Part I: Inconvenient Debt - Glenn Beck

Carry on

Northern said:

Dale said:

Thank you, Katii, for starting Part II!

Members, please feel free to cross-post any of the posts from Part I of this discussion, to continue the discussion here at Part II.

Again, here is the link to Part I:

http://www.care2.com/c2c/groups/disc.html?gpp=22384&pst=1346155#reply_to_topic_container

Smoot-Hawley wasn't the problem. Community Redevelopment Act was what gave us the mortgage mess...thank you Jimmy Carter and thank you Barney and Chris for blocking any regulation of those bad mortgage bundles.

Slamming Republicans is as unproductive as slamming Democrats .... what is the point? ALL of your politicians past (and present it would appear) are responsible for what has taken place ....

Question - What are you, the American people going to do to turn things around because the politicians sure as hell are not taking a run at it. They are running the meter faster and faster on your debt .... How are you going to stop it?

Dear Northern,

Reasonable questions - which we ask ourselves every day.  Now, if the bunch of us could agree on some things to turn this around, than would be great....But we as a people are as divided as our government.

I wonder if you are really Knate? This was never about Obama as some of you think. His inexperience was my greatest concern and I think time will continue to prove that I was right to be concerned about that unfortunately.

He is not change - just a different politician of the same ole' same ole' - only he does have people surrounding him that he needs to rid himself of. He has too many voices whispering in his ears and now we come to the hard lesson = who is behind Obama?

I have some things to offer for consideration but my wife is yelling at me right now .... this is Halloween and we need to on the road to do the rounds with the grandkids so I will return to this later tonight - and post more food for thought (notice I said thought and not fight?) .... until then I wish you all a Happy Halloween!

“Besides trading it for goods or services, repay with what?”--Katii

Basically something that represents the ability to demand goods and services, or goods and services.

“Am I understanding you correctly that you think that because money isn't made of gold it shouldn't be backed by and redeemable for gold (value) ? which is of couse what Paul advocates, that our dollar be backed by something of value.”—Katii

No, I’m not saying that.  I’m saying it doesn’t need to be backed by gold and if it is backed by gold there will be discrepancies between the value investors place on gold and the value they place on dollars.

I am saying it is odd for someone who believes the free market is so wise in setting the value of everything else, and compares fighting the Law of Supply and Demand to fighting the Law of Gravity, but then wants to thwart the free market’s determination of the value of gold and the dollar. 

“Take your Federal Reserve Note to the Fed and see what you can exchange it for.”—Katii

I can exchange it basically for goods and services worth the note’s dollar value.  The gold standard doesn’t change that point.

“If money is power, then yes. (going off the gold standard giving more power to the Fed)”—Katii

“Of course it is. (taking power out of the hands of the President and Congress)”—Katii

OK, so you’re saying by going off the gold standard, Nixon gave the Federal Reserve more power and decreased his own power. 

Does Richard Nixon seem like the kind of guy who willingly gave his own power away? 

You know history and you know Nixon.  Doesn’t something seem amiss in that story about the gold standard where it makes Richard Nixon out to be the kind of guy who would intentionally give away his power? 

“Let's not forget about the false inflation that comes with the printing of more (devalued) dollars, but shouldn't the value of their money be of concern to everyone who depends upon the U.S. dollar to survive?”—Katii

I’m not forgetting that at all.  I would argue that it is not “false inflation,” though but just inflation.  But I get your point that you think printing all this money causes inflation, and I agree that increasing the money supply decreases the value of currency.

Yes, among many other things, the value of money should be of concern to everyone who depends on U.S. dollars to survive.  But the value of the dollar going up or down does not help or hurt every person the same.  It depends who you are.

“I have a problem with the Federal Reserve and I have a problem with bankers.”—Katii

I was trying to as whether the “banksters” are in control of the Federal Reserve and that is a problem for you? I don’t know who these “banksters” are separate from people we call bankers.

“I don't understand your question, but what bankers do is carry many more times in debt than they have money (cash) which is why  a "run on the banks" by depositors is a danger - the money isn't there (that 'many times more in debt' than cash on hand means it never was there).”—Katii

I was trying to ask: Do these banksters have a lot of money? Like I said, I am trying to figure out who these “banksters” are.

Yes Northern, I agree with Knate - we are as divided as the politicians.  ACtually, I think it's wishful thinking to speak of the American people...we are definitely not monolithic.....but collectively we are rather apathetic...

I don't really see the possibility of the populace as a whole doing anything, sadly.  Unfortunately, we are polarized into two parties...it's a ridiculous system.  The only thing we do as a group is vote - and even then the turn-out is pathetic...It's not like it is in European countries where the average person is much more well informed about the issues, and more passionate about them..

“As long as America was on the gold standard your debt was miniscule .... once you went off it - the sky was the limit and that is what happened.”—Northern

That’s not true.  The truly meaningful measure of debt is debt relative to the size of the economy.  Our debt was massive relative to our economy during WWII.

Look at 1965 and 1971 on that graph.  Is that where the problem started?

“I neither like nor dislike Glenn Beck but I like to learn and I find him very easy to understand. I do not ask questions about lines and '0''s because that does not interest me in the least. It is a non issue to me .... the issue that came out of all of it is the amount of debt that is the burden of every living legal American .... and how you are going to turn it all around.”—Northern

So, you find Glen Beck easy to understand BUT you don’t understand and aren’t interested in the meaning of his graph, even though you thought the whole presentation was important enough to post in this forum.

That makes no sense.  If he is important enough to listen to, then his graphs should be worth understanding.  And if he is easy to understand, then you ought to be able to explain it. 

Are you saying that you don’t care about the details of his account, but like the general impression that you get from them?

Because, that may be the case, but that is one of my problems with Beck and his confusion, half-truths and lies.  He leaves people with a vague impression based upon no actual understanding.

“The fact that the federal reserve takes most of your tax money yet is not controlled by nor answers to your own government. Is that a smart idea? Is is by all that can be found out run by foreign nationals who have no love or concern for America so what the hell are they up to?

Never been audited - top secret who runs it - is that a smart idea?”—Northern

The Federal Reserve doesn’t “take most of our tax money.”  Where did you get that idea?  Is it Glenn Beck?  Is it Fox News?  Whoever it is, you need to quit listening to whoever is putting those ideas in your head if you want to understand what is going on. 

It’s not run by foreign nationals and the people who run it are not top secret, either.  Where did you get those ideas?

The reason people do limit politicians controls over it, is because when politicians have control over the money supply, they manipulate inflation for short-term political gain.  Central banks around the world are insulated from political control.  I’m not saying that is a great thing, but many people do think it is a smart thing.

“The fact that you are paying almost more daily interest on the money you owe than you bring in as a nation - is that a smart idea?”—Northern

No, it is not a good idea (although you are mistaken about the balance). 

But that is a separate issue than the Federal Reserve.  If watching Glenn Beck has left you with the impression that the Fed is the cause of the debt problem, then you need to stop watching Glenn Beck.  I can’t tell you to do it, but it is just the type of confusion Beck is trying to sow.

“There were far more questions arise than answers given and that was the point of what Beck demonstrated and what he is saying to the American people is 'DEMAND THE ANSWERS' ....”—Northern

The problem is that you are saying “Demand answers,” but then Beck injects more confusion, you don’t care about the details, and nobody wants to hear the complex answers. 

The kind of lies and demagoguery perpetrated by Beck is simply sowing confusion and drowning the answers along with the real questions.

There are answers, but Beck has nothing but confusion and lies.  He neither knows nor cares about the right questions.  His presentations intentionally obscure issues in order to trot out boogeymen like LBJ and the Fed, rather than get people thinking about facts.

My God, he made that whole presentation and followed that line, then you put it in the forum, and it is not even clear what the hell the line stands for.  That is not about informing anyone about anything.

I can exchange it basically for goods and services worth the note’s dollar value.  The gold standard doesn’t change that point.

Actually, yes it does because being off the gold standard has resulted in your dollar being worth about 4 cents instead of a dollar with far less purchasing power - five times less purchasing power in 2008 (no gold standard) than in 1969 (with gold standard), and since the Federal Reserve Act in 1913 it takes $22.84 today to equal the purchasing power of the dollar we had in 1913 (before the Fed).

As I hilighted in the Part I thread in blue font, the gold standard keeps government spending in check, which is why they went off the gold standard - so they didn't have to worry about checking their spending which let them off the hook for the diviation between the value of gold and the value of the dollar.

It's only to those who don't care how much the feds spend, or how much more new money has to be pumped into the system at the expense of already existing dollars, or how much debt they have to create, or how many tax dollars we are forced to give them to cover that spending that don't care about the value of the dollar or the inflationary practices of the Fed.  I happen to care how much the feds spend and how much more new money is pumped into the system and how much I'm forced to pay in taxes to cover the astronomical debt incurred by the feds spending.

Dear Northern,

I'm not really me?  Are you sure?  Then who am I?      

