For the Sellers of Gold Bricks

Here stands the wrong idea of How to enjoin more Labor Hires from a faltering economy. Everyone talks about spending Government money which neither the Credit market or Government possess at the moment. All economists, whether Liberal or Conservative, all talk about giving Advantage to someone, rather than a curtailment process. It is exactly the later process which will work under such situations as We find ourselves, and there should be discussion of alternate means. I suggest a primary flat tax of $200 on every Employee who cannot prove a liability of an outside transportation Vender over the continuous period of the Tax Year. It would cut domestic imports of Oil, increase the number of domestic transport Venders, and actually increase the Take-Home Pay of Employees; to say nothing of an increase in Vender employment. Car-Pooling with a Vengeance!

Consumers are not yet ready to spend the level of Cash necessary for Job proliferation. The Government needs to do something about that. Business is not going to do anything with Tax Credits, except feed their own Incomes. I would suggest passage of a new federal law mandating a Severance Pay of a Month’s salary to any Laid-Off or Downsized employee. I would add another lovely procedural detail of canceling any Income tax on previous Income in the Tax year for the employee with Tax rebate, if the Employee pays no further Income tax within the Tax year. It retains the Income for a Consumption pattern, even if spent only on Necessities.

Read this article and reach the understanding that no one, not Bernanke, Bank, or Mutual Funds are attempting any rescue of the Consumer. I would call for a further federal law which would insist that a minimum of 4% Interest must be paid for any Deposit made in an financial institution, and a mutual fund cannot not maintain license absorb Investment funds if it does not furnish a 4% Return on its investments. Failure to accomplish this level of performance will lead to Bank Auditors sequestration of all Accounts for repayment of all Investors. The Whole level of activity on the part of the federal government should be to sustain normal Consumption patterns within the economy. Would the entirety of legislation also have some impact on the lending practices of all Parties and Counterparties? lgl

Do We resemble This?

Tyler Cowen likely has it right, but What if he doesn’t? I had better explain myself, at least to myself. Consider this Scenario: We have a billion-person+ economy which has never been noted for adequate Supply to the consuming Public. Traditional leadership has always been hidden from 85% of the Population, even when those Figures were well-known. Americans can probably tell one more about another State in detail, than Chinese can explain How things operate in a nearby Province. American military forces have only become lately involved in Training for Riot Control (say within the last half-Century), while the Chinese Army has had this Training as the central focus of their military life for Centuries. One of the great Terrors of the Cultural Revolution was that neither Government or Student could determine if any of the Charges against the Outcasts were true or false; even the Victims perforce had to accept the speculation that Others were guilty, even when they themselves assumed they were falsely accused. What I am saying is that Chinese leadership does not know How to respond to Chinese society, even if they can determine of What those Demands consist.

The Point I have been trying to make the hard way may be the Statement that the Government structure is already overburdened with data, and cannot process even that material it deems essential for it’s own survival. I would suggest that the Chinese Unemployment rate is twice that reported by the Government, even if the Government was attempting to present accurate numbers. The number of the Poor reported is probably only about of Third of the actual number, even those Numbers utilized by internal economists; simply because the hidden population cannot be hunted down by overworked Civil Servants multi-tasked with other details. It will not help to identify the Representatives of the Government to the Public, there are simply too many functionaries to keep track of and hold accountable. One cannot even gain clarity by holding separate Offices responsible for alternate things, solely because the Offices are unremarked, and cannot themselves explain their exact relationship to superior Dept. or Government.

The greatest power-brokers in Beijing could be arrested for Vagrancy in one of the Provinces, unless the individual has some personal connection with the leadership of the Province. Restriction of communication in the Chinese penal system holds the equivalence of a Death Sentence; only family and friends can get you out of the clutches of the Chinese penal system, which is too massive to find an individual within the system. There are Those who claim the Chinese Government has changed with the advent of the Computer; but Crap In means Crap Out. There are entire Chinese Departments which are Months behind on their data entry. Chinese leadership themselves often find great difficulty in locating family or friends within the complex system. This multiplex confusion means that Information is disseminated only slowly, often with great inaccuracy, and official economic policy often extends only to the Office door. Enforcement becomes more an effect of Tradition, than it is a policy of decision. American economists are unused to such a system, and will never understand such policy behavior. The real amusement comes in the fact that, in reality, the American system does not differ greatly from the Chinese system; with all functionaries ignoring unpleasant policy. lgl

