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Everyone's Missing the Bigger Picture in the Reinhart-Rogoff Debate

George Washington's picture





 

You've heard that an incredibly influential economic paper by Reinhart and Rogoff (RR) - widely used to justify austerity - has been "busted" for "excel spreadsheet errors" and other flaws.

 

As Google Trends shows, there is a raging debate over the errors in RR's report:

Even Colbert is making fun of them.

Liberal economists argue that the "debunking" of RR proves that debt doesn't matter, and that conservative economists who say it does are liars and scoundrels.

Conservative economists argue that the Habsburg, British and French empires crumbled under the weight of high debt, and that many other economists - including Niall Ferguson, the IMF and others - agree that high debt destroys economies.

RR attempted to defend their work yesterday:

Researchers at the Bank of International Settlements and the International Monetary Fund have weighed in with their own independent work. The World Economic Outlook published last October by the International Monetary Fund devoted an entire chapter to debt and growth. The most recent update to that outlook, released in April, states: “Much of the empirical work on debt overhangs seeks to identify the ‘overhang threshold’ beyond which the correlation between debt and growth becomes negative. The results are broadly similar: above a threshold of about 95 percent of G.D.P., a 10 percent increase in the ratio of debt to G.D.P. is identified with a decline in annual growth of about 0.15 to 0.20 percent per year.”

 

This view generally reflects the state of the art in economic research

 

***

 

Back in 2010, we were still sorting inconsistencies in Spanish G.D.P. data from the 1960s from three different sources. Our primary source for real G.D.P. growth was the work of the economic historian Angus Madison. But we also checked his data and, where inconsistencies appeared, refrained from using it. Other sources, including the I.M.F. and Spain’s monumental and scholarly historical statistics, had very different numbers. In our 2010 paper, we omitted Spain for the 1960s entirely. Had we included these observations, it would have strengthened our results, since Spain had very low public debt in the 1960s (under 30 percent of G.D.P.), and yet enjoyed very fast average G.D.P. growth (over 6 percent) over that period.

 

***

 

We have never advised Mr. Ryan, nor have we worked for President Obama, whose Council of Economic Advisers drew heavily on our work in a chapter of the 2012 Economic Report of the President, recreating and extending the results.

In the campaign, we received great heat from the right for allowing our work to be used by others as a rationalization for the country’s slow recovery from the financial crisis. Now we are being attacked by the left — primarily by those who have a view that the risks of higher public debt should not be part of the policy conversation.

But whether you believe that the errors in the RR study are fatal or minor, there is a bigger picture that everyone is ignoring.

Initially, RR never pushed an austerity-only prescription.  As they wrote yesterday:

The only way to break this feedback loop is to have dramatic write-downs of debt.

 

***

 

Early on in the financial crisis, in a February 2009 Op-Ed, we concluded that “authorities should be prepared to allow financial institutions to be restructured through accelerated bankruptcy, if necessary placing them under temporary receivership.”

 

Significant debt restructurings and write-downs have always been at the core of our proposal for the periphery European Union countries, where it seems to us unlikely that a mix of structural reform and austerity will work.

Indeed, the nation's top economists have said that breaking up the big banks and forcing bondholders to write down debt are essential prerequisites to an economic recovery.

Additionally, economist Steve Keen has shown that “a sustainable level of bank profits appears to be about 1% of GDP”, and that higher bank profits leads to a ponzi economy and a depression.  Unless we shrink the financial sector, we will continue to have economic instability.

Leading economists also say that failing to prosecute the fraud of the big banks is dooming our economy.  Prosecution of Wall Street fraud is at a historic low, and so the wheels are coming off the economy.

Moreover, quantitative analyses provides evidence that private debt levels matter much more than public debt levels.  But mainstream economists on both the right and the left wholly ignore private debt in their models.

Finally, the austerity-verus-stimulus debate cannot be taken in a vacuum, given that the Wall Street giants have gotten the stimulus and the little guy has borne the brunt of austerity.

Steve Keen showed that giving money directly to the people would stimulate much better than giving it to the big banks.

But the government isn't really helping people ... and has  instead chosen to give the big banks hundreds of billions a year in hand-outs.

