GOP Not A Normal Party

[Fast Gunn]

Those are some heavy observations, CM.

I will have to ponder on them before getting back to you, but no national leadership?

We have a strong leader at the helm. What we need is more cooperation and less bickering.

. . . The situation is a disgrace, but how do we remedy it?

Originally Posted by CaptainMidnight

The author of the article linked in the opening post correctly notes that the Republican congressional caucus is dysfunctional and in disarray. However, he forgot to note that the same is true of Pelosi's Democratic caucus. After all, that's why it got landslided out of office in 2010. It certainly wasn't because people forgot the malfeasance of the Republican Party during the early-to-middle part of the '00s.

The current debate over the fiscal cliff is a national embarrassment. It's simply ridiculous. Very few of these people (in either party) are remotely serious about confronting real problems in any meaningful way. All their actions are geared toward scoring political points. No one in a leadership position gives a damn about putting the nation's fisc on a sustainable course. And no one will, at least not until the onset of a crisis that can no longer be papered over or swept under the carpet. The U.S. is a nation adrift with no responsible leadership.

Republicans need to acknowledge that tax revenue is going to need to be increased. Democrats need to drop the pretense that raising taxes only on the top two percent would do all that much to reduce the size of the deficit, and also need to admit that entitlement reform is absolutely essential.

But I think what we'll probably see is a gimmicky "deal" allowing Obama to declare some sort of victory, and House Republicans to claim to their base voters that they've capitulated in the politically least disadvantageous way. Then there will be a countdown to the next "fiscal cliff" or debt ceiling standoff. Wash, rinse, repeat!



A drastic monetary contraction, along with bad economic policies pushed through by both Hoover and FDR, prolonged and worsened the Great Depression.

When a large number of banks failed during the early years of the Depression, the money supply fell by about one-third. If that had not been allowed to happen, the Depression would have only been a more or less ordinary recession. (Of course, the Smoot-Hawley Tariff Act triggered a trade war and compounded our problems in the early 1930s.)

Hoover is sometimes mistakenly portrayed as a laissez-faire "conservative" who did nothing while the economy burned. But the opposite was the case. Federal spending increased by over 40% during his four years in office, and he crammed through big tax increases on businesses and high incomes. One thing that's quite ironic is that during the 1932 campaign, Roosevelt lambasted Hoover for what he characterized as the latter's reckless spending.

At least with respect to the fact that sustained economic growth had resumed, the Great Depression's "second act" (the 1937-38 downturn, caused by the Federal Reserve's monetary tightening by way of a doubling of bank reserve requirements) was over by midyear 1938. World War II did not "end" the Great Depression, at least not in the sense that most of us were taught. A common misconception is that during the 1930s we simply failed to spend enough money to create sufficient aggregate demand to lift us out of the Depression, and only the massive spending connected with the war effort was able to do the trick. That's just absolute nonsense. For contrast, look at the response to the severe deflationary downturn of 1920-21:

http://articles.washingtonpost.com/2...-state-senator



The burdens of taxation, government spending, and regulation were actually very light in 1929. There have been times when lightening them has been an appropriate prescription, but it should be obvious that it's not always and everywhere the proper course. In fact, a lack of effective regulation was one of the problems at the time. That's why Glass-Steagall was passed in 1933. As I noted above, the proper response to the crisis would have involved a monetary policy response to the deflationary money supply collapse.

And Coolidge "did just that" in 1920? Wow. Surely a few people sitting around in Boston must be trying to figure out how a Massachusetts governor can wield that much control over federal government policy! (Wilson was president in 1920. Coolidge assumed office after Harding's death in 1923.)

Anyone interested in learning more about factors that caused and prolonged the Depression are encouraged to google up some of the stuff written by professors Cole and Ohanian. They have produced a lot of good work on the issue.



No it isn't.

Episodes of hyperinflation have all been associated with the collapse of an economy's foundation, genarally following events such as wartime devastation or other catastrophes causing massive capital flight. For instance, Germany after World War I and Hungary after World War II were burdened with impossible-to-meet reparations impositions, and didn't have much left in the way of productive capacity. Comparisons of our situation to cases like those are even more inapt than comparisons of our fiscal condition to that of Greece, which doesn't have a productive economy and connot borrow in its own currency.

That's not to say that we don't face plenty of problems; we obviously do. It's just that hyperinflation is not likely to be one of them. I think there's a fair chance that at some point down the road, we could have more inflation than we'd like. But the dollar will not collapse into virtual worthlessness.