Thoughts without Notes

I have not attempted this thing in years, but sometimes you must just express some of your own sentiments; all without dragging Anyone else down with you. I simply want to identify what I think is wrong with the World. The first thing is to consider the last two Booms, and then find a way to express what need be said. The last two Booms were always about Expectations, never about reality. Everyone invested upon potentials, never on recorded Profits or realized Advantages. Investors always sought the golden opportunity, never accepting the dismal Present with its miniscule performance. Everyone condemned any form of a Safety net, exactly at the time for which such Nets were designed; when Everyone was hazarding Risks that they could ill-afford to lose. Risk-takers insisted on less and less moderation along with scrapping old-time regulation, simply because they restricted Movement--exactly like Seat belts.

The entire philosophy infected all of the economy of the Times. Labor practices are a Case in Point. Managers hired, not based upon current needs for labor, but for a concept of future potential needs. Consultants were hired, even thought most Consulting work required only a minimal study of the Internet. Investors threw loads of Cash at Managers, who had to justify the funds, and hired and spent based on the need to show activity; all awaiting the predicted potentials ahead. The trouble came as the potentials for slow to arrive, and came mainly only after the development of a Sales and Distribution network to generate the necessary Sales of Products; a eventuality never arrived at because the potentials stayed at home.

Everyone today wants the Good Times and high Wages of the previous Booms, yet those pesky potentials have still not arrived, and Investors are looking for Profits and finding few. Managers are worried about keeping their own Paycheck, so the Hiring has declined; with the reversal not presenting any greater safety for the Managers' Paychecks. Investors are looking to get the Money out which they put in, and are turning very restive with the notification that Properties still have not reached their potentials. Part of the real problem was that the Investments were made with Profits made under the potentials Boom, and were as vaporous in actual value as are the current Profits based upon Downscaling. It is a Wonderful Life. lgl

I hate these Birds

I hate the Bird, so I ate Ham instead. Does that make me a Big Ham? Canadians have always had enough on their plate that they didn’t have to pursue the cheap meat before; I pity them. Canadians used to Shoot their Thanksgiving dinner, as did Americans at one time. Our neighbors may be following in our Footsteps, even changing the date of their Holiday. I would like to say that they are not imitating Us in Unemployment, but I believe the News is bad. We must all hope for a better coming year, but of all the data, I think the 3rd Quarter numbers are the anomaly. You should call your own personal investment banker for information on Cooking, they have been cooking our bird for some time now!

Study the various aspects of this article. Banks will not lend under reasonable chance of failure, unless they face a Cost constraint; guess what people? Not-interest liquidity means there is not Cost constraint to failure to Lend, while the odds of reasonable chance of failure have not changed. The interesting aspect of it all consists of the fact that the Banks will offer no significant interest to Depositors, if they has an unlimited source of capital at lower interest than they would have to offer to Depositors. Here is where We find the interesting data, as about half of the population, and 75% of Set Incomes, utilize the simpler form of Bank deposits rather than the complexity of Equities. Those who utilize both have about half of their fortunes invested in Bank deposits, or instruments tied to them. It gets real interesting when We realize almost 17% of discretionary Spending for Consumption traditionally comes from interest from these deposits. When such Income is not present, then this Consumption is halved, and total Savings is drawn down. The no-interest policy is an impoverishment policy; designed specifically to lower the living standard of the poorest Americans, the Ones who have the least likelihood of regaining their purchasing power if lost.

How much of all this result has been planned? Everyone knows current economic and fiscal policy has been developed to lower the value of the American dollar. Some will not recognize this aspect translate into a lowering of the American standard of living. The most horrid aspect of the entire program is its Instigators hope to make immense wealth from the practice. It is noticeable in every Country in the World that the planned theft of the living standard of the Poor is always preceded by extreme efforts to improve the Security of the Wealthy–they fortifying their own residences, and hiring Security guards in abundance. Notice How almost all of the Wealthy advocate restrictions of Arms and Ammunition on the Public, except in the areas of Police and Private Security services. Are you sufficiently prosperous to live in a gated community with patrolling Guards? Happy Thanksgiving, and may your chauffeur be trained and armed with knowledge of security driving. lgl

That is not what I said!

