Saturday, July 4, 2009

Memo To Fed and ECB: Raise Rates!

Vacation time is here. I will be away for the next two weeks, though ever vigilant on markets.

As a parting shot, a friendly note to the Fed and ECB.

_____________________________________________________________

The Web, July 4, 2009

To: Messrs. Bernanke and Trichet
From: A Friend, Dubiously

Dear Sirs,

You have slashed rates to the bone and you are now signaling your commitment to keep them there "for as long as it takes". Assuming your aim is to revive credit markets, i.e. generate a "healthy" amount of credit demand and creation for the greater benefit of the economy, what you are doing is mostly wrong.

Oh, I do understand that your actions and statements are in line with academic monetary policy theories. But, they are misplaced when it comes to what happens in financial markets in practice and work against what we are hostage to: our "animal spirits". You know... fear, greed.. the usual day-to-day stuff.

Allow me to explain in more detail.

I assume that everyone in mainstream finance and government now wants to see credit markets back to normal, i.e. a resumption of borrowing and lending, a rebound in housing and retail sales, global trade. (You know, I am not crazy about this Permagrowth model, but the memo is not about me.) For "growth" to happen, credit demand is of paramount importance: people and businesses must want to borrow. It doesn't matter much if lenders are willing to lend, if there are no willing takers for their loans.

As you know, credit demand from the private sector is very low right now. Apart from the economic crisis which reduces demand, another important factor is pricing, i.e. current and future prospects for the direction of interest rates. If a potential borrower is sitting on the fence about taking out a loan, your statements about low rates as far as the eye can see are creating no sense of urgency at all.

There is plenty of time to think it over
, you seem to say. Interest rates are low and will stay low, so no need to rush into a decision right away. Stick around, but you're not going to miss the boat, anyway...

How about this message, instead:

Current interest rates being near zero is an unprecedented event that will not last much longer. We are planning to raise rates in the very near future because such loose conditions are unhealthy for monetary stability and the economy in general. So, if you want to borrow, the best time is right now.

In other words, you should immediately start dispelling interest rate complacency.

Sincerely Yours,
H.


45 comments:

Daniel in Paris said...

Oh, I do understand that your actions and statements are in line with academic monetary policy theories.

Everyone has the academic support they wish. I take my views from W. Roepke, Von Mises and a couple of others, mostly Austrians economists and others found in dusty bookshops, and certainly do not feel stupid.

Never surrendering to Keynes accepted principles, for example as Jacques Rueff.

That means that I do not follow what I was taught at school - yes I did attend one the top league, European style, by the way. Call me a drop-out or a goldbug if you wish. But we saw it coming, prepared ourselves and have a framework to deal with the situation.

As I heard a couple of months ago on this brilliant US financial blogosphere, at equivalent level of brain and work, the Austrian economist will end up teach somewhere in the US hinterland - no name here - whilst the chances that you end up in some classy ivy league position is next to nil if you do not buy into this kind of stuff below.

At the very same time period, April 2005, a piece by Bernanke and one by Volcker.

http://www.federalreserve.gov/boarddocs/speeches/2005/200503102/

http://www.washingtonpost.com/wp-dyn/articles/A38725-2005Apr8.html

Make up your mind. Any science that does help you grasp the situation at hand has to be dumped.

As a sailor, I jump on board with Volcker any time. But no chance to have me enroll on ship with Bernanke at the helm.

I understand that the treatment inflicted by Volcker was too harsh and, because of this, instrumental in the construction of the neo-con ideology.

But the later ideology will possibly most certainly end up in the wreckage the dollar system.

And this Pax Americana that was as important to peace and prosperity on this planet since WWII.

Greenspan and Bernanke are of course plan individuals more reflecting their epoch than driving it. But I doubt history will be noy kind in view of the mess we are now running into.

OkieLawyer said...

Call me a drop-out or a goldbug if you wish. But we saw it coming, prepared ourselves and have a framework to deal with the situation.

Daniel in Paris:

Welcome to this blog. (I don't remember you posting before.)

But let me say that I am generally a Keynesian, and I saw this coming a mile off, too. And I also have a framework to deal with this: let's dust off the old Civilian Conservation Corps and Work Projects Administration. What we need to do is put people back to work. That will create demand.

Why don't we do it? Well, for two main reasons:

1) Economic optimists keep saying that "recovery is right around the corner" and "any 'government' jobs will only become created after the recovery is in full swing" (and will be "too expensive"); and

2) The wealthy don't want to pay taxes for it because it will "redistribute wealth" to those workers.