“Actually, yes it does because being off the gold standard has resulted in your dollar being worth about 4 cents instead of a dollar with far less purchasing power - five times less purchasing power in 2008 (no gold standard) than in 1969 (with gold standard), and since the Federal Reserve Act in 1913 it takes $22.84 today to equal the purchasing power of the dollar we had in 1913 (before the Fed).”—Katii

Inflation happens regardless of whether we are on the gold standard or not.

And to the extent that the Federal Reserve increases the money supply, causing the dollar to lose value, it does not increase the debt.  It decreases the value of the debt.

Take your example of a 1969 dollar being worth 5 times the purchasing power of the 2008 dollar (I’ll take your word for it).  That means the debt incurred in 1969 is that much less valuable.  $100 billion in debt in 1969 dollars, is much easier to pay off in 2008 dollars. 

While, it is true that if you shoved a $1 in your mattress in 1969, it will now only buy you $.20 worth of stuff, that’s only a problem if you left your money in a mattress.  If you’re in debt, then inflation is your friend because it decreases the real value of the debt.

 
“As I hilighted in the Part I thread in blue font, the gold standard keeps government spending in check, which is why they went off the gold standard - so they didn't have to worry about checking their spending which let them off the hook for the diviation between the value of gold and the value of the dollar.”—Katii

If the gold standard keeps government spending in check, then how come we were able to go so massively in debt in WWII even though we were on the gold standard? 

Relative to the size of the economy and our ability to repay (the actual check on our ability to go in debt), we were far more in debt during WWII than even now. 

 
“It's only to those who don't care how much the feds spend, or how much more new money has to be pumped into the system at the expense of already existing dollars, or how much debt they have to create, or how many tax dollars we are forced to give them to cover that spending that don't care about the value of the dollar or the inflationary practices of the Fed.  I happen to care how much the feds spend and how much more new money is pumped into the system and how much I'm forced to pay in taxes to cover the astronomical debt incurred by the feds spending.”—Katii

You’re mixing two issues.  Deficits are caused when the government spends more than it takes in, but that is caused by how much we spend and how much we bring in, not whether we are on the gold standard or whether the Federal Reserve increases the money supply. 

It seems to me that your real issue is with too much spending, not with Federal Reserve policy. 

If “banksters” is your term for bankers and you are bothered with their influence on Federal Reserve policy, then you must recognize that because they have lots of money and people owe them lots of money, they are not interested in promoting inflation that decreases the value of the money people owe them. 

If you were a banker with people owing you $100 million, then I’d bet you’d sure not want that debt to decrease in value because the Fed irresponsibly increased the money supply. 

Yes, there is a climb that starts in 1981 when Reagan cut taxes and began his Supply Side policies.

It was not going off the gold standard that started the climb back up.  It was the irresponsible Reagan tax cuts when he claimed you could cut taxes and it would raise revenue.  

Of course cutting taxes does not raise revenue it decreases revenue.  You could also say that had Reagan made more cuts to the spending, then there would not have been as much debt.  Either way, that is an issue of revenue vs. spending, and not Federal Reserve policy. 

I'm not saying that Fed policy is unimportant, just that it is not the cause of the massive debt.

If Beck was at all knowledgeable and cared about the truth about the debt, he would point the finger right at Ronald Reagan.  But of course you'd have about 30 seconds on Fox News if you started pointing out Reagan's role in damaging the country. 

Instead, he makes vague references to the Great Society and the gold standard. God forbid Fox viewers get the truth about their hero Reagan.  They prefer to think it has something vague to do with LBJ and the mysterious Federal Reserve (and no, I know you aren't in that crowd, I'm just bringing it back to the thread topic).

Inflation happens regardless of whether we are on the gold standard or not.

That's the argument we always hear.  But while inflation happens under the gold standard it does not happen to the great extent that is named hyper-inflation. The anti-gold standard argument always, conveniently, leaves that part out.  They also seem to never recall the history of fiat money which is one of dismal failure:

The Daily Reckoning Presents:

Fiat Money -Toilet Paper Money

The history of fiat money, to put it kindly, has been one of failure. In fact, EVERY fiat currency since the Romans first began the practice in the first century has ended in devaluation and eventual collapse, of not only the currency, but of the economy that housed the fiat currency as well.

Why would it be different here in the U.S.? Well, in actuality, it hasn’t been. In fact, in our short history, we’ve already had several failed attempts at using paper currency, and it is my opinion that today’s dollars are no different than the continentals issued during the Revolutionary War. But I will get into that in a moment. In the meantime, I will show you that fiat currencies have not been successful, and the only aspect of fiat currencies that have stood the test of time is the inability of political systems to prevent the devaluation and debasement of this toilet paper money by letting the printing presses run wild.

Fiat Money -Rome — The Denarius

Although Rome didn’t actually have paper money, it provided one of the first examples of true debasement of a currency. The denarius, Rome’s coinage of the time, was, essentially, pure silver at the beginning of the first century A.D. By A.D. 54, Emperor Nero had entered the scene, and the denarius was approximately 94% silver. By around A.D.100, the denarius’ silver content was down to 85%.

Emperors that succeeded Nero liked the idea of devaluing their currency in order to pay the bills and increase their own wealth. By 218, the denarius was down to 43% silver, and in 244, Emperor Philip the Arab had the silver content dropped to 0.05%. Around the time of Rome’s collapse, the denarius contained only 0.02% silver and virtually nobody accepted it as a medium of exchange or a store of value.

...... fast forward ......... entire article is HERE ........

Fiat Money -More Recent Times

In recent times, fiat failures have become more common occurrences. For the sake of time, I won’t go into extensive details of all these examples of paper money failures, because there are SO many. But here you have it:

In 1932, Argentina had the eighth largest economy in the world before its currency collapsed. In 1992, Finland, Italy, and Norway had currency shocks that spread through Europe.

In 1994, Mexico went through the infamous “Tequila Hangover,” which sent the peso tumbling and spread economic hardships throughout Latin America.

In 1997, the Thai baht fell through the floor and the effects spread to Malaysia, the Philippines, Indonesia, Hong Kong, and South Korea.

The Russian ruble was not the currency you wanted your investments denominated in in 1998, after its devaluation brought on economic recession. In the early 21st century, we have seen the Turkish lira experience strokes of hyperinflation similar to that of the mark of Weimar Germany.

In present times, we have Zimbabwe, which was once considered the breadbasket of Africa and was one of the wealthiest countries on the continent. Now Mugabe’s attempts at price controls, combined with hyperinflation, have the nation unable to supply the most basic essentials such as bread and clean water.

Fiat Money -Lessons to Be Learned

Here in the U.S., I should say the lessons were not learned. There are many consistencies from the above-mentioned stories that led up to the eventual collapse of the currencies.

Continued...

The scary thing is that the U.S. has some of these above-mentioned characteristics, the ones that lead to toilet paper money becoming just that. More on that in just a second. I would first like to give a brief look at the U.S. attempts with paper money in our short history.

The first attempt with paper money came in 1690 with the issuance of Colonial notes. The first Colonial notes were issued in Massachusetts and were redeemable for gold, silver, corn, cattle and other commodities.

The other Colonies quickly jumped on the toilet paper money bandwagon and began issuing their own paper currencies. Like a broken record, the money quickly became overissued. The lessons of John Law and others were definitely not learned. It is not good enough just to say that a currency is backed by commodities. It actually HAS to be backed by commodities. Essentially, it was still a fiat money, and in a short period of time, Colonials became as good as toilet paper.

The next experiment came during the Revolutionary War. Big surprise — the issuance of paper money was used to finance the war efforts. This time, the currency was called a continental.

The crash of the continental was spectacular, and the phrase “not worth a continental” was coined. This brought on a large distrust for paper currency, and until 1913, toilet paper money in the U.S. wasn’t used. Enter the infamous Federal Reserve and its monopoly on money and interest rates. Now we have the greenback.

Although the money was “officially” backed by a gold standard until 1971, it wasn’t a true gold standard. When the government found it inconvenient to have a gold standard, it just made it illegal for U.S. citizens to hold gold or exchange dollars for gold.

As reported on Strike-the-root.com:

“Under the infallible leadership of President Franklin Roosevelt, it was made illegal to own gold. On March 11, 1933, he issued an order forbidding banks to make gold payments. On April 5, Roosevelt ordered all citizens to surrender their gold — no person could hold more than $100 in gold coins, except for collector’s coins. He also made it unlawful to export gold for payment abroad, unless done through the Treasury. The penalty for defying Roosevelt was 10 years in prison and a $250,000 fine.”

But the official demise of the dollar was locked into place in 1971 when “Tricky Dick” Nixon completely severed all ties between the dollar and the gold standard. During the decade that followed, the U.S. experienced some of the worst inflation in its history, only matched by today’s U.S. monetary and fiscal irresponsibility.

The U.S. of A. has all the characteristics set in place that have led to the collapse of every other fiat currency money in history.