We find there is real debate starting over the whole issue of Stimulus. Here is the problem in a nutshell: Recessions come repetitively, and in modern times, never seem to fade away. The traditional Solution, according to economists, is to utilize Government Spending as Stimulus to the economy. John Meynard Keynes, back in the early 1930s, postulated that the World economy was broken, deficit Government Spending could kick-start the economy by putting substantial funds into the hands of Consumers. His view, though vastly more complicated, was that the Great War had revolutionized the World economy, with Business pushing for mass production with minimal labor. He considered the Period between the Great War and the Great Depression the gestation period required to fully establish a greatly enhanced labor pool, but with only a sporadic labor market. He estimated that a Scenario like the War Draft was needed to absorb labor with payment, so as to supply the Consumer revenue necessary to fully develop a productive Private Sector production fitting the total population. He expected it to be a One-Shot short Period of Government sponsorship, and did not publish his doubts about the repetitive use of the deficit spending.

Keynes was later pressured to alter his initial Concept, with little venue under a very Liberal Government to present alternate comments on a mass distribution. Keynes was in some ways as honored for what he did not say, as for what he did say. We has been somewhat faced with this process ever since; everyone proclaiming the virtues of Stimulus, with few articulating their doubts about the accomplishments attained by it. The reality states that Recessions occur with far greater frequency than political desires to pay down Government debt, and there is even bitter opposition to ending Stimulus efforts; until such time that all Parties have received their share of free Pie. The Process has left the realm of economic policy, and entered Politics; all the while costing Taxpayers a significant portion of their Income–through taxation, or by absorption of their sources of Credit. The real thing resulting in massive Debt, sustained Unemployment, and the inability of Consumers to fund their Consumption.

Are the Liberals of the western World leading those poor Chinese Communists down the Primrose path? It is known that the five largest Chinese banks are searching for recapitalization after underwriting the Chinese Stimulus of over $1 trillion. The entire World may be getting tired of all the Governments of the World with their added Demands for an extended Credit line. This is not to say that these banks will have much difficulty with the recapitalization; Most know a family relative in the Chinese Secret Police. The study of Worldwide markets, though, indicate that the great economic dynamos need more than a minor kick-start. I am still betting on the United States to lead Us out of the Recession, I simply will probably not enjoy the methods used; simply signifying that the next Recession will come sooner. lgl

The Government Magic Wand

Start here with your reading of the day, minding especially to go through the Commentary. It is all a positive Statement about the lack of positive direction in our economic policy. It worries me that national debt continues to grow in the World, Recession after Recession, while the benefits of Stimulus can never seem to pay off the debt. Milton Friedman would have discussed the natural rate of Inflation at about this point, but I believe that is a Cop-out; I have hardened in belief that Inflation comes not from the aggregation of debt, it being channeled by sub-level rates of Interest on that debt. Read every link in the Post and the Commentary, and ask what the Inflation rate would have been since 1934, if the average Interest rate had equaled 8% at the central bank position. The Cost of debt would have changed many elements in the economy, while having produced about as much Product, though it would have been of enhanced quality and life-span, with lower Wages and less Recession. I have begun to dislike almost all economic policy by Government, starting to imagine Government is the sole cause of Recession because of excess Spending with artificial pressure on all Resource prices. I might be underrating the employment power of Government, but the existent strength of Make-Work lessens the power of real Labor in the economy.

Read this Letter, and ask what has altered the resource market for diesel. Gasoline stands as very market-oriented, but Government manipulation of Interest rates suppresses the market forces for diesel by inducing heavy consumption, by artificially low Production Costs at both the Producer and Consumer Production lines. It even curtails the Costs in Heating by distillate, so that the switch to Natural Gas was delayed. Suppressed Interest rates corrupt all Price mechanisms at vastly varying levels, so that central information to markets is negated or by-passed. Only careful data modeling can establish the impact of the distortion, but it can easily be seen that substandard production can be profitable, while necessary production finds itself operating in the Red. I personally have nothing against the Fed, but central banks should learn to alter their policy in a manner which does not reverse natural market forces.

