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Old 06-09-2012, 07:38 AM   #401
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Old 06-09-2012, 10:45 AM   #402
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Obama: "The Private Sector Is Doing Fine" | RealClearPolitics

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Question: What about the Republicans saying that you're blaming the Europeans for the failures of your own policies?

President Obama: The truth of the matter is that, as I said, we created 4.3 million jobs over the last 27 months, over 800,000 just this year alone.

The private sector is doing fine.
He as since been forced to eat those words. When I graduated in 1984 the economy was growing by 7.4%, THAT is a private sector "doing fine."
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Where we're seeing weaknesses in our economy have to do with state and local government. Oftentimes cuts initiated by, you know, Governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don't have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.
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"Oftentimes cuts initiated by, you know, Governors or mayors..."
Governors and mayors attempting to balance budgets as required by their constitution or newly elected to do just that, restore some fiscal sanity.

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"who don't have the same kind of flexibility as the federal government in dealing with fewer revenues coming in."
Flexibility? To what? Print money? Borrow from China? Not balance a budget, wait, not even pass a budget !!

Forget all my recent posts about Barack Obama's radical ties, that's low hanging fruit, this guy is an economic imbecile and his policies and rhetoric have paralyzed our economy.
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Old 06-09-2012, 02:29 PM   #403
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What's paralyzed our economy is lack of stimulus and the gutting of the public sector, let alone Europe.

The deficit is essentially Saddam Hussein, and austerity Gulf War 2.

We exaggerate a problem, terrify the populace, then enact policies that benefit no one but the oligarchy.

And your enjoyment of 1984 is what precisely led to today.
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Old 06-09-2012, 03:31 PM   #404
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I'm annoyed by the somewhat neo-Mercantalist attitude towards money that's so easy to find in this country, and that is really the backbone of Indy's post.

Such an attitude is fundamentally driven by a belief that, more or less, a country has a set amount of money and it can only overspend by borrowing on printing, the former of which creates the same nasty obligations as private debt and the latter of which just creates inflation. There's some truth to that, but it is not at all the end of the story.

Money creation happens through more than printing money. Under normal circumstances, investment and the fractional reserve banking system have their own money creation system of sorts. If investment and fractional reserve banking did not exist and the government had, say $1,000,000,000,000 in circulation, probably $800,000,000,000 or so of that would actually be in circulation, as people would store the other $200,000,000,000 in banks that would more or less be mattresses. Unless that money was cashed in on, for all intents and purposes, it would not be in circulation. Investment and fractional reserve banking, however, put money stored in savings into circulation. They effectively create $200,000,000,000 more than would have been in existence otherwise. When the economy starts booming, this takes off even more. The issuing of debt, for many purposes, allows money to be represented twice and used twice. The borrower has the seller's money, but the seller has a guarantee to get that money (plus some) back. And often, those guarantees are traded as not much less than money to other people in the form of bonds. Stocks and various securitized assets work more or less the same way. Money multiplies itself under good circumstances. In the process, inflation is created without the government ever firing up the printing presses, but so it growth.

In 2008, trillions of dollars of this paper wealth vanished. Much of it was based on completely absurd securitized tranches of mortgages and other assets. Sure, to an observer in hindsight, it may have been a bad idea for banks to have issued ARMs for $600,000 homes to people making $40,000 per year (probably an exaggeration, but it was pretty bad). But that's not what mattered. What mattered is that investors bought tranches and tranches of these mortgages. And as long as other investors thought they were worthwhile and the borrowers paid their minimum payments under their temporarily low interest rates and optimism for future salaries, the cycle maintained itself. In a way, a Ponzi scheme organically developed, and the creation of de facto money rested on its shoulders. When that cycle crashed (animal spirits? high oil prices? investors realizing that this may not be a good idea? all of the above and then some?), de facto money vanished.

