Just have a look at the NYTimes website. Fortunately, they took the picture of Bernanke from the top of the page and made it smaller, but geez, I mean, who the heck has their picture taken with a pose like that? I dont trust anyone who would be caught dead posing liking that. Creeeeeeeeeeeeepy. That's the kind of picture you put up that comes back to haunt someone when their hubris is made plain to the world.
AllenM, iceman, MoT, yeah, Volcker did what he had to do. But also note that in Feb 2005 he was very concerned about many issues that are biting today:
"Boomers are spending like there is no tomorrow."
"Homeownership has become a vehicle for borrowing and leveraging as much as a source of financial security."
--
"Education" of Bernanke, or anyone else who wish to be appointed to the Fed, is to serve Crooks in banking and finance. Praise their crookery as financial innovation! The tradition began with Greenspan when the Crooks of New York were able to oust Volcker, with the help of James Baker, III, and peddled Greenspan, a masterful manipulator.
The rest, as they say, is history. The foundations of the collapse of the American econo-political system were led; because once Greenspan got in he made room for other manipulators, e.g., Kohn, and pushed out anyone who wanted to be a good guy, or gal, to do the right thing. Alan Blinder, a Democrat, was pushed out by Greenspan.
Once Crooks take over it is very hard to dethrone them except for violence. Greenspan made himself irremovable!
who the heck has their picture taken with a pose like that?
give 'm a "grill", a cap on backwards, and some bling, tattoo "CREDIT THUG$" on his fingers, and the words "BENNEY B" over the picture, and he's all set.
"Bernanke, who had canceled plans for a vacation to Myrtle Beach, S.C., was now confronting the specter of a financial implosion of the sort he had so often written about. Although he knew the experience of the 1930s in his sleep, he was, in truth, unfamiliar with the exotic mortgage instruments that were failing now."
15%. no. But induce a fever to save the patient? yes. Worked for Volcker, as a 25-bps rise last fall would have done the same for Bernanke last summer, before he got that deer-meet-headlights look in his eyes.
When you say Volker most of the country that remembers him remembers 15% mortgage rates. Not exactly a beloved national hero. The fact that he eventually beat speculators into a pulp is largely lost to time.
When inflation is running 12-14%, is hiking interest rates to 15% reasonable in order to tame it?
Headline inflation now is 4.2%, why would Bernanke go to 15%, are you that thick?
Now would one could argue that he should raise rates above the headline rate of inflation to encourage saving and dampen inflation(though this kind of inflation is beyond the Fed's control.)
Currently the FFR is matching the headline number, but in all liklihood below the real rate of inflation.
When the NYT blurb says "Banks won't lend money", that's an exaggeration. They won't lend money to deadbeats with no down payment, just like they wouldn't for 300 years up until 2003.
While we're castigating Prof. Ben we ought to understand the situation they, and we, are facing. Normally you look for the tradeoff between growth and inflation. The risks of a bubble-burst downturn are so high they're emphasizing growth, or least arresting lack of same(consider Japan's 15+ year malaise). And hoping that slower growth will curtail inflation which is likely. Their real problem though is with the breakages of the credit and money markets which really puts them in a 3-corned dilemma. And traditional monetary policy won't work for what really ails us. For more detail try this: http://tinyurl.com/236bf8
If we're going to get out of this mess we need policy makers who're informed. Frankly the Fed does get it but almost nobody else, including the Street. That's very dangerous.
hese folks want change, and if it takes Huey Long to deliver it, he will:
Those folks could be my neighbors - seriously.
And 'yes' they want change - if it means breaking a few eggs, even if the eggs are of the 'faberge' kind - so be it. These folks are NOT your typical mini-McMansion Beemer Boomers...
TPTB are playing with fire pissing those folks off...
If Lowenstein's partial quote is correct, and Bernanke said "I believes in the laws of arithmetic," then Bernanke needs to take a course in the laws of grammar. Or perhaps Lowenstein needs to learn the laws of quoting people accurately.
Unless the Fed is sitting on some oil wells or arable land, their ability to control oil and food inflation is limited. The inflation of the 70s involved wages feeding back on prices, something that the Fed can affect to a much greater extent. China took care of the wage part.
The Roger Lowenstein article in 10 pages . That much paper devoted to Bernanke is a massive waste.
Bernanke is a tool, who has made it clear he barely understands Macro Economics 101. He should go back to Princeton and miseducate a few more generations of students. People are going to talk of and remember Bernanke the same way as they do Arthur Burns.
The hope is that inflation will come down as growth slows. The reality is that high commodity prices are here to stay because of demand from emerging markets. America's share of world trade is declining (in %age terms) every year. So "decoupling" is not as insane an idea as it looks.
"Joe, the point is that Volcker would do what is appropriate today, given today's situation.
lama | 01.16.08 - 3:59 pm | # "
Let me rephrase that:
"Joe, the point is that Volcker would have done what was appropriate to fight irrational exuberance (1996) and the housing boom (2004-2007), so we wouldn't be in today's situation."