We are currently at war, and the financing of this war is extremely inflationary. In fact, if you look back at our history, since 1914, the U.S has engaged in 16 military conflicts. We have been involved in some form of violent international accord in 44 of the past 93 years. The overwhelming majority of military conflicts result in monetary inflation.

The U.S. has a debt similar to that of Weimar Germany. All though the reasons for the debt are completely different, it appears thatthis Mount Everest of IOUs is going to be impossible to pay back. I guess the U.S. could just print 10 trillion dollar bills and hand them out, but the implications of such actions are obvious.
We are currently increasing the supply of dollars at a rate of 13% per annum. This overissuance of a currency has been the leading indicator of a currency on the brink.

So what’s in the future for the dollar?

Some, myself included, might say that the dollar has already failed. It has lost over 92% of its value since its initial issuance in 1913. After the revaluation in 1934, the dollar dropped another 41%. In my opinion, it already is toilet paper money, but for the above-mentioned characteristics, which are alarmingly similar to the circumstances that led up to the eventual collapse of the dollar’s toilet paper predecessors, I believe that we have seen only the tip of the iceberg of the dollar’s inevitable path toward becoming toilet paper money.

~end

Even with fiat money, sucess would be guarateed if the government would print and coin less money and have a progressive tax policy that taxed the rich more than the poor, relative to their income. That was what income tax was supposed to be for, and Republicans have been trying to undermine it ever since.

Yes, there is a climb that starts in 1981 when Reagan cut taxes and began his Supply Side policies.

I always wondered what sort of idiot would expect cutting taxes to lead to growth of revenue later that would make up for the tax cuts. It didn't happen in the 1980s and it didn't happen this past decade. Supply Side was a total failure and a total FRAUD!

I posted two stories about the federal reserve in the last link that have nothing to do with Glen Beck .... It is part one and pary 2 and it will educate you on facts you do not know about your federal reserve. IMO they are well worth watching .... I learned a lot from them ...

"I always wondered what sort of idiot would expect cutting taxes to lead to growth of revenue later that would make up for the tax cuts. It didn't happen in the 1980s and it didn't happen this past decade. Supply Side was a total failure and a total FRAUD!"--Dale

Be honest Dale, you already know what sort of idiot thinks Supply Side economics works, but you're just trying to be nice.

“That's the argument we always hear.  But while inflation happens under the gold standard it does not happen to the great extent that is named hyper-inflation.”—Katii

OK, but I think that is a different issue.  We can go over a whole bunch of economic issues, but I thought we were talking about whether going off the gold standard had caused the debt since 1971 (or as Beck says after the Great Society programs kicked in).  We haven’t had hyperinflation since 1971.

If you want to discuss the pros and cons of the gold standard or the pros and cons of central banks, those seem like different issues.  I think I have been repeatedly on record disagreeing with the Fed policy, but I don’t think the issue with the debt is the Federal Reserve.

My point here is about the inaccuracy of Beck’s presentation.  Whatever the hell he is talking about, it is unrelated to the real causes of the problems.  He’s doing nothing but spreading confusion and multiplying ignorance

Fiat money is doomed to fail because governments can't hep themselves from spending more money than they have so they print more, and more, and more, and more...  and it wouldn't matter how much they taxed the people half to death, tax payers can not keep up with a pace like that. 

And again, 'income tax' was unConstitutional until the Washington Wizards implemented an Amendment that was never ratified (which defenders of fiat money always fail to acknowledge), but it seems if anyone is doing their homework they would know about it.

Andrew Jackson on the "Central Bank"

The greatest party battle centered around the Second Bank of the United States, a private corporation but virtually a Government-sponsored monopoly. When Jackson appeared hostile toward it, the Bank threw its power against him.

Clay and Webster, who had acted as attorneys for the Bank, led the fight for its recharter in Congress. "The bank," Jackson told Martin Van Buren, "is trying to kill me, but I will kill it!" Jackson, in vetoing the recharter bill, charged the Bank with undue economic privilege.

His views won approval from the American electorate; in 1832 he polled more than 56 percent of the popular vote and almost five times as many electoral votes as Clay.

From a White House webpage.

“Fiat money is doomed to fail because governments can't hep themselves from spending more money than they have so they print more, and more, and more, and more...  and it wouldn't matter how much they taxed the people half to death, tax payers can not keep up with a pace like that.”—Katii

Human societies fail because they are human.

Government budgets go into debt because they spend more than the revenue they bring in, either because they spend without a commensurate increase in taxes or they cut taxes without a commensurate cuts in spending.  It’s not because of leaving the gold standard or because of the Federal Reserve.

And it does matter how much they tax. If you tax enough to pay for your spending, then you won’t have debt.  It’s that straightforward.

And you can’t change that with a gold standard or without it.  You can’t change it with a Federal Reserve or without it.

 “And again, 'income tax' was unConstitutional until the Washington Wizards implemented an Amendment that was never ratified (which defenders of fiat money always fail to acknowledge), but it seems if anyone is doing their homework they would know about it.”—Katii

I’ve done plenty of homework.  I know people keep saying the income tax is unconstitutional but the income tax is constitutional.  The reason people “fail to acknowledge” it is because it is not true.  The income tax has been upheld in plenty of court decisions, and it is not a giant conspiracy by the court system. 

Reagan damaged the economy...more than BHObama?


Supply side economics don't work?

We'll see what Obama does after he has actually produced his own whole budget and had some time for it to take effect, but no Obama has not done as much damage to the economy as Reagan.

And Supply Side economics do not work.  Supply Siders say that you can cut taxes and gain more revenue, but in reality Supply Side tax cuts have always resulted in lower revenue compared to ordinary growth.  It is an historical fact.  I can't force you to believe facts, but it is true.

BHObama's trillions in debt and tax increases with no effect on the economy, joblessness or the national debt don't compare in any way to the Reagan years.

Tax cuts have worked every time they were used.  I can't force you to stop looking at history from a peculiar ideological view, but that's the truth.

Funny thing about the Inconvenient Debt is it seems to have lost sight that we're all still just basically human beings. So I wonder if I could find anything about that in the history.

"Tax cuts have worked every time they were used.  I can't force you to stop looking at history from a peculiar ideological view, but that's the truth."--Robert

No, they have not.  Revenue after Supply Side tax cuts on average grows at a slower rate than ordinary revenue growth. 

And I'm not talking about a "particular ideological view." 

There is something called reality to compare beliefs against, and I am talking about the actual revenue according to the government's own numbers.

So, without any ideological blindness, looking right at the government's numbers, Supply Side fails.  It's wrong, exactly as Dale noted that common sense would tell us.

Human societies fail because they are human.

No, human socieities fail when they are controlled by power hungry, greedy fuks.

So who's problem is that, the power hungry, greedy fuks that control or the ones that are controlled by the power hungry, greedy fuks???????

Ken, obviously it's not a problem for the ones in control.

"No, human socieities fail when they are controlled by power hungry, greedy fuks."--Katii

When aren't societies controlled by power hungry greedy fuks? Is it when they are controlled by power hungry greedy %#&!*%?

Not all humans are power hunger greedy fuks.  The vast majority of people just want to live and let live, not be told how they are going to live. It's the controlling power seekers that undermine societies and create elaborate schemes like central banks to financially enslave the less powerful - just as our government has done, not because they are human but because they are inhumane humans.

It was a joke about the difference between the word fuk and %#&!*%.  I don't think all humans are power hungry and greedy.  Those people do tend to congregate in the halls of power and take power, even though it is not all power. 

Reagan damaged the economy...more than BHObama?   Yes.
Supply side economics don't work?     No, they never have.

Tax cuts have worked every time they were used.  Yes, they work to help elect more Republicans. That's all.

  I can't force you to stop looking at history from a peculiar ideological view, but that's the truth.

Projection like yours just makes me laugh, Robert. You seem to have no regard for truth. Do the math: Reduce tax rates, reduce revenue. The claim that decreasing tax rates would stimulate the economy and then boost revenues was based on the short term assumption that wealthy people would invest more money in businesses. They do, to make themselves richer off the businesses, and the decreased cash flow that eventually results causes ANOTHER recession, negating any revenue increases that might have resulted. So in the long term, Supply Side economics is always doomed to fail and bring us back to where we started. That's what history has shown and it has nothing to do with any ideological view.

You don't match Kevin by contradicting him, but by proving him wrong....which you never have.

Reagan was one of the biggest hypocrites ever as President. He was so "Conservative" that he blew up the defense budgets, which in turn drove us deeply in debt, contradicting a basic principle of genuine Conservatism. Yet Glenn Beck and other right-wing extremists never condemn him for that. Well, I DO! And what Reagan did enabled Bush Jr to get away with the same things!

reduce tax rates, increase investment, increase employment, increase tax revenues, increase the general welfare of the citizens.