Under the classical microeconomic approach to thinking, the apt response to this would have been instant broad-based deflation to the point where real income and prices all adjusted to be just the same and everyone went on their merry way. Well, also according to the classical micro model, none of what I just described should have happened, because investors should have been rational and should have known what was coming their way. It may be argued that government protection helped to fuel the fire, because it minimized investor losses and they knew that it would. This is a fair argument. However, it's silly to think that investors didn't suffer at all from this crash; the government just cushioned the loss. But what the classical micro modal predicted would happen is not at all what happened. Recession happened. De facto money went out of circulation. Investors lost confidence and put their money into safe assets (cash itself, US treasury bonds, safe corporate bonds, and whatnot), the layoffs began, investors lost more confidence, et cetera.

All of this happened with no change to the base money supply, but assets that were treated as de facto money and that freed up cash to circulate disappeared. And from this, another thing that shouldn't happen according to classical microeconomics happened: the economy began producing at less than its full capacity to produce. An answer I hear a lot in defense of classical micro models is that unemployment insurance and other safety net government programs disincentive employment... in other words, that this unemployment is more or less voluntary. Of course, this ignores the reality that a life on unemployment insurance and the rest of the safety net isn't exactly glamorous compared with life with the help of a good job. But this issue gets to the root of our economic problem: the United States is not producing as much as it could. Why? Largely because there isn't the demand, also known as consumer confidence, for corporations to justify investments and hiring. We may talk about regulations being an issue. And it is true that lower regulations will lead to more hiring, although lower regulations also present future problems (that 7.5% growth rate from 1984 was probably a bad thing), such as the sort of bubble that caused all of these issues in the first place. What really is needed to justify hiring is demand, but demand comes from hiring... so there's a nasty vicious cycle. To clear this up requires the insertion of new money into circulation, through debt and through printing. Printing creates inflation, yes, but in the case of the first two rounds of quantitative easing, such inflation probably just prevented deflation (which would have been really, really nasty for borrowers). What it creates, more importantly, is demand. If that demand could not be met by additional supply, at the point where the economy is producing at its structural capacity, then all that would happen is pure inflation. And even before that point, there's probably a point where the inflation consequence would be worse than the growth reward. But printing money has its place, in order to get an economy to create more. What is important is not the lump sum of money that a country has, but how much it produces. When an economy is not producing at its structural potential is when printing money is really a problem. That is where examples of disastrous hyperinflation come from... the Zimbabwes and the Wiemar Republics of the world. Any level of growth inherently creates inflation, and inflation is not always the end of the world. When de facto money evaporates, printing real money does not just create pure inflation. Putting it in the hands of consumers and investors can stop an economy's retreat away from full production. Of course, classical micro says that an economy should always be at full production, because that's what happens when people act in their own self-interest. That ignores the fact that it is only wise to spend money on employment and whatnot if everyone else is... i.e., if the economy is booming. In a recession, the economy is stuck in an equilibrium of sorts where nobody spends because nobody spends, but if every spent then things would be all fine and dandy. Getting out of that requires both replacing toxic assets with less toxic assets and spurring demand. Quantitative easing and TARP helped do the former. The latter requires spurring demand, through stimulus programs. There is no direct way to do that with printing money in America, legally, so there comes fiscal stimulus, through a variety of programs often financed through debt. Federal debt has its own money-creation effects, though. The liquidity of US treasury bonds is considered incredibly high (look at how low their yields are right now), and they are also traded as de facto money... federal debt in the United States isn't all that different from firing up the printing presses. But this response has to hit both the supply side and the demand side, or it's useless.

Sorry for the length of this... I guess, overall, my point is just that money creation through its variety of methods is not just tantamount to pure inflation. What matters to an economy is how much it produces, and that can often be spurred through money creation in the face of falling corporate liquidity and falling consumer demand. Inflation happens when demand increases because people have more money, in whatever form. But if an economy can produce more and there is demand for more, companies faced with more healthy-looking demand curves will, given the capital and potential resources (such as a bunch of laid off people to potentially hire), also produce more rather than just purely raise prices.
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Old 06-09-2012, 05:06 PM   #405
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What's paralyzed our economy is lack of stimulus and the gutting of the public sector, let alone Europe.
Right, because only government creates wealth.