Volker was a central banker's central banker. He knew when to take the punch bowl away and had the stones to do it.
As is was, we had Greenspan, a whore on the Street. Whenever Wall Street said "boo", he would roll over and spread 'em. As a result, our entire financial system is seriously ill; we have infected the world's banking system with SIV; and the Fed has lost many of its tools and safeguards via deregulation.
With credit pretty well siezed up how will the fed even be able to fire up another bubble even if they want to? Congress probably gets the next shot at starting a new bubble.
Reduced taxes always result in increased tax revenue.
Implies that with rates at zero, revenue is infinite.
Ok, you got me. Absolutes do apply. My point was that given today's tax rates, its progressive position and where we are on the Laffer curve, increasing taxes would have resulted in reduced tax revenue. Roughly the top 50% pay 97% of the taxes. A majority of tax revenue comes from the middle class. There are not enough incomes in the top 5% to make a dent in the debt.
The real problem is spending. I think everyone here would agree that we can't tax our way out of the current deficit/debt. The "let's tax the rich" is class warfare. If we were to increase taxes today would would be the impact?
The NYT and Lowenstein are still intellectually dishonest in the support of socialism.
MPinCO, sorry, your thinking is quite sloppy, including your imprecision between "deficit" and "debt."
as was demonstrated in the 1990s, marginal increases in rates at the high end given where rates are today does, in fact, increase revenues considerably without in any way harming eocnomic growth. as european economies demonstrate, considerably higher taxes aren't incompatible with growth either.
taxes at 22% of gdp balance spending at 22% of gdp: you wouldn't have to cut a penny of spending to bring the general fund into balance. (that doesn't mean there isn't plenty of spending i wouldn't cut, but i want to replace that spending with alternative spending.)
as for the serious matter at hand, i'm not sure how susceptible the current problems are to either monetary or fiscal fix: they strike me as somewhat different in nature than typical recessionary problems.
Why is it B. Bernanke said in 2007, under oath and in front of congress, "there is no evidence that taxcuts raise revenue"......
Considering that the Fed has a credibility problem who cares what helicopter Ben says in front of politicians?
Appears you believe that money in the governments hands is better than in private hands? That the government is better at deciding how to invest? That the government knows better?
Sounds like the European socialist philosophy that produces high unemployment, low quality health care and emmigration.
as was demonstrated in the 1990s, marginal increases in rates at the high end given where rates are today does, in fact, increase revenues considerably
Would that have been the latter half of the 90's? Say during a previous bubble? When the stock market bubble produced huge capital gains taxes?
Hehe, supply-side economics doesn't conform to the laws of arithmetic?
That's a good one. One point for Ben.
I personally don't think Volcker was a good chairman. Sure, he tamed the runaway inflation, but his method inflicted a lot of unnecessary pain on the economy at that time. No need to mythologize him.
Volcker was the dad that all children depise and resent when they are young and inexperienced and suffering under discipline's whip...but come to love(and thank) once they have tasted the real world and realize that they have been well prepared. Adversity builds character and resolve. Coddling the incompetents and and appeasing Wall Street is counter to the collective good and the check is now due.
Like that horrible "socialist" Germany that happens to have a 160 billion trade surplus with big, bad we're number 1 "capitalist" United States?
And a 9 to 11 percent unemployment rate? That would sure fly in the 'capitalist' US. That will probably be the low going forward for the german unemployment rate.
The problem is entitlement spending, not tax rates.
PMinCO,
Which entitlements? Intergenerational compacts that make this a more humane society? Or, the slow destruction of the currency for the benefit of bankers and weapons makers?
Triumphalism uber alles. Just as soon as we get rid of all the weak and poor who drag down the rest and best of us, huh?
PMinCO,
If you stil believe the economic (unemployment & inflation) rates being fed you by the same geniuses who've told you "we're making progress" in Iraq, you are going to be very surprised (unpleasantly), and very soon.
As AllenM writes: "Some day this war's gonna end." I'll add for him, and the aftermath will be very ugly.
"And a 9 to 11 percent unemployment rate? That would sure fly in the 'capitalist' US. That will probably be the low going forward for the german unemployment rate."
So in addition to believing that "taxcuts increase revenue" in light of the fact it's been long established that they create debt, you believe in a model that doesn't actually count the unemployed?
"Which entitlements? Intergenerational compacts that make this a more humane society? Or, the slow destruction of the currency for the benefit of bankers and weapons makers?
Triumphalism uber alles. Just as soon as we get rid of all the weak and poor who drag down the rest and best of us, huh?"
oh, la la. What rhetoric. Do you have kids? Do you worry about their future? Does the "intergenerational compact" that's going to come crashing down in the next coupla decades have anything to do with this worry? If not, go buy a vowel.
Must have forgot to put on the sarcasm font. Yes, I have kids: grown, successful and... I anticipate them living under my roof again.
There were simple reasons why people lived in multigenerational households in the depression, and it wasn't all based on narratives the likes of which informed "It's a Wonderful Life." Though, the moral crisis of a small town banker... that's refreshing.