Keynes is a fraud.  Reagan spent the Soviet Union into impolding.  However they haven't gone away, just changed their stripes.  KEVIN just asserts about Reagan...and so do you.

American does not own the Federal Reserve - it is owned by internationals - are u aware of this?

Federal Reserve caused the 700 billion dollar bailout and economic crash part 2

"reduce tax rates, increase investment, increase employment, increase tax revenues, increase the general welfare of the citizens."--Robert

That is the theory, but theory is usually different than reality.  It is particularly different with Supply Side economics.  The taxes get cut and the revenue falters.  Growth rates dropping relative to normal growth has been the historical experience each time it was tried. 

It didn't work for Reagan, Bush or Bush.  It's a foolhardy theory followed by politicians who let their faith in a theory override reality.

Kevin and Dale, you were both young when Reagan was your President. I did not agree with all of his politics but he was a great President .... he made mistakes but he was much admired in the world and in America. I beleive that history will show he was one of the greatest Presidents of your last century ....

You don't have to agree with me but I lived that time. His tactics pulled the world out of a great recession and we had a lot of good years after his presidency was over .... I credit Reagan and his administration for turning things around .... It was a mess - over 20% interest rates - unimaginable! But true and it all turned back around under Reagan's administration ....

Reagan much admired in the world? Not in the UK he wasn't!! Most people thought he was very stupid, but not as stupid as George Bush of course. "Spitting Image", a TV programme which was very, very popular, had a weekly sketch called "The President's Brain is Missing". 

There were some people who admired Reagan in the U.S., but a lot of people in the U.S. felt the same way, Lynn.

There's a lot to say about Reagan's policies, but as concerns this thread, his Supply Side policies were flawed and hurt revenue growth. 

Dear Lynn,

I think it is almost always true: What people - in general - feel in the United States, can be very different from the way people - in general - feel in Europe or Africa or Asia. Often, they mayfeel the opposite.

President Barack Obama is struggling, trying to function as President while his appproval ratings, in the minds of Americans, are plummeting.  Yet in many places around the world, President Obama is held in the highest esteem.

President Ronald Reagan, for many complex reasons, was well-liked and respected by a clear majority of the American people, and he is currently thought of - by many - as one of the country's greatest Presidents.  Yet, as you know, Lynn, that is not the assessment of him where you live (outside of the States).

It is a strange phenomenon.  IMO.

Aww, who could not love these faces

Bonzo and Reagan                              President extraordinaire

Kevin, "banksters" are the people who own and operate the Federal Reserve system.

And it does matter how much they tax. If you tax enough to pay for your spending, then you won’t have debt.  It’s that straightforward.~Kevin

It matters how much they spend.  If they spend more money than they are able to collect you have debt.  It's that straightforward.

And you can’t change that with a gold standard or without it.  You can’t change it with a Federal Reserve or without it.

Again, having a gold standard helps to check government spending. And the reason we are in so much debt as a nation is because there is a Federal Reserve.  If you disagree with that, please explain to me how it's not true. 

When our tax dollars don't pay one nickel toward the federal budget any given year but rather go to the payment of federal debt obligations, which I understand to be the case, at what income tax rate do you think people should have to bear to pay off the feds' debt of $12 Trillion and ticking, and still cover the federal budget without the feds borrowing money?  Or do you think it's OK for the feds to rack-up a $12 Trillion debt that ever grows and never shrinks regardless of any GDP number?

Kevin, by defending the idea that the only reason federal spending is not paid for without borrowing is because you don't pay enough in taxes are you arguing that you think you should pay more income tax? If so how much do you think we should pay?  If not then what do you see as the answer to a federal balanced budget and a dollar that's worth a dollar and an economy that isn't home to hyperinflation?

When it comes to control or being controlled I don't think there is another human being on the face of this earth that hates being controlled more than me. I gained a reputation for doing custom painting first and then metal work on cars and motorcycles. My work has appeared in magazines and covers since the late seventies. I was approaching working on million dollar cars but felt a trillion dollars worth of miseries inside of me like a low priced prostitute. More then once I had been beaten down by unscrosplous competitors stealing work I spent countless hours designing and engineering. Then I just broke as a human being. When I worked I never made a lot of money so when more money came my way I already learned to live on little, which meant I could save more by continuing to do so. Some months I'd save three pay checks telling myself it was always money I wouldn't have to kiss some body's behind for.

Then I was working on a Porsche Spyder, the same type car James Dean was killed in, when the owner started playing games. I mean these people knew how to make money yet I learned how to not be controlled by their money. It was all a matter of knowing who I was and what I was about, not who they wanted me to be. Quite simply put I had learned to deal with my own fears instead of buying into the fears they attempted to use on me. So I first expressed my dissatisfaction about the game playing but wasn't listened too. That put the ball in my court. I either enable a behavior or I disable a behavior. This is entirely my choice to make and nobody else's.

I'm kind of stuck on that theory when it comes to matters that concern our country. It's totally a matter of individual choices if they want to be controlled or don't want to be controlled. The individual choices either enable or disable the control.

Well, KEVIN, we'll just continue to disaree about tax cuts.  Let's see in 3 years who winds up being more right.

“Kevin, "banksters" are the people who own and operate the Federal Reserve system.”—Katii

OK. 
 

“It matters how much they spend.  If they spend more money than they are able to collect you have debt.  It's that straightforward.”—Katii

Yes, if we (the U.S.) spend more than we (the U.S.) bring in revenue, then we (the U.S.) has deficits and debt.  So you should worry about that issue instead of the Federal Reserve if you are really worried about the massive debt.  It is not the Federal Reserve “banksters” who decide how much to spend or tax.  The Federal Reserve isn’t a significant part of the debt equation. 

“Again, having a gold standard helps to check government spending. And the reason we are in so much debt as a nation is because there is a Federal Reserve."--Katii

No, no, no and no.  The gold standard doesn't prevent debt, and the Federal Reserve is not the reason we are in debt.

"If you disagree with that, please explain to me how it's not true. “—Katii

I have repeatedly explained it.  The government can spend more than it brings in regardless of whether we are on the gold standard.  That is the budgeting process and not the Federal Reserve monetary policy.  Congress and the President decide spending and tax level, not the Federal Reserve. 

The debts have not been caused by some “bankster” cabal.  They have been caused by elected officials who spent more than the revenue.  It budgeting, not monetary policy.

You yourself said that debt is caused by piling up deficits by spending more than you bring in revenue.  That is related to the President and Congress spending and taxing, not the Federal Reserve.  I don’t know how to make that point more simply.

The massive deficits of the WWII era prove that the gold standard does not prevent the government from taking on massive debts.  Relative to the size of the economy, the U.S. went far more in debt before it went off the gold standard to fight the Great Depression and WWII.

“When our tax dollars don't pay one nickel toward the federal budget any given year but rather go to the payment of federal debt obligations, which I understand to be the case,”—Katii

Sorry, Katii, but that is not the case. Federal revenues do go toward the federal programs and the budget.  They cover more than just the debt obligations. 

You need to go to CBO.gov, the BEA website and look at NIPA tables and quit listening to whoever is telling you stuff like that. 

“at what income tax rate do you think people should have to bear to pay off the feds' debt of $12 Trillion and ticking, and still cover the federal budget without the feds borrowing money?  Or do you think it's OK for the feds to rack-up a $12 Trillion debt that ever grows and never shrinks regardless of any GDP number?”—Katii

At some point, they need to be at whatever tax rates it takes.  It’s not a question of what I want.  It’s a matter of reality. You know that all during the Bush administration I was complaining about deficits and their effect on debt. 

When I say that to avoid massive deficits we have to bring in more money than we spend and that raising taxes is a way to bring in more money, I’m not stating it as my opinion.  I am stating it as a fact.  I wish the whole thing could be fixed by ending the Federal Reserve, but that is not the case.  But the issue is not the Fed.  It is spending and taxing.

 “Kevin, by defending the idea that the only reason federal spending is not paid for without borrowing is because you don't pay enough in taxes are you arguing that you think you should pay more income tax?”—Katii

I think you are misunderstanding what I have repeatedly said. I have always said that it is an issue of revenue versus spending. The reason federal spending is not paid for is because it is too high relative to how much we bring in.  We can either cut spending, raise revenue or both, but there aren’t any magic bullets like Supply Side economics, ending the Fed or going on the gold standard. 

The reason that I usually mention raising taxes whenever we have discussions is because you always act as if the only way to bring the budget into line is spending cuts, but the fact is that increasing revenue is also an option. 

When I’m talking to you about what causes deficits and debt, I’m not just stating my opinion.  It’s not just a matter of opinion that deficits are caused by spending more than revenue AND revenue can be increased through tax increases.  That’s just plain a fact.

And yes, I’d agree to raising my taxes if they are going to raise taxes to fix the budget deficit.  I won’t enjoy it, but my country is in debt (through policies I have opposed for almost three decades) and it’s got to be paid down.  It does no good to pretend that going on the gold standard or ending the Fed will fix it.

