OptimizedPrime

http://www.cbsnews.com/stories/2011/09/03/earlyshow/saturday/main20101324.shtml This is just so bad on so many levels. I guess I shouldn't be surprised, but I am. OP

Or maybe many people here don't even read the contents of posts and just glean a "feeling" from them and instantly react to them without any kind of subtle thinking through of the matter. If we want knee-jerk reactions like this to events we can in fact go to the mainstream media, which is to say Fox News. OP

Yes, and it's important to think of this as "war" (an analogy), not peace. Everybody in the USA is under attack by taxes. Nobody deserves that. In war you make trade-offs to protect your population, which may involve diverting the attack to those whom would be less effected by the attack. This is not about rewarding mediocrity or punishing the successful, it's about surviving a bad situation. As I alluded to in a previous post, rational people who make life the standard of value should have every interest in a path to change that doesn't simply crush people because after living a lifetime in a welfare state they "should have known". So yes, one good way to put is, "(slowly, carefully) ween the country off the welfare state", not "liquidate the poor". OP

I don't think the demos need to be that clever. Tax cuts are not some magic fairy dust that will stimulate the economy in short order, no matter what form they take. The Repub's calls for fiscal cutbacks will actually make the economy much worse in the short run because it would simply cause lots of unemployment and thus lower aggregate consumer demand. But ah, good ole politics: none of this matters since voters just vote out whatever party is in power when things aren't good regardless of the truth of the matter. This is why Obama's capitulation to the Repub's framing of the debate is political suicide. The Repub's calls for austerity will make things nice and miserable for the 2012 presidential election, paving the way for the Bachman/Palin ticket to win by a landslide. So my prediction is this: 1. The economy sucks now, and the answer given is austerity (driven by the Repubs, but accepted by the Demos). 2. This makes the economy suck a lot for 2012 and the Repubs win big next November, taking both houses and the WH. 3. The economy will then suck a lot more as austerity will kick into high gear. The badness of this sort of situation (deflation) is heavily skewed towards lower-income, less skilled, and retired people. 4. Come about 2014 or so, we'll have a flat-lining economy and much bigger disparities between the haves/have nots. What happens after that will depend on ideology. Now before you get too cynical and depressed, witness the recent collapse of Keynsianism. Everybody in the USA now "knows" that stimulus doesn't work because we tried that $700b thing and we're still in the shitter. This was a very positive development for our cause. Certainly what the country will turn to after both sides of the argument are thoroughly discredited is anybody's guess. This has certainly not gone well in other countries in other times. The USA is, however, different. We might, God Forbid, find ourselves actually making a difference for once. OP

The government was scheduled to run out of money completely within a week give or take, within the confines of the law, provided the president didn't exert certain statutory powers (e.g. the $1T coin etc.). Clearly had the deal not been reached, the president would have been duty-bound to override congress' attempt at ending our democracy. Yeah, instantly removing the livelihood of tens of millions of people with no prior warning wouldn't have any bad effects at all. We should totally do that. *** Ayn Rand once called Objectivism, "a philosophy for living on Earth". I guess people are free to use it however they want, and some are perfectly happy using it as a mental exercise, or a puzzle, or a way to win meaningless arguments at cocktail parties. What a waste. OP

Yes. The immediate halting of all federal operations would be catastrophic. I think that's pretty obvious to anybody who has thought the matter through. The two issues are unrelated. They were apparently advocating an enormous and sudden change in fiscal spending, and a temporary all-out halt. Beyond that I have no idea what was going through their heads, if anything. For what it's worth, interest on the debt amounts to 6% of the budget, so defaulting wouldn't really help much. OP

The debt ceiling fiasco. Regardless of one's view of the principles involved, blowing up the country is never necessary or justified, and it underscores the t-party's status of a bunch of idiots who don't understand anything more complicated than 3rd grade math. Insofar as these morons occupy the concept of liberty in the population's minds, the long term cause is damaged. While it's true that other sorts of revolutions operated without regard to human life and suffering, they only did so because they were actually being true to their ultimate principles. You might as well being talking astrophysics to the average t-party member though. The correct first principles to operate from would have us implement a peaceful and fair move to a free society, not trade-off Armageddon and/or wide-spread inequity and displacement for a slightly faster transition. No not at all. You are free to make a choice between a contract that is protected by the government and one that is not. Insofar as you benefit from this sort if service, you should pay for it. OP