"Altogether, the circumstances seem as dangerous and intractable as I can remember," Volcker said during a keynote address at the second annual summit of the Stanford Institute for Economic Policy Research. (Feb. 2005) "But no one is willing to understand [this] and do anything about it."
TPTB are playing with fire pissing those folks off...
I foresee a mighty ground swell of leftism coming down the road for the USA. This next election, to be held in the midst of a bitterly severe recession, may open the door for this. People want more equality, more regulation, more taxes on the rich, more redistribution of income to the poor, screwed little people in this society etc., etc., etc. And this disaster will bring all that about.
If you stil believe the economic (unemployment & inflation) rates being fed you by the same geniuses who've told you "we're making progress" in Iraq, you are going to be very surprised (unpleasantly), and very soon.
Oh, no. Why? Because neo-conservativism=compassionate conservatism=Bush=Clinton=Obama. There really is little difference. They are all promising government 'solutions'. What they are really promising is more of the same. Isn't this the same mindset that Greenspan operated under? The government can control everything? The reality is that this mindset has created an enormous debt through unfunded entitlement spending. OPM. Promising OPM is easy. Alexander Tyler described it well. Today's EU is no exception.
The only reality check I've have heard is from Fred Thompson, that the current spending is placing the West on a path equivalent to Soviet style oblivion. So if you REALLY care about the next generation quite spending their money.
http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
I personally don't think Volcker was a good chairman. Sure, he tamed the runaway inflation, but his method inflicted a lot of unnecessary pain on the economy at that time. No need to mythologize him.
He did inflict a lot of pain but to say it was 'unnecessary' isn't fair. The failure he was correcting via pain had been inflicted YEARS prior to that - namely the guns & butter spending of the Viet Nam War and Great Society coupled to an overly generous dose of fed easing (in an effort to avoid any pain - didn't work). The options available to him weren't that great.
But if you want to lay blame - blame Johnson, Nixon, Ford & Carter... the congress during those years and the fed prior to Volcker... he had the vision, courage and determination to do the right thing and stick to it even if it sucked at the time (I was there - it sucked!!).
I foresee a mighty ground swell of leftism coming down the road for the USA.
Me too - it won't be good either. If you want socialism (real socialism - not the 'liberal lite' MPinCO confuses with socialism)... then by God promote extreme conservative policy going into a deflationary recession. Man you'll get whiplash socialism out the other end in a heartbeat.
On the other hand if you want real cut throat dog eat dog laissez faire... then push for socialism... when socialism blows up the opposite will be demanded.
Extremes always seem to create the conditions favorable to enable the other extreme to replace it.
dryfly: "On the other hand if you want real cut throat dog eat dog laissez faire... then push for socialism... when socialism blows up the opposite will be demanded."
Some, perhaps you (or me), will be begging for a laborer's job rebuilding roads, bridges, reservoirs, rails, nextgen power systems, etc. Let's see that get done by an insolvent nation of people drowning in debt.
What is REALLY annoying is when they come out with some stat's on "core inflation" only rose 2.4 yada, yada %
and go on to say that while food, gas, health care went up BUT (there's alway's a BUT) clothing, dog food, cars, widgets were down so it's ALL better now. HELLO! First of all to bring DOWN the cost of fuel let's first STOP using corn which is a main food supply in the chain. Corn to cows, to milk, to beef ect. Why not use sugar cane. Because I can't stuff a pair of panty hose in the friggin gas tank to drive to work! GREAT clothing is down! I 'll also run out to buy another auto like I need one! & do a Bevis & Buthead. Sell the new car to buy gas! Whao are these idiots running this country. There is SOO much more that a person with a junior collage degree could run this country better!
It could well come to pass that the US will be forced soon to choose between saving what remains of her ravaged economy (to rebuild for later) or maintaining diehard support for what passes for mainstream economic academic principles ie reflate or die through much lower interest rates. Another bubble? Bring it on!
It will be a choice focussed on the plight of the currency. In a serious, I mean SERIOUS currency crisis the choices become quite stark.Protect the currency (ala Volcker) or shave the zeroes (ala Argentina and the Lat Am experience). It will boil down to this type of choice as all others have been discarded along the way.
It will be a choice focussed on the plight of the currency. In a serious, I mean SERIOUS currency crisis the choices become quite stark. Protect the currency (ala Volcker) or shave the zeroes (ala Argentina and the Lat Am experience). It will boil down to this type of choice as all others have been discarded along the way.
I don't buy the inevitableness of us getting to an 'either or' crisis... I think there is a possibility for an effective muddle through to get back to a basic sanity (greatly reduced current accounts & fiscal deficits and a sound currency WITHOUT total shock therapy)... We have time to do that IF we get good management now. I think technically its possible & would require more than the fed - congress & the administration would play a large role too.
But I'll also concede it is possible we might end up in the 'either or' mode if it gets badly managed. It won't be due to technical mistakes as much as making bad political choices.
The potential for political mischief scares me more than the economics.