This is the type of hyperbole which I dislike intensely. GM is celebrated for a debt repayment, which must be removed to open opportunity to subsidize further debt acquisition. Neither Government or Company cites the exact level of debt owed by the Company to the Government, and both laud a booming outlook while still going further into debt. No one supposes there will be any improvement in the near term, and Taxpayers are directly funding the recovery of GM; this means the debt is only advancing, while the Costs go up, and the value of the company goes down for Consumers and Labor both. The next thing will be GM executives awarding themselves Bonuses based on accumulated Debt; they sure can’t award Bonuses on Profits. lgl

The difficulties of meaningful Change

I am not saying that I agree with Bruce Bartlett about this, but do feel that Medicare Proscription D has cost American patients more than they ever received in benefit. I, a User of the great program, find that Drug companies have raised Prices without restriction, Insurers have raised premiums without restriction, and most Patients are simply paying about the same as before; but with Drug companies and Insurers subsidized by the Government. I would need an extreme amount of data and extensive time to integrate the data into a model, but I have the inherent suspicion that these two groups simply guaranteed their usurious Profits from the Proscription D program. I will suggest that these industries are making about a 8% overall Profit because of it and totally from it. This was probably Why there was such classic Arm-Twisting to force the Vote.

Arnold Kling, with his gift of snaring the correct component, has outlined the real failing of Stimulus. The modern Business structure has isolated them from pressures exerted by both Customers and Labor; Arnold utilizes the fancy name of organizational capital. What Business need Today is Lenders and technology. Consumer Demand remained generated by Consumer needs, with a disrupted market provisioning replacement of any discouraged Consumers; this means Anyone who is angry with the presented Product. Business purchases specialized Help for specific Projects, minimizing their Labor Costs, and letting Labor depart after the specific programming is done. It is the reason that Business is so concerned about the restrictions on financial resources, which must fund their business organization based upon only business management–terribly overpriced in the market, when evaluated within the context of introduction of Inputs into the Production process.

I decided to finish with this article, as it highlights a major problem, but even more so freedom from regulation; at a point where traditional Common Standards of Decency exert no impact. Shipping has always been a major Polluter, and any regulation of this Pollution means huge Costs for both Shippers and Fuel Suppliers. The former will have to supply much more expensive engines, while the later will lack a traditional source of disposal of corrupted fuels. Complete Burning of Carbon emissions present higher fuel Costs with the same contribution of Greenhouse gasses to the atmosphere. I personally favor Wind production of Electricity for propelling Ships, at great advantage to both atmosphere and fuel Cost; the problem here is increasing the Travel times of Shipping, which would have to fall back to the traditional 8-Knot speed of Sail, rather than the current 28-Knots of current Cargo-carriers. How likely is it that We will revert to previous modes of travel, considering the modern focus of Business management? lgl

How to make the whole World Mad without really trying

There is a lot to be said for this article, but in some ways, I would say a lot about this article. Stimulus is amazingly hard to define, and even harder to evaluate. We start with the removal of the alternate Minimum Tax. This was not Stimulus, and really did not even save the Middle Class Taxpayers whom it was supposed to aid; it only allowed States and Localities to raise the Taxes they assess. This again is not really of aid to Anyone, simply assuring a bloated Payroll could stay bloated. It is also larger than the amount suggested by the article, possibly up to $150 billion as eventually applied. The Third Quarter increase of 3.5% at a seasonally adjusted rate is also relatively exaggerated; this being the time of Retail Christmas Orders to Manufacturers, a seasonal event having nothing to do with long-term Production trends. There was no attempt in the Stimulus to get the funds into the hands of Consumers; the only Participants who could generate sufficient Demand to induce Producers to Hire. My final Comment must be that if the Unemployment rate is already 10%, then an additional increase of 10% is realistically only cosmetic; the Production cycle has broken down anyway!

I like this article, though it is on the Outside looking in. I, like The Economist, am tired of Protestations of Politicians that We will fix the fiscal problem Tomorrow–which never comes. What comes is another Recession, which it seems We must always correct, even though allowing natural performance would readjust the economy in the most efficient, swiftest manner. The United States has been in the habit of initiating new programs under adverse conditions, first devised by LBJ in 1965. These are always designed under financial stress to Taxpayers, so actual adequate funding is never devised. Tax policies should be managed without resort to fiscal or economic policy; their sole goal should be adequate underwriting, then We could slug out the infighting over the issue.