(Obama's policies are even worse than Bush's in terms of redistributing wealth to the very richest. Indeed, government policy is ensuring high unemployment levels, and Obama – despite his words – actually doesn’t mind high unemployment. Virtually all of the government largesse has  gone to Wall Street instead of Main Street or the average American. And “jobless recovery” is just another phrase for a redistribution of wealth from the little guy to the big boys.)

If we stopped throwing money at corporate welfare queens, military and security boondoggles and pork, harmful quantitative easingunnecessary nuclear subsidies,  the failed war on drugs, and other wasted and counter-productive expenses, we wouldn't need to impose austerity on the people.

Indeed:

Neither stimulus nor austerity can ever work … unless and until the basic problems with the economy are fixed.

 

But stimulus and austerity are not only insufficient on their own … they are actually 2 sides of the same coin.

 

Specifically, the central banks’ central bank warned in 2008 that bailouts of the big banks would create sovereign debt crises. That is exactly what has happened.

 

Remember, it is not the people or Main Street who are getting bailed out … it is the giant banks.

 

A study of 124 banking crises by the International Monetary Fund found that propping up banks which are only pretending to be solvent often leads to austerity:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

 

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

 

***

All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

In other words, the “stimulus” to the banks blows up the budget, “squeezing” public services through austerity.

 

But instead of throwing trillions at the big banks, we could provide stimulus to Main Street. It would work much better at stimulating the economy.

 

And instead of imposing draconian austerity, we could stop handouts to the big banks, stop getting into imperial military adventures and stop incurring unnecessary interest costs (and see this). This would be better for the economy as well.

 

Why aren’t we doing this?

 

Because – underneath the false easing-versus-tightening debate – this is not a financial crisis … it’s a bank robbery.

 

Profits are being privatized and losses are being socialized.  So the big banks get to keep the mana from heaven being poured out of the stimulus firehose, while austerity is forced on the public who has to bear the brunt of Wall Street’s bad bets.

 

The big banks went bust, and so did the debtors.  But the government chose to save the big banks instead of the little guy, thus allowing the banks to continue to try to wring every penny of debt out of debtors.  An analogy might be a huge boxer and a smaller boxer who butt heads and are both rendered unconscious … just lying on the mat.   But the referee gives smelling salts to the big guy and doesn’t help the little guy, so the big guy wakes up and pummels the little guy to a pulp.

 

And creditor committees dominated by giant banks like Goldman which helped countries like Greece fraudulently cover-up their financial problems are now demanding austerity, and Greece is holding a fire sale of its infrastructure, public utilities, tax base and whole islands to give to the creditors.  Spain, Italy, and even countries like the U.S. are no different.

 

As we wrote last year:

Economists note:

A substantial portion of the profits of the largest banks is essentially a redistribution from taxpayers to the banks, rather than the outcome of market transactions.

Indeed, all of the monetary and economic policy of the last 3 years has helped the wealthiest and penalized everyone else. See this, this and this.

 

A “jobless recovery” is basically a redistribution of wealth from the little guy to the big boys.

 

***

 

Economist Steve Keen says:

“This is the biggest transfer of wealth in history”, as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people.

Nobel economist Joseph Stiglitz said in 2009 that Geithner’s toxic asset plan “amounts to robbery of the American people”.

 

And economist Dean Baker said in 2009 that the true purpose of the bank rescue plans is “a massive redistribution of wealth to the bank shareholders and their top executives”.

 

The money of individuals, businesses, cities, states and entire nations are disappearing into the abyss …

… and ending up in the pockets of the [fatcats].

 


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Sun, 04/28/2013 - 07:27 | Link to Comment nmewn
nmewn's picture

Hey GW!...here's one for ya!

"After surveyors discovered what appears to be plane landing gear from the 9/11 attacks, authorities are wondering how it got sandwiched between two buildings—one of them housing a much-debated Islamic community center.

"The odds of it entering that space at exactly that angle that would permit it to squeeze in there ... it had to come in at almost precisely the right angle," says a police spokesman, per the New York Times. Investigators are considering the possibility that it was deliberately stuck in the spot, CNN reports.

"We are also looking into a possibility it was lowered by a rope," said NYPD commissioner Raymond Kelly, who noted that some rope seemed to be wrapped up in the landing gear."

http://www.freep.com/article/20130427/NEWS15/304270062/Was-9-11-landing-gear-hidden-on-purpose-

lol...let the games begin!