You know, kinda like some people I know who don't like paying property taxes because it pays for "someone else's kids to go to school."

The first argument at least has some merit, historically speaking. But I think "it's different this time." I think this recession / depression is going to a lot longer than most people think.

The way to recovery is for people to be able to pay down their debt loads before they can start borrowing and spending again, but that is next to impossible when you are getting laid off or having your hours cut (and losing your health benefits in the process).

Another thing is that a report came out very recently indicating that wages are going down. This also will not help people pay down their debt loads.

OkieLawyer said...

Oh, one more thing, Daniel:

Ludwig Van Mises already has adherents here in high-profile Libertarians (Milton Friedman is now so passé) like Peter Schiff and Republican Representative Ron Paul.

fajensen said...

Why don't we do it? Well, for two main reasons:

Missed the third:

3) Employment only helps recovery if salaries are high enough for workers to pay down debt. For this to happen "globalisation" will have to die as well as mass immigration.

That breaks the Imperial Visions of our great leaders.

Thai said...

Okie, as Hell keep pointing out, the issue is HOW we spend our money- period.

It can be spent well by either the private sector or public sector and the same is just as true when it comes to poor spending decisions.

Handing resources from one group of poor spenders to another group of poor spenders changes nothing- actually it makes things little worse because you have to add in the additional cost of moving the money from group A to group B.

The money needs to be in the hands of good spenders- period.


As but one example:

I was driving through Baltimore the other day and traffic was backed up for an hour as a result of a huge construction project north of the city. When I got closer I noticed all these signs saying jobs brought to you by the American Recovery and Reinvestment Act of 2009.

Do you know what they were building?

Freeway sound barriers! Tons and tons of freeway sound barriers.

Now I am as annoyed at freeway noise as the next guy (I can hear it when I walk out my front door).

But you know as well as I that freeway sound barriers will not solve our national/global economic mess.


But your other point ignores a little "inconvenient truth" and you ignore it with as much peril to social cohesion as the idiots who keep bailing out wall street seem to be similarly ignoring, and that is namely


government spending as a percentage of GDP is at an all time peacetime high.
And while some of this spending comes from borrowing, the majority of it comes from lots and lots of taxes. And these taxes are more progressive today they have ever been in the history of this country. Indeed, they are more progressive than almost every other country in the world.

So you say we need more of something that is already the biggest it has ever been?

You say we need the wealthy to step up more and pay into the collective's kitty when they are already putting more into the kitty than they have ever given in the history of this nation in both % terms and relative to their fellow citizen.

And it has gotten us what?

Wealth inequality is again at a high. Life is just as unfair as it used to be.

But today certain very large programs we all us and that we all pay into (e.g. Medicare and Social Security) are grossly mismanaged and have been raided for other purposes.

And we have a government that is bailing out that which should not be bailed.

How about the reverse- we simply "off load" some of the functions of the government back to individuals and let them manage these fuctions themselves?

I realize many would make bad choices and get into a lot of trouble, and that it would be grossly unfair for some as well.

But how is that different that what we have done today?

We have decided to try to eliminate all personal risk and transfer that risk to the system and now all we have done is put the system at risk instead.

Which approach is "more evil"?

Government needs to get back to the role of enforcing rules and get out of everything else.

The risk is there but personally I will take individual over systemic risk every day of the week.

But What do I Know? said...

And just think--if they raise interest rates the people living on CD income will have more money to spend and can stimulate the economy!!!!

Anonymous said...

thier goal is simply to keep thier criminal government jobs and the paymaster from Goldman Sachs that pay them.

They could not care less about the US economy, it has nothing to do with thier decisions.

Anonymous said...

well considering economics is NOT a science, and is not based on any type of fact, these decisions are NOT even academic.

They are pure stupidity. Might as well use astrology.

OkieLawyer said...

Thai:

You said: "And these taxes are more progressive today they have ever been in the history of this country."

You can think better than this, I'm sure.

Look at the entry at this Wikipedia entry Look here under History of progressivity in federal income tax and then tell me with a straight face that taxes are more progressive now than at any time in U.S. history. That statement made no sense on its face.

Furthermore, the Tax Foundation, while "non-partisan" is certainly not "non-aligned." Here is a critique of their many tax claims and methodology.

The rest of your assertions fail if this premise fails.