Case in Point: Health Care should be universal and Paid For. Tax: the first $25 of every Paycheck goes as Health Care Tax, no matter the size of Income or number of Hours worked. Established law shall decree that all Doctor and Clinics will cost no more than $50, with the Individual patient charged $20 at the door. Emergency Room services will inflict the same Fee, unless there has been an outright Accident. Doctors, Clinics, and later Hospitals, will have opportunity to claim added Costs and file with a Health Commission, utilizing medical policy set in D.C. for distance from Claimants. Doctors will additionally be charged a $10 fee per Proscription, if their average cost of written Proscriptions exceed $200 per Patient per month. Hospitals will be proscribed by law from Itemizing their Costs, and will carry a Day rate of $200 per Day. Operating Rooms will carry a $200 Price tag for a 2-hours service, and only increase additionally. Hospitals will not be able to purchase any medical equipment without Health Commission approval, which will be based upon Need and Population density. Ambulance Services will receive a $100 fee per patient delivery, and can again apply to the local Health Commission for Cost Overruns. Employers of Labor in the Community will be charged by Business tax for the full Cost of medical equipment, while the rest of health care will rest upon Labor. No one will be allowed to escape their medical expenses, Drug companies must justify their Wholesale Costs with the Health Commissions; a difficult process as the self-same Commissions will be providing most of the funding, with Pharmacies regulated to a 4-level set Price for all drugs. We should bring it in under the line as a self-funding mechanism under proper Tax rates. lgl

Changing the Rules of the Game

Why don’t I like this article? Could it be that it talks about exactly those behavior patterns which destroyed the potential of the American Consumer? We do know that We are making about 8 times what our Grandparents made, but how much of that is Inflation? Americans are beginning to realize that you can purchase from a position of strength, simply by accumulating the Cash first before purchase, thus avoiding a great deal of Interest; bringing down the price of the Goods as well as the debt level. Consumer Credit has always been a great deal for the Business world, a way to minimize Business attachment to the viability of the Household Incomes at low Cost; lowered further by the level of difficulty in declaring bankruptcy. Economists would acclaim this separation of Business from the dislocations of the Household, except what happens when Business practice adopts excitement of those dislocations for the benefit of itself? We are now trying to export the practices of ‘Finance without Restriction’, knowing full well that We are additionally adding Consumer-Loss Recessions into the matrix as well, as Consumption pushes against over-pressured Credit limits. This article does nothing but spread the Joys of a major epidemic.

What I dislike most about Paul Krugman’s Writings lay in the fact that he is always Right in the technical aspects, and Wrong in the ideology. This means he will always basically be able to forecast What is currently going on in the Near Term, but does not ask the hard Questions about the Long-Run. The process of transferring Short-Term Credit into Long-Term Credit is totally Right, but what happens When Consumers think to reduce their short-term holdings of Cash Reserves. Can the Readers understand the relationship between these two paragraphs. One might not, but what happens when these two trends collide? Interest rates will rise in the Short-Run with the return of Consumers to previous practices, and Government access to Capital will not be easy or inexpensive. The Job market will obviously not have returned to previous levels, and previous levels could not repay the Government debt accumulation for something like 17 years of previous high levels of Employment. One must understand that actions taken Today can bind the economy into high Inflation rates in the future, and the Government has no program to pay for its own activities at any time–Past, Present, or Future.

This is a Piece which condemns both Congressional regulation of the Fed, and Fed policy at the same time. One has to understand that Everyone proposes platforms which have already been overused, and doubtful in effect; the most asked Question is whether this Crap will have any impact at all. Every time We propose Inflation suppression Someone screams about the Unemployment levels. Someone else screams about getting Money to flow into Households, so that they will continue to Consume. Everyone thinks Government Spending must have an impact, though no one has found one yet. Several people have asked me if I thought of anything which was worth the hot air expressed in the explanation. I finally came up with This, and asked that Everyone consider it for a while, before yelling:

The Retirement Age for Social Security benefits should be lowered to Age 55. Every Retiree could Retire, but with only 60% of the Benefits until Age 75. Each Retiree would be allowed to work a maximum of 20 hours per Week, without any dislocation of his personal Benefit. A vast Draft of new Labor would be developed, especially if Medicare Benefits were extended to the Retirees. The Cost would not be as great as the current Stimulus proposals, and Stress conditions within the current Labor market would guarantee high Participation. lgl

It is always Sunny in Podunk village

I may be tired this morning, but this Post by Brad DeLong seems like Junk. Brad discusses the Spread, which is only one of the factors necessary in study of the national debt. One important element in the formulation consists of the magnitude of loanable funds. It sort of mirrors the Consumption function–there must be existent funds, and agreeable Lenders holding those funds. Americans have been buying less foreign Goods, and paying less Cash for those Goods; it leaving a hole in the formula unless central foreign banks continue to purchase US Treasuries. India is buying Gold, and China is emitting noises of transfer of capital elsewhere. The one thing which is known is that the US Government has not slowed its Expenditure pattern, increasing the national debt about One Year’s worth of total revenue within the last say 18 months.