Government spending needs to shrink so the real economy can grow and create jobs and prosperity (the opposite of austerity). Austerity is rising taxes, food and energy prices cutting into household budgets. Austerity is a stagnant job market when you are searching for employment.
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The deficit is essentially Saddam Hussein, and austerity Gulf War 2.
Current debt -- $15.7 trillion
Cost for both the Iraq and Afghanistan wars -- $1.3 trillion
The federal debt in 2000 -- $5.6 trillion.

Well Irvine, that only leaves you $8.8 trillion dollars short of a working hypothesis.
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Old 06-09-2012, 06:28 PM   #406
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I can hear the point whooshing over your head even from a DC sidewalk.
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Old 06-09-2012, 07:28 PM   #407
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I can hear the point whooshing over your head even from a DC sidewalk.
Wouldn't be the first time.

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Old 06-10-2012, 12:07 PM   #408
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Forget all my recent posts about Barack Obama's radical ties, that's low hanging fruit, this guy is an economic imbecile and his policies and rhetoric have paralyzed our economy.
No, that fruit isn't even on the tree my friend.


Seriously though--and this stands a critique of both INDY and many of the rest of us--it's funny how quickly we forget how similar Obama and Romney really are. Back when Romney wasn't the only Republican in the race both left and right were quick to point out the similarities between the two (though albeit for different reasons). Not so long ago most of us felt that Romney would be be the best choice for president if it HAD to be a Republican, and INDY undoubtedly felt he was the worst.

My biggest reason for voting for Obama over Romney is not because I believe he'd be radically different in terms of policy--including economic policy (haranguing Obama for the state of the economy? THAT'S low hanging fruit!), but because Romney will have to make obeisance to the more radical elements of his party in a way that Obama won't have to. It's not Romney I fear as much as the extremists in his party that will attempt to force his hand.

And no, INDY, the left wing radicals simply do not have that kind of clout over Obama. As a nation, I believe we tend to lean more conservative which means that the conservative nutjobs have a lot more traction than the liberal ones do. Sorry.
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Old 06-10-2012, 01:16 PM   #409
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No, that fruit isn't even on the tree my friend.


Seriously though--and this stands a critique of both INDY and many of the rest of us--it's funny how quickly we forget how similar Obama and Romney really are. Back when Romney wasn't the only Republican in the race both left and right were quick to point out the similarities between the two (though albeit for different reasons). Not so long ago most of us felt that Romney would be be the best choice for president if it HAD to be a Republican, and INDY undoubtedly felt he was the worst.

My biggest reason for voting for Obama over Romney is not because I believe he'd be radically different in terms of policy--including economic policy (haranguing Obama for the state of the economy? THAT'S low hanging fruit!), but because Romney will have to make obeisance to the more radical elements of his party in a way that Obama won't have to. It's not Romney I fear as much as the extremists in his party that will attempt to force his hand.

And no, INDY, the left wing radicals simply do not have that kind of clout over Obama. As a nation, I believe we tend to lean more conservative which means that the conservative nutjobs have a lot more traction than the liberal ones do. Sorry.
Nice, nice summary of how some more of us look at this.
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Old 06-10-2012, 02:48 PM   #410
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Great post, Sean.
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Old 06-10-2012, 04:29 PM   #411
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Forget all my recent posts about Barack Obama's radical ties, that's low hanging fruit, this guy is an economic imbecile and his policies and rhetoric have paralyzed our economy.
You might be confusing low hanging fruit with low hanging knuckles. With the exception of that fading portion of the right who are still living in the Cold War and think all you have to do is mention a connection to communism, radicalism, or socialism no one falls for this. His policies just do not speak to your portrait, and you have failed time and time again to try and prove so, as has everyone else.

Actually the economy would be the low hanging fruit in this situation, it's the easiest to notice, it's the easiest to access, now the problem is understanding it.

