One of the better arguments I’ve read against the Chartalists and Folk Keynesians lately is here. Here’s the conclusion:
American investors and businessmen do not have lower IQs today than they did in 1966. An unstable currency makes them stupid. An unstable dollar induces both short-term thinking and malinvestment.
The American economy will not grow normally, create jobs normally, and convert investment dollars into real assets normally until we once again have a stable dollar. Until then, our economic nightmare will continue.
I don’t think that a hard metal currency is necessary to have a stable currency. What you do need is commitment and that’s what’s lacking.
What an incredibly informative article! The ‘facts’ are laid out like bones in a forensic lab — stripped of all their phoniness and fabrication!
Now why isn’t something like this published in the NYT, Washington Post, or discussed on ABC, NBC, CBS, NPR, MSNBC, CNN??? If real explanations were given for our real problems then maybe more people (voters) would have a real grasp of what is really going on, instead of slurping up Obama’s fantasy that we are in recovery mode.
This is the reason for the simmering frustration in this country — most of the economical analysis put forth by the MSM is based on false premises.
Argentine statistical hanky-panky draws IMF censure.
Isn’t the U.S. subtly doing the same thing — playing with the numbers, that is?
Not sure where to post this, but I felt it worth a mention.
My wife worked for two companies last year. Each company is now having to provide corrected W-2 forms, because both companies got hung up by new regulation associated the ACA, and didn’t report things correctly. Thank God for government sponsored efficiency!
I guess this should go into the thread discussing government regulations and Matt Yglesias’s sudden realization that having the government fuck with people in every way imaginable just might have negative externalities, but I’ll just leave it here.
They still haven’t figured out that regime uncertainty has costs associated with it. One of the problems I have with continuing approximation as a policy approach. When the costs introduced by the uncertainty exceed the savings to be realized by the reform, you’re going nowhere.
Basically, it’s something I’ve believed for forty years or more: fine-tuning is not possible.
Also, I regularly drive by a small warehouse building that has been trying to lease one of its slots for months. It has finally been leased by a tax preparation company! I drive by it the other day and saw a lot of obviously poor people lined up outside the door.
Poor people need tax preparation services right now! That is how bad it has become. The current tax code and tax system would be considered an act worthy of rebellion if it had been foisted on us from a foreign power.
” When the costs introduced by the uncertainty exceed the savings to be realized by the reform, you’re going nowhere.”
That has ring of being a wise proverb, Dave.
There’s a sucker born every minute. The reliability of tax preparing companies is notoriously bad. I once served as an election judge with an elderly woman who worked as a tax preparer during tax season. She was so addle-pated she could barely find her way to the restroom and she was preparing other people’s tax returns.
Rendering it impossible to determine what the law says is a form of tyranny.
Basically, it’s something I’ve believed for forty years or more….
Sounds like the bitter voice of experience.
The reliability of tax preparing companies is notoriously bad.
So’s the reliability of the IRS help-lines.
Rendering it impossible to determine what the law says is a form of tyranny.
I sincerely believe it is time to set aside the Constitution and take up the Declaration as our motivating document of choice. Elections are not going to accomplish anything anymore.
@icepick, the W-2 delays certainly tell a story. The ACA required employers to simply report the cost of employee healthcare benefits. The requirement was delayed for a year, while series of regulations and informal guidance were produced by the IRS and continually amended. Now, many employers are late with their W-2s and are potentially subject to penalties. All for a requirement that at this point appears to have no substantive purpose whatsoever.
“I don’t think that a hard metal currency is necessary to have a stable currency. What you do need is commitment and that’s what’s lacking.”
“You can be cops or criminals, but when you are looking down the loaded barrel of a gun, what’s the difference?”
In any event, the concept of a REAL DOW is fine. I’m suspect of the calculations because they pre-suppose the real value of gold.
BTW – malinvestment, and all kinds of problems right now go far beyond currency. This notion gets rejected all the time here, but the funny thing is, our Board meetings spend an awful lot of time on costs of Obamacare and other regulations, employment issues, taxes……….and very little on currency, and those primarily wrt manufacturing input costs. Thank you Helicopter Ben.
@icepick, the W-2 delays certainly tell a story.
These aren’t delays, these are incorrect W-2s that need to be redone, corrected. I found the errors at the smaller company, I won’t meantion the name of the company that found the errors at the bigger firm (separate entities) but I will give you their initials: A. D. P.
All for a requirement that at this point appears to have no substantive purpose whatsoever.