The money needs to be in the hands of good spenders - period.

And how do you determine that rich folks spend their money "better" than poorer ones? What is your criteria?

But today certain very large programs we all us and that we all pay into (e.g. Medicare and Social Security) are grossly mismanaged and have been raided for other purposes.

Have you ever thought that "raiding" the funds (when we were told that they were "overfunded" -- just like pension funds were "overfunded" when we allowed corporate raiders to bankrupt companies to take them from the workers) were designed to eventually discredit them? Who might want to do that? Maybe a political party that advocated "privatizing" them?

I am reminded of a quote that went something like this: "Republicans say that government is the problem. Elect them and they will prove it to you."

How about the reverse- we simply "off load" some of the functions of the government back to individuals and let them manage these functions themselves?

Give me an example of what you are talking about? This statement is too general for me to understand what point you are trying to make. I would like to take some general rule I believe in (or that the law sets out) and then apply it, but I don't know what you are talking about here.

Anonymous said...

Fed can't raise rates until Goldman Sachs gets bailed out. Will not happen until after 2012.

We need more illegal Mexican slaves and so push the price down.

I have a gardner, maid, and hooker all from Mexico as my salary goes down it is getting more expensive and I might have to let the gardner go soon.

Thai said...

Okie, your point "And how do you determine that rich folks spend their money "better" than poorer ones? What is your criteria?" is a good but it was not my point.

Forget the rich-poor divide, my point was it needs to be in the hands of people who spend it well and sadly the world seems a little short on these people right now.

Perhaps it has something to do with human nature?

And the point you are making with your Wikipedia link is just plane silly. You are smarter than that Okie. Think about it for a moment, it passes no sniff test whatsoever.

While it may be absolutely true that tax rates were higher once upon a time, no one could have actually paid these rates fully or government spending as a % of GDP would have been far far larger than it was back then.


And I read your link criticizing the my tax link... Links criticizing links, you got to love it ;-)... NONE of their criticisms suggest the point I was making is invalid. They take this FOX news link approach and suggest these fine criticisms and the small differences they make mean would should ignore the overall conclusion- kind of like criticizing people who round 4.9 up to 5 when they are trying to make a point.

So while I see their/your point, this is meaningless for the point I am making.

OkieLawyer said...

Thai:

You say I a missing your point(s). Well then, what are your points?

Here is a page that seems to support your argument that federal spending as a percentage of GDP is going up, but he excludes "world wars" and the chart is not to "scale" (meaning that he does not show all years).

The argument that the writer puts forth is that it is all the fault of "social programs." It couldn't possibly be because we are traipsing all over the world maintaining an empire with our military, could it?

And, let me say this: I am suspicious of the writer's methodology.

In 2008, federal spending just under was $3 Trillion (rounded up) and government revenues were just over $2.5 Trillion and the GDP was $14.29 Trillion (You can get all of these figures at the CIA factbook.

My quick calculation is that federal government spending comes to 21% of GDP and federal government taxation comes to 17.5% of GDP.

Something tells me someone is lying about the numbers (or -- to be generous -- someone has a bad methodology).

Thai said...

Your methodology concerns are legitimate. But as I am not an economist and will never do more than read the (potentially incorrect) articles, I can't comment on this issue- though I think the CIA site may be missing state and local spending data.

What I can say is the GAO says the same thing I do

Tyler Cowen says the same thing I do.

Wikipedia says the same thing I do.

(Indeed these and other places were where I learned this. If it is wrong I conceded the entire point.)

But assuming it is true, all sources I read make the same basic point- collective spending as a percentage of all spending world wide has been increasing for the last 100 years or so.

And while this makes a lot of sense on the one hand, for only through cooperation do we ever achieve greater living standards, still this growth always comes with a corresponding risk. The risk inherent in the tragedy of the commons itself, namely the commons. It is simply too tempting for some individuals to spoil the commons in their own self interest.

And where there is no commons, its risk of spoilage do not arise.

Remember, air and water are not the only commons. So too is social cohesion.

Increasing the % of a person's life work to the commons creates a lot of unforeseen issues- issues that are very very unpleasant for politicians to discuss but necessary never the less if the commons is to survive.


We are trading individual risk for systemic risk in an alarming way with mickey mouse level discussions and my personal opinion says this is very very dangerous.

Look at how I point out that we are wasting money when we spend it on inpatient smoking cessation programs or psychoanalysis because the data does not support its effectiveness and some commenters on this blog go nuts.