(Sometimes I really can't help myself)

Sun, 04/28/2013 - 07:00 | Link to Comment Kina
Kina's picture

"Steve Keen showed that giving money directly to the people would stimulate much better than giving it to the big banks."

There it is: Keen sucking up to Helicopter Ben.

 

Well if you are going to go Keynsian you may as well give some of it straight to the public.

The idea of giving it to a bank to on lend to business so they can finance continuted employment or expand or set up new businesses...so that that will create employment and thus give people money to spend to give demand to the new businesses that just set up ...without the neccessary demand being their....Sort of the build it and they will come trickle down method of Keynsian spending...

Problem with Trickle-Down-Keynsian-QE is that is loading up banks to lend to groups who dont want to borrow...when Everybody is sitting around waiting for some sort of recovery before they commit themselves to more debt. In other words nothging will (and has) happen.

Keynsianism through giving money to banks model for lending is a total nonsense...and was never the intention, so no surprise nothing happened.

Want to stimulate demand then go to the bottom of the food chain where the demand actually comes from....the plankton/people that everything upwards feeds on.

Give people money to pay down debt so they do feel less stressed, and have their own little wealth effect....then they will spend more as well as reduce leverage with banks. Like giving them an advance on their pocket money. That is how it managed to work in Australia (but they did it early before damage was done)...except the rest of the world didn't come out of recession as would normally happen, and China is beginning to sink.

If they were going to do Keynsianism then they should have done it early and hard and to areas directly affecting peoples incomes/wealth...and not give it all to banks to pump into share markets since nobody would want to borrow in those sorts of times.

 

AND the elephant in the room for the USA is the massive cost of maintaining itself as a Super power.

Sun, 04/28/2013 - 07:00 | Link to Comment ParisianThinker
ParisianThinker's picture

This debate was settled in 1989 by Robert Heilbroner and Peter Bernstein in their book," The Debt and the Defict".  Few Americans can remember anything past a nanosecond. Many have felt no harm in the high unemployment and debt numbers, so why change?

 

Sat, 04/27/2013 - 22:30 | Link to Comment FreeMktFisherMN
FreeMktFisherMN's picture

Ignore all of these 'models' and eCONometric and STATISTicians. It's all central planning. As the Austrians reinforce, there is no way to aggregate and/or value total production, because value is subjective. 'GDP' is no different, and in fact it is total sleight of hand because consumption makes up such a large portion of it, let alone that most of that is debt-financed as occurs when a fiat currency is used. Debt is not money. There is a reason debt is called odious. 

 

These kinds of discussions get people distracted in the trees and fail to see the forest which is that individuals run their own economies (literally, 'economy' is derived from Greek oikonomia, which means 'management such as of household). People fall prey to the whims of ivory tower statists' 'models' as though they are somehow omniscient about what the price of money should be and capital allocation decisions, etc. 

Get out of the paradigm of thinking all these Phds deserve to be listened to. The Austrian school is truly a blessing, recognizing that each individual has his or her own valuation processes, from market/price signals to their own preferences, as opposed to 'rational actors' the statists/neoliberals/Keynesians assume. 

Sat, 04/27/2013 - 21:41 | Link to Comment Everybodys All ...
Everybodys All American's picture

Avoiding bankruptcy for banks as well as sovereigns at this point is not possible.

Sat, 04/27/2013 - 20:53 | Link to Comment Walt D.
Walt D.'s picture

A “jobless recovery” is basically a redistribution of wealth from the little guy to the big boys.

Another piece of Marxist-Obama clap-trap.

Redistribution of wealth from the little guys? The little guys don't have any wealth to redistribute, other than their cell-phones and TV's, and perhaps a used car. They live pay check to pay check, if they get a pay check, or on welfare and food stamps.

Obama has not yet realized that there is difference between income and assets. The person who listens to his prattle doen't know the difference either.

Obama does not care about jobs as long as he meets his core goals - having 100 million people on food stamps, and legalizing all illegal immigrants. As long as he meets these goals for his second term it will be "mission accomplished".

Oh BTW

"This time it is going to be different ! "

Sat, 04/27/2013 - 21:59 | Link to Comment Accounting101
Accounting101's picture

With comments like these Walt, you are clearly part of the problem. You serve the Oligarchs. Please refrain from participating in our democracy.

