401K or bust...

[blackshoe]

Right. This makes your assertions much more credible.

No, it makes the assertions about my assertions less credible.

[blackshoe]

Blackshoe: I can't say what I want to say to your very blinkered thoughts, because that would be mean for no reason. However, people as far on the Overton Window as you are seem mean to me.

 

Because of the true welfare state, which the U.S. isn't even approaching (frankly, my country isn't even approaching, but at least this hole was filled), I am allowed to be the successful IT player in a niche and very desirable field. I make my company a large amount of money, a significant amount of which (but not enough), they pay me, and a significant amount of which (too much, of course) I pay the governments. Some of that (not enough, again, but you know) goes to providing the welfare state...

 

That made it possible for me to get the training I needed to be that successful IT player (at $450/semester tuition, that was extra because I was engineering, for instance).

 

Oh, and saved my life. Literally. And didn't crush me to death or bankruptcy - which would probably be the same thing, given what they saved my life from - while doing it. And which I will never be able to pay back, even if a majority of the taxes I pay for the rest of my life are earmarked for it. So I graciously pay my "too much" taxes -

 

Even if it goes to help people who think I should be dead. Of which, unfortunately, there are too many in my city and province. Some of whom play bridge, and are happy to tell me that the world should be different; more like your world.

A long and rambling reply of which I can make little sense. And what the heck is "the Overton Window" anyway?

[ArtK78]

A long and rambling reply of which I can make little sense. And what the heck is "the Overton Window" anyway?

Well, I made sense of it. And I am very happy for mycroft, who is obviously a successful example of government assistance.

 

As for the "Overton Window," a quick look at Wikipedia shows this as the first paragraph of the entry under that title:

 

The Overton window is a political theory that describes as a narrow "window" the range of ideas the public will accept. On this theory, an idea's political viability depends mainly on whether it falls within that window rather than on politicians' individual preferences.^[1] It is named for its originator, Joseph P. Overton (1960-2003),^[2] a former vice president of the Mackinac Center for Public Policy.^[3] At any given moment, the “window” includes a range of policies considered politically acceptable in the current climate of public opinion, which a politician can recommend without being considered too extreme to gain or keep public office.

[kenberg]

Apparently it is also a novel by Glenn Beck. Should I buy it?

[ArtK78]

.... by Glenn Beck. Should I buy it?

That pretty much answers the question, doesn't it?

[32519]

Next bubble is securitised car loans.

[mike777]

as the title suggests we don't learn from the past so we repeat it.

 

Blackshoe to suggest a govt program does not work is to repeat it but add more

 

suggest a quote is conservative(anti spend) or fox news to get more clicks.

 

even Mycroft misses the main point...capitalism paid his tuition and created a job for his brilliant mind. In other words his own hard work and very hard work. without capitalism his job does not exist.

 

Mycroft is the poster child for free markets and not for welfare.

[Vampyr]

No, it makes the assertions about my assertions less credible.

 

No, it is meaningless like most name-calling, and only makes you look small and your arguments empty.

 

I'm a gun nut so I must be "conservative" so I must believe X Y and Z. That's the way your mind works, isn't it?

[Winstonm]

as the title suggests we don't learn from the past so we repeat it.

 

Blackshoe to suggest a govt program does not work is to repeat it but add more

 

suggest a quote is conservative(anti spend) or fox news to get more clicks.

 

even Mycroft misses the main point...capitalism paid his tuition and created a job for his brilliant mind. In other words his own hard work and very hard work. without capitalism his job does not exist.

 

Mycroft is the poster child for free markets and not for welfare.

 

Non sequiturial leap of faith.

[P_Marlowe]

Let me shift a minute to illustgrate a point. I have a friend who thinks the Federal Reserve is a menace. It isn't. But what is dangerous, and I think we are seeing it, is to place too much faith in the Federal Reserve. I am sure that Janet Yellen is brilliant and dedicated. Same for Ben Bernanke, Alan Greenspan, Paul Volker, many others. But they are not gods, and they would probably be the first to note their own limitations, and the limitations of their powers regardless of their brilliance. The danger is that we decide we do not have to make sound decisions ourselves because if a problem arises the Fed will fix it. Maybe saints perform miracle, maybe not, but we don't and won't have a miracle performing saint running the Fed.