Do they need a reason? They’re doing it to fuck with the people and to burden the economy. They are letting us know who be the masters, and who the serfs. You can bet that Turbo Timmy doesn’t worry about this kind of nonsense, and that he probably will go right back to not doing his taxes correctly now that he’s out of office. And when they tap him to be Bernanke’s replacement, not a word will be said of this. The law is for the little people, and not the Ruling Class.
What changed between 1966 and 2009? Lots of things. If he gets to pick gold, do I get to pick tax rates are lower now? I think there are a few interesting data points in the article, but no cohesive point or conclusion. Our economy was more based on manufacturing then, services now. We have a lot more debt now, especially in the private sector. China, India, Russia, Brazil were non-factors in the world economy. Etc, etc. TBH, it really came across as a whole bunch of problems, then deus ex machina, the solution is gold.
(I am too lazy today, but I would bet a case of good beer that there is a secondary reason for choosing 1966 since we left BW in 1971 IIRC.)
Steve
steve, he says he picked 1966 because it was a good year. I admire his honesty.
I’m wondering…is this true. I know it is true for where people are employed, but is manufacturing a smaller sector of our economy than in the past?
Yeah, I know. I feel the same way when I read stuff by gold bugs. Still, the blind chicken does occasionally find a kernel or two, so not all the observations maybe wrong or even the conclusions regarding an unstable currency.
Jeez, steve. Are you OK today?
“If he gets to pick gold, do I get to pick tax rates are lower now?”
I suspect you meant taxes, not rates. But its a fallacy. As I’ve pointed out numerous times, taxes to GDP is a false ratio, because GDP has been goosed by borrowing. Of course it looks good. But taxes to income are NOT lower. And that’s all that matters. Do you pay taxes out of income or GDP?
“We have a lot more debt now, especially in the private sector.”
Yes we do, but NOT in the private sector. If you want the citations I have them….
Debt service can only be measured in one way – as a ratio to income or cash flow. Its done various ways: to GDP, to income or per capita. I prefer income – which is a proxy for cash flow – because I’m classically credit trained.
The fact of the matter is that consumer debt, measured narrowly (mortgage, credit card and student loans) or more broadly with rent and auto leases (probably a fairer measure) is even with 30 years ago. Even. (Admittedly, some through default)
Public debt? My God. As a percentage of income its approaching tripling. (And per capital shows the same pattern.) I could go through administration by administration but basically the Reagan years are mid-50’s. The vaunted Clinton years are mid-90’s, except right at the end with the dot com bubble. The hated Bush II years are mid-80’s, except after the housing bubble when it hit 100%.
And Obama? About 125% and now about 140% That’s called an explosion.
But I know, I know. Its all Bush’s fault, Obama the great single handidly saved the world in 2009, but is now just an impotent and helpless pawn of the Republicans……..poor bastard.
I would be interested in your data showing that we are back to 80s level debt as a percentage of GDP (what I tend to look at). I usually go to FRED. Link goes to site that has a few made already.
http://www.businessinsider.com/us-debt-hits-a-6-year-low-2012-10
Steve
which brings us back to the point that I made in a previous post. If one contends, as steve did, that the Obama Administration’s policy is deleveraging, then either a) you think that a 2006 level of debt is just peachy and robust economic growth should restart any time now or b) taking 12 years to return to an appropriate level of debt is perfectly acceptable and the people without jobs should quit their bellyachin’. We needed a Volcker. We’ve got Ben Bernanke.
What sticks in my craw about the administration is the cognitive dissonance. The sad reality is that most of the excess debt is being held by the top income earners. Increasing taxes “on the rich”, whether via FICA or higher tax rates doesn’t facilitate the process. It slows it.
The measures taken would only have been effective in an ordinary cyclical downturn. If the problem is household balance sheet, put the jack into principle reduction and let that solve the bank’s problems rather than more direct subsidies. If the problem is structural, where are the structural reforms? We’re all going to be putting green rooves on houses and building electric cars that no one will buy?
However, we’re getting a bit far afield from the main point, that a weakening dollar may strengthen exports but it also invites retaliation and incentivizes short term thinking by managers, a bad habit that’s hard to eradicate.
If the problem is structural, where are the structural reforms?
That’s the problem. There are none. Higher taxation for higher income earners and social divisions are the political antidotes being applied by the Obama administration — with an end game of enlarging government, not the pocketbooks of the people.
Also, one has to correctly diagnose the problem to apply a remedy that has a resonable chance of working. Obama’s perspective, though, is controlled by ideology, rather than a working knowledge of how to successfully manage and grow an economy.