Sat, 04/27/2013 - 22:54 | Link to Comment Walt D.
Walt D.'s picture

I don't have a dog in the fight. I agree that the TARP program was a welfare program for Wall Street and the Banks, even though it was opposed by 99% of the population - so much for our democracy. Wall Street no longer exists - it was assimilated by the big banks (resistance was futile!). Even the Goldman Sachs is now a big bank, eligible for hand outs from the Fed.

In case you have not yet figured it out, the whole system is rigged. Ralph Nader and Noam Chomsky were right all along.

The way the system is working at the moment is that the Federal Government is overspending to the tune of $100 billion a month. The Fed is buying all this debt though the member banks by giving them 0% loans with money crerated out of thin air and then accepting the treasuries back  as collateral. This way the Federal Government gets to spend what it wants and the banks make a profit without taking any risk - no need for risky commercial loans and mortgages anymore.

 

Sat, 04/27/2013 - 18:36 | Link to Comment robobbob
robobbob's picture

platitudes to democracy not withstanding, wasn't the real motivation behind the assasination of Julius Caesar his attempt to reign in runaway inflation and a real estate bubble by forcing lenders to do loan writedowns based on pre-boom appraisals?

R&R may want to be careful not to defend their thesis too strongly.

Sat, 04/27/2013 - 18:57 | Link to Comment The Heart
The Heart's picture

Everyone is missing the Bigger Picture alright.

"I think we should sue...we should have a class action law suit against every major media outlet..."

(5:33 min mark)

http://www.youtube.com/watch?v=3A8JDqHhUD4

The lame LSM is under fire for being part of the massive cover-up and truth that israel was a major player in the boston drill.

http://intellihub.com/2013/04/27/boston-bombing-investigation-fbi-search...

Sat, 04/27/2013 - 16:11 | Link to Comment Walt D.
Walt D.'s picture

Google Woody Brock.

He has it right for the right reasons.

It is OK to go into debt provided that what you spend the money on has an a positive internal rate of return.

In other words "All Keynesian Holes in the Ground are not Created Equal".

When the Federal Government borrows money "to invest", it needs to pick holes in the ground that have positive internal rates of return.

Unfortunately, the Federal Government wants to invest in Bridges to Nowhere, Bullet Trains to Nowhere, GreenEnergy Projects to Nowhere, Education Projects to Nowhere ...........

Sun, 04/28/2013 - 12:34 | Link to Comment moneymutt
moneymutt's picture

Ever hear a small to medium sized businessman complained about banks being too tight fisted costing them money in long run because they don't understand business and thus stick to overly risk adverse formulas. Some examples I have heard is they count all inventories at say 60 percent of value for assets securing loans, regardless if they are concrete products that predictably sell or perishable food. Or if you predictably need 20 of something every year, and can get a discount for buying 10 at a time , and even better discount buying 20, bank only let's you buy 3 at a time at no discount.

So businesses know there is good debt, debt that will yield returns and of course there is bad debt. But when people discuss govts, debt is always and only bad, even while private sector debt swamps govt debt.

So like a business, govt can save long term costs by investing now, incurring debt now, but austerians say that never good. I see this in infrastructure spending as a civil engineer all the time. There are ways to build things to last 30-40 years, or you can spend 4 times as much over those 40 years just filling potholes over and over again ...politicians almost always choose the thing that is cheaper in short run and much more expensive in long run.

Running up debt stipudly like we did during W admin ( hugely expensive Medicare Part pills for seniors where Pharma made out like bandits because they could charge Medicare anything they wanted and govt was banned from negotiating.

Blind austerity is a bit like leveraged buy-out guys buying a business that has long preformed...first the ruin it by running up debt to pay their handling fees, , then they squeeze by cutting the productive things that long-term owner knew to spend on, like valuable employees, equipment investments etc....

But the business analogy falls short when it comes to govt...becuase when a company cuts employees, they don't lose customers and revenues and don't incur big costs to take care of unemployed employees, but govt does

Sun, 04/28/2013 - 08:19 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

walt, and others - please add in crime and corruption as one factor  in the debt gambit (the most important one IMO). one could hope that central planners have some good souls who think what they are doing is for the good of the majority- but that's foolish,- they are all evil reptiles- remember j corzine

Sat, 04/27/2013 - 22:01 | Link to Comment Accounting101
Accounting101's picture

Please Walt!