“If so how much do you think we should pay?  If not then what do you see as the answer to a federal balanced budget and a dollar that's worth a dollar and an economy that isn't home to hyperinflation?”—Katii

How much we should pay should be based upon how much we spend.  The two don’t have to always match (that is complex), but to solve the debt we to cut spending, increase taxes or both. 

I don't suppose anybody ever thought that our debt is not just our own country's doings. It's international and I attempted to introduce China lowered the value of their money which followed by saturating the US low priced products that our own country's manufactures could not compete with. Brazil, Russia, India and China formed an organization known as BRIC which really fell in place because of our US involvement in the Mideast.

Two summits in Russia: A cautious challenge to the US
http://www.wsws.org/articles/2009/jun2009/bric-j22.shtml

The Bush administration wooed India as a strategic partner and counterweight against China, a policy that has continued under Obama. Russia, however, is attempting to restore the close relations it had with India during the Cold War by offering New Delhi access to Central Asian oil and gas and selling large quantities of weapons. China and India still view each other as regional rivals.

A major theme at the BRIC summit was the replacement of the US dollar as the global reserve currency. Earlier this month, Russia announced its intention to reduce holdings of US Treasury bonds and was joined by China and Brazil. The three have agreed to buy International Monetary Fund (IMF) bonds, instead. Collectively, BRIC holds $1.711 trillion in US Treasury bonds, or 33 percent of the total foreign ownership of US federal debt. It is unlikely, however, that the BRIC countries, especially China, will abruptly dump their dollar assets, as such a move would potentially crash the US dollar.

The US is not going to sit by and watch China and Russia consolidate a rival bloc on the Eurasian landmass. The Obama administration is stepping up the US-led war in Afghanistan and pressing Pakistan to intensify military operations against anti-US insurgents operating inside its territory. At the same time, it is seeking to strengthen strategic ties with India. These growing rivalries are setting the stage for even greater conflicts as the major powers vie for economic and strategic dominance in this key region of the globe.

"Well, KEVIN, we'll just continue to disaree about tax cuts.  Let's see in 3 years who winds up being more right."--Robert

We can agree to disagree about Obama as a person, and perhaps you'll be right about Obama being a bad president within the next three years. 

I don't know if he'll be a good president.  I have said I am reserving judgment on him until after he has his own whole budget and time to see how it works. 

But there's nothing to agree to disagree about concerning Supply Side economics.  Nothing that happens in the next 3 years can change the historic record of Supply Side economics. 

You can disagree if you want, but as concerns Supply Side tax cuts, the facts are already in.   The facts are that Supply Side tax cuts have still underperformed relative to the historic average.  Here's the numbers accounting for Bush's 2001 retroactive tax cut:

Here's Supply Side Presidents vs. Others on revenue:

Nothing Obama can do will change those numbers.

The reason that I usually mention raising taxes whenever we have discussions is because you always act as if the only way to bring the budget into line is spending cuts, but the fact is that increasing revenue is also an option. ~Kevin

I see now that what I was wrong to assume there were a set of options to reduce deficit and debt - I thought that everyone knew already there is more than one way to skin a cat. 

While I never implied there  weren't the obvious options of reducing deficit by raising taxes without reducing spending/borrowing, or by raising taxes with reducing spending/borrowing, my apologies for not spelling it out.  But those are options I don't support because I don't think they are fair options.  I think we already pay more than enough of our wages in income tax - I don't believe we should pay ANY tax on our income.  I think it's unAmerican for the government to have put America's people into serfdom.  And only in unusual circumstances do I believe the government should ever go into debt to support itself.

It’s not just a matter of opinion that deficits are caused by spending more than revenue AND revenue can be increased through tax increases.  That’s just plain a fact. ~Kevin

I've never argued that plain fact so I don't know why you pointed it out.

It does no good to pretend that going on the gold standard or ending the Fed will fix it. ~Kevin

Kevin, I've never made such a claim that going on the gold standard or ending the Fed will "fix it."  What I've been trying to explain and you've been somehow missing (I'm sure that's my fault) are the advantages of being on the gold standard which would help keep spending in check, and the disadvantages and the historically proven dangers of fiat money, which along with the Federal Reserve, allows greatly the government's ability to rack-up more and more and more debt than it ever could have otherwise. 

I believe the only reason we went off the gold standard in favor of fiat money was so that the feds could grossly inflate the amount of dollars thru the borrowing/lending scheme set up by the Federal Reserve.  You seem to disagree.  So be it.

How much we should pay should be based upon how much we spend.  The two don’t have to always match (that is complex), but to solve the debt we to cut spending, increase taxes or both. ~Kevin

On that we can agree.  I'm just not in favor of the increase in taxes part.

I'm for ignoring taxes and money altogether at the present because to me no opinion or suggestion would ever matter to government and they will do what they want anyways. Usually that doesn't appear to be what's best for the people as I see it as always doing what's best or profits those in government. So fine raise taxes but still the money doesn't put the country on a better path for the good of the people. It usually ends up profiting those that already have more then enough money leaving the people scratching for crumbs. I have a hard time seeing how this senseless cycle keeps repeating itself.

To me I think that it would be better to ignore the debt and place the importance on being human beings sharing the same time and place in this world now, then take human reasoning from there with hopes of little by little making people more important than money.

The way we're living right now sure doesn't seem to be working, does it?????

Here's Supply Side Presidents vs. Others on revenue:

What's the source of that graph?

NM, just saw it at the bottom...

This is what happens when the government tries to print their way out of problems. Are these guys crazy?! Printing money like this may temporarily help statistics to get people reelected, but down the road I see big trouble. Note the date this silliness started. I heard Obama and Bush both wanted a weaker dollar but this is rediculous. From my own selfish point of view--hello hyperinflation: goodbye retirement.

Get rid of the federal reserve - it is ridiculous that the most powerful country in the world does not take care of its own money ....

http://www.wtv-zone.com/Mary/BIGGESTSCAMINHISTORY.HTML

The charts seem a bit off to me?

Kennedy used Supply Side theory.

Your chart shows great growth in that era?

Does your chart account for inflation? As far as I remember coming out of Carter into Reagan inflation was off the charts. We were also in somewhat of a recession were we not?

It's weird because people always talk about Reagan and his record of peacetime economic growth.

I wonder what the chart cites as "inputs" to the Federal revenue. Because I know Tax Revenues shot up tremendously during Reagan's admin...

"Printing more money to finance more government spending would be futile, since the money would be devalued as a result." ~Dale

Yet that is exactly what government does.  It prints more money to finance more government spending which devalues our money.

Even importing a lot more gold to back the extra money would lead to the gold becoming less valued. CDs (compact discs) used to be considered precious back in the 1980s when they were first sold because there were so few of them (and there were cheaper ways of reproducing recordings), but today they are superabundant and thus their "value" in the eyes of people has dropped to the point that CDs are often thrown away. The same thing would happen to gold if it was as abundant as iron or lead." ~Dale

Dale, your analogy doesn't work for me because, as yet, plastics are not a rare or valuable (per unit measure) commodity such that gold is, and because of the important and pointed difference between gold and a compact disc which is that a CD is manufactured and mass produced by man, gold can not be manufactured.

Alan Greenspan said it best when he wrote Gold and Economic Freedom in 1966 (before he entered the Federal Reserve System; since then, he has been silent on the subject):

The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which – through a complex series of steps – the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy’s books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion.

In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the “hidden” confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights.
- Alan Greenspan, Gold and Economic Freedom, 1966

But, that was the Alan Greenspan of the mid-1960s.  The Alan Greenspan of the mid-1990s was the “Bubble Blower-in-Chief” as Federal Reserve Chairman.  He was a man who believed in the necessity of printing money to avoid the necessary the pain of recession, a economic re-balancing process that is a necessary part of capitalism and a crucial feature of the business cycle.  It is like trying to stay  awake at the expense of any sleep.

Gee....maybe I can make up a chart that leaves out the Kennedy tax cuts,the Carter hyperinflation and the positive side of the Reagan and Bush tax cuts.  They worked, and that's a fact.

Dale, your analogy doesn't work for me because, as yet, plastics are not a rare or valuable (per unit measure) commodity such that gold is, and because of the important and pointed difference between gold and a compact disc which is that a CD is manufactured and mass produced by man, gold can not be manufactured.

My point, Katii, is that not even gold is an absolute standard that people can put their faith in. Nothing is. Gold may be more reliable than fiat money, but not absolutely. Especially since there may be vast gold deposits that we have not yet discovered. Remember the gold rushes of the past and how quickly they burned themselves out.

From the graph I posted, it appears that the Federal reserve at least had some control or restraint until this latest recession. We've had many recessions before and nothing remotely close to this expansion of money has happened.  Looks like we're being run by a "confederacy of dunces:" Congress, the Federal Reserve, Bush and now Obama!