Now would one could argue that he should raise rates above the headline rate of inflation to encourage saving and dampen inflation(though this kind of inflation is beyond the Fed's control.)
Something odd going on out there. Small banks (with very decent CALL report numbers) are offering somewhat better than normal rates (they call them Promo Rates) on 7 and 13 month CD's (but not on the more common terms).
what an insane way to try to run an economy. Creating money out of thin air, parsing Fed minutes, telegraphing 'signals', 'managing expectations', etc etc ad nauseum.
imho the way the system is run isn't the problem, it's the system itself.
truly idiotic
The sad truth that few will acknowledge is that America like Argentina wants to consume more than it produces, and like Argentina its been filling this gap with debt. No amount of interest rate manipulation by the Fed or exotic financial engineering from Wall Street is going to fix the problem. What will fix it are more investment, production, and less consumption. More investment is going to require some kind of protectionism until we restore our manufacturing base. The idea of protectionism is anathema to most economists who continue to believe that global trade benefits the US. Another problem at even a more fundamental level is the diversion of intellectual talent into law and finance at the expense of production. A physicist does better on Wall Street doing finance than doing research physics. One of our premier industrial research centersBell Laboratories is now a shadow of its former self. Many other industries have largely gone out of the basic research business. Dont confuse product-oriented research with basic research. Until we go back into the production business, we will get poorer and poorer once the American credit card maxes out.
The people who run this government are a bunch of idiots. Despite their ivy league educations, political connections and money, they still can't get the job done. I'm praying for a 50% real estate price drop in NYC and an abandonment of the dollar as the world's reserve currency. The only way to end the corruption of the system is to see it destroyed, pray for our downfall as it's for the best.
"The only way to end the corruption of the system is to see it destroyed, pray for our downfall as it's for the best."
The CAT
Huh?
Pray that we act with the wisdom obtained from past follies (but neglected recently by policy makers) instead of mob madness nihilism that produced the multi-generation deprevations suffered by our ancestors.
I feel you may have no idea what's behind the door you're eager to open.
Arithmetic? That's so old-school--unless I'm first!
Just have a look at the NYTimes website. Fortunately, they took the picture of Bernanke from the top of the page and made it smaller, but geez, I mean, who the heck has their picture taken with a pose like that? I dont trust anyone who would be caught dead posing liking that. Creeeeeeeeeeeeepy. That's the kind of picture you put up that comes back to haunt someone when their hubris is made plain to the world.
I want Volcker back on the Fed!!!
Maybe after the misery index gets to 20!
Nice gains in the last month- inflation up, unemployment up!
A twofer.
I can hardly wait to see what the congresscritters propose to do.
Someday this war's gonna end...
Paul Volcker - what a central banker should be.
Bring back Paul Volcker!!!
Bubbles? What bubbles? This is the first I have heard of any of this.
AllenM, iceman, MoT, yeah, Volcker did what he had to do. But also note that in Feb 2005 he was very concerned about many issues that are biting today:
"Boomers are spending like there is no tomorrow."
"Homeownership has become a vehicle for borrowing and leveraging as much as a source of financial security."
Volcker saw there was a problem.
Best Wishes.
--
"Education" of Bernanke, or anyone else who wish to be appointed to the Fed, is to serve Crooks in banking and finance. Praise their crookery as financial innovation! The tradition began with Greenspan when the Crooks of New York were able to oust Volcker, with the help of James Baker, III, and peddled Greenspan, a masterful manipulator.
The rest, as they say, is history. The foundations of the collapse of the American econo-political system were led; because once Greenspan got in he made room for other manipulators, e.g., Kohn, and pushed out anyone who wanted to be a good guy, or gal, to do the right thing. Alan Blinder, a Democrat, was pushed out by Greenspan.
Once Crooks take over it is very hard to dethrone them except for violence. Greenspan made himself irremovable!
Jas
who the heck has their picture taken with a pose like that?
give 'm a "grill", a cap on backwards, and some bling, tattoo "CREDIT THUG$" on his fingers, and the words "BENNEY B" over the picture, and he's all set.
I used to do a half-eye roll when scrolling passed JJ, but dammit, when he's right he's right.
How Reagan got an Inner Party Randroid as chair of our premier watchdog institution is beyond curious.
I (heart) Volker!
Ben may say he like all three of the three 'Rs', but that is still not going to stop him from cutting by 100bps, IMHO.
Nor is inflation.
What do you guys say here: Bernanke should deliberately break the economy's neck at 15%?
Give me a break. You can't be serious.
O-Joe
These folks want change, and if it takes Huey Long to deliver it, he will:
Blue-Collar Jobs Disappear, Taking Families' Way of Life Along - NY Times
Someday this war's gonna end...
Sorry, my post got destroyed:
Should Bernanke break the economies neck at 15%?
That's outside any serious discussion.
O-Joe
I give up HaloScan destroys my posts.
O-Joe
Volcker or Victorica. Actually anyone might be better.