A likely outcome, in my view, is that we'll muddle through a long period of slow growth as policy makers grapple with how to digest an entrenched, much higher level of government spending. The period of deleveraging is far from over, and may last for a number of years. And that's disinflationary.

2013 is likely to feature a number of vicious political battles.

Happy New Year!

[joe bloe]

Originally Posted by CaptainMidnight

The author of the article linked in the opening post correctly notes that the Republican congressional caucus is dysfunctional and in disarray. However, he forgot to note that the same is true of Pelosi's Democratic caucus. After all, that's why it got landslided out of office in 2010. It certainly wasn't because people forgot the malfeasance of the Republican Party during the early-to-middle part of the '00s.

The current debate over the fiscal cliff is a national embarrassment. It's simply ridiculous. Very few of these people (in either party) are remotely serious about confronting real problems in any meaningful way. All their actions are geared toward scoring political points. No one in a leadership position gives a damn about putting the nation's fisc on a sustainable course. And no one will, at least not until the onset of a crisis that can no longer be papered over or swept under the carpet. The U.S. is a nation adrift with no responsible leadership.

Republicans need to acknowledge that tax revenue is going to need to be increased. Democrats need to drop the pretense that raising taxes only on the top two percent would do all that much to reduce the size of the deficit, and also need to admit that entitlement reform is absolutely essential.

But I think what we'll probably see is a gimmicky "deal" allowing Obama to declare some sort of victory, and House Republicans to claim to their base voters that they've capitulated in the politically least disadvantageous way. Then there will be a countdown to the next "fiscal cliff" or debt ceiling standoff. Wash, rinse, repeat!



A drastic monetary contraction, along with bad economic policies pushed through by both Hoover and FDR, prolonged and worsened the Great Depression.

When a large number of banks failed during the early years of the Depression, the money supply fell by about one-third. If that had not been allowed to happen, the Depression would have only been a more or less ordinary recession. (Of course, the Smoot-Hawley Tariff Act triggered a trade war and compounded our problems in the early 1930s.)

Hoover is sometimes mistakenly portrayed as a laissez-faire "conservative" who did nothing while the economy burned. But the opposite was the case. Federal spending increased by over 40% during his four years in office, and he crammed through big tax increases on businesses and high incomes. One thing that's quite ironic is that during the 1932 campaign, Roosevelt lambasted Hoover for what he characterized as the latter's reckless spending.

At least with respect to the fact that sustained economic growth had resumed, the Great Depression's "second act" (the 1937-38 downturn, caused by the Federal Reserve's monetary tightening by way of a doubling of bank reserve requirements) was over by midyear 1938. World War II did not "end" the Great Depression, at least not in the sense that most of us were taught. A common misconception is that during the 1930s we simply failed to spend enough money to create sufficient aggregate demand to lift us out of the Depression, and only the massive spending connected with the war effort was able to do the trick. That's just absolute nonsense. For contrast, look at the response to the severe deflationary downturn of 1920-21:

http://articles.washingtonpost.com/2...-state-senator



The burdens of taxation, government spending, and regulation were actually very light in 1929. There have been times when lightening them has been an appropriate prescription, but it should be obvious that it's not always and everywhere the proper course. In fact, a lack of effective regulation was one of the problems at the time. That's why Glass-Steagall was passed in 1933. As I noted above, the proper response to the crisis would have involved a monetary policy response to the deflationary money supply collapse.

And Coolidge "did just that" in 1920? Wow. Surely a few people sitting around in Boston must be trying to figure out how a Massachusetts governor can wield that much control over federal government policy! (Wilson was president in 1920. Coolidge assumed office after Harding's death in 1923.)

Anyone interested in learning more about factors that caused and prolonged the Depression are encouraged to google up some of the stuff written by professors Cole and Ohanian. They have produced a lot of good work on the issue.



No it isn't.

Episodes of hyperinflation have all been associated with the collapse of an economy's foundation, genarally following events such as wartime devastation or other catastrophes causing massive capital flight. For instance, Germany after World War I and Hungary after World War II were burdened with impossible-to-meet reparations impositions, and didn't have much left in the way of productive capacity. Comparisons of our situation to cases like those are even more inapt than comparisons of our fiscal condition to that of Greece, which doesn't have a productive economy and connot borrow in its own currency.

That's not to say that we don't face plenty of problems; we obviously do. It's just that hyperinflation is not likely to be one of them. I think there's a fair chance that at some point down the road, we could have more inflation than we'd like. But the dollar will not collapse into virtual worthlessness.

A likely outcome, in my view, is that we'll muddle through a long period of slow growth as policy makers grapple with how to digest an entrenched, much higher level of government spending. The period of deleveraging is far from over, and may last for a number of years. And that's disinflationary.