The is bad marketing, to say the least. We have to push for the right sort of principles to move government in the right direction, but its important to do this as skillfully as possible. In a proper government, most taxes would be use-based (and voluntary). Given that, it would follow that "rich" people would generally pay a lot more for services than poor people since they have a lot more to protect. One could also imagine that "rich" people, having a lot more expendable income, would choose to spend a lot more on less tactical things like security and safety, would generally engage in more complex transactions that required more government work, and so forth. Poor people wouldn't pay much since they wouldn't use much. For instance, they might choose to buy a car without paying the sales "tax", with the understanding that if the transaction is disputed, they would have no recourse. A rich person would generally make the opposite choice. So instead of "tax the poor" the t-party dorks should be pushing for flat taxes, more use fees (increased prices at parks, post-office, etc.) and so forth. Now why wouldn't they be pushing for a flat tax? Let me see... could it have something to do with the fact that a zillion special interests support every one of those special tax breaks, and that the t-party, operating without any clear principle, is really just another form of politics-as-usual? You don't hear the t-party dorks calling for the end of the interest deduction on homes, or the end of Prop 13 in California--two tax "breaks" that benefit a single special-interest and generally distort the free market for housing. You don't hear them calling for the end of income taxes in favor of transaction use-taxes. For that matter, I personally don't even hear the word "flat tax" these days as even the t-party people know that is politically untenable within their own ranks. This sort of rhetoric exposes the t-party for what they are, which is a bunch of unprincipled children screaming for their own taxes to be lowered without regard to any of the "hard" issues like how we're going to continue to pay for the welfare state they all live off of (I think the average age of t-party ding dongs is about 70) and how we're going to continue to be the police of the whole world. This was exposed in vivid color in August when they injected needless panic into the markets by threatening to blow up everything in the short run if they didn't get what they want, which is to have their cake and eat it too. I never expected the t-party to live very long. I give them about one more election cycle. After that, reality will catch up with them, and they will return to supporting fatter social security checks regardless of what "other people" need to pay in taxes. (The only POSITIVE thing that's happened in the last couple of years is the death of Keynesianism, which had nothing do with the t-party, but more to do with a simple miscalculation of the necessary size of the original stimulus and good ole' government corruption that watered what little was there down to almost nothing. For the foreseeable future, "stimulus" is going to have a bad name). OP

No, the Fed is certainly "trying" to achieve an inflation target of a point or two. They might get this right. They have before. And to be sure, I don't think the austerity crowd is "pushing" deflation, they are merely pushing fiscal cutbacks and I doubt most who are pushing for this understand what they are doing vis a vie *flation. Debtors are fans of inflation, but creditors are fans of deflation. With our interest-group driven political system such as it is today, it's completely unclear who is going to win in the long run. But yes, no doubt, creditors are liking what they see in the short run. OP

You bring up an interesting point (or at least you did for me :-)). Before his fall, Greenspan talked about the advent of trade with emerging economies (e.g. China) being an incredibly deflationary event. It's as if our labor force doubled in size overnight (and the new labor was dirt cheap). A quick trip to Walmart will give anybody a lesson in this. And clearly advances in technology should also drive prices down drastically as well. Everything from food to manufactured goods benefit from IT, and there have been huge advances particularly in the past 20 years in that area. And then IT itself has obviously fallen through the floor in price for a wide range of goods. So Greenspan basically took all of this as an indicator that the Fed and congress were free to "try" to inflate the living shit out of everything because the net effect on prices would be neutral. Besides inflating the money supply, covert deficit spending aka the housing bubble financing massively inflated things to the point of counteracting all of the inherent deflation. Greenspan's goal was ALWAYS price stability, and if that was the goal, then you must inflate as much as you can from a policy perspective. All this, however, leads us right back to where we started. The driver of inflation will be policy in Washington, not the market (and this will be true as long as we are not on a gold standard). Right now Washington looks to be in a deflationary mood. Nobody on either side of the aisle is talking about fiscal expansion, and Keynes, at least for now, is thoroughly discredited because the $700b stimulus didn't work and we're on our way to a double-dip. Meanwhile, the Fed is up against the "zero bound" in terms of lowering interest rates. So maybe this clears things up a bit. Yes, the government is busy "inflating" these days, but from a price perspective all they are doing is canceling out natural deflation. The question is, will they get it wrong, and in which direction? Right now everything policy-wise points to DEflation, not inflation. OP