The article takes us to August 9:
"Bernanke, who had canceled plans for a vacation to Myrtle Beach, S.C., was now confronting the specter of a financial implosion of the sort he had so often written about. Although he knew the experience of the 1930s in his sleep, he was, in truth, unfamiliar with the exotic mortgage instruments that were failing now."
Coodanode, but dint til right then.
"I give up HaloScan destroys my posts.
O-Joe"
HaloScan finally earns 100 bps.
15%. no. But induce a fever to save the patient? yes. Worked for Volcker, as a 25-bps rise last fall would have done the same for Bernanke last summer, before he got that deer-meet-headlights look in his eyes.
Ben and Paulson are still trying to find the world wide saving glut that shrub keeps talking about...
When you say Volker most of the country that remembers him remembers 15% mortgage rates. Not exactly a beloved national hero. The fact that he eventually beat speculators into a pulp is largely lost to time.
When inflation is running 12-14%, is hiking interest rates to 15% reasonable in order to tame it?
Headline inflation now is 4.2%, why would Bernanke go to 15%, are you that thick?
Now would one could argue that he should raise rates above the headline rate of inflation to encourage saving and dampen inflation(though this kind of inflation is beyond the Fed's control.)
Currently the FFR is matching the headline number, but in all liklihood below the real rate of inflation.
When the NYT blurb says "Banks won't lend money", that's an exaggeration. They won't lend money to deadbeats with no down payment, just like they wouldn't for 300 years up until 2003.
While we're castigating Prof. Ben we ought to understand the situation they, and we, are facing. Normally you look for the tradeoff between growth and inflation. The risks of a bubble-burst downturn are so high they're emphasizing growth, or least arresting lack of same(consider Japan's 15+ year malaise). And hoping that slower growth will curtail inflation which is likely. Their real problem though is with the breakages of the credit and money markets which really puts them in a 3-corned dilemma. And traditional monetary policy won't work for what really ails us. For more detail try this: http://tinyurl.com/236bf8
If we're going to get out of this mess we need policy makers who're informed. Frankly the Fed does get it but almost nobody else, including the Street. That's very dangerous.
Ben Bernanke is the new Herbert Kornfeld.
BB-Dog
hese folks want change, and if it takes Huey Long to deliver it, he will:
Those folks could be my neighbors - seriously.
And 'yes' they want change - if it means breaking a few eggs, even if the eggs are of the 'faberge' kind - so be it. These folks are NOT your typical mini-McMansion Beemer Boomers...
TPTB are playing with fire pissing those folks off...
Joe, the point is that Volcker would do what is appropriate today, given today's situation.
O-Joe musta seen the ticker at noon, took 2 hours to draft his insightful post, then missed the trapdoor that opened in the last half hour.
Monster Nsadaq volumes in a whipsaw day, gold down, oil down.
"TPTB are playing with fire pissing those folks off"
What's a TPTB?
The powers that be
Ben Bernanke is the new Herbert Kornfeld.
No way -- Kornfeld is way more pimp.
But it makes you wonder what other poses they asked Ben to try before they settled on that one.
If Lowenstein's partial quote is correct, and Bernanke said "I believes in the laws of arithmetic," then Bernanke needs to take a course in the laws of grammar. Or perhaps Lowenstein needs to learn the laws of quoting people accurately.
Unless the Fed is sitting on some oil wells or arable land, their ability to control oil and food inflation is limited. The inflation of the 70s involved wages feeding back on prices, something that the Fed can affect to a much greater extent. China took care of the wage part.
Queequeg-Ben's been meeting with Mr "Is our children learning?" Bush, so he has picked up some bad habits.
Is a reliance on econometrics - or too great a reliance - what placed the committee so far behind the curve?
Now here is a dumb statement
".... ideology that championed deficit-spawning tax cuts"
Reduced taxes always result in increased tax revenue. The problem is spending. The politicians love to spend YOUR money. OPM?
The US can't tax its way out of the entitlement promises. It can print its way out but you won't like the effects.
The Roger Lowenstein article in 10 pages
. That much paper devoted to Bernanke is a massive waste.
Bernanke is a tool, who has made it clear he barely understands Macro Economics 101. He should go back to Princeton and miseducate a few more generations of students. People are going to talk of and remember Bernanke the same way as they do Arthur Burns.
The hope is that inflation will come down as growth slows. The reality is that high commodity prices are here to stay because of demand from emerging markets. America's share of world trade is declining (in %age terms) every year. So "decoupling" is not as insane an idea as it looks.
Let me rephrase that:
"Joe, the point is that Volcker would have done what was appropriate to fight irrational exuberance (1996) and the housing boom (2004-2007), so we wouldn't be in today's situation."
Volker was a central banker's central banker. He knew when to take the punch bowl away and had the stones to do it.
As is was, we had Greenspan, a whore on the Street. Whenever Wall Street said "boo", he would roll over and spread 'em. As a result, our entire financial system is seriously ill; we have infected the world's banking system with SIV; and the Fed has lost many of its tools and safeguards via deregulation.
Why would CR recommend an intellectually dishonest article from the NYT?