Am I missing something here? Or is it what Greenspan was quoted as saying above: "This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the “hidden” confiscation of wealth."

My point, Katii, is that not even gold is an absolute standard that people can put their faith in. ~Dale

You're right of course, because no monetary system is perfect. But nobody has been claiming there is a perfect monetary system, just that there's a better, less risky monetary system than one of fiat money.

Gold may be more reliable than fiat money, but not absolutely. ~Dale

Gold is more reliable than fiat money, but "absolutely" or not that it is more reliable makes it a better system than fiat money, which begs the question of why governments absolutely insist on continuing a path that, if history is any trusted indicator, is a path of destruction, which begs the other question...

Why do so many people vehemently defend the fiat money system?  I can only guess the answer to that question is misery loves company or the defenders don't care because they are betting they won't be around for the crash, and/or it's more convenient not to change - until it's not, which when the economy collapses it will very painful compared to any inconvenience we could more easily adjust to if governments began a careful, well-planned comprehensive transition - starting with allowing failed businesses to fail to be replaced with new businesses that aren't boated pigs and won't be allowed to become such bloated pigs that the slightest pressure put upon it will cause it to come crashing down not only upon itself but on everyone who had become dependent upon that bloated pig.

So without the gold standard what backs our currency? Beck contends maybe federal land. Beck was correct in predicting the stock market crash. I think he's overboard in saying we're in for a a Weimar-style hyperinflation for the United States but if it was only one tenth as bad as the Weimar Republic, that's still bad.

I think he's overboard in saying we're in for a a Weimar-style hyperinflation for the United States but if it was only one tenth as bad as the Weimar Republic, that's still bad. ~Dan

Maybe he is over-board (even while the U.S. keeps marching forward toward a total collapse of our economy pretending that borrowing more and more money will save us when that can only ultimately crash the economy), but yes, if hyperinflation becomes just a fraction of what the Weimar Republic suffered, we're in for a world of hurt.

Why do so many people vehemently defend the fiat money system?  I can only guess the answer to that question is misery loves company or the defenders don't care because they are betting they won't be around for the crash, and/or it's more convenient not to change - until it's not, which when the economy collapses it will very painful compared to any inconvenience we could more easily adjust to if governments began a careful, well-planned comprehensive transition - starting with allowing failed businesses to fail to be replaced with new businesses that aren't boated pigs and won't be allowed to become such bloated pigs that the slightest pressure put upon it will cause it to come crashing down not only upon itself but on everyone who had become dependent upon that bloated pig.

You could say exactly the same things about lassez-faire capitalism. Replacing fiat money with the gold standard would only be half the battle. And it is not really the fiat money system that is the problem, but the mismanagement of it by the government (I also want our money supply reduced to increase its value, whatever our standard). Finally, the gold standard is not a cure all for our economic problems, or those of any society. The Great Depression occured under the gold standard.

http://en.wikipedia.org/wiki/Gold_standard#Disadvantages

“I see now that what I was wrong to assume there were a set of options to reduce deficit and debt - I thought that everyone knew already there is more than one way to skin a cat.”—Katii

Just to be clear, I always figured you knew that the deficit could be reduced (or God forbid solved… which we would both like to see) by either cutting spending or raising revenue. I always just mentioned raising taxes as an alternative because I was pointing it out as a possible alternative. 

I know you do not see raising taxes as a good idea.  If this was 2000 before the irresponsible Bush tax cut and the two wars, I would not say that we would be in favor of an eventual tax increase.  We could have solved the budget problem by simply reducing the military budget.

“I've never argued that plain fact so I don't know why you pointed it out.”—Katii

I didn’t understand what you believed because you keep blaming the Federal Reserve for the debt, when the debt is because we spend more than we bring in.

“Kevin, I've never made such a claim that going on the gold standard or ending the Fed will "fix it."  What I've been trying to explain and you've been somehow missing (I'm sure that's my fault) are the advantages of being on the gold standard which would help keep spending in check, and the disadvantages and the historically proven dangers of fiat money, which along with the Federal Reserve, allows greatly the government's ability to rack-up more and more and more debt than it ever could have otherwise.”—Katii

That to me sounds like you are saying that going off the gold standard or eliminating the Fed is going to “fix” (by which I meant help reduce the problem or “keeping it in check&rdquo the debt.  Going on the gold standard Fed will not fix the debt or keep the debt in check.
 

We racked up way more debt relative to GDP during WWII before Nixon took us off the gold standard.  We will have deficits as long as the government spends more than it brings in, and it will be able to do so as long as investors will loan it money based on its ability to repay. 
 
 
“I believe the only reason we went off the gold standard in favor of fiat money was so that the feds could grossly inflate the amount of dollars thru the borrowing/lending scheme set up by the Federal Reserve.  You seem to disagree.  So be it.”—Katii

We went off the gold standard because the free market had overvalued dollars relative to gold, and as things were there would have been a run on U.S. gold and a trade deficit. 

I still do not understand why you think these “banksters” who hold so much money in their hands as well as have so many people owe them money would be all that interested in having inflation reduce the value of dollars.  You are basically arguing that people with money wanted their money to be less valuable.  The “banksters” do not want inflation,
 

“On that we can agree.  I'm just not in favor of the increase in taxes part.”—Katii

Like I said, I would have been there with you if it was still 2000.  I’m not even sure we should raise taxes now, but it seems like it has to happen eventually because there does not seem to be the political will to make the necessary cuts, and the most politically easy cuts are mostly the wrong ones.

It sure seems like the Federal Reserve doesn't care about inflation; or possibly they don't know what their doing; or possibly I'm wrong. I sure hope it's the latter.

It wouldn't be the first time government let things get out of control and we had "hyper-inflation." I was around during Carter and it sucked.

Both Bush and Obama seem to want a weak dollar and they're getting their wish. Perhaps they think we can inflate our way out of this debt. I think the president appoints the Federal Reserve board of governors so I wouldn't be surprised if they, and past and present presidents have the same opinions.

Once we got off the gold standard, it was possible to print enough money with no backing to make certain people BILLIONAIRES, even if their money was actually WORTH LESS  (pun intended).

I still do not understand why you think these “banksters” who hold so much money in their hands as well as have so many people owe them money would be all that interested in having inflation... ~Kevin

Kevin, the banksters don't give a flip about inflation because it's not about how much money they have or even the value of the money they have because money is a means to the end:  Power.  It's about money equals power and as long as they hold most of the money, regardless of it's value because it's value is relative, they have the power to rule our world - and they do.

We went off the gold standard because the free market had overvalued dollars relative to gold, and as things were there would have been a run on U.S. gold and a trade deficit. ~Kevin

I think that's a very simplistic view or reasoning for abandoning the gold standard system, flawed that it was - but removing the flaws would have been preferable to abandoning it altogether.

Dollar dominance got a huge boost after World War II.  We were spared the destruction that so many other nations suffered, and our coffers were filled with the world’s gold.  But the world chose not to return to the discipline of the gold standard, and the politicians applauded.  Printing money to pay the bills was a lot more popular than taxing or restraining unnecessary spending.  In spite of the short-term benefits, imbalances were institutionalized for decades to come.

The 1944 Bretton Woods agreement solidified the dollar as the preeminent world reserve currency, replacing the British pound.  Due to our political and military muscle, and because we had a huge amount of physical gold, the world readily accepted our dollar (defined as 1/35^th of an ounce of gold) as the world’s reserve currency.  The dollar was said to be “as good as gold,” and convertible to all foreign central banks at that rate.  For American citizens, however, it remained illegal to own.  This was a gold-exchange standard that from inception was doomed to fail.

The U.S. did exactly what many predicted she would do.  She printed more dollars for which there was no gold backing.  But the world was content to accept those dollars for more than 25 years with little question-- until the French and others in the late 1960s demanded we fulfill our promise to pay one ounce of gold for each $35 they delivered to the U.S. Treasury.  This resulted in a huge gold drain that brought an end to a very poorly devised pseudo-gold standard.

It all ended on August 15, 1971, when Nixon closed the gold window and refused to pay out any of our remaining 280 million ounces of gold.  In essence, we declared our insolvency and everyone recognized some other monetary system had to be devised in order to bring stability to the markets.

Amazingly, a new system was devised which allowed the U.S. to operate the printing presses for the world reserve currency with no restraints placed on it-- not even a pretense of gold convertibility, none whatsoever!  Though the new policy was even more deeply flawed, it nevertheless opened the door for dollar hegemony to spread.

Realizing the world was embarking on something new and mind boggling, elite money managers, with especially strong support from U.S. authorities, struck an agreement with OPEC to price oil in U.S. dollars exclusively for all worldwide transactions.  This gave the dollar a special place among world currencies and in essence “backed” the dollar with oil.  In return, the U.S. promised to protect the various oil-rich kingdoms in the Persian Gulf against threat of invasion or domestic coup.  This arrangement helped ignite the radical Islamic movement among those who resented our influence in the region.  The arrangement gave the dollar artificial strength, with tremendous financial benefits for the United States.  It allowed us to export our monetary inflation by buying oil and other goods at a great discount as dollar influence flourished.