Sat, 04/27/2013 - 18:43 | Link to Comment robobbob
robobbob's picture

governments are political institutions that make political based decisions. and the biggest donors and biggest voting blocks are king. they are incapable of making decisions based purely on economics.

Sat, 04/27/2013 - 10:16 | Link to Comment PubliusTacitus
PubliusTacitus's picture

R/R is understated.

Leftists must destory them to perpetuate The Big Lie: vulgar redistributionist Keynesianism.

Leftists are economic fuckwads.

 

Ready, aim......

Sat, 04/27/2013 - 22:02 | Link to Comment Accounting101
Accounting101's picture

A classic case of the dumb. More political tribal shit. My god we're doomed!

Sat, 04/27/2013 - 19:04 | Link to Comment robobbob
robobbob's picture

my only disagreement is that at this point, the establishment right is no better then the left. just different beneficiaries of the spending.

Sat, 04/27/2013 - 08:59 | Link to Comment Plumplechook
Plumplechook's picture

This:

Who's hurt the American economy most? The line-up features greedy bankers, lazy lawmakers, anxious executives and two more unusual suspects: well-respected economists.

Yet, suspicion has fallen on Kenneth Rogoff and Carmen Reinhart for good reason. The pair wrote a 2010 economic study that was the economic equivalent of the Bush administration's spurious claims about Iraqi WMDs. It pushed nations into a war against government, and we may still be paying the price in unemployment and slow growth.

Now, the economists have responded with a stubborn, pouting defense that's as watery as their initial research, and it's worth calling them out on it.

For one thing, Reinhart and Rogoff insist that despite this "academic kerfuffle", austerity is sound policy. Their research provided austerity's pillars – supports built onflawed data, now fallen. For months, the International Monetary Fund has declared that austerity damages economies. Reinhart and Rogoff's refusal to let go may remind younger economists of the movie Mean Girls, in which one girl chides another for trying to make a nonsense word popular:

"Stop trying to make 'fetch' happen! It's not going to happen!"

Reinhart and Rogoff keep trying to make austerity happen. It's not going to happen.

The economists also imply that they're innocent academics whose stunning data was abused by evil politicians. They deplore the "politicization of economics". Like J Robert Oppenheimer, they're horrified research could be used to make a bomb.

"That paper, along with other research we have published, has frequently been cited – and, often, exaggerated or misrepresented – by politicians, commentators and activists across the political spectrum … As career academic economists … we find these attacks a sad commentary on the politicization of social science research. But our feelings are not what's important here."

Plaintive line about feelings aside, Reinhart and Rogoff are trying to distance themselves from politics. But Reinhart, at least, was not always a "career academic economist"; she spent much of the 1980s at the very un-academic Bear Stearns.

Importantly, neither complained about "politicization" when the US Senate often cited their work. Their site even brags about many political citations: they knew quite well when their idea was popular, but didn't decry misunderstandings at the time.

The disingenuousness goes on: they chose to be political. They went to Washington and sold austerity, hard. From a book by Senator Tom Coburn:

"Johnny Isakson … stood up to ask his question: 'Do we need to act this year? Is it better to act quickly?'

'Absolutely,' Rogoff said. 'Not acting moves the risk closer,' … 'You have very few levers at this point,' he warned us."

Similarly, when Reinhart testified to the Senate, she reiterated the note of fear, euphemistically calling "austerity" an "adjustment" – which is the equivalent of calling the Great Recession "the recent unpleasantness".

"The sooner our political leadership reconciles itself to accepting adjustment, the lower the risks of truly paralyzing debt problems down the road … Countries that have not laid the groundwork for adjustment will regret it."

That is, as they say in boardrooms and mob films, a "hard sell". And here's another misleading bit, in which they claim to believe in fluid economics:

"Does high debt merely reflect weaker tax revenues and slower growth? Or does high debt undermine growth? Our view has always been that causality runs in both directions, and that there is no rule that applies across all times and places."

This is not exactly right. If they truly believed that high debt and weaker growth were equally intertwined, they'd also believe in actively spurring growth. Yet their past statements cling to one premise: cutting debt helps growth. Here's Reinhart in an interview with Der Spiegel:

"The best way of dealing with a debt overhang is to never get into one. Once you have one, what can you do? You can pray for higher growth, but good luck! Historically it doesn't happen – you seldom just grow yourself out of debt. You need a combination of austerity, so that you don't add further to the pile of debt, and higher inflation."