A recession would seem to be a clear repudiation of President Bush’s policies and, by extension, the Republican Party.
A recession would be a clear repudiation of Greenspan and a Congress that is responsible for spending. No wonder the NYT is fading.
"Reduced taxes always result in increased tax revenue."
Paging Mr. Laffer
Volcker is an idiot. The Wright Model-B, and the Research Triangle says so.
Reduced taxes always result in increased tax revenue.
MPinCO |
Umm, not to put too fine a point on this, but that statement is utter and complete bullshit.
The Laffer curve goes in more than one direction.
"Let me rephrase that" - hmmmm, leave it to a lawyer to expound.
Roger Lowenstein - "When Genius Failed"...the LTCM book. This guy knows the game.
Reduced taxes always result in increased tax revenue.
Implies that with rates at zero, revenue is infinite.
With credit pretty well siezed up how will the fed even be able to fire up another bubble even if they want to? Congress probably gets the next shot at starting a new bubble.
ARMS BUBBLE
Salvation to the US trade imbalance
Reduced taxes always result in increased tax revenue.
Implies that with rates at zero, revenue is infinite.
Ok, you got me. Absolutes do apply. My point was that given today's tax rates, its progressive position and where we are on the Laffer curve, increasing taxes would have resulted in reduced tax revenue. Roughly the top 50% pay 97% of the taxes. A majority of tax revenue comes from the middle class. There are not enough incomes in the top 5% to make a dent in the debt.
The real problem is spending. I think everyone here would agree that we can't tax our way out of the current deficit/debt. The "let's tax the rich" is class warfare. If we were to increase taxes today would would be the impact?
The NYT and Lowenstein are still intellectually dishonest in the support of socialism.
MPinCO, sorry, your thinking is quite sloppy, including your imprecision between "deficit" and "debt."
as was demonstrated in the 1990s, marginal increases in rates at the high end given where rates are today does, in fact, increase revenues considerably without in any way harming eocnomic growth. as european economies demonstrate, considerably higher taxes aren't incompatible with growth either.
taxes at 22% of gdp balance spending at 22% of gdp: you wouldn't have to cut a penny of spending to bring the general fund into balance. (that doesn't mean there isn't plenty of spending i wouldn't cut, but i want to replace that spending with alternative spending.)
as for the serious matter at hand, i'm not sure how susceptible the current problems are to either monetary or fiscal fix: they strike me as somewhat different in nature than typical recessionary problems.
Now here is a dumb statement
".... ideology that championed deficit-spawning tax cuts"
Reduced taxes always result in increased tax revenue. The problem is spending. The politicians love to spend YOUR money. OPM?
The US can't tax its way out of the entitlement promises. It can print its way out but you won't like the effects.
MPinCO
Hmmm... We have another blog brain surgeon I see. Wizard me this Batman......
Why is it B. Bernanke said in 2007, under oath and in front of congress, "there is no evidence that taxcuts raise revenue"......
And just 30 days later, Paulson said "Taxcuts don't increase revenue".....
I can't wait for this one.
Why is it B. Bernanke said in 2007, under oath and in front of congress, "there is no evidence that taxcuts raise revenue"......
Considering that the Fed has a credibility problem who cares what helicopter Ben says in front of politicians?
Appears you believe that money in the governments hands is better than in private hands? That the government is better at deciding how to invest? That the government knows better?
Sounds like the European socialist philosophy that produces high unemployment, low quality health care and emmigration.
as was demonstrated in the 1990s, marginal increases in rates at the high end given where rates are today does, in fact, increase revenues considerably
Would that have been the latter half of the 90's? Say during a previous bubble? When the stock market bubble produced huge capital gains taxes?
Sounds like the European socialist philosophy that produces high unemployment, low quality health care and emmigration.
MPinCO
Like that horrible "socialist" Germany that happens to have a 160 billion trade surplus with big, bad we're number 1 "capitalist" United States?
Get a grip SweetPea.
Hehe, supply-side economics doesn't conform to the laws of arithmetic?
That's a good one. One point for Ben.
I personally don't think Volcker was a good chairman. Sure, he tamed the runaway inflation, but his method inflicted a lot of unnecessary pain on the economy at that time. No need to mythologize him.
"supply-side economics doesn't conform to the laws of arithmetic?"
Has it ever?
TPTB are playing with fire pissing those folks off...
I agree, American's have a very deeply held belief that the world is fair. Not completely, but basically.
It's a dangerous thing to screw with.
Volcker was the dad that all children depise and resent when they are young and inexperienced and suffering under discipline's whip...but come to love(and thank) once they have tasted the real world and realize that they have been well prepared. Adversity builds character and resolve. Coddling the incompetents and and appeasing Wall Street is counter to the collective good and the check is now due.
Like that horrible "socialist" Germany that happens to have a 160 billion trade surplus with big, bad we're number 1 "capitalist" United States?
And a 9 to 11 percent unemployment rate? That would sure fly in the 'capitalist' US. That will probably be the low going forward for the german unemployment rate.