 Continued...

This post-Bretton Woods system was much more fragile than the system that existed between 1945 and 1971.  Though the dollar/oil arrangement was helpful, it was not nearly as stable as the pseudo gold standard under Bretton Woods.  It certainly was less stable than the gold standard of the late 19^th century.

During the 1970s the dollar nearly collapsed, as oil prices surged and gold skyrocketed to $800 an ounce. By 1979 interest rates of 21% were required to rescue the system.  The pressure on the dollar in the 1970s, in spite of the benefits accrued to it, reflected reckless budget deficits and monetary inflation during the 1960s.  The markets were not fooled by LBJ’s claim that we could afford both “guns and butter.”

Once again the dollar was rescued, and this ushered in the age of true dollar hegemony lasting from the early 1980s to the present.  With tremendous cooperation coming from the central banks and international commercial banks, the dollar was accepted as if it were gold.

Fed Chair Alan Greenspan, on several occasions before the House Banking Committee, answered my challenges to him about his previously held favorable views on gold by claiming that he and other central bankers had gotten paper money-- i.e. the dollar system-- to respond as if it were gold.  Each time I strongly disagreed, and pointed out that if they had achieved such a feat they would have defied centuries of economic history regarding the need for money to be something of real value.  He smugly and confidently concurred with this.

In recent years central banks and various financial institutions, all with vested interests in maintaining a workable fiat dollar standard, were not secretive about selling and loaning large amounts of gold to the market even while decreasing gold prices raised serious questions about the wisdom of such a policy.  They never admitted to gold price fixing, but the evidence is abundant that they believed if the gold price fell it would convey a sense of confidence to the market, confidence that they indeed had achieved amazing success in turning paper into gold.

Increasing gold prices historically are viewed as an indicator of distrust in paper currency.  This recent effort was not a whole lot different than the U.S. Treasury selling gold at $35 an ounce in the 1960s, in an attempt to convince the world the dollar was sound and as good as gold.  Even during the Depression, one of Roosevelt’s first acts was to remove free market gold pricing as an indication of a flawed monetary system by making it illegal for American citizens to own gold.  Economic law eventually limited that effort, as it did in the early 1970s when our Treasury and the IMF tried to fix the price of gold by dumping tons into the market to dampen the enthusiasm of those seeking a safe haven for a falling dollar after gold ownership was re-legalized.

Once again the effort between 1980 and 2000 to fool the market as to the true value of the dollar proved unsuccessful.  In the past 5 years the dollar has been devalued in terms of gold by more than 50%.  You just can’t fool all the people all the time, even with the power of the mighty printing press and money creating system of the Federal Reserve.

The above is just a portion of Ron Paul's speech on the floor of the house on Feb. 2, 2006.  It can/should be read in it's entirety HERE

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“The charts seem a bit off to me?”—Buck

Really? Where?  I don’t think it is off. 

 
“Kennedy used Supply Side theory.

 
Your chart shows great growth in that era?”—Buck

Sorry, Buck, but you have been misled. Kennedy did not use Supply Side economics. Kennedy was already dead when Supply Side economics was thought up.

And nothing about Kennedy’s tax cuts were in line with Supply Side theory.  JFK cut the rates, but removed many of the deductions, so that the overall effect was nowhere near what Supply Siders want.  JFK was pretty much a standard Keynesian.

“Does your chart account for inflation? As far as I remember coming out of Carter into Reagan inflation was off the charts. We were also in somewhat of a recession were we not?”—Buck

The chart would look pretty much the same if I accounted for inflation (although inflation is actually good for the debt because it decreases the value of the money owed). 

I’ll tell you what, though, here’s the chart adjusting for inflation.  It makes Clinton look better because inflation was relatively low during his administration, which means that most of the revenue growth was real revenue growth rather than just inflation.  It also makes Bush look a little better, but he is so abysmally low that it doesn’t help much.

“It's weird because people always talk about Reagan and his record of peacetime economic growth.”—Buck

Yes, there were periods of growth but the overall rate was not as good as the historic average. You can have a couple quarters or even a year of record growth, but if it doesn’t continue over an extended period of time then it still doesn’t match the average.

I think, though, that you may also just have developed that impression because Reagan’s people were particularly adept at getting positive spin put on their economic figures (and yes I agree all presidents try to do that but Reagan was good at it).

“I wonder what the chart cites as "inputs" to the Federal revenue. Because I know Tax Revenues shot up tremendously during Reagan's admin...”—Buck

I don’t know what “inputs” you are talking about.  The chart measures federal revenues after Supply Side cuts by presidents who had Supply Side policies versus times and presidents who used ordinary economic policies.

The problem is the growth rate dropped when he first cut taxes (as common sense would tell you would happen when you reduce taxes) and then when it picked up later it looked great relative to where it had been even though it never caught up to where it would have been if it had not slowed in the first place.

"Gee....maybe I can make up a chart that leaves out the Kennedy tax cuts,the Carter hyperinflation and the positive side of the Reagan and Bush tax cuts.  They worked, and that's a fact."--Robert

OK, so if you can do it with the real numbers, then go right ahead and do the  math but it is going to tell the same story.

I just included all the stuff Buck wanted and you say would change the results.

I included the Kennedy tax cuts (which were cuts in rates but also ended many deductions which did not have the net effect of dramatically lowering taxes and were certainly not Supply Side cuts), the Carter inflation (also the Reagan inflation but you somehow forgot that part) and reports the full effects of the Reagan/ Bush tax cuts on revenue. 

It's all from the government's information and using the government's measures of inflation. 

The fact is that Supply Side cuts reduced the revenue growth compared to the historic average.  I know that hurts some people's feelings because reality does not meet what they have been telling themselves for the last three decades but it is fact. 

My God! It means the beloved Gipper was full of %#&!*%.  No kidding, I could have told you that over 20 years ago.

Deal with it, Reagan fans.  Maybe you can still love him for his charm, but his policies hurt revenue growth.

And, Robert, if you don't believe that second number, then I suggest you get the numbers, whip out your business calculator, use the DOL inflation calculator and do the math.

I have posted earlier versions of these same basic tables multiple times before in other groups and at earlier times with adjustments for inflation, and in response to all kinds of protests by people's whose versions of reality do not match up with the reality in these graphs. 

“Kevin, the banksters don't give a flip about inflation because it's not about how much money they have or even the value of the money they have because money is a means to the end:  Power.  It's about money equals power and as long as they hold most of the money, regardless of it's value because it's value is relative, they have the power to rule our world - and they do.”—Katii

So, your explanation of events requires that we buy the idea of a group of bankers that don’t care if the debt people owe them drops in value, or the money they personally have drops in value.

And the &ldquoower” they are willing to give it up for is the power to make their own dollars worth even less in the future.

And you say they do this because they want to have the most money in the end regardless of the money’s value. Well, they already have the most money now, so there would be no advantage to decreasing the value of the money they have.

I don’t buy your version of events. 

But, as long as you are going to assume that Nixon was the kind of guy who gave up his power to other people, then you might as well assume bankers aren’t interested in maintain the value of their money and the debt owed them.

“I think that's a very simplistic view or reasoning for abandoning the gold standard system, flawed that it was - but removing the flaws would have been preferable to abandoning it altogether.”—Katii

Why is that simplistic?  It matches the historical record.  I’m not saying whether Nixon was right or wrong to do it, but it is why he did it. 

If he had not gone off the gold standard, investors would have cashed in their dollars for gold and depleted the U.S. gold reserves.  Essentially his action simply recognized the fact that the market was treating currency and gold as two separate things, anyway.

I think that the bankers and the Fed know that inflation is the natural trend in the value of currency (because almost everyone prefers one dollar of goods today just a little bit more than having it next week), but they prefer to regulate the ups and downs of inflation because business works more efficiently the more predictable the value of currency is. 

So, the Fed increases and decreases the money supply to moderate inflation from valleys and mountains to peaks and troughs.

My real beef with the Fed is that they are actually biased toward anti-inflationary policies because low inflation benefits bankers (who want to keep the money they hold and the debt other's owe them as valuable as possible), and hurts people who actually produce goods and services but are in debt to the bankers.

I don’t know how many more words I can write on the issue that could possibly persuade you to see it that way (a world where bankers like their money to remain valuable so they can make the suppliers of goods and services work cheap). I’ll keep offering my opinion and answering questions, though. 

Come to think of it, hyperinflation would indeed hurt EVERYONE, including the bankers themselves. It would be in EVERYONE'S best interests to STOP the excessive production of money. So let's shut down the US Mint for about a decade or so and just let the money supply run down, forcing the banks and the businesses to put a higher value on the remaining dollars.

And you say they do this because they want to have the most money in the end regardless of the money’s value. Well, they already have the most money now, so there would be no advantage to decreasing the value of the money they have. ~Kevin

No, Kevin, I said - I thought clearly - that what they want is power.