Or I point out that if we didn't shoot each other so much we might save quite a bit of money in health care (trauma is the second highest cost in all of medicine) and other readers accuse me of being racist.

Our public does not seem nearly as ready to deal with commons discussions as it did when (say) the framers of the constitution discussed these issues to create our republic.

I admit I could be wrong but this is how I see things.

OkieLawyer said...

The chart that appears on the Tyler Cowen page suggests that federal government outlays are not at the "highest they have ever been."

Looking at the black line in the link above (or from your link), federal spending went up starting in 1980 (Reagan and Bush the Elder), and went down under Clinton, and went up again at the end of Bush the Younger's term.

Hmm, what does that say?

By the way, your Wikipedia entry seems to have old information (2004).

Here is a graphic the I got to from your Wikipedia link that shows federal government spending as a percentage of GDP from 1902-2010.

What this does not show is how much has been shifted to the states.

OkieLawyer said...

And here is that Wikipedia graphic broken down by categories.

Anonymous said...

I do not support my statements with academic monetary policy theories.

That is why I am the only one posting here that is correct.

ALL policy theory is a joke. The only policy theory that works is NO POLICY THEORY.

In other words, close the Federal Reserve and return to real money.

Thai said...

If you can tell any difference on that Tyler Cower chart between the spike at 2008 and 1992 (when I might remind you BOTH public and private debt were a much smaller % of GDP), your eyes are much better than mine. But more importantly though, the data only goes to 2008. The original link I gave you goes up to 2010.

Further, if you look closely at your Wikipedia link, you will see it simply refers back to the very first link I gave you in my very first comment when I said government spending as a percentage of GDP is at an all time peacetime high.

AND interestingly, the Wikipedia link you gave us does not seem to reflect up to date spending for fiscal year 2009 for if you compare your link and the chart it refers back to (i.e. my link), the supposedly identical charts are no longer identical and there is a massive spike representing 2009 spending to 2010 that is not included in your link.

This spike clearly indicates that government spending is at an all time peacetime high today as a % of GDP.

And I do recognize the operative word is peacetime.

Okie, everything you are giving me further supports my claim- and fwiw, it is not my claim either, I am just reading the same stuff you are.

Thai said...

And again, this all time peacetime high is funded with the most progressive tax system in the world.

And still it is not enough

AND it is very easy to not watch every nickle closely when you think you are spending "other people's" money.

If you want to separate social security from the government and make it an entirely independent entity whose directors are elected in independent national elections and if social security has the ability to not loan to the Federal Government if they think its credit risk is too great, I would support this.

If you want to do the same with Medicare, and these independently elected directors make all the programs own rules (kind of a public option) I would support this as well but this robbing Peter to pay Paul with the hope that a smaller and smaller minority of people will pick up the difference when people start wondering where the money has gone has got to stop.

And blaming this on a political party that wants to privatize them is absurd. They don't trust the system period (with good justification I might add) and when they complain, they are simply told they need to pony up more.

It is not as if you are letting them opt out and not put money in now are you?

Nice try but that one is a total pack of lies.

Thai said...

How about we send some of the stimulus money reminding everyone how much their stupid behavior costs everyone else?

For here is a rather sad reminder that other people's stupid behavior will cost you dearly.

OkieLawyer said...

Thai:

I like your most recent link better; but after I posted my link earlier this morning, I realized that these charts have the same problem: they all show current federal spending as 40% of GDP. How can that be?

Here is the spending as a percentage of GDP, according to your link:

1977 32.90
1978 32.01
1979 31.57
1980 33.71
1981 33.62
1982 36.23
1983 36.29
1984 34.42
1985 35.46
1986 35.69
1987 35.07
1988 34.71
1989 34.92
1990 36.00
1991 37.20
1992 37.07
1993 36.36
1994 35.45
1995 35.62
1996 34.79
1997 33.88
1998 33.42
1999 32.95
2000 33.01
2001 33.91
2002 35.32
2003 35.86
2004 35.32
2005 35.44
2006 35.69
2007 35.49
2008 37.04
2009 45.19
2010 41.90

Here is a chart that purports to show federal spending 1980-2010.

(This page is kinda neat because you can change it to show almost any set of dates you want. I might have to come back to these and see if I can mess around with them some more.)

I think I might have figured out where the extra spending is coming from: off-budget items (the War in Iraq and Afghanistan) were not included in the budget, I don't think.

