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LOST OUTPUT CLOCK (link)

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  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    You have heard of the Debt Clock. In reality, that's a non-government net-savings clock. Government deficit=non government surplus.

    Well, here's the Lost Output Clock.

    http://www.lostoutputclock.com/

    Sadly, it's all been avoidable. In 2008, when the private sector got its credit cards taken away, the proper policy response would have been to cut the regressive, punishing payroll tax; thereby, boosting people's incomes to mitigate and offset their loss of credit, preventing a wholesale crash of credit markets and a tidal wave of foreclosures stemming from people who lost their jobs and couldn't pay their loans. The private sector can deficit spend for a while, and it all works on the way up; but once debt-service ratios get too high, and/or you let the banks make liar's loans that hyper-inflate the credit accelerator, it all comes crashing down Madoff style. What people don't get is that it's the government's deficit spending that provides the equity that supports the private credit structure. Without enough equity, the private sector credit expansion goes into Ponzi. And your economy blows up.

    You don't fix the banks with top down bailouts and regulatory forbearance. What makes a bank's balance sheet go bad is borrowers who can't pay their loans. If a borrower can't pay, that loan is junk. Doesn't matter what's stamped on there by the credit rating rating agencies.

    A FICA tax cut fixes the economy from the bottom up, instead of top-down. Two successive presidential administrations have now pursued top-down policies to fix the banks and presided over the largest upward transfer of wealth from the least to the most wealthy in the history of the world. Meanwhile, the economy still stinks. Labor force participation is at abysmal lows, and that's the only reason unemployment numbers have come down to the 7-8% range.

    FICA is not needed to 'pay' for Social Security and Medicare. Government spends by marking up accounts in the banking system. FDR understood this. Those taxes are there for political reasons, and they are punishing the people that Democrats are supposed to represent.
    I say cut FICA and add to Social Security and Medicare benefits!

    Democrats have no business proposing or supporting austerity measures in any capacity, whatsoever. Given this economy's built-in demand leakages from tax law incentives, which divert large portions of income into savings, combined with foreign demand for US dollars, there's no runaway government spending to speak of. There's no long-term or short-term deficit problem. Quite the contrary, THERE'S AN OUTPUT PROBLEM. We are arbitrarily restricting what our economy can produce, when the resources and labor is there, sitting idle, available to put to work. Yes, there are limits to government spending. They are on the real side of the economy. That real side is not being fully utilized. So the danger right now is deflation, more lost output, and an even bigger output gap.

    We can have full employment. We can have an economy where everybody who is able and willing to work can enjoy a lifestyle that makes us all proud to be Americans. And we can enjoy an economic boom the likes of which we've never seen. There's never been a greater opportunity for the progressive agenda.

    Unfortunately, US policymakers are either ignorant or subversive. Probably a little of both. Only a progressive, educated, and active electorate can bring about progressive government.
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    Debt spending should only be done when justifiable expenses exceed revenues, like real war. We need to do more revenue generating. As it stands the debt money is not being used to do anything other than make the wealthy more so. And the "Job Creators" send the money out of country.

    New rule - all steel used in updating our infrastructure must be made in this country.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Government issues the currency. The only way we can pay our taxes with US dollars or save in US dollars is if government spends the currency first. That's a point of logic. If you look at a US dollar bill, you will see that it is signed by the US Treasury Secretary. Did the government acquire it before the US Treasury Secretary signed it? Are there dollar bills out there without the Treasury Secretary's signature? No. The dollar bill comes from the government. The FED is the government's designated score-keeper.

    If government deficit spending is not done to offset net-savings demands, you end up with 'paradox of thrift' involuntary unemployment and even less revenues. People like to save. Eases the mind. There's a desire for it that is not just based on some future spending desire, but security in case of stormy weather.