2013 is likely to feature a number of vicious political battles.

Happy New Year!

I stand corrected. Coolidge did take office in 1923 after the economic downturn of 1920. However, he did implement a supply side strategy and the economy did bounce back. Coolidge was Reagan's favorite president because of his supply side policies.


Coolidge administration accomplishments:

• Top marginal income tax rates were lowered from 73% to 24%.
• By the end of his term, 98% of the population paid no income tax at all.
• The federal budget was reduced by 35%.
• Per capita income increased over 30%.
• Unemployment averaged 3.3%.
• GNP grew at the fastest compound rate of any eight-year period in U.S. history.

Read more: http://www.americanthinker.com/2012/...#ixzz2GHGghAbC

Follow us: @AmericanThinker on Twitter | AmericanThinker on Facebook

Concerning hyperinflation, it's my observation that when countries have more debt than they can pay, they inflate their currency. The closest analogy, is the Weimar Republic, the Treaty of Versailles left Germany with crushing debt, in the form of reparations, which they could not service. Germany essentially cancelled their debt with hyperinflation.

Maybe we won't follow exactly the same path as Germany, but my guess is the dollar won't hold it's value much longer with the Fed printing money at the current rate and our unfunded liabilites estimated at 222 trillion.

[Guest040616]

Originally Posted by joe bloe

Concerning hyperinflation, it's my observation that when countries have more debt than they can pay, they inflate their currency.

Your observations have not been very good as of late. You totally blew your observations on election 2012!

[HoustonMilfDebbie]

Originally Posted by Fast Gunn

Well, that is funny in a dopey sort of way.

. . . But no, I don't resemble anyone in that show, but you might!

k

I love men from "Ohio"...Neil Young rocks!!

[HoustonMilfDebbie]

Hey Fast Gunn, love your name...did I "spell" that right???

[joe bloe]

Originally Posted by bigtex

Your observations have not been very good as of late. You totally blew your observations on election 2012!

Bite me.

[Guest040616]

Originally Posted by joe bloe

Bite me.

You have difficulty accepting a humiliating defeat, don't you?

[Texas Contrarian]

Originally Posted by joe bloe

IConcerning hyperinflation, it's my observation that when countries have more debt than they can pay, they inflate their currency. The closest analogy, is the Weimar Republic, the Treaty of Versailles left Germany with crushing debt, in the form of reparations, which they could not service. Germany essentially cancelled their debt with hyperinflation.

Maybe we won't follow exactly the same path as Germany, but my guess is the dollar won't hold it's value much longer with the Fed printing money at the current rate and our unfunded liabilites estimated at 222 trillion.

That's a fringe view. No one I know in the world of mathematical finance shares it.

I already pointed out the inaptness of the Weimar comparison back in post #43, and briefly touched on the primary reason. Predictions of Weimar-style hyperinflation in the U.S. depend on the assumption that our productive base will fall down into a smoking heap of rubble. The huge unfunded liabilty estimate you mentioned is an abstraction arising primarily from the extrapolation of an assumed and unreformed entitlement-related fiscal gap. The governmnent will be under no legal obligation to fulfill promises implied by such forecasts, and programs will eventually be reformed, adjusted, and means-tested. I also think we'll implement a VAT before the passage of very many more years.

Although it's far from a certainty, we may at some point within the next ten years experience inflation levels similar to those of the 1970s, but that's certainly not hyperinflation -- and it's not an existential threat to the economy.

Nevertheless, dealing with even that level of inflation is a painful process, as we saw in the early 1980s. But we will do so if it becomes necessary.

[joe bloe]

Originally Posted by CaptainMidnight

That's a fringe view. No one I know in the world of mathematical finance shares it.

I already pointed out the inaptness of the Weimar comparison back in post #43, and briefly touched on the primary reason. Predictions of Weimar-style hyperinflation in the U.S. depend on the assumption that our productive base will fall down into a smoking heap of rubble. The huge unfunded liabilty estimate you mentioned is an abstraction arising primarily from the extrapolation of an assumed and unreformed entitlement-related fiscal gap. The governmnent will be under no legal obligation to fulfill promises implied by such forecasts, and programs will eventually be reformed, adjusted, and means-tested. I also think we'll implement a VAT before the passage of very many more years.

Although it's far from a certainty, we may at some point within the next ten years experience inflation levels similar to those of the 1970s, but that's certainly not hyperinflation -- and it's not an existential threat to the economy.