Brad talks about raising Taxes in 2013, but that We need Tax Cuts now. Remember the Republican clarion call that the Bush Tax Cuts would Sunset? Well—the United States is getting a like reputation to the British Empire, what with the Sun never setting. Try telling Businessmen that they should pay less Tax–what a chorus of approval! Now attempt to tell that same group that they should pay more Taxes–I have even been called a Racist as well as Communist. Reality should ultimately force Us to admit that Tax Cuts will not generate Jobs without increased Consumption, a woebegone desire without getting direct funds into the hands of Consumers. Tax Cuts, on the other hand, are almost impossible to rid oneself of, no matter what is the economic environment. Economists should stop proposing Solutions that can only make the situation worse–Now and in the future.

One will naturally ask what I would propose to alter the dismal economic fortunes of the time. No one will like the basics of my point. Congress should immediately declare a 4-day Workweek for all federal employees. The same legislation should also dictate that all Government contracts must be filled utilizing the same 4-day Workweek. All labor will be paid One-Fifth less under the new program, even such minor entities as Congress and Judges who often work Bankers’ hours now. Further legislation would detail all federal agencies and departments to train the first 10 most successful Applicants to any position at Minimum Wage, under the ideation that the Training of Four Weeks would be beneficial to all Applicants, even if only the best Applicant will be hired. Legislation should be passed allowing Business to hire Unemployed Personnel at 80% of the stated Salary for the first Six months, with federal aid to pay an additional 40% for the same Period, up to a limit of $25k per year in Wages or Salary. Businesses which Fire said Help within the following 12-month Period must repay the federal program the full value Wages extended to the Employee. All Bush Tax Cuts should be allowed to Sunset, because there is nothing in the increased taxation which indicates a further Drop in economic activity. Ain’t I sweet! lgl

Patents

I tend to run off at the mouth sometimes, and articles like this one can really set me off. Robert Pozen has several good ideas, though none of the proposals alter the basic underpinnings of the Patent process; something which is the real necessity. Patents have screwed up business practice in the United States for much of its history, and should be rationalized. This methodology must start at the heart of the Patent process; i.e., Patents are necessary to protect Investor interest, but should not be utilized to create Wealth, control business competition, or inhibit technological development.

The first realization must be that Patents are unnatural entities, created solely by Government interference in business activity, and therefore are some form of taxation. Keep that ideation in mind while One considers that current Patent regulations allow the Holder to set artificial Tax levels on the efforts of Others. Granting this right of taxation might even be beneficial, though the allowance by Government to the Holder to set the magnitude of the taxation most definitely is not of value or acceptable. The first Step in any revision of the Patent system must insist on Government issuance setting the magnitude of the liability that the Holder might charge for the Patent right. The Patent itself is artificial, so Government should set the limit of the imposition on Others, and the value of Protection for the Holder.

The next Step flows naturally for the setting the magnitude of the Patent royalty. This is Government statement that all Patent must be on Record, accessible to Anyone, and open for Production to Anyone willing to pay the set royalty. Patent Holders will be under obligation to pursue identification of Patent infringement, notify the Patent Office or designated Patent Court, where the infringers will be ordered to pay the previously-set royalties. The important element in the whole Process states that Government has the inalienable right of Taxation, can utilize any system of royalty rates it desires, and that all Patent royalty rates should be passed by the lower House of Congress. lgl

Stimulus Capture

Here is another Questioning if the old economic models apply. Alan Kirman focuses on the real prospect that economic theory about Rationality and Equilibrium cannot truly meet the real expectations considering such things as ‘herd behavior’ and aggregate canceling out process. I approach the problem by saying that Economies alter with Size, bringing vastly different reactions than earlier economies. Take the question of Stimulus. Massive size makes common distribution impossible, with Special Interests’ capture of the process; One has to ask if the Fed is not Too Small to Succeed and/or is the Treasury Too Broke to Survive. Regulation, not just of the Stimulus package but all Government, cannot develop sufficient supervisory personnel to identify any violation, let alone to assign any punishment for such violation. One knowledgeable Source, not cited for his own protection, stated that a full Audit for one year’s operation of the Economy would take 11 years. Which of you budding economists can tell me Why capture of Stimulus stops the process of Stimulus? Hint: Captured Stimulus simply funds previous Production Costs extremes under capture conditions.