Suddenly, after the "kerfuffle", they say they have always seen austerity as just one element of good policy:

"Austerity seldom works without structural reforms – for example, changes in taxes, regulations and labor market policies – and if poorly designed, can disproportionately hit the poor and middle class."

You can comb Reinhart's comments: she blames debt for most everything. The economists did not give nearly enough airtime to structural reforms, if they supported them. They preferred the same point over and over: cut debt or suffer.

These are two of the brightest minds in economics, respected for good reason, and talented at explaining difficult concepts. The passion of hard work could have led them to truly believe in, and push, their research. But passion can become hubris, and hubris can cloud vision – even when everyone else sees the facts for what they are.

Reinhart and Rogoff don't know everything, and they're smart enough to know that themselves. They should show some remorse and reconsider austerity.

Sat, 04/27/2013 - 09:51 | Link to Comment DOT
DOT's picture

Stop spending what you do not have (even a remote possibility) of paying for.

Doing so make you a vile and disgusting liar who will cheat instead of an honest party to a transaction.

With-out  "good will" no market can exist. All transactions become coercive.

Sat, 04/27/2013 - 08:29 | Link to Comment proLiberty
proLiberty's picture

Let us not forget that this infinite debt scheme was invented hand-in-glove with government so that government could enjoy the power flow that came from infinite social spending.

When (not if) bond writedowns take place, one of the main victims will be those citizens who placed their financial futures in the hands of government pension programs. Pensioners will be the ones forced to accept a writedown in their monthly incomes. Even more perverse, it is just a matter of time before governments pressure health care actuaries to reduce the amount of government health care spending on older citizens. In other words, the incentive structure now works to allow non-taxpaying expensive older citizens to exit this world earlier than otherwise would be.

At the same time, pressure will build on government to fund abortions especially in young mothers on public assistance because demographics indicate these mothers give rise to tax consumers rather than tax payers.

By using government to fund social programs, we have set up a government that has all the wrong economic incentives. And make no mistake, government does respond to economic incentives.

Sat, 04/27/2013 - 06:21 | Link to Comment luckylongshot
luckylongshot's picture

At last, I was getting frustrated at the stupidity of those involved in the Austerity/Printing debate. Now you place the only option that will both fix the problem and has historically proven itself. Thankyou for restoring my confidence in ZH. 

Sat, 04/27/2013 - 08:29 | Link to Comment midtowng
midtowng's picture

Amen! Since when did ALL of our economic solutions involve just deficit spending or cutting services to the poor?

There is a whole world of other economic thoughts and ideas that aren't being considered.

Sat, 04/27/2013 - 04:25 | Link to Comment kurt
kurt's picture

The Answer

Give money to the people who will SPEND it. That is, give money to the people who NEED it. Stimulate the living NOT THE UNDEAD! Corporations are the Undead. Don't do a study. Just send a one time tax bonus refund of a million dollars to each individual tax filer. SEVERLEY regulate and punish and jail the hoards of carpet baggers and scammers who will attempt to defraud the individual recipients. Do not attempt to counter balance the one-time bonus payment with fees or other programs to absorb said stimulus. Make this payment NONTAXABLE.

 

Rewrite the tax code. 20% maximum for all human individuals, more tax on rich fuckers and corporations. Do this immediatly without warning.

 

Sat, 04/27/2013 - 09:40 | Link to Comment DOT
DOT's picture

Envy much, Think little, Accomplish nothing.

If your directed distaste for wealth dominates you; anyone who has more than you is a "rich fucker".  

Call  up old Uncle Sugar, maybe he will toss you another bone.

Sat, 04/27/2013 - 22:10 | Link to Comment Accounting101
Accounting101's picture

So we should continue with the bailouts? That is what you are advocating. Do you even know what the hell you're typing?Jesus Christ! Proof read and think for longer than two seconds before hitting the save tab.

Sat, 04/27/2013 - 04:17 | Link to Comment Notarocketscientist
Notarocketscientist's picture

Piss shit fuck

Fri, 04/26/2013 - 23:21 | Link to Comment TheFulishBastid
TheFulishBastid's picture

deficits don't matter, but monthly payments are a bitch!

Sat, 04/27/2013 - 16:03 | Link to Comment Uncle Remus
Uncle Remus's picture

And the corollary - Debts that can't be paid, won't be.

