it creates jobs, doesn't welfare spending create jobs too? I mean, either way we are giving money away. But bombs disappear, whereas welfare spending gets spent, and also pays the wages of all those who dole it out. Kind of a trickle up idea, instead of a trickle down. That way those at the top actually have to work to get some of it.

But in the end, I hear deficit spending doesn't mean shit so long as the petrodollar/dollar is the world's currency. Sure, if the world switched to a PetroEuro or Wan or whatever, we'd be a third world country over night. But we still have the bombs, right?

I don’t care who it’s for. It’s done because others have given them the power to do it. — NOS4A2

Or they took it. Maybe even paid money for it. Hmmm. Wonder where they got the money. Must have "created wealth." :rofl:

If anyone other than the government acted like the government, took wealth as they did, they’d be rightfully called a criminall. That’s why it’s difficult to distinguish the government from any other criminal class.

If anyone other than the government acted like the government, took wealth as they did, they’d be rightfully called a criminall. That’s why it’s difficult to distinguish the government from any other criminal class. — NOS4A2

You are right. And those who aren't deluded DO call them criminals. And it is hard to distinguish. That's part of the plan. Let me tell you how it works:

Like many a person I've argued with before, there is a fundamental failure to distinguish between the government and those who wield it. Let me try and help you: Government is not the living, breathing, sentient, conscious, evil monster that some deluded people think it is. Sure, if you are telling stories around the campfire, to gullible little kids, that works.

But government is really just a tool. Like a hammer, or a gun. It does not hurt you or steal from you or make you it's bitch. It is the people behind the government that do that. Guns don't kill people. People kill people. Government does not take wealth as a criminal. Criminals take wealth as criminals. When you hold a hammer, the whole looks like a nail. When you hold lots of money, those who hold little look like chumps. So you take even more and the chumps line up to help you. The chumps love to hear the stories about money and they go to bed at night with visions of money dancing in their sweet little heads.

So, now all you have to do is follow the money. Guess what? The trail emphatically does lead back to the people who you think "created" wealth with brawn or brains, bootstrapping themselves up with risk-taking daring-do and personal responsibility. Those who have you thinking they came by it honestly are the very thieves you are looking for.

Now I'm not so stupid as to think what I just said didn't fall on deaf ears. I know it did. But I can speak truth anyway. Futile though it may be. Those who can't distinguish don't distinguish. They listen to the fairy tales and believe them.

[edited to delete the NOT]

If anyone other than the government acted like the government, handcuffed people and locked them in a cell, they’d be rightfully called a criminal. That’s why it’s difficult to distinguish the government from any other criminal class.

A lot had been written about that. Appears to be a combination of things. First, the demand side. Part of that was too much government spending going up too quickly due to the Great Society and Vietnam War. That was new demand that couldn't be met by new supply quick enough. Also an increase in consumption as Baby Boomers started to hit adulthood and buy their own cars, homes, etc.

The supply side was probably a bigger issue. Immigration reform had been passed but was slow to start and illegal immigration was nothing like the 1990s to today, with a metropolis worth of mostly working age people entering the labor force each year (and at a large disadvantage in negotiating wages, which keeps wages low). Women were joining the workforce but the peak of the transition hadn't hit yet. So the supply of labor to meet new demand wasn't elastic enough to avoid price increases. And since labor is a major component in almost all goods, change in labor costs often result in changes in prices (although people drastically misunderstand when they think the correlation is 1:1, that only holds if demand is perfectly elastic with price, which is basically never is, hence $15 minimum wages don't drive the price of Big Macs up much).

You can see this in how productivity gains and wages used to go up together in lock step. Since 1979 wages have flatlined, going down for the lower income (along with life expectancy), while the gains flow to the owners of capital. Women entering the workforce and mass migration was a seismic and sustained expansion in the labor pool that probably helped keep inflation so moderate from the 90s on.

Obviously the gas supply shock was another major cause. Gas is used to transport goods and rub machinery so it is an input in the price for everything, so the 1973 shock had huge ramifications. Today the US is a net petroleum exporter, but back then we were way more sensitive to oil price shocks. Absolute supply mattered because vehicles had nowhere near the fuel efficiency of today. A modern heavy truck gets more miles per gallon than a 1970 passenger car (passenger cars averaged 13.75 MPG at the start of the shock, trucks today sit around 24 MPG and cars are up around 33 MPG). Obviously new production methods also help with supply shocks since domestic production exceeds demand even with Americans all driving SUVs and light trucks as commuter vehicles (of course that leads to other, larger problems than inflation).