Here is a very confused Individual, and I empathize with him. He wonders at the dynamic inconsistency of Fed policy, while I understand that it is the poor economic modeling on Inflation which is at fault. Goods with a lifespan of longer than three years should never play a part in any Inflation index. The best index would be One which models Products which will be consumed within one year. High and Low Movers should not be excluded from such models, but Intermediate and Long-Term Products will always follow any sustained Inflationary trend within 18 months. Understand that 70% of usual Consumption Income has been spent before a Household reaches these long life Goods. Getting a clear presentation of what Inflation exists comes only with the frequency of purchase, and We need to know the Prices of what consumes over 50% of disposable Household Income.

This article fits in nicely with both paragraphs above. The Consumer Price Index is down 1.3%, all basically because of the downturn in Car purchases and Big-Ticket items. The Drug industry, though, uses the Cover of this dropping CPI to hide its acceleration of Drug prices; here preemptive capture of Stimulus from promised Health care provision. Drug companies will get away with this capture, unless Government conducts suppressive negotiations for Drug supplies; a Condition no one expects out of a Congress heavily-subsidized by political contributions from the health sector. The Drug companies expect 30 million more Customers, but expect they can raise their Prices another 15%, while their Production Costs will likely reduce by about 30%. The trouble seems to be that they will get away with it. lgl

Use of the federal Whip

How do you explain the bias against Capitalism? Art Carden tries to give an Answer. He is clear and somewhat concise, a wondrous thing from the von Mises’ devotees. Any system of economy adopted will run into problems, simply because the Whole is infested by humans. They cause problems, especially the Ones who hope to create a Power base within the system. Understand that it is never the economic system, but the individuals who manage it, which run it into the ground periodically. Every economic system can function to some level of performance, else it still would not be around. Which is the Best? The One which got an A+ on the last Market Day.

I would give James a proper Citation, if only I could remember How to spell his name. The Message, though, is well explained. The Tax system does subsidize Debt, while it penalizes alternate forms of Investment. This leads to an over-Investment in Debt, which actually slows normal Investment because of the high Prices generated for Investment resources. Readers should understand that economies are not so much Market-driven, but are a balancing act where proper performance is dependent upon Inputs and Outputs being in balance; not only between them, but within themselves. Interference in that balance leads to less than optimum performance. Right Now, the Debt drag is cutting into economic performance, because there is too much Debt which must be funded through repayments–those later producing too much drag upon Profits for adequate production levels. That is How we have arrived at this position in the economy, and more Debt will not help; don’t get me started on the horrors of Debt finance through Inflation, I turn Mean and Spiteful.

James Hamilton gives Us a very decent Post about the tendency of Commodities to rise and fall together. I favor the Concept that Investors utilize Commodities as an Investment class, and the splash into Commodities comes always with a relative Drop in the Equities, Treasury Interest rates reduction, or erosion of the American Dollar. This places Me in conformance with Tang and Xiong, and I agree with Smith that much of the hoarding occurs outside the United States. I have serious doubts about the later’s claim that these Investors lack an outside market for these Commodities. Here is the relative Problem: Successful foreign purchase of Commodities will universally lead to foreign sale of such Commodities; a Situation which will place added pressure on the American economy. I think it is as dangerous as Hamilton believes for the federal government to ignore this Trade. My Solution would be to make the federal government a Trader in the Commodities Markets, buying when Commodity Prices lower, and selling when Commodity prices seem too high; the later only to domestic Consumers of said resource. lgl

The Mist of Confusion

Can Anyone tell Why this Condition exists? Men are always at the forefront–in Construction, in Plant production, and in all Risk-taking activities. Read specifically the NYTimes link provided, especially Jan Hatzius et al, which exhibits the absolute proof that Orders are down, and not likely to revive anytime soon. Many forecasters are predicting that October will have been much better, but there is no real indication of such; remember that the horror of September came only with the revision of the numbers. Companies are slow to report disaster, as they know that the reality will depress potential Customers. Bad is bad, though, and the economy effectively sucks; perhaps the worst horror is that Everyone expects that the Christmas Season will be financed, with the Credit Card companies tightening their Credit restrictions. Remember that the Mortgage Crisis will not be improved with massive extension of Consumer Credit.