Well, so much for your "peacetime" argument. Then there is the Department of Homeland Security; that is a new set of spending by the federal government (and does not fall under "social spending").

OkieLawyer said...

OK, now that I have had a chance to look at the charts, it looks like they are mislabeled. The charts reflect total government spending (federal, state, local), but it is labeled only "federal." I think that makes it misleading.

In the most recent chart, a large part of the increase is due to the "bailouts" of Wall Street financial institutions. That is not something I would expect would be repeated year after year.

Thai said...

Yes, I think these numbers include state and local spending as you can play with the chart at the top and it says so in box.

But if these numbers did not include state and local debt, then it would even further support my general claim than government spending has reached historic peacetime proportions as a % of GDP- unless state and local spending was much larger in the past than it was today and I would seriously doubt that to be the case "as I remember the following post by Hell which talked about municipal spending.

... Although to be fair Hell's point at the time was that muni debt growth was much smaller than private sector debt growth.

Interestingly, if you look at your link on how money is spent and look at military spending as a percentage of GDP, it is not very high from a historical perspective (even including Iraq).

It is the entitlement spending programs that have grown as a percentage of GDP. These are the programs which differ from historical levels (again, as a percentage of GDP). I do not have census data to see if private spending is included whether they truly are different or not from a historical perspective. Nor can I say which spending levels are "correct".


Re: bailout effecting the number.

Yes and No- this kind of goes two ways. For even if the bailout had not been done (as I have been convinced it should not have), and we had simply let the private sector fail, simple math tells us that a fixed numerator over a shrinking denominator is still a bigger number.

If government spending stayed the same but the private sector's contribution shrank by the same amount as the bailout, then government spending as % GDP would still have increased to the same degree.

Fixed government spending over a shrinking GDP denominator is still a larger number.

And re: future government spending as % GDP, I am not so sure.

Hell has been warning us about deflation- no?

If this happens with no change in government spending, government spending as a percentage of GDP will continue to increase in future years. This is where Japan is today.

We need to stop spending our money in truly expensive ways.

Human behavior needs to change.

Anonymous said...

Tax the anti-American scumbag GOP.

a) 50% special tax on each American registered with the Republican Party.

b) 80% special tax on all religious retards suffering from addiction to Jesus.

c) 100% special tax on born-again (addicted again) retards that left drug addiction to join the Jesus cult.

Anonymous said...

Tax the anti-American scumbag GOP.

a) 50% special tax on each American registered with the Republican Party.

b) 80% special tax on all religious retards suffering from addiction to Jesus.

c) 100% special tax on born-again (addicted again) retards that left drug addiction to join the Jesus cult.

Anonymous said...

Watch out for the RRR - they is a new Fox News campaign to keep ahold of the RRR political base.

Obama is threatening to provide "educational" programs to the RRR for things such as "technology training" - this is very, very scary.

Redneck
Religious
Retards

Anonymous said...

Currently the highest priority for humanity is to reduce carbon dioxide emissions.

The simplest and most effective method for doing this is to limit economic activity through higher interest rates.

Base rates should be lifted to at least 10%

All You Need Zone said...

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Thai said...

re: raise rate

Anon, you make a very good point but are you personally willing to live with the consequences?

Talk is cheap

Italian said...

Hey Hellasious, being a SEO wannabe expert, I feel that somebody is spamming this blog to float his site.

Please take note of the recurring keywords in the comments from anonymous users, followed by links in some other posts.

My suggestion is that you allow posting just to the registered users, and clean up by deleting unuseful comments.

Other suggestion: do not alert everybody you are going on vacation for two weeks... blog spammers are just waiting for that.

Anonymous said...

I issued my own IOUs for illegal Mexicans.

illegal Mexicans deserve some more of our taxpayer dollars, don't you think?

jp said...

Thai says:

"And blaming this on a political party that wants to privatize them is absurd. They don't trust the system period (with good justification I might add) and when they complain, they are simply told they need to pony up more."

and

"But today certain very large programs we all us and that we all pay into (e.g. Medicare and Social Security) are grossly mismanaged and have been raided for other purposes."

I don't think you can "raid" the Social Security Trust fund. I'm pretty sure that it's an accounting fiction. I don't think Social Security is "mismanaged". It's a pretty straigtforward. Benefits will go down and taxes to pay for it will go up in the future.

Medicare is a different problem entirely.