    So for a given sized government and credit expansion, there's a rate of taxation that corresponds with full employment.
  • Independent
    New Hampshire
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    Some lost their homes because they lost their jobs and the reasons for that vary radically. Sub-prime loans were used in all income sectors and it had the same impact in all income sectors. I find it difficult to feel sorry for a family that owned a new 3500 sq ft house, which they could not afford, have a few new cars with loans to pay for them and add in the boats, atvs, 60" TVs with surround sound and all the other things that a family needs to survive. At least feel they need to survive.
    Pre WW2 was an era of one person in the family having a job. Post WW2 saw the beginning of high inflation caused by workers demanding higher and higher wages. If prices remain the same and wages go up the result is a lower profit for businesses. The solution for business was to reduce expenses and they began by moving jobs from the Industrial North to the South. They forgot that a skilled and even some semi-skilled people were needed to fill these new positions which the south lacked. A migration began with people moving from the North to the South to fill these positions at a lower wage than they had earned in the North but higher than what the locals worked for. Labor rates began to increase due to the wage differentials. The original problem was back.
    Companies really don’t care about people, they care about profits. Keep the businesses here and go broke or get the work done in locations where the workforce is luck to be paid $10.00 per week rather than $10.00 per hour and they don’t have to worry about retirement plans, medical insurance, over time or safety.
    We want or we need? If the decision was not made that we wanted more and more we would never have required two wage earners per family. Easy credit put the frosting on the cake, the credit card. We were told that there was no reason to wait until you could afford to pay cash for something, get a credit card and get it now. Make the minimum payment and you can have anything you heart desires. That comes with a price, its call debt. Families required 2 incomes and it didn’t take long for the 2 incomes to be stretched to the limit.
    It is right to blame companies and politicians for our problems, it is not right to give them all of the blame. We must accept a part of the blame.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Yeah, that's the mainstream view to blame unions and wages for 70s style inflation. Only it doesn't begin to explain it. But it's a rather convienient argument for those who want to cut wages by breaking unions. Meanwhile, unemployment rates went up during the 70s from where they were in the late 60s; so the argument that unions had more power and were driving the price increases through wage demands doesn't hold water.

    Up until the mid 70s, the Texas Railroad Commission set the price of oil in the western hemisphere. That soon changed with rising demand and the Saudis being the only one left with excess supply. They had an entirely different view on what the price of oil should be.

    Main thing that brought inflation to a halt was the deregulation of natural gas. Up until 1979, we were burning oil in this country to produce electricity. Everything we did to bring inflation down with fiscal and monetary policy made the problem worse, because the inflation wasn't coming through the demand side, but the supply side due to monopoly oil pricing.

    Indeed, we were running smaller government deficits than today, and today the fed funds rate is at historical lows.

    Yes, consumers took out too much debt during the housing run-up. Who gave them those loans? Who steered them into higher-interest rate loans? Who hard sold them on debt they couldn't afford? Who made loans without any underwriting, which we've known for centuries is a recipe for fraudsters? Liar's loans hyper-inflated the housing bubble, not subprime.

    So you can blame our debt-consumer culture. But it was forced upon us by an increasingly parasitic financial sector and restrictive fiscal policy.

    In the early 70s, we had a much smaller financial sector composed primarily of a bunch of dumb savings and loans that didn't have a whole lot of sophistication. They made loans, kept them to term, and took deposits. They closed their doors at 4pm and went and played golf. We had way more regulation of what they were allowed to do, way higher taxes, and less people. The same amount of housing start-ups that they managed was completely unsustainable during the previous housing run-up, even though we have way lower taxes and regulations, and even more people. Compared to the 70s, there's literally an infinite number of things that banks and financial institutions are allowed to do, and instead of leading to better results, and more sustainable, productive lending, we get nothing but increasing inequality, poverty, and a financial sector that relies increasingly on government support.
  • Independent
    New Hampshire
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    The demand for higher wages, reduced work weeks and the glut of middle class America provided the a major reason for inflation. You can deny it all you want. I had found out about the Rail Road being controller of oil in the early or middle 60's. My father-in-law was the head booker for MP in Corpus Christi and I dealt with them during the oil production slow down which brought on the first energy crisis. The shortage was 30% the oil companies reduced their pumping time from 12 hours to 8 hours per day. A drop in oil output of 30%. They used the excuse that they didn't have the reserves that were estimated. It was the oil companies who told the government what the reserves were.
    When confronted by the directors of a utility board in San Antonio they found some reserves, which they say were removed from the report by accident and a major price increase was not necessary. The price of gasoline doubled in a month and I don’t know your age so you may or may not remember the every-other-day gas lines.
    Back to wages: A company employs 100 workers getting $3.50 per hour ($140.00 per week or $7280.00 per year). That’s $728,000 just in wages and we can figure about 50% in overhead, which includes nonproductive labor. Material costs of $250,000. A 10% profit on sales would be 134,200
    Year 1 a 5% raise for the workers with materials, overhead and sales staying the same. Profit $97,000
    Year 2 a 5% raise for the workers with materials, overhead and sales staying the same. Profit $59,580
    Year 3 a 5% raise for the workers with materials, overhead and sales staying the same. Profit $19,449
    Year 4 a 5% raise for the workers with materials, overhead and sales staying the same. Loss $22,688
    Yes, your demanding and getting a 5% raise will have an effect on inflation
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Lot going on there, but why do assume sales stay the same?