But continue on with the Muslim, radical, birther, socialist, drug dealer bullshit and you'll shoot yourself in the foot.
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Old 06-10-2012, 05:50 PM   #412
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Agreed. If conservatives want to be taken seriously in this debate they need to get off that inflammatory stuff. It adds nothing to the conversation and has no basis in truth. Talk about Obama's foreign policy, talk about the economy, hell, talk about his stance on social issues, I don't care. But let the communist/socialist/birther/Muslim stuff effing GO already. It needs to stop.

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My biggest reason for voting for Obama over Romney is not because I believe he'd be radically different in terms of policy--including economic policy (haranguing Obama for the state of the economy? THAT'S low hanging fruit!), but because Romney will have to make obeisance to the more radical elements of his party in a way that Obama won't have to. It's not Romney I fear as much as the extremists in his party that will attempt to force his hand.
I'd vote for Obama even without the extremists of the GOP around, but yeah, this, completely.
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Old 06-12-2012, 08:39 AM   #413
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When I went to the post office yesterday (in a very wealthy suburban "liberal" town), there were two of those LaRouche people with a table set up at the front end of the driveway. They had several pictures of Obama with a Hitler mustache. It's going to be a long, ugly few months.

One of them was a young African American man-the other was a young white woman, they were both in their 20's I'd guess. Don't know if that was by design or just a coincidence.
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Old 06-12-2012, 02:11 PM   #414
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I've seen those all over Seattle since he took office.

I can't imagine they garner much support in Seattle, of all places.
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Old 06-12-2012, 02:34 PM   #415
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Every president has been labeled 'Hitler' since, well since Hitler.

It's just lazy debate.
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Old 06-12-2012, 03:36 PM   #416
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Are LaRouche and his supporters far left or far right, I've never been able to figure out, and I've actually gone to the trouble, in the past, of reading some of the policy papers on his website. Maybe they're just crazy. LaRouche says Obama is a traitor but he said the same about Bush/Cheney IIRC. LaRouche was seemingly associated with some factions of the Democrats in the past.
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Old 06-12-2012, 04:55 PM   #417
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When I went to the post office yesterday (in a very wealthy suburban "liberal" town), there were two of those LaRouche people with a table set up at the front end of the driveway. They had several pictures of Obama with a Hitler mustache. It's going to be a long, ugly few months.
I saw a married couple doing the same thing outside my local DMV. I don't know who these LaRouche people are.

Either way, these people eventually got kicked off the premises. It was a pretty funny spectacle.
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Old 06-12-2012, 05:13 PM   #418
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Are LaRouche and his supporters far left or far right, I've never been able to figure out, and I've actually gone to the trouble, in the past, of reading some of the policy papers on his website. Maybe they're just crazy. LaRouche says Obama is a traitor but he said the same about Bush/Cheney IIRC. LaRouche was seemingly associated with some factions of the Democrats in the past.
Well political spectrums are more of a circle or sphere than they are a line, and I think LaRouche is so extreme that he straddles where both extremes meet.
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Old 06-12-2012, 06:35 PM   #419
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LaRouche seems to cherry-pick from both extremes at will, without necessarily having guiding a guiding ideology, or even guiding sub-ideologies for individual issues.

That being said, I'm not sure how much coherent guiding ideologies can truly be found in more familiar belief systems.

Also, I'm not very familiar with LaRouche, so this is just going off of my impression.
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Old 06-12-2012, 08:40 PM   #420
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Right, because only government creates wealth.

Government spending needs to shrink so the real economy can grow and create jobs and prosperity (the opposite of austerity).
Government spending absolutely needs to shrink, but it needs to do so when the economy is healthy.

You can starve the beast when middle and lower income families are out of the shitter, instead of blowing up their benefits and giving them to rich folks as tax cuts.

Taking the legs out from under the very people who need to be spending to generate growth when the economy is shaky is ridiculous. Supply side economics does not work. The very people who were the architects of it during the (!) Reagan era have admitted it is ineffective.

And growth is not a zero-sum game between government and the private sector as you are simplifying it to fit your political ideology
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