Then the solutions, Nixon era price and wage mandates, just distorted the economy more. Taking the currency of the gold standard, while clearly the right thing to do long term (fiat has proved far more stable than gold backed currency for developed nations), probably also hurt simply because it hurt consumer perceptions of the risk of future inflation. Hell, even after 30+ years of well controlled inflation there are still goldbugs raving about how all our fiat money will be worth nothing any day now, but when it was a new shift the fear effected behavior far more.

But the thing with inflation is, it doesn't necissarily stop when the thing that started it stops. So current inflation is obviously due to the Pandemic and supply shocks, but the wage/price increase cycle is a positive feedback loop sans other factors. With stagflation back then, you had inflation kick off during economic expansion, but then the feedback loop continued during slow growth due to continued supply shocks and lack of adequate policy solutions.

If anyone other than the government acted like the government, handcuffed people and locked them in a cell, they’d be rightfully called a criminal. That’s why it’s difficult to distinguish the government from any other criminal class. — Michael

:100: Bingo. And the list goes on. Who is government to stop me from dumping metric shit-tons of hazardous waste into the air or the river? And then fining me for it!

The idea that America can fund things like universal healthcare out of the defense budget just doesn't make sense. — Count Timothy von Icarus

This isn't what's being claimed. When the grotesquely bloated defense budget is brought up, it's done so to expose the utter hypocrisy and stupidity of those who suddenly worry about deficits and "fiscal responsibility" whenever social services are brought up. They don't care about deficits or the debt, or about spending -- provided the money is spent on their interests, and they use other people's money (taxpayers) while avoiding paying much themselves. That's the capitalist class for you.

The state is a tool, true, but more of a machine. Its sole purpose is the exploitation of one class by another, and to secure its interests from insurrection from within and without. It doesn’t matter who wields it or pulls its levers, it goes on doing what it always has, in fact, what all states were created to do. If you were to man the state with a flock of honorable men, what exactly would change? Extortion, robbery, exploitation, coercion, mendacity, hypocrisy, rent-seeking, corruption—all of it would go on, simply because no state was formed for any other purpose.

Thank you! I've been trying to put the facts together into a coherent picture for a while now.

So why did return on investment decline? Because wages were high?

The state is a tool, true, but more of a machine. Its sole purpose is the exploitation of one class by another, and to secure its interests from insurrection from within and without. It doesn’t matter who wields it or pulls its levers, it goes on doing what it always has, in fact, what all states were created to do. If you were to man the state with a flock of honorable men, what exactly would change? Extortion, robbery, exploitation, coercion, mendacity, hypocrisy, rent-seeking, corruption—all of it would go on, simply because no state was formed for any other purpose. — NOS4A2

A machine is a tool. The purpose is determined by he/she/they who build it and wield it. One purpose is indeed to prevent insurrection from anywhere. It does matter greatly who wields it and pulls its levers.

If I were to man the state with a flock of honorable people, nothing would change. That is why neither I nor any other individual should be charged with manning it. Nor should I decide who is honorable and who is not. The people at large, constrained by a Constitution designed to protect against a tyranny of the majority, and acting pursuant to the rule of law, should make such decisions and they should do so periodically, again as set forth in law.

They should also keep money from making the decisions and they should tax every swinging dick and tit under their sovereign jurisdiction; more so those who benefit the most from the machine.

Those who want the machine to seize up and stop working will, of course, seek to deprive it of oil and grease. They will instead grease palms. With money. They are insurgents from within and without. They are enemies of the people. They are the reason the state does not work for the people.

Sometimes money keeps the machine running to do dirty work against the people. Money will keep the machine around as a punching bag for those so stupid as to blame the machine instead of the money that pulls the levers. But yeah, gerrymander, buy up the 4th estate, dole out enough bread and circuses to keep the guillotine at bay, man the levers with hacks, and convince the sheep that the machine is their oppressor. But never let the people get the levers.

The right of the people to keep and bear levers has been infringed. Now money has them. But don't blame the levers. Keep and bear them. Or in this case, take them back. Legally.

I could go on but you're smart enough to beat this analogy out to it's obvious conclusion.

I assume you mean returns on the stock market? I'm not super familiar with the period like I am with 2008, which I've read a lot of books on. My understanding is that was blue chips being over valued going into the crash and then inflation beat down stocks into 1980.