Fri, 04/26/2013 - 22:21 | Link to Comment Pike Bishop
Pike Bishop's picture

Nobody knows shit.

The only way you can know less is have somebody quantify it to some conclusion.

Fri, 04/26/2013 - 20:26 | Link to Comment kindape
kindape's picture

the big picture missing in Reinhart/Rogoff debate is:

1) there is no correlation between debt levels and gdp, but there IS a STRONG negative correlation between debt growth rate and GDP growth rate  (debt prooductivity)

2) energy is not mentioned as driver of productivity. your 'growth' can vary dramatically irrespective of debt levels if you have access to huge amounts of inexpensive high quality fuel

3) RR focused on govt debt when total debt (consumer, household, corp, muni etc) is much better metric..

Fri, 04/26/2013 - 22:30 | Link to Comment the grateful un...
the grateful unemployed's picture

3) private debt is off the scale and the jobs part of the economy is not ever coming back. my solution, instead of taking the rent money to the indian casino, is to first max out the credit card buying gold, then don't go to the indian casino, but say you did, and then declare bankruptcy. if they try to throw you in (debtors) prison, go to mexico. if not home owners foreclosed out can get back in the market in two years, and with a pocket full of gold coins you should have a nice down payment, which you make under the table, while the seller drops the price and carries a no down for you. thats how the rothchilds do it.

Fri, 04/26/2013 - 19:58 | Link to Comment StarTedStackin'
StarTedStackin''s picture

Is this George Washington loser still blaming everything that happens during the Obowel Movement on 'Busch an Cheyney'

 

 

 

 

 

The biggest liars on the net always name themselves 'George Washington' or 'Truithteller' or maybe "Voice of Reason'

 

 

 

It's quite sad, really.

Sat, 04/27/2013 - 04:16 | Link to Comment Notarocketscientist
Notarocketscientist's picture

If you EVER make a partisan comment on this site again this is what is going to happen to you my friendhttp://www.youtube.com/watch?v=C75NCMldrdE

If you think Bush, Reagan, Clinton, Obama are anything but front men for the beasts who really run this country and the world then you are living in a world of delusion. 

Here's what you need to do.  Stop typing. Stop saying anything. Because the more you open your mouth or move your fingers the more you demostrate that you know fuck all - so stop before you make an even bigger fool of yourself and observe and LEARN.

Sun, 04/28/2013 - 04:45 | Link to Comment OldPhart
OldPhart's picture
Member for
10 weeks 1 day

StarTedStackin, I lurked on this site for two years before even getting a signon.  I'm still the dumb shit of the lot, follow the well given advice.

STFU, read and don't play D v R games.

Sat, 04/27/2013 - 09:33 | Link to Comment The Old Man
The Old Man's picture

@Star.....Really. If you've got some better ideas in that noggin, put them forth for discussion, or just read, learn and STHU.

Fri, 04/26/2013 - 18:41 | Link to Comment WhiteNight123129
WhiteNight123129's picture

I mean please... Louis XVI got his head chopped because of hte monetization of debt and we got ( I am french) the dictator Napoleon.... The Russians got Lenine for the debt war monetization... The German got Hitler for war debt monetization...  The Chinese got Mao. for war debt monetization... What is next in teh US? A war, a massive monetization and then a good old dictator old world style??

 

The US is doing everything upside down.

The US needs to .

1. Stop war spending.

2. Stop pork and lobbies

3. Cut entitlement.

Once that is done, the US needs to spend a bit more now to reflate the economy and get the wheels out of the mud. But only under the condition that the real problem (off-balance sheet debt, pork and lobbies, and entitlement) are dealt with first.

Instead, the US is doing.

Nothing on long term spending, nothing done against lobbies.

Cut spending on the short term, which does nothing to help long-term debt issues but hurt economy short term.

Starts another war in Syria and spends on that.

Hope we can believe in.

Sat, 04/27/2013 - 04:13 | Link to Comment GoldenDonuts
GoldenDonuts's picture

Why is it that so few people can see this?  Throw criminals in prison no matter who they are.  Let banks fail and be restructured.  Stop attacking other countries, let others work out their own problems. 