I don’t buy your version of events. ~Kevin

I never thought for a moment that you would, and there's nothing wrong with you being in disagreement - you're not alone, ergo, here we are with a crashing economy and a worthless piece of paper for money.

But if they did that Dale they wouldn't be able keep quazi-financing all their bullshyt agencies, pork spending, and the military industrial complex.  We can't have that!

"My real beef with the Fed is that they are actually biased toward anti-inflationary policies because low inflation benefits bankers (who want to keep the money they hold and the debt other's owe them as valuable as possible)"

 I can only hope they are biased in the anti-inflation direction. Then I could actually save some money and retire someday without my money loosing half it's value every decade. I can only hope we don't have a repeat of the Nixon, Ford and Carter years when peoples saving were permanently hurt badly.

"No, Kevin, I said - I thought clearly - that what they want is power."--Katii

"Power" is a vague term.  What power would they gain relative to the fact that all their own moeny and the value of money owed  them drops in value?

Other than the power to continue to devalue money (if that is their plan), what power do thay gain?

Imagine for a second that you are a banker and have $5 million yourself plus people owe your bank $100 million and you could choose to pump so much money into the economy that the value of dollars was cut in half.

Why would you do it?

You say "for power" but what power?  What do you really gain?

And if you are right about your version of events, then why would Nixon willingly give away presidential powers to the Fed?

"I never thought for a moment that you would, and there's nothing wrong with you being in disagreement - you're not alone, ergo, here we are with a crashing economy and a worthless piece of paper for money."--Katii

There's no problem except that people like me apparently destroyed the economy, huh?

The economy is not in trouble because the Federal Reserve policies or going off the gold standard.  The economy is trouble because elected officials spent more than the revenue, and they failed to regulate financial institutions such as Wall Street banks and insurance companies.

Money has dropped in value because inflation is a natural part of the economy and the free market sets a lower value on future dollars than current dollars, It's the same basic thing when I would prefer someone give me $100 today instead of one year from now, even if I could buy the same amount of stuff a year from now.

"I can only hope they are biased in the anti-inflation direction. Then I could actually save some money and retire someday without my money loosing half it's value every decade. I can only hope we don't have a repeat of the Nixon, Ford and Carter years when peoples saving were permanently hurt badly."--Dan

Hyperinflation is a problem for everyone becuase of the unpredictability and chaos it brings to the economy.

If the majority of your income comes from money you control or in the bank, then all else being equal inflation is your enemy because it reduces the value of your money relative to goods and services that you want to trade it for.

But if the majority of your income comes from wages based on producing goods and services or you are in debt, then all else being equal mild inflation is your friend because the value of the goods and service you provide is going up relative to any debt you have.

"Power" is a vague term.  What power would they gain relative to the fact that all their own moeny and the value of money owed  them drops in value?

In context to those who own and control the Federal Reserve and this nation's (ex)wealth there is absolutely nothing "vague" about the word power.  Nothing.

Kevin, I don't know why you made a statement like that, but I know you're much smarter than to say power is a vague term in this context,  so I'm left to feel like you're just playing a game of cat and mouse, which I'm not willing to play.

Game over.

"But if the majority of your income comes from wages based on producing goods and services or you are in debt, then all else being equal mild inflation is your friend because the value of the goods and service you provide is going up relative to any debt you have."

Right, but I don't want to, and probably can't, work until the day I die. Inflation is no friend to me now because the future me is going to be in trouble and that stresses out the present me and stress is bad!

"Right, but I don't want to, and probably can't, work until the day I die. Inflation is no friend to me now because the future me is going to be in trouble and that stresses out the present me and stress is bad!"--Dan

You're right that most people live some part of their life when they produce goods and services and all else being equal some inflation works to their advantage, and then some part of their life when they are living on retirement savings and are all else being equal inflation hurts you.  The difference is that people who live off of just having money (i.e. bankers) and people owing them money all else being equal are hurt by inflation.  I was mainly just pointing out that bankers generally have an interest in avoiding inflation not creating an institution to promote it.  

"In context to those who own and control the Federal Reserve and this nation's (ex)wealth there is absolutely nothing "vague" about the word power.  Nothing.

Kevin, I don't know why you made a statement like that, but I know you're much smarter than to say power is a vague term in this context,  so I'm left to feel like you're just playing a game of cat and mouse, which I'm not willing to play.

Game over."--Katii

It's no game. It was a serious point.  There's a lot of ways to define and think about power, and I do not know what power you think "banksters" get out of it all.  So I asked.

Your whole claim assumes that "banksters" would do something that is not generally in the interests of bankers-- i.e. promoting additional inflation.  And I don't understand why they would undermine their obvious power of having money and keeping it as valuable as possible for whatever power you think they gain by causing inflation.

I'm not playing cat and mouse.  You're claim also portrays Nixon as doing something Nixon wouldn't do. I'm trying to get you to consider the possibility that if your theory/ claim/ story/ explanation of events requires you to assume people to act against their own interests, then maybe your theory/ claim/ story/ explanation isn't accurate.

The gold standard was a domestic standard regulating the quantity and growth rate of a country’s money supply. Because new production of gold would add only a small fraction to the accumulated stock, and because the authorities guaranteed free convertibility of gold into nongold money, the gold standard ensured that the money supply, and hence the price level, would not vary much. But periodic surges in the world’s gold stock, such as the gold discoveries in Australia and California around 1850, caused price levels to be very unstable in the short run.

The gold standard was also an international standard determining the value of a country’s currency in terms of other countries’ currencies. Because adherents to the standard maintained a fixed price for gold, rates of exchange between currencies tied to gold were necessarily fixed. For example, the United States fixed the price of gold at $20.67 per ounce, and Britain fixed the price at £3 17s. 10½ per ounce. Therefore, the exchange rate between dollars and pounds—the “ par exchange rate”—necessarily equaled $4.867 per pound.

Because exchange rates were fixed, the gold standard caused price levels around the world to move together. This comovement occurred mainly through an automatic balance-of-payments adjustment process called the price-specie-flow mechanism. Here is how the mechanism worked. Suppose that a technological innovation brought about faster real economic growth in the United States. Because the supply of money (gold) essentially was fixed in the short run, U.S. prices fell. Prices of U.S. exports then fell relative to the prices of imports. This caused the British to demand more U.S. exports and Americans to demand fewer imports. A U.S. balance-of-payments surplus was created, causing gold (specie) to flow from the United Kingdom to the United States. The gold inflow increased the U.S. money supply, reversing the initial fall in prices. In the United Kingdom, the gold outflow reduced the money supply and, hence, lowered the price level. The net result was balanced prices among countries.

The fixed exchange rate also caused both monetary and nonmonetary (real) shocks to be transmitted via flows of gold and capital between countries. Therefore, a shock in one country affected the domestic money supply, expenditure, price level, and real income in another country.


The gold standard broke down during World War I, as major belligerents resorted to inflationary finance...


For the gold standard to work fully, central banks, where they existed, were supposed to play by the “rules of the game.”


Most other countries on the gold standard—notably France and Belgium—did not follow the rules of the game.


But because economies under the gold standard were so vulnerable to real and monetary shocks, prices were highly unstable in the short run.


Moreover, because the gold standard gives government very little discretion to use monetary policy, economies on the gold standard are less able to avoid or offset either monetary or real shocks. Real output, therefore, is more variable under the gold standard.


Finally, any consideration of the pros and cons of the gold standard must include a large negative: the resource cost of producing gold. Milton Friedman estimated the cost of maintaining a full gold coin standard for the United States in 1960 to be more than 2.5 percent of GNP. In 2005, this cost would have been about $300 billion.


Despite its appeal, however, many of the conditions that made the gold standard so successful vanished in 1914.


Link

...I don't understand why they would undermine their obvious power of having money and keeping it as valuable as possible for whatever power you think they gain by causing inflation. ~Kevin

Maybe if you watch some videos, like this one HERE, it will help you understand.  Or read articles written by people who have taken the time to study and write volumes in articles and books concerning the motives, operations, and power of the Federal Reserve system which our government has transferred immense power to by becoming dependent upon the banking cartel known as the Federal Reserve System to finance itself.

Katii, I have watched videos and read books about the secret formation and machinations of the Federal Reserve.  I think I have watched videos you posted on the subject.

So far, every one of these kinds of videos that I have watched is half facts and half vague suspicions.  They throw in just enough facts to give the impression that they are at all concerned with facts, but then it leaves out the details that would actually support the claims it makes. 

I'm hesitant to watch another video, especially this one that is three hours long.  When I have time, I'm all fine with watching 3 hours of educational stuff, but not three hours of half truths.

Seriously, can't you explain in a couple paragraphs why bankers would want the value of the money they hold and the money people owe them to decrease in value due to inflation?  What tangible gain would they get compared to the value of their wealth?