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Politics (formerly Election 2012)

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Re: Politics (formerly Election 2012)

Postby Fivelives » Thu Sep 19, 2013 3:53 am

I thought the argument for spending your way out of debt was explained either here or somewhere else like this:

Joe Q Public loses his job, and can't pay taxes. The government doesn't give Joe Q Public welfare, so he can't afford groceries, which means the grocery store goes out of business because they can no longer afford to buy food to resell at a profit. That grocery store supplier is no longer receiving the income from that grocery store, which means that the supplier goes out of business because of a lack of income, and so on and so forth. So by spending money on social programs for Joe Q Public, the government is actually preventing an even bigger loss, and when Joe Q Public transitions back to the workforce and is once again a taxpaying member of society, the government eventually recoups the losses.

And inflation reduces debt because debt is an absolute. You owe Billy $10. Say inflation has raised the minimum wage up from $5/hr to $10/hr, it now only takes you one hour to pay Billy back the loan, as opposed to two hours (this is EXTREMELY simplified, because it's basically my take-away from the entire conversation that I'm not really grasping). However, Billy may be getting his $10 back, but that $10 won't buy nearly as much as it would have before the debt was "inflated away", so he's experienced a net loss in the deal.

Does that sound about right, or am I missing this whole thing entirely?
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Re: Politics (formerly Election 2012)

Postby Nooska » Thu Sep 19, 2013 6:26 am

For a very simple explanation, yes.

Its t he same thing that was in our math textbooks back when I was in 9th grade - an example of why it was better to borrow money in the bank to spend than save up, due to inflation being higher than the interest, so the 100 bucks you borrowed would be less when you payed them back a year later (even though it was still more than 100 bucks due to interest).
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Re: Politics (formerly Election 2012)

Postby KysenMurrin » Thu Sep 19, 2013 6:37 am

Aren't loan interest rates generally close to or above inflation?
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Re: Politics (formerly Election 2012)

Postby Klaudandus » Thu Sep 19, 2013 8:33 am

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Re: Politics (formerly Election 2012)

Postby Koatanga » Thu Sep 19, 2013 2:58 pm

The sticky thing about inflation is that China owns vast quantities of US debt - in 2009 it was 63% of the US GDP. Should inflation rise at too high a rate, China may elect to cut their losses and sell off US debt at pennies on the dollar, devaluing the US dollar, causing other countries to dump the US dollar, and sending the US economy into free-fall Zimbabwe-style.

At least then US wages would allow for competitive manufacturing, and the US has enough natural resources that if it re-tooled the economy for manufacturing it could work its way out of the hole, but the country as a whole would probably not survive the exercise. Once the federal currency tanked, richer states would flee the failing Union. The Free State of California would have agricultural and other resources to trade itself into respectability within little time, although it would have to annex Nevada and Arizona in order to meet demands for water and electrical power.
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Re: Politics (formerly Election 2012)

Postby Fivelives » Thu Sep 19, 2013 11:43 pm

KysenMurrin wrote:Aren't loan interest rates generally close to or above inflation?


Wouldn't that depend on the loan and the rate of inflation?
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Re: Politics (formerly Election 2012)

Postby Nooska » Fri Sep 20, 2013 1:38 am

Fivelives wrote:
KysenMurrin wrote:Aren't loan interest rates generally close to or above inflation?


Wouldn't that depend on the loan and the rate of inflation?


Yes, and yes respectively.

Sometimes though interest rates are fixed and inflation outpaces the interest.
Its not a usual circumstance, but it does happen (happened here in the 80's)
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Re: Politics (formerly Election 2012)

Postby Klaudandus » Fri Sep 20, 2013 6:05 am

http://www.reuters.com/article/2013/09/ ... D020130918
With losses calculated at $2.4 billion, Preska said under the guidelines Collins faced life in prison. She instead sentenced him in July to a year in prison, citing his community service and the fact he didn't financially benefit from the scheme.
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Re: Politics (formerly Election 2012)

Postby aureon » Sat Sep 21, 2013 11:09 am

Koatanga wrote:The sticky thing about inflation is that China owns vast quantities of US debt - in 2009 it was 63% of the US GDP. Should inflation rise at too high a rate, China may elect to cut their losses and sell off US debt at pennies on the dollar, devaluing the US dollar, causing other countries to dump the US dollar, and sending the US economy into free-fall Zimbabwe-style.