 

First though get the money out of politics.  Make donation limits low and if you can't vote you can't donate.  So if you are a bank, public company, multi national, union, charity, non american  whatever.  Only adult americans should be able to donate up to say $100 bucks to a candidate.   Then make it impossible for that candidate to cash in after he has finished his run as a legislator.  Then and maybe only then there might be some integrity to politics.  Maybe

Fri, 04/26/2013 - 20:16 | Link to Comment AmCockerSpaniel
AmCockerSpaniel's picture

Nothing will work, as long as we have crime with out punishment.

Fri, 04/26/2013 - 17:55 | Link to Comment ThisIsBob
ThisIsBob's picture

Its fairly simple.  The US Economy is going nowhere until there are more customers for its goods and services who can pay for them with other than food stamps.

Sat, 04/27/2013 - 10:15 | Link to Comment Punch Bag
Punch Bag's picture

News to me, I was unaware the US produced its own goods these days

Sun, 04/28/2013 - 02:23 | Link to Comment John_Coltrane
John_Coltrane's picture

Ever heard of Boeing, GE, Dupont, Dow Chemical, Cargill, Microsoft, Newport Mining, Lockheed martin etc.  Yes, we let the Chinese peasants assemble low value added Igagets designed by American scientists and engineers, but we reserve the jet engines, nuclear power reactors and dynomos, MMR scanners, biochemicals, drugs and chemicals and most importantly food production and even exotic metals and alloys (Nucor) etc. for ourselves.  It just doesn't take anywhere as many workers to produce them as it used to due to efficiencies and advanced robotics.

Fri, 04/26/2013 - 21:58 | Link to Comment Che Guevara is Dead
Che Guevara is Dead's picture

Nah, you see you just expand the list of things you can use EBT to pay for. Pretty soon you'll be able to use EBT to get tattoos and piercings as well as pay for cable.

Fri, 04/26/2013 - 19:33 | Link to Comment Herd Redirectio...
Herd Redirection Committee's picture

Think of Henry Ford.  Think of HP.  Their employees were also their customers.  Not perhaps always in the direct sense, but they were also the biggest supporters of the company, through word of mouth advertising.  Lay them all off, open a plant in China, and, well, I think this is where a dead goose and a golden egg come into the picture.

Fri, 04/26/2013 - 22:42 | Link to Comment GoldForCash
GoldForCash's picture

Right..out source everything and make a bundle on the first few shipments then we realize no one can afford the fourth shipment so then there is no fifth shipment. Then the big guys wonder what went wrong.....

Fri, 04/26/2013 - 20:00 | Link to Comment onthesquare
onthesquare's picture

The employees are the customers is un-sustainable.  New money has to come into the loop but where will it come from.  Ride on the backs of poor foreign workers and if they resist bomb them into the stone age.  This is the American saga.

Fri, 04/26/2013 - 22:37 | Link to Comment Diogenes
Diogenes's picture

Why does new money have to come into the loop? New wealth has to come into the loop but wealth comes from productive work not money printing. This is the fundamental mistake of modern economics, to mistake money printing for wealth creation.

Sat, 04/27/2013 - 10:09 | Link to Comment WhiteNight123129
WhiteNight123129's picture

Expansion of money and credit affects the economy short term, but productivity only affects wealth long term. The MMT guys think the long term does not matter., and they confuse currency and money and wealth all in teh same bundle.

 

Sat, 04/27/2013 - 09:49 | Link to Comment The Old Man
The Old Man's picture

Bingo Diogenes. Rockefeller, Ford, Morgan, and the short list of megalithic movers and shakers during that age invested "THIER MONEY" for risk ventures that built this country. So where the hell is the investment coming from now. Are the big banks "RISKING" their (OUR) money in new ventures? Look at interest rates. Try a new venture that is promising. Go try and get financing with a great business plan. Denied! Why? BECAUSE THE EFFING BANKS CAN'T MAKE ENOUGH MONEY ON THE DEAL! So where does this stop? When we draw a line in wet fast set concrete which says after this point you FAIL.
NO EXCUSES, POLITICS, PAYOFFS OR SYMPATHY. YOU DUG THE HOLE, NOW BURY YOURSELVES IN IT.

Fri, 04/26/2013 - 17:51 | Link to Comment New_Meat
New_Meat's picture

"Steve Keen showed that giving money directly to the people would stimulate much better than giving it to the big banks."

There it is: Keen sucking up to Helicopter Ben.

- Ned

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