When inflation goes up, generally so will interest rates, because lenders assume they will get paid back in currency that is now worth less than what they gave out.

Central banks also raise interest rates as a means of combating inflation. Higher rates basically equate to raising the price of cash, which in turn weakens demand for it. Less lending means less money changing hands (velocity in macro models), which should reduce inflation, all else being equal.

The combo led to very high rates in the 70s. The Federal Reserve had rates at 20% by 1980, which is wild. If you can earn 20+% on money markets and bonds, you don't really have much incentive to stash your cash into stocks. Inflation also makes the potential yields on speculating in bonds a lot hotter because real bond yields shift more over time with volatile inflation rates. Meanwhile, stock value needs to keep up with the high inflation rate just for your asset not to lose value.

Also, if the company you now own runs into problems, a likely issue with high inflation and low economic growth, it has to either borrow at high interest rates, which will burden it with debt service, or it will choose to issue more stock because selling debt costs too much, which devalues your asset since each share is now less of the total.

Wealth and income equality was also much better back then. Now the top 10% own 90% of stocks, and that's weighted to the top 0.1%. So we see stocks booming despite inflation because the rich need assets to stick their cash in, but fixed income has garbage yields because interest rates are so low, so money pours into other assets (unfortunately single family real estate has become a major investment class, and it is killing regular citizens). If money is more evenly distributed, less is available to flood into asset classes like stocks.

I think the mental danger of inflation in the biggest challenge right now. People fear rising prices more than they should. Because wages have stagnated for so long, they don't have faith that their wages will keep up with prices, but in the past that has absolutely been the case in tight labor markets. For the first time since 1979 I believe, the bottom 50% are seeing bigger raised than the top 10%, and their wages are beating inflation growth.

Not only that, but about 29% of Americans have more credit card debt than cash savings. That share grows if you include mortgage debt, student debt, car loans, etc. People with more debt than savings tend to be poorer obviously. The thing about inflation is, it makes your debts worth less. You're paying them back in currency with less value. So low income Americans are winning on both sides of the equation.

But the top 10-20% is getting hurt, and that's who tends to lobby best, and who makes calls in the media, so we can expect to mostly hear about the bad side of this. It's a liability for the Democrats aside from them just holding power as this happens, because they've shifted so far on migration that they no longer have any coherent criteria for when anyone shouldn't be allowed to move to the US outside them being a violent criminal. However, I think this will be a big wake up to workers that businesses having access to an inexhaustible supply of cheap labor isn't favorable for them, and that there are reasons outside of racism to control migration.

Its sole purpose is the exploitation of one class by another, and to secure its interests from insurrection from within and without. It doesn’t matter who wields it or pulls its levers — NOS4A2

It does matter who pulls the levers. What you're describing is the state being controlled by the capitalists, and so you generalize this to all states. A nation-state is a kind of social organization, and there are various forms. Just as there are various forms of business. It would be nice if we tried democratic participation in both. You rail against the former while defending the latter, and so you forfeit any right to be taken seriously.

Abolish the state? Fine. Let's first abolish capitalism.

while doing everything in their power to support — StreetlightX

:rofl:

I thought Team Biden hit a big winner today with the joint announcement with China at COP26. :party:

A former colleague of mine is involved in this show, which in the end it is. There's no system of accounting for carbon emissions and it's not going to be negotiated here either. That's left to career civil servants who have been at it for at least 4 years. Every negotiation, countries try to introduce exemptions, loopholes, set off mechanisms etc. just to avoid having to do fuck all.

We already have our targets from Paris and we already have stated commitments. We actually don't need COP26. We need every country to just follow up on what they've previously promised.

This latest statement from China and the USA doesn't mean anything. It has the same value as the love letters exchanged between Trump and Kim.

This latest statement from China and the USA doesn't mean anything. It has the same value as the love letters exchanged between Trump and Kim. — Benkei

Easy to dissolve everything in the acid bath of cynicism. There’s a few specialists of that around.

Nothing cynical about. I have experience negotiating with 27 EU members and that's already a problem. I know what's going on in this field because former colleagues are doing the legwork. We're looking at another decade of useless wrangling about definitions. I suspect we'll have an energy revolution despite governments not thanks to them.

Having China and the US agreeing about something important is a welcome change from cold-war sabre rattling.