At least then US wages would allow for competitive manufacturing, and the US has enough natural resources that if it re-tooled the economy for manufacturing it could work its way out of the hole, but the country as a whole would probably not survive the exercise. Once the federal currency tanked, richer states would flee the failing Union. The Free State of California would have agricultural and other resources to trade itself into respectability within little time, although it would have to annex Nevada and Arizona in order to meet demands for water and electrical power.


The very notion of the world's strongest economy going into free-fall zimbabwe style is EXTREMELY unlikely, without the added point that China's economy is very strongly tied to USA's - Why would China even THINK about crashing it's main export market? It'd crash itself.
And China's ownership is 7.5% of USA's public debt, not 63%.

America saying all trade with China is suspended would be a far more critical threat than China selling off all the USA debt it owns, honestly.
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Re: Politics (formerly Election 2012)

Postby Qeeze » Sun Sep 22, 2013 6:00 pm

Watch these 2 clips from the 1976 movie "Network".

Paddy Chayefsky was the screen writer, and he got it right.

http://www.youtube.com/watch?v=zI5hrcwU7Dk

http://www.youtube.com/watch?v=NcpWk2WKhEM
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Re: Politics (formerly Election 2012)

Postby Klaudandus » Tue Sep 24, 2013 3:12 pm

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Re: Politics (formerly Election 2012)

Postby Fivelives » Wed Sep 25, 2013 4:17 am

I find that guy to be fucktarded. I don't have a clue how it's done, exactly, but the highest "earners" hardly pay any taxes at all. I remember an article I was reading in Forbes (it was at a doctor's office while I was waiting for my appointment) right around the time of the Facebook IPO where it talked about how Zuckerberg managed to pay nothing in taxes by dropping his salary to $1 or something like that.

http://www.cnbc.com/id/46236916

He is getting hit with an initial huge tax though, for all the shares of Facebook that he "bought" during the IPO. But Facebook also doesn't pay taxes, and in fact took a tax refund to the tune of $429 million:

http://www.forbes.com/sites/timworstall ... s-so-what/

And these are the people that muppet wants to get CMH awards? Despite the CMH being not available to civilians; the equivalent is the Presidential Medal of Freedom, but that's neither here nor there. I wouldn't even give these assholes a copy of the game Medal of Honor.
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Re: Politics (formerly Election 2012)

Postby Shoju » Wed Sep 25, 2013 4:37 am

There is Irony in using Green Eggs and Ham as your Filibuster on something you don't like.
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Re: Politics (formerly Election 2012)

Postby Klaudandus » Wed Sep 25, 2013 4:40 am

Fivelives wrote:I find that guy to be fucktarded. I don't have a clue how it's done, exactly, but the highest "earners" hardly pay any taxes at all. I remember an article I was reading in Forbes (it was at a doctor's office while I was waiting for my appointment) right around the time of the Facebook IPO where it talked about how Zuckerberg managed to pay nothing in taxes by dropping his salary to $1 or something like that.

http://www.cnbc.com/id/46236916

He is getting hit with an initial huge tax though, for all the shares of Facebook that he "bought" during the IPO. But Facebook also doesn't pay taxes, and in fact took a tax refund to the tune of $429 million:

http://www.forbes.com/sites/timworstall ... s-so-what/

And these are the people that muppet wants to get CMH awards? Despite the CMH being not available to civilians; the equivalent is the Presidential Medal of Freedom, but that's neither here nor there. I wouldn't even give these assholes a copy of the game Medal of Honor.


You know, I'd be willing to give a pass to Bill Gates, Steve Jobs and the guys from detroit, given that their companies produce goods. But what kind of goods does a Hedge Fund manager produces? All they do is play with other people's moneys and in some cases they have ruined the economy with bad trades and its not their own money they lose, but other people's
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Re: Politics (formerly Election 2012)

Postby Sagara » Wed Sep 25, 2013 4:50 am

Sorry Klaud, as Finance major, I'll have to stop you on that - what these guys are selling in theory is their expertise, their ability to fructify capital. When they do their job right, they are indeed an important part of a functioning society by making capital that would otherwise be "dormant" available to further projects and initiatives. That's what Funds should be about.

Not saying there's no problem with how cavalier they were and stil are, and not saying they don't deserve a serious commeupance for crashing the economy entire, but this has more to do with them being *BAD* managers, and not their profession per se.

Your line of reasoning can also be used against banks as well, and I don't think anyone would consider removing banks from our economies and still keep it above the Medieval Age level.
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