"Privatizing" social security is an absolutely insane idea in the current political and social environment. The net result would be move more money from the hands of the general public to Wall Street. The general public buys high and sells low, with Wall Street making the commissions. I used to think this privatizing social security was a great idea. I don't think so anymore. Keep social security in place unless there is a better idea. "Privatization" is a worse idea.


Okielawyer says:

"Another thing is that a report came out very recently indicating that wages are going down. This also will not help people pay down their debt loads."

I don't think that people can pay down their debt loads under any probable future circumstances at this point. The subprime/Alt-A/Option-ARM crisis is a debt and debt service crisis. The debt was created without any sense that it could be paid back. The debt needs to be restructured and/or defaulted upon.

Thai says:

"But assuming it is true, all sources I read make the same basic point- collective spending as a percentage of all spending world wide has been increasing for the last 100 years or so."

I think this is because there are no longer "family farms" to allow you to eat if you lose your job. In modern industrial/post-industrail economies, much of the public is dependent upon collective spending when the recessions/depressions hit.

Thai said...

Hey JP

I too am opposed to privatizing SS.

But re: SS mismanaged. Are you sure?

The growth in SS disability roles in recent years has been truly stunning- over 100% increase in 20 years.

And interestingly, while we have seem dramatic reductions in the incidence of industrial accidents, cancer rates, etc... we have seen a dramatic increase in disability payments for conditions like fibromyalgia, chronic fatigue syndrome, non-specific musculoskeletal pain and chronic daily headache.

It is very easy for SS administrators to spend other people's money

I personally think the retirement and disability functions of SS need to be separated into their individual components.

In the end, "how do you want to spend your money"?



And re: collective spending

I hear you- if it really was once that good... But history might also have a different tale.


No system is robust enough to tolerate large numbers of people not working very long once they have lost their jobs, whatever the reason may be.

Anyone who thinks collective compassion will always win out is behaving no differently then the gang members of this paper- in my opinion the are operating in an illusion.

Family farms may have once helped their unemployed for short periods of time to get back on their feet, but they could never have subsidized unemployment it reached a certain level.

Will Asian nations continue to loan us the money to fund our safety net while ignoring the needs of their own family?

What happened to Argentina's safety net after its crash?

The sector of the Argentinean economy that truly could compete in world markets was not the loser in that collapse.

What is the safety net looking like today in Spain vs. a few years ago.

I think an equally interesting question to ask is "do we live in a zero sum world?"

I might suggest we do

Anonymous said...

Redneck Religious Retards and illegal Mexicans = 70% of America.

America has zero brain power, no chance of survival.

90% of PHd students have been Asian over the last 20 years and the other 10% Russian.

America is a country of fat retards.

Don't believe me: look at the man in the mirror. LOL

Anonymous said...

Why is GW Bush not in jail?

Does he have a lie-brary yet? I want to go a piss on his statue.

Have you America retards already forgotten how Bush bailed out wall-street with $700 billion in taxpayer money as his last criminal act?

How is it possible for a president to do the exact wrong thing each time?

Anonymous said...

For Matt Taibi fans:

http://forums.somethingawful.com/showthread.php?threadid=3159732

Anonymous said...

Why are Americans so fat?

I was just on vacation in North Carolina and damm...what a bunch of fat pigs! My God, how do you Americans even have sex, gross..grad another soda and some nachos...pigs

Anonymous said...

I read a swimming pool in PA kick out all the black kids that got shipped in.

Thank God! America is finanly getting back on track.

We need to re-segregate blacks out of our town.

If fact we may as well keep locking them up now that we have illegal Mexicans to work as our slaves - the Mexicans work harder and do not kill thier masters as often.

DEBT said...

VERY INTERESTING

Thai said...

@jp

I saw this from Mankiw's blog and it reminded me that many people assume our collective social entitlement programs are not mismanaged because the have low administrative costs vs. their private peers.

I think the key statement is: "Low administrative costs are not to be confused with high administrative efficiency"

Regards

yoyomo said...

It's so reassuring to live in the land of the free and fair press:

"On June 20th 2009, Neda Agha Soltan was shot dead during the post-election protests in Iran." (we all heard about that incident)

"On July 1st Marwa El Sherbini, an Egyptian researcher living in Germany, was stabbed to death 18 times inside a courtroom in the city of Dresden, in front of her 3-year-old son. She had won a verdict against a German man of Russian descent who had verbally assaulted her because of her veil. Her husband, who rushed in to save her when she was attacked in the courtroom, was shot by the police." (admittedly, I don't watch an inordinate amount of TV but I seem to have missed any mention of this incident)

I wonder if these two examples betray an agenda bias and if we can rely on the MSM to provide us with all the news fit to report especially regarding critical matters like the financial future of the sheeple.