Philosophy 2.0 Rocky Mountain Spring Philosopher Deep Thoughts with Hack Diani You Don't Hsieh Thinking Harder Wikipedia's Ex The Deepest Blog On the Internet Unmuddied Waters The Hacker's Cleric ......... That's all I have for now. I'm sure I'll think of more. OP

You obviously don't watch the Glenn Beck Show (or every show on Fox News for that matter)--good for you :-). It's basically one giant infomercial for gold. A 500% run-up in the last ten years doesn't scare you? Even a little? You keep making my case here, over and over. It's fear of default and/or massive inflation that is driving the price of gold. There is no possibility of default and there is no massive inflation anywhere on the horizon. US 10-year bonds are priced as if we're never going to have inflation ever again and other commodities like oil (or even platinum to some extent) are NOT following gold, which is what you'd expect if there was real inflation fears among the mainstream of investors. Deficits might be immoral (I would never put it way but no matter), but they are current "not" causing inflation and by all accounts this is NOT a valid reason we should be against deficits. We should be against deficits because involuntary taxation is immoral, as is involuntary indebting of citizens. But ascribing specious additional downsides is misleading and counter-productive. OP

Most goldbugs don't think it's a "smear" to call them(selves) that. It's just a shorthand term for somebody who is bullish on gold as an investment. It's common in investment lingo, etc. No offense implied. My phrasiology aside, a 500% run-up in gold, insofar as you believe it's an index for actual price inflation, would imply that we are seeing or soon will see, a 500% run-up in dollar-denominated prices. What I am hearing here seems to imply (tell me if I'm wrong) that the price of gold proves that massive price inflation must be underway. Many don't seem to accept that gold is just one kind of investment like so many others, and as such can be subject to a speculative bubble wherein it's price makes a drastic departure from its fundamental value and/or investors can be wrong in their assessment of its value. And yes, I've looked at all of the various forms of inflation measurement, up to and including my own anecdotal evidence: I personally remember ten years ago, and I don't recall everything being 1/5th the price everything is now. I actually feel like everything is approximately the same price, give or take. If we had massive inflation during this time, it seems like the average person would have noticed it and it would be very obvious. OP

...and devalue the dollar 500%. That's what gold has done in the last few years, so THAT is what you are banking on happening in the next few (assuming gold doesn't go even higher, which is probably what it would do if there were actually REAL inflation indicators). So yeah goldbugs, you are envisioning a world where a Toyota Camry goes for about $125,000 when the price of the thing has gone from $22k to $26k in the LAST ten years. Good luck with that. The assumption about monetary expansion automatically leading to price inflation is like assuming a storehouse of TNT will inevitably blow up because you assume somebody will put a match to it. But a potentiality is not an actuality. "Past performance is no guarantee of future returns". Which is to say that, the same applies to AAPL, GOOG or some other home-run stock or a thousand other investments you can come up with that did really well. The early investors in Facebook are on-tap to make 1000x their initial investments. What is your point? OP

Please re-read the whole thread, not just the very last post. Thanks, OP

Story: Obama Goes All Out For Dirty Banker Deal This is a great article that summarizes the fraud committed by banks and rating's agencies back in the Housing Bubble--and the sweet deal they are in the process of getting from the federal government. This represents a breakdown of our whole civilization, and is by far our highest priority to fix. If the perps get away with this, you can absolutely BANK on it happening again but ten times bigger next time as it basically will mean that financial crime is now LEGAL. OP

So we need to pick the lesser of two evils? It's either "dishonest money" (?) or S&P? And how again am I "supporting" "dishonest money"? Wtf? Okay. I'm glad to be of help. Your post puts your assessments into their proper perspective as well. This morning, my dog barked, which put HIS assessments into their proper perspective as well. I'm chock full of perspective today. OP

Here's an interesting video: An Introduction to Objectivism Part2 by Leonard Peikoff This is fun. Completely off-topic, but fun. OP

I'm not sure what you are asking here, but I think I showed that my assertion that S&P were acting from purely political motives was at least plausible, and supported by several facts. I also showed that Hsieh's assertion was actually refuted by (admittedly after-the-fact) facts. But somehow we're way down a rhetorical rat-hole here... I think I made my original case, which was that supporting and defending S&P was a really dumb thing to do, and is counter-productive to the cause of liberty. OP