 

And this same danger applies to the debt. It's one thing to say that a little debt won't kill us, possibly even is good for us (maybe), but it is another thing entirely to say that the quite large debt, and our massive overall commitment, is nothing to worry about. We just cut some military retirement commitments. I doubt that this will be the last cutback needed in our commitments.

 

 

I also do not expect the immanent collapse of the United States. But again that is different from thinking we are in great shape. If we accept a responsibility to give future generations a strong and prosperous country, it is fair to ask how this plan is going. So-so, in my view.

To worry about debt is ok. But all debt is not equal. This is the point often ommitted.

 

If the debt finances things, that will be around a couple of years, than you have something, that can be used,

while you are paying down dept.

I.e. if you invest in infrastructure, and education / research is part of infrastructure, you are investing in the

future, in the children, that have to pay back the cost, when they have grown up, this is ok. Raising children costs

money, and those costs is not only paid by the parent, also by the society.

And children have to pay it back. I would not worry about this kind of debt. (*)

 

But you have other debt, like tax breaks, for those who may or may not need them.

Those who need them, may need money to raise children, the ones who have to pay back the debt, that we make to invest

in infrastructure, and we will need lots of peoble in the future.

But if you throw the money at peoble, who dont need it, the money is gone. And to worry about the amount of money that

goes down this way is reasonable.

 

Healthcare is in between. A reasonable health care system keeps the peoble healthy and productive, so that they can

pay back more with their work, but you have to watch, that you spend the money wisely.

 

With kind regards

Marlowe

 

(*) If you finance sensible things with your credit card, they cant be taken away that easily.

If you help your children with their education, they have the education, if you buy things to eat for you

and your children, you and your children will stay alive, if you buy cars / TV sets, wait for the next technology round

coming next week, and you can move most of the tings to the trash bin, ... maybe you recylce, but you wont get enough

to cover the interest.

 

PSS: Just found, one link does not prove anything, but the conclusion that the money spend, is payed back with interest

later, is a conclusion I can follow

http://opinionator.blogs.nytimes.com/2014/01/18/what-happens-when-the-poor-receive-a-stipend/?_php=true&_type=blogs&_r=0

[kenberg]

To worry about debt is ok. But all debt is not equal. This is the point often ommitted.

 

If the debt finances things, that will be around a couple of years, than you have something, that can be used,

while you are paying down dept.

I.e. if you invest in infrastructure, and education / research is part of infrastructure, you are investing in the

future, in the children, that have to pay back the cost, when they have grown up, this is ok. Raising children costs

money, and those costs is not only paid by the parent, also by the society.

And children have to pay it back. I would not worry about this kind of debt. (*)

 

But you have other debt, like tax breaks, for those who may or may not need them.

Those who need them, may need money to raise children, the ones who have to pay back the debt, that we make to invest

in infrastructure, and we will need lots of people in the future.

But if you throw the money at people, who don't need it, the money is gone. And to worry about the amount of money that

goes down this way is reasonable.

 

Healthcare is in between. A reasonable health care system keeps the peoble healthy and productive, so that they can

pay back more with their work, but you have to watch, that you spend the money wisely.

 

With kind regards

Marlowe

 

(*) If you finance sensible things with your credit card, they cant be taken away that easily.

If you help your children with their education, they have the education, if you buy things to eat for you

and your children, you and your children will stay alive, if you buy cars / TV sets, wait for the next technology round

coming next week, and you can move most of the tings to the trash bin, ... maybe you recylce, but you wont get enough

to cover the interest.

 

PSS: Just found, one link does not prove anything, but the conclusion that the money spend, is payed back with interest

later, is a conclusion I can follow

http://opinionator.b...type=blogs&_r=0

 

I am pretty much in agreement with all of this. I would add this though: In addition to "if you throw the money at people, who don't need it" we have to consider "if you throw the money at people, who do need it but have no sense". I am fully on the side of helping people develop their skills and their lives. Some people are very hard to effectively help. I expect that most of us do not need an academic study to see the truth of this, we just consult our memories.

 

But yes, not all debt is equal and I am all in favor of government giving a helping hand.

[onoway]

 

PSS: Just found, one link does not prove anything, but the conclusion that the money spend, is payed back with interest

later, is a conclusion I can follow

http://opinionator.blogs.nytimes.com/2014/01/18/what-happens-when-the-poor-receive-a-stipend/?_php=true&_type=blogs&_r=0

I agree with your comments and found the link interesting. The findings are comparable with others I have read.