The problem is entitlement spending, not tax rates.
MPinCO,
Go home, sharpen your pencil, and resubmit your paper with the noted corrections.
PMinCO,
Which entitlements? Intergenerational compacts that make this a more humane society? Or, the slow destruction of the currency for the benefit of bankers and weapons makers?
Triumphalism uber alles. Just as soon as we get rid of all the weak and poor who drag down the rest and best of us, huh?
PMinCO,
If you stil believe the economic (unemployment & inflation) rates being fed you by the same geniuses who've told you "we're making progress" in Iraq, you are going to be very surprised (unpleasantly), and very soon.
As AllenM writes: "Some day this war's gonna end." I'll add for him, and the aftermath will be very ugly.
"And a 9 to 11 percent unemployment rate? That would sure fly in the 'capitalist' US. That will probably be the low going forward for the german unemployment rate."
So in addition to believing that "taxcuts increase revenue" in light of the fact it's been long established that they create debt, you believe in a model that doesn't actually count the unemployed?
I have to ask... How old are you?
"Which entitlements? Intergenerational compacts that make this a more humane society? Or, the slow destruction of the currency for the benefit of bankers and weapons makers?
Triumphalism uber alles. Just as soon as we get rid of all the weak and poor who drag down the rest and best of us, huh?"
oh, la la. What rhetoric. Do you have kids? Do you worry about their future? Does the "intergenerational compact" that's going to come crashing down in the next coupla decades have anything to do with this worry? If not, go buy a vowel.
"Do you have kids? Do you worry about their future?"
I do but I'm willing to wager my kids are actually older than you are.
Must have forgot to put on the sarcasm font. Yes, I have kids: grown, successful and... I anticipate them living under my roof again.
There were simple reasons why people lived in multigenerational households in the depression, and it wasn't all based on narratives the likes of which informed "It's a Wonderful Life." Though, the moral crisis of a small town banker... that's refreshing.
From Volcker, almost three years ago:
"Altogether, the circumstances seem as dangerous and intractable as I can remember," Volcker said during a keynote address at the second annual summit of the Stanford Institute for Economic Policy Research. (Feb. 2005) "But no one is willing to understand [this] and do anything about it."
Who could have forseen?
TPTB are playing with fire pissing those folks off...
I foresee a mighty ground swell of leftism coming down the road for the USA. This next election, to be held in the midst of a bitterly severe recession, may open the door for this. People want more equality, more regulation, more taxes on the rich, more redistribution of income to the poor, screwed little people in this society etc., etc., etc. And this disaster will bring all that about.
If you stil believe the economic (unemployment & inflation) rates being fed you by the same geniuses who've told you "we're making progress" in Iraq, you are going to be very surprised (unpleasantly), and very soon.
Oh, no. Why? Because neo-conservativism=compassionate conservatism=Bush=Clinton=Obama. There really is little difference. They are all promising government 'solutions'. What they are really promising is more of the same. Isn't this the same mindset that Greenspan operated under? The government can control everything? The reality is that this mindset has created an enormous debt through unfunded entitlement spending. OPM. Promising OPM is easy. Alexander Tyler described it well. Today's EU is no exception.
The only reality check I've have heard is from Fred Thompson, that the current spending is placing the West on a path equivalent to Soviet style oblivion. So if you REALLY care about the next generation quite spending their money.
http://www.fakepaycheckstubs.com IS THIS LEGAL? No wonder why we have the subprime mess we have when lenders USE FAKE DOCUMENTATION to help PUSH the loan through Quickly SO THAT EVERYONE DOWN THE FOOD CHAIN (from loan processor to the loan officer to the actual lender) can make the commissions they "WERE" making during the booming 90's!!! Now we are BAILING OUT THESE CROOKS....SOUNDS LIKE the good ol' 1980's Savings and Loan BAILOUT DAYS! http://www.fakepaycheckstubs.com see it with YOUR OWN EYES!
lets start a website and petition to get Volker back!
Whos with me?
I personally don't think Volcker was a good chairman. Sure, he tamed the runaway inflation, but his method inflicted a lot of unnecessary pain on the economy at that time. No need to mythologize him.
He did inflict a lot of pain but to say it was 'unnecessary' isn't fair. The failure he was correcting via pain had been inflicted YEARS prior to that - namely the guns & butter spending of the Viet Nam War and Great Society coupled to an overly generous dose of fed easing (in an effort to avoid any pain - didn't work). The options available to him weren't that great.
But if you want to lay blame - blame Johnson, Nixon, Ford & Carter... the congress during those years and the fed prior to Volcker... he had the vision, courage and determination to do the right thing and stick to it even if it sucked at the time (I was there - it sucked!!).
what's up the personal attacks? a tactic, btw, usually reserved to the immature.
I foresee a mighty ground swell of leftism coming down the road for the USA.
Me too - it won't be good either. If you want socialism (real socialism - not the 'liberal lite' MPinCO confuses with socialism)... then by God promote extreme conservative policy going into a deflationary recession. Man you'll get whiplash socialism out the other end in a heartbeat.