Oh come on. There is not ONE person on Earth that interpreted their announcement that way (Paul didn't for starters), and I also have a very hard time believing they "didn't know what was going to happen" when the announcement was interpreted by non-investors as a major ding on the credibility of the US, etc. etc. As you mentioned, there's virtually nobody that actually pays attention to this rating for serious investment (and the market has underscored that). I think they know that too. So yeah, the motive of currying favor with the Repubs is a reach maybe, but it's one possible explanation that isn't refuted by the available facts and supported by circumstantial evidence. Now, you don't think that imagining the other agencies didn't change their ratings because they were afraid of being prosecuted wasn't a reach either? I'm not trying to justify bad behavior--we're both working with less-than-complete facts--but it's a judgement call and I think Paul's guess was far less plausible (and then was proven wrong by the facts). OP

This won't work. By supporting S&P, you are not supporting some arcane reaction you yourself might have to them. The headline for this one is simple: "The US Can't Pay it's Debts, say S&P". This is stupid on the face of it, and S&P are wrong and anybody with a brain can figure that out. They are going to be charged and possibly convicted as criminals--for all of the right reasons. You want to go on the record as supporting THEM? All this will do is crush your credibility, and help the other side make their case. OP

Why do I apparently think that? I'm pretty sure I implied the exact opposite--that monetary expansion is something one should keep an eye on, as it is one factor in price inflation (but without other factors in play its just so much dry powder). It's an internet forum, not a fancy dinner party. I'm being provocative and direct. So yeah, defending S&P is retarded. OP

No it doesn't. I have no idea (and I read the rest several times) how you came to that. You understand how t-bills are sold, right? You understand what the agency is rating here, right? *** And to the other thread (I don't have this multi-response thing figured out yet), I use the term "inflation" in the sense of, "a general rise in prices". I'm familiar with the other sense of the word, and they are not the same thing and one doesn't necessarily lead to another (as we've witnessed in the last couple of years). Certainly the other sense might be an important thing to follow along with many other risk factors, but it's just a factor, not an actual thing. *** And yes, my case against S&P's recent action is circumstantial. So take that for what it's worth. It's possible that they are merely idiots. Paul Hsieh goes on to suggest that other agencies did NOT down-rate t-bills because they are afraid they will be investigated by the government like S&P was (which apparently they all are anyhow). This too is circumstantial (speculative?). So we're all just piecing together circumstantial evidence--and I think mine's a lot better. But nobody can know exactly what is going on in their minds for sure of course. Now my case against their earlier behavior is not circumstantial (at least at the macro scale). They rated giant multi-billion dollar lumps of dog doo as "AAA zero risk". It was fraud and a proper government should go after them. So to defend these guys makes you look stupid, and that's a bummer for me since I don't like advocates of freedom and reason looking stupid. OP

I wasn't claiming that at all. I don't know how you read that into my posts. Please explain. OP

Well, for a little help, here's how a prominent online dictionary defines the word, "default": http://dictionary.reference.com/browse/default default -- "to fail in fulfilling or satisfying an engagement, claim, or obligation." Anybody buying t-bills are buying debt denominated in US dollars. Yes, you can inflate those dollars, but no, that is not "default" in any sense of the term. Investors know what "dollars" are, and they act accordingly. The treasury also sells TIPS, for example, which is the product for customers who would like to bet FOR inflation. But all that said, in today's environment, significant inflation in the US is utterly laughable. The ONLY thing going up in price these days is gold, which is obviously a speculator-induced bubble, not a sign of the 500% inflation it portends. To say it again (as I have in other threads), I'm quite afraid of what are otherwise very rational people being made to look like crackpots in resting a lot of conclusions on something is utterly without evidence. The next decade will be about DEflation not inflation (see: Japan), t-bills are as safe as mother's milk, and S&P was just manipulating public opinion not making any kind of judgment that people expect from them (which amounts to fraud). Getting on S&P's side and defending them is a BIG mistake. And yes, S&P (and many of the other ratings agencies) absolutely SHOULD be investigated and potentially prosecuted for the fraud they committed during the subprime fiasco. I have no idea why these cases haven't been brought forward--and I wondered that two years ago, long before this downgrade business. OP