 

In Canada it is estimated to cost over $100,000 per year per man to keep him in jail. The $100,000 doesn't include such things as the costs of getting him or her TO prison nor say anything about what happens when they get out, nor include the impact their antisocial behaviour has on the victims, both in their own mental and physical well being as well as loss or damage to their possessions.

 

That's way way way more than anyone is estimating it would cost to help a family at risk. Such help would likely mean that that child would never end up in the justice system in the first place.

 

Seems to come down to pay me now (when I am young and need help) or pay me later (through jails and mental health institutions.) The thing is that people hate to think that someone else is getting something for nothing, especially if its something of "theirs" (tax dollars) and although the majority of people on welfare are in real need of help, there will always be some who scam any system. Of course those are the ones most people focus on.

 

One thing I thought was interesting in the study was the observation that the money was unconditional seemed to be important. This is a point which has come up more than once in Canada. Once a client got over a certain threshhold of income..fine, but the threshold was set so low as to not only keep them in poverty, but jeapordise any future help available.. "why did you leave your job" etc.

 

More than one way to charge for help and humiliation/disrespect is one way that many (not all, for sure) welfare workers use (intentionally or not) on their clients, many of whom already have little or no self respect for being there in the first place. Someone with no self respect is unlikely to be able to teach their kids how to have any., Having the money come unconditionally wipes those issues out.

 

Still, it's interesting how many people don't object to or even think about the costs of the justice system (jail) but they do object strenuously to providing for needy kids. Perhaps that's why the US has such a comparitively high percentage of their population in jails. http://www.nytimes.com/2008/04/23/world/americas/23iht-23prison.12253738.html?pagewanted=all&_r=0 It's not a cost effective way to budget.

[blackshoe]

No, it is meaningless like most name-calling, and only makes you look small and your arguments empty.

 

I'm a gun nut so I must be "conservative" so I must believe X Y and Z. That's the way your mind works, isn't it?

Nope.

[32519]

Emerging market contagion threatens rich countries.

[Al_U_Card]

This website shows the actual numbers. 4.1% of the U.S. population is on welfare. Total welfare payments are less than 150 billion annually.

 

There are some genuine concerns, though. In 8 states welfare payments exceed salaries to teachers.

 

I gather that 10% of the US GDP involves or depends upon lawyers and legal actions. Maybe the welfare "problem" is not located where it appears to be? :blink:

[32519]

Twitter faces critical earnings test

[32519]

Twitter's huge losses do not mean its business model is broken

[32519]

Economic crisis has stripped Euro of legitimacy

[phil_20686]

I thought I could be strong, have a quick look on the WC and then go home. But here I am. Sucked in Again.

 

(1) The US does not have a debt problem. It never did. Its deficits are down to manageable levels because the economy has recovered, and that was all that it needed. It will likely be in surplus next year because of the cuts and the rebounding economy. There is some level of debt at which one can have a problem, but countries have survived, even thrived, with much higher debt levels than the US. See the UK following WW2 where debt was somewhere in the region of 300% of GDP. That level depends a lot on the expectations of your creditor base, especially following the war the creditor base was the UK people, so from a broad perspective paying of the debt cost nothing, it was just redistribution. The US is in a similar position, with 60% of the debt owed to US citizens.

(2) Currency has at least one useful function over a barter economy which noone has alluded to, but which is arguably the most important: it allows one to defer consumption. A coin earned today can be spent next year, an apple bartered today must be consumed before it perishes.

(3) Debt in the current finanical system is essential because it forms the basis of capital ratios for banks and other institutions, without it they would be unable to meet the BASEL regulations. The financial system with zero public debt would necessarily look very different from today.

 

The main problem with the discussion of debt in this thread is that it seems deeply wedded to the money illusion (look it up). The economy is about making real stuff, but financial flows are about nominal quantities. One of the primary aims of government and the Fed is to control these nominal flows such that the real economy underneath them continues to produce at its maximum potential come rain or shine. Printing money/fiscal expansion, really does improve the general welfare if it reduces a production shortfall, and achieves nothing except inflation if there is no production shortfall.

 

Multipliers are not stable, they depend on the size of the output gap. At the height of the recession QE and fiscal expansion were helpful, but 2013 more or less showed that monetary dominance has reasserted itself, and the fed is back in control of the economy, that is why everyone talking about how the fiscal headwinds of 3.9% of gdp due to austerity were going to cause a new recession looked pretty silly when GDP growth accelerated in the UK/US, and the answer is because the fed was steering the economy through QE, so the fiscal multiplier was essentially zero in 2013, or much smaller than those people predicting disaster thought based on 2008-2012 data.