Nevertheless, dealing with even that level of inflation is a painful process, as we saw in the early 1980s. But we will do so if it becomes necessary.

I think we're headed for a trainwreck. I don't know exactly what it's going to look like, but it's not going to be pretty. Economics is the dismal science; no one's predictions of the future are very reliable. Economics makes phrenolology seem scientific.

[Guest040616]

Originally Posted by joe bloe

Economics is the dismal science; no one's predictions of the future are very reliable.

There is an easy solution to this problem. Let's ask Whirly what the latest "trending" lines are and go with the opposite.

Problem solved!

[joe bloe]

Originally Posted by bigtex

There is an easy solution to this problem. Let's ask Whirly what the latest "trending" lines are and go with the opposite.

Problem solved!

When you're on your deathbed, your last words will probably be something about Whirly and trending. You need new material.

[Texas Contrarian]

Originally Posted by joe bloe

I think we're headed for a trainwreck. I don't know exactly what it's going to look like, but it's not going to be pretty. Economics is the dismal science; no one's predictions of the future are very reliable. Economics makes phrenolology seem scientific.

I certainly think we're in for myriad difficulties, but I'm not as pessimistic as you. Some sort of economic "train wreck" is certainly a possibility, though. I just don't think it would involve hyperinflation. In my judgment, a prolonged, slow-growth, "muddle-through" period is much more likely.

I'm with you in one respect, though: Generally speaking, people in my field hold most academic economists in very low esteem, especially the ones whose discredited theories are used to undergird arguments supporting the efficacy of pseudo-Keynesian fiscal "stimulus" packages that end up being little more than vote-buying schemes -- like the $800 billion ARRA of 2009.

[joe bloe]

Originally Posted by CaptainMidnight

I certainly think we're in for myriad difficulties, but I'm not as pessimistic as you. Some sort of economic "train wreck" is certainly a possibility, though. I just don't think it would involve hyperinflation. In my judgment, a prolonged, slow-growth, "muddle-through" period is much more likely.

I'm with you in one respect, though: Generally speaking, people in my field hold most academic economists in very low esteem, especially the ones whose discredited theories are used to undergird arguments supporting the efficacy of pseudo-Keynesian fiscal "stimulus" packages that end up being little more than vote-buying schemes -- like the $800 billion ARRA of 2009.

My knowledge of economics is extremely limited, but it's my understanding that most so called Keynesians are really just bastardizing what Keynes actually believed. I don't think he ever said that governments should just spend, spend, spend in good times and bad. His idea of stimulating the economy was to increase spending in recessions to sort even things out, the same way individuals might borrow in hard times and put money aside in good times.

There's a story about Keynes that he once went to a conference on Keynesian economics and realized he was the only non-Keynesian there.

[Fast Gunn]

Thanks and yes you did spell it correctly.

Could you help out COG with that?

. . . Apparently, he has some sort of cognitive disability.

Originally Posted by HoustonMilfDebbie

Hey Fast Gunn, love your name...did I "spell" that right???

[Texas Contrarian]

Originally Posted by joe bloe

My knowledge of economics is extremely limited, but it's my understanding that most so called Keynesians are really just bastardizing what Keynes actually believed. I don't think he ever said that governments should just spend, spend, spend in good times and bad. His idea of stimulating the economy was to increase spending in recessions to sort even things out, the same way individuals might borrow in hard times and put money aside in good times.

During his era, governments generally ran surpluses during good times, or at least budgets that were balanced or in near-balance. That's why I refer to this bastardization as "pseudo-Keynesianism." Most serious students of Keynes feel that he would likely be horrified by some of the nonsense invoked in his name. He wasn't some wild-eyed radical who thought it was OK to run massive permanent deficits.

Perhaps it's also worth mentioning that Keynes absolutely abhorred trade deficits. Imagine what he would think about our accumulated balance-of-payments deficits.

One very big problem is that many neo-Keynesian economists of the last few decades have produced macro models claiming large fiscal multipliers for almost any type of government spending, even entitlement expansions and food stamp dispensation. There's no evidence whatsoever that any of that works very well in the real world.

Harvard's Robert Barro has been doing research in this area since the 1970s, and he may have done more than anyone to debunk the over-the-top claims of some of his peers. In his view, instead of typically landing in the 1.5-1.75 area, "multipliers" associated with most types of government spending are often less than 0.5, and in many cases significantly closer to zero.

I was trained as a mathematician, not an economist. Perhaps that's why I have a "show-me" brand of skepticism about this sort of stuff. I like to see rigorous proof, and I'm simply not impressed by what essentially amounts to "faith-based economics."