On the other hand if you want real cut throat dog eat dog laissez faire... then push for socialism... when socialism blows up the opposite will be demanded.
Extremes always seem to create the conditions favorable to enable the other extreme to replace it.
dryfly: "On the other hand if you want real cut throat dog eat dog laissez faire... then push for socialism... when socialism blows up the opposite will be demanded."
Kinda like Putinsberg?
Entitlement Spending?
Some, perhaps you (or me), will be begging for a laborer's job rebuilding roads, bridges, reservoirs, rails, nextgen power systems, etc. Let's see that get done by an insolvent nation of people drowning in debt.
Unexpected? Probably. Impossible? Not hardly.
What is REALLY annoying is when they come out with some stat's on "core inflation" only rose 2.4 yada, yada %
and go on to say that while food, gas, health care went up BUT (there's alway's a BUT) clothing, dog food, cars, widgets were down so it's ALL better now. HELLO! First of all to bring DOWN the cost of fuel let's first STOP using corn which is a main food supply in the chain. Corn to cows, to milk, to beef ect. Why not use sugar cane. Because I can't stuff a pair of panty hose in the friggin gas tank to drive to work! GREAT clothing is down! I 'll also run out to buy another auto like I need one! & do a Bevis & Buthead. Sell the new car to buy gas! Whao are these idiots running this country. There is SOO much more that a person with a junior collage degree could run this country better!
It could well come to pass that the US will be forced soon to choose between saving what remains of her ravaged economy (to rebuild for later) or maintaining diehard support for what passes for mainstream economic academic principles ie reflate or die through much lower interest rates. Another bubble? Bring it on!
It will be a choice focussed on the plight of the currency. In a serious, I mean SERIOUS currency crisis the choices become quite stark.Protect the currency (ala Volcker) or shave the zeroes (ala Argentina and the Lat Am experience). It will boil down to this type of choice as all others have been discarded along the way.
Kinda like Putinsberg?
Bingo.
It will be a choice focussed on the plight of the currency. In a serious, I mean SERIOUS currency crisis the choices become quite stark. Protect the currency (ala Volcker) or shave the zeroes (ala Argentina and the Lat Am experience). It will boil down to this type of choice as all others have been discarded along the way.
I don't buy the inevitableness of us getting to an 'either or' crisis... I think there is a possibility for an effective muddle through to get back to a basic sanity (greatly reduced current accounts & fiscal deficits and a sound currency WITHOUT total shock therapy)... We have time to do that IF we get good management now. I think technically its possible & would require more than the fed - congress & the administration would play a large role too.
But I'll also concede it is possible we might end up in the 'either or' mode if it gets badly managed. It won't be due to technical mistakes as much as making bad political choices.
The potential for political mischief scares me more than the economics.
Now would one could argue that he should raise rates above the headline rate of inflation to encourage saving and dampen inflation(though this kind of inflation is beyond the Fed's control.)
Something odd going on out there. Small banks (with very decent CALL report numbers) are offering somewhat better than normal rates (they call them Promo Rates) on 7 and 13 month CD's (but not on the more common terms).
what an insane way to try to run an economy. Creating money out of thin air, parsing Fed minutes, telegraphing 'signals', 'managing expectations', etc etc ad nauseum.
imho the way the system is run isn't the problem, it's the system itself.
truly idiotic
The sad truth that few will acknowledge is that America like Argentina wants to consume more than it produces, and like Argentina its been filling this gap with debt. No amount of interest rate manipulation by the Fed or exotic financial engineering from Wall Street is going to fix the problem. What will fix it are more investment, production, and less consumption. More investment is going to require some kind of protectionism until we restore our manufacturing base. The idea of protectionism is anathema to most economists who continue to believe that global trade benefits the US. Another problem at even a more fundamental level is the diversion of intellectual talent into law and finance at the expense of production. A physicist does better on Wall Street doing finance than doing research physics. One of our premier industrial research centersBell Laboratories is now a shadow of its former self. Many other industries have largely gone out of the basic research business. Dont confuse product-oriented research with basic research. Until we go back into the production business, we will get poorer and poorer once the American credit card maxes out.
"So if you REALLY care about the next generation quite spending their money."
So shifting the tax burden from the wealthiest to those who can afford to pay isn't spending their money?
The people who run this government are a bunch of idiots. Despite their ivy league educations, political connections and money, they still can't get the job done. I'm praying for a 50% real estate price drop in NYC and an abandonment of the dollar as the world's reserve currency. The only way to end the corruption of the system is to see it destroyed, pray for our downfall as it's for the best.
"The only way to end the corruption of the system is to see it destroyed, pray for our downfall as it's for the best."
The CAT
Huh?
Pray that we act with the wisdom obtained from past follies (but neglected recently by policy makers) instead of mob madness nihilism that produced the multi-generation deprevations suffered by our ancestors.
I feel you may have no idea what's behind the door you're eager to open.
That the government is better at deciding how to invest? That the government knows better?
Tactical Flashlights
r c helicopter
video game