It really has been the case that QE has been a free lunch for the US. They got to effectively decrease their debt, and close the output gap. If you want to know what would have happened without QE, just look at the ECB. The eurozone continues to grind into deflation, its a F****** disaster, and Draghi continues to refuse QE, mostly because that would involve admitting that he had been wrong all this time. The lost output in the eurozones long since passed a trillion euros. The greek economy is still in freefall.

http://research.stlouisfed.org/fred2/graph/fredgraph.png?recession_bars=On&id=GRCGDPNQDSMEI&scale=Left&range=Max&cosd=1995-01-01&coed=2013-07-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Annual&fam=avg&fgst=lin&transformation=lin&vintage_date=2014-02-19&revision_date=2014-02-19

and there continues to be no hope of any improvement. I could put up a similar graph for other countries like spain, portugal etc.

This recession would have been over much faster if the Fed had done more QE sooner, and combined it with a stronger forward guidance policy, preferably some type of level target, either for inflation or for NGDP.

Those poor misguided souls who think that a gold backed currency is better need to read about the insane Bank of France in the 1930's, and how it exported deflation throughout the world by buying all the gold it could lay its hands on. This make the depression much worse, partly because other central banks seemed to see no need to counteract this insane member by selling gold on the open market. This is not unlike what the ECB has been doing with its insanely tight policy. CHeck out this graph of UK and Euro exchange rates vs the US dollar

http://www.tradingeconomics.com/charts/euro-area-currency.png?s=eurusd&d1=20000101&d2=20141231&URL2=/united-kingdom/currency&type=line&title=EURO%20AREA%20CURRENCY%20%7C%20%20UNITED%20KINGDOM%20CURRENCY

The scale is the number of dollars which 1 unity of currency cost. Blue is the UK and black is the Euro. See how much weaker the pound became? This is one measure of how much easier policy was in the UK with QE than in the EU, and the result has been that accomoadation led to expansion, as it should. Now the UK and the US are recovering, but the EU is still grinding into a death spiral with its tight policy.

[32519]

FaceBook announces 19 billion WhatsApp deal.

 

 

Here is an extract from the article:

 

"How the service will pay for itself is not yet clear.

 

Zuckerberg and Koum on the conference call did not say how the company would make money beyond a $1 annual fee, which is not charged for the first year. "The right strategy is to continue to focus on growth and product," Zuckerberg said.

 

Zuckerberg and Koum said that WhatsApp will continue to operate independently, and promised to continue its policy of no advertising."

 

Question:

How many years do you think it is going to take you to recover your investment in FaceBook in the form of dividends?

Answer:

Never (read the full article yourself).

 

Here's a free tip. Get rid of your Facebook shares while you can.

[mike777]

I thought I could be strong, have a quick look on the WC and then go home. But here I am. Sucked in Again.

 

(1) The US does not have a debt problem. It never did. Its deficits are down to manageable levels because the economy has recovered, and that was all that it needed. It will likely be in surplus next year because of the cuts and the rebounding economy. There is some level of debt at which one can have a problem, but countries have survived, even thrived, with much higher debt levels than the US. See the UK following WW2 where debt was somewhere in the region of 300% of GDP. That level depends a lot on the expectations of your creditor base, especially following the war the creditor base was the UK people, so from a broad perspective paying of the debt cost nothing, it was just redistribution. The US is in a similar position, with 60% of the debt owed to US citizens.

(2) Currency has at least one useful function over a barter economy which noone has alluded to, but which is arguably the most important: it allows one to defer consumption. A coin earned today can be spent next year, an apple bartered today must be consumed before it perishes.

(3) Debt in the current finanical system is essential because it forms the basis of capital ratios for banks and other institutions, without it they would be unable to meet the BASEL regulations. The financial system with zero public debt would necessarily look very different from today.

 

The main problem with the discussion of debt in this thread is that it seems deeply wedded to the money illusion (look it up). The economy is about making real stuff, but financial flows are about nominal quantities. One of the primary aims of government and the Fed is to control these nominal flows such that the real economy underneath them continues to produce at its maximum potential come rain or shine. Printing money/fiscal expansion, really does improve the general welfare if it reduces a production shortfall, and achieves nothing except inflation if there is no production shortfall.