How to Clear Debts said...

I'd say we all go back to coins and paper money only, then the concept of electronic borrowing will be gone and will eliminate easy debts! Just a theory :)

Affacturage said...

America is a Free Enterprise economy. I learned this in grade school economics class, but it appears it is no longer taught and our political leaders really don't want to recall what makes this nation so great; supply and demand

Debra said...

Geez, I lost patience with the comments section before the end, mea culpa.
I sometimes get SO SO TIRED of reading comments where it is a TACIT ASSUMPTION that EVERYTHING, absolutely EVERYTHING of "value" CAN and MUST have a number (price tag) tacked on to it.
Just back from first part of my vacation and a read through Stan Rougier's beautiful book about Saint Francis of Assisi. (Patience, Hell, this is NOT off topic, not too much at least, and it's the summertime anyway...)
Francis who was a rich brat, son of the richest cloth merchant of Assisi, a bourgeois with lots of ambition, lots of patience, at least as much patience as ME with my offspring, and perhaps some of YOU with your offspring who are desperately trying to find themselves in a mercantile world (as WE desperately tried to find OURSELVES in a mercantile world ?).
Francis who definitely was NOT satisfied with the idea of following in Daddy's footsteps, and BUYING and SELLING until there wasn't anything left to buy and sell. (This is around 1200, NOT 2009, by the way...)
And Francis's daddy got very very nasty when Francis raided daddy's shop one day, making off with the MOST BEAUTIFUL and MOST EXPENSIVE bolt of cloth in sight, selling it for a very good price, I presume, and then promptly proceeding to donate the proceeds to the poor.
What American society needs right now is :
more people like Francis
and
people who are able to rediscover the VALUE (not necessarily the MONETARY value... of WORK).
I agree with Okie about redistribution, and I do not know what planet you are from, Thai in your arguments.
But, the MAJOR problem these days is that we think that we will solve problems with numbers, attached or not, to money.

Thai said...

Um, Deb, its a pretty good planet.

And re: numbers. What are you talking about? This has nothing to do with numbers other than numbers show us a window into what is going on.

Without sounding mean, I am not sure you know what you want- do you:

A. Plan to redistribute the savings of some so it can be consumed by others??? And if so, how will this solve anything (or change anything for that matter).

If you are suggesting this, you would be in very good company as it is exactly what our current leadership is trying to do by solving this debt crisis through creating even more debt (really slowing its collapse while simultaneously shifting it from the private to public sector).


Or

B. Plan to prevent (or encourage) people from doing certain things so that they change their behavior to do something else?


And re: your statement society needs to "find people who are able to rediscover the VALUE (not necessarily the MONETARY value... of WORK)"... But I might add criticizing those of us at the same time who find solace in the protestant work ethic???...

So if one of the women I work got her nursing degree after her husband was laid off to make extra money to help pay family bills, should she be fired because her first love is her family? Even if she does a pretty good job as a nurse, but her heart is not in it for more than the money?


Or yet another mass agrarian kill off in the name of ???

Hasn't it been tried in the recent past- Pol Pot in Cambodia?

I guess you could try it with a more Libertarian approach and see if it lead to less loss of life than his command and control approach method did?

.. But you would still have to deal with the unfortunate issue of those who didn't want to follow you

My planet is just fine

Debra said...

Thai, as I get older, I manage to control my totalitarian impulses better, and find the patience to reach out to others in love, not judgment, not the desire to punish, or with a false idea of entitlement.
When I said that our society needs MORE Francises, I did NOT say that EVERYBODY had to be a Francis.
But I try to be like Francis to the extent that I can, and with all my inconsistancies that I do not find necessary to abolish, because WHAT COULD POSSIBLY BE MORE TOTALITARIAN THAN ABOLISHING ALL INCONSISTANCIES IN HUMAN NATURE and in our lives ?
I think that you are trying to find the perfect... SYSTEM, Thai, and in my book, that is part of the problem. There is NO perfect system, and the answer to our problems HAS to take place at the INDIVIDUAL, and not the collective level.
That is my theory, at least.
AND, I am sorry if I offended you by the planet thing. Sometimes I type too fast....