    Back to oil: First round of oil price shocks came from the OPEC decision to enact an oil embargo in response to U.S. support of Israel during the Yom Kippur war.

    Here's price of oil in real US dollars (link).
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    Carlitos Wrote: Lot going on there, but why do assume sales stay the same?

    Back to oil: First round of oil price shocks came from the OPEC decision to enact an oil embargo in response to U.S. support of Israel during the Yom Kippur war.

    Here's price of oil in real US dollars (link).
    Like we know the price of oil at any point in history. The only way we would is if Anonymus hacked into the oil companies and leaked the contracts. Oil is contracted, the market is a game of three card monty.
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    We know the price from where it trades at in the spot market. We don't know the reserves. We don't know if buyers are end buyers or speculators.
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    You miss the point. Company A has a contract to provide X volume of crude at X price. Company A uses market price to determine price at the pump. This results in huge windfall profits. Why is that economists don't understand accounting?
  • Liberal
    Independent
    Durham, NH
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    GemsWoven Wrote: Debt spending should only be done when justifiable expenses exceed revenues, like real war. We need to do more revenue generating. As it stands the debt money is not being used to do anything other than make the wealthy more so. And the "Job Creators" send the money out of country.

    New rule - all steel used in updating our infrastructure must be made in this country.
    From Amercan guns!
  • Strongly Liberal Democrat
    Democrat
    Dallas, TX
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    Not sure where this is going. You said we don't know the price. Well, we know the spot price. That's the price being paid to take delivery. Yes, the entire oil commodity market is opaque, and what we don't know is what is driving spot prices, whether it be supply and demand fundamentals, or trading strategies aimed at running up prices, because we don't know exact available supply or as to what is driving demand.

    Makes no sense to let oil trade in the spot market, and government as the monopoly supplier of the currency, acting as a market participant, could effectively move the price off the spot market by engaging in long term pricing with suppliers at a price that makes sense to everybody. You'd get rid of the need and costs for so many analysts, end the speculative price shocks, and create more market certainty, leading to more general price stability. Serves public purpose. Does not rely on coercion. And it would make operations smoother for everybody.
    Not doing so effectively allows commodity traders to engage in speculative rent-seeking activities that add nothing in terms of real goods and services to the market place.
  • Independent
    New Hampshire
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    There are a lot of people in this country that feel their income should increase and the cost of living stay the same almost constant. For the cost of living to stay the same prices of the items we buy would have to be a constant. This is a condition they want and expect and will not accept responsibility for the part they play in the inflation rate.
    The numbers I put together reflect what would happen if the cost of living did not increase and wages increased by 5%. Inflation takes into account wages as a key expense, if we would have been content with a 1% wage increase each year, inflation would have been lower and we might not have lost as many jobs as we did.
    I don’t think Capitalism is a good system as it is based on greed, I’d like to see it replaced with something better; but I cannot come up with a replacement. I can’t even begin to formulate a replacement system that would not require a major change in the attitude of people. I use the following to illustrate: “Doing the right thing only because it is the right thing to do.”
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    Capitalism with rules.
    Fair trade instead of free trade.
    and let's not forget tariffs to protect domestic production.

    That factory colapse is why jobs left. 'Cause you can't do that to our people. The jobs will come back when the rules that were changed change back.
  • Independent
    New Hampshire
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    Jobs left first.