 

Multipliers are not stable, they depend on the size of the output gap. At the height of the recession QE and fiscal expansion were helpful, but 2013 more or less showed that monetary dominance has reasserted itself, and the fed is back in control of the economy, that is why everyone talking about how the fiscal headwinds of 3.9% of gdp due to austerity were going to cause a new recession looked pretty silly when GDP growth accelerated in the UK/US, and the answer is because the fed was steering the economy through QE, so the fiscal multiplier was essentially zero in 2013, or much smaller than those people predicting disaster thought based on 2008-2012 data.

It really has been the case that QE has been a free lunch for the US. They got to effectively decrease their debt, and close the output gap. If you want to know what would have happened without QE, just look at the ECB. The eurozone continues to grind into deflation, its a F****** disaster, and Draghi continues to refuse QE, mostly because that would involve admitting that he had been wrong all this time. The lost output in the eurozones long since passed a trillion euros. The greek economy is still in freefall.

http://research.stlouisfed.org/fred2/graph/fredgraph.png?recession_bars=On&id=GRCGDPNQDSMEI&scale=Left&range=Max&cosd=1995-01-01&coed=2013-07-01&line_color=%230000ff&link_values=false&line_style=Solid&mark_type=NONE&mw=4&lw=1&ost=-99999&oet=99999&mma=0&fml=a&fq=Annual&fam=avg&fgst=lin&transformation=lin&vintage_date=2014-02-19&revision_date=2014-02-19

and there continues to be no hope of any improvement. I could put up a similar graph for other countries like spain, portugal etc.

This recession would have been over much faster if the Fed had done more QE sooner, and combined it with a stronger forward guidance policy, preferably some type of level target, either for inflation or for NGDP.

Those poor misguided souls who think that a gold backed currency is better need to read about the insane Bank of France in the 1930's, and how it exported deflation throughout the world by buying all the gold it could lay its hands on. This make the depression much worse, partly because other central banks seemed to see no need to counteract this insane member by selling gold on the open market. This is not unlike what the ECB has been doing with its insanely tight policy. CHeck out this graph of UK and Euro exchange rates vs the US dollar

http://www.tradingeconomics.com/charts/euro-area-currency.png?s=eurusd&d1=20000101&d2=20141231&URL2=/united-kingdom/currency&type=line&title=EURO%20AREA%20CURRENCY%20%7C%20%20UNITED%20KINGDOM%20CURRENCY

The scale is the number of dollars which 1 unity of currency cost. Blue is the UK and black is the Euro. See how much weaker the pound became? This is one measure of how much easier policy was in the UK with QE than in the EU, and the result has been that accomoadation led to expansion, as it should. Now the UK and the US are recovering, but the EU is still grinding into a death spiral with its tight policy.

 

Once we you accept the usa does not have debt problem the discussion changes.

Once you say the numbers say we have a debt problem the discussion changes.

[blackshoe]

The financial system with zero public debt would necessarily look very different from today.

Would that necessarily be a bad thing? If so, why?

[hrothgar]

Would that necessarily be a bad thing? If so, why?

 

1. Counter cyclical investment policies have been extremely successful in mitigating large swings in the economy

2. Government's can often borrow at rates significantly less than the hurdle rate for investments

[kenberg]

1835 was the only time the US had a zero national debt. Shortly after that the country went into the longest depression in the nation's history.

 

Planet Money discussed this in 2011.

 

I read, and listened to, this story. It's very interesting, regardless of what we might think current policy should be.

[kenberg]

I think of the zero debt issue as being like the 155 pound weight issue. I'm a little over 5'-10" and, back when I was at 175 or so, I had a doc tell me I should get down to 155. If I get below 170 I get very hyper, Still, perhaps he is right. But right now, it's a non-issue. Getting down to 185 would be good. If I ever reach that we will see about 175. I have serious doubts that getting down to 155 will ever be even a mirage.

 

Exercise is good, eating sensibly is good, and so it is with money. There are plenty of worthwhile ways to spend some money. And plenty of stupid ways. If we could get that part right, I suspect the debt problem will not bother us that much. Art might well be right that we don't have a debt problem but it feels like a debt problem. I'll keep an open mind on that, for now I suggest we eat our veggies, build some new bridges, support basic research, etc.