Can Anyone tell me What this Post has to do with the previous paragraph? Follow the embedded links to try to derive an Answer. Hint: Credit ratings and Credit extensions are based upon current employment values, all of which can change when the economy recovers from an overcharging of the economy. One of the greatest Means to control this excessive Funding of the economy lies in nominal income targeting. Why is this important? It is an effective Means to control Over-Employment–a Concept never utilized by economists because of the ugly connotations involved in the Concept. It has a still more disagreeable aspect where Credit is extended where it should not be. How? It insists that Production schedules must be based upon current Profits, not projected future Profits. This is also a Contention which will be criticized by economists, though it is true. The final result is an effective control over Credit extension.

You can find the real Truth about the economy here. We can see the outcome in the graphs and tables, but One has to ask What is the suppression behind all the Numbers? This is a most difficult Question to answer, but I will give it my best Shot. Take several lead-in years where central banks accommodated the easy expansion of Cash, within a reduced Tax structure. No nominal income suppression was utilized. Inflationary Profits were accrued and inefficiently taxed. This produced the natural Business reaction of financing by Credit, and assuring Profits by constant unregulated Price increases. These Profits, earned by Business personnel, were invested; not spent within the economy. There was a disconnect brought to the economic model, where Profits are independent of actual Production; this Production, though, must eventually pay for it all. Then the Consumer finds impediment to his future expenditure, whether it is loss of a Job, reduction of Hours, loss of Credit rating, inability to borrow greater amounts, etc. We have the resultant condition where a shrinking Production must finance Dividends to invested funds which had been artificially inflated. We reach a Condition, at least in the United States but reflected in the rest of the World, where about $3 trillion are searching for a Return which is actually undeserved; a drag to actual Production performance, where Labor expansion is retarded, labor hours are reduced, Wages are suppressed, and Consumer Demand evaporates. lgl

Simple may be the best!

Daniel Gross I might consider an Optimist, while he would likely view me as an Conspiracy theorist; if he thought of me at all. Here is the thing! He looks at some Hires, and think that the economy must be getting better; while I know such Hires were being done even in the midst of the worst of the Great Depression, and some percentage were even successful. A lot of economists are relatively the same as Daniel, placing great Stock in these new businesses and new Hires. I, on the other hand, know that it is the established businesses with their pessimism which cause the Unemployment. It is one of the reasons Why I dislike Government economic policy so rigorously because of the way it works. Established business, and most especially Corporations, develop a Pavlovian impulse to Unemployment, which is downright disagreeable. They have previously been granted easy Credit and vast Government Spending whenever economic conditions have turned adverse; an environment which makes Profits relatively easy to access. The Pavlovian impulse on their part consists of an raptorial slashing of Jobs whenever Profits-taking becomes hard; they knowing this is the swiftest manner to engage the easy Credit and vast Government Spending. The problem comes in the fact that restoration of Jobs is such a more difficult and longer process, than is the retention of those Jobs; there first needing to exist prime production conditions for Hiring–making the Training Costs and lower Production viable. There are many reasons to detest Government interference in the economy, and I have listed probably the worst of all.

This Post by Robert has some degree of unworkability to it, but has a direction which is outright decent in appeal. Simple outright Commands are much simpler than complex valuation systems. We would simply need a federal law which set the total full Workweek per Employee, rising under Good Times, and lowering under Bad Times. The Command must be limited in force, though, so the law should take that Businesses could simply not deduct the Wages over the stated Hours–considered as Overtime. The later reason being there are certain personnel and Job functions which are absolutely necessary to work long hours. This Plan would work much better than Tax Credits or Subsidies, and We do not even have to call it Pigovian taxation.

Paul Krugman has much better ideation with the Problem, as one should expect from a Nobel Laureate. He, though, still expresses the Concept of granting American industry Tax advantages to start re-Hiring once more, which simply reinforces the Pavlovian reflex which I mentioned in the first paragraph. What We need is a group of economists to get together to study World Labor market history, and inform which of the Solutions present the highest viability. I think mine does, simply because of its simplicity, and the ability to quickly adapt; even on a monthly basis. You can even gear it to sensible economic data, and enjoin the Governing Board regulating the Work hours to prove the necessary increase or decrease of the Workweek. lgl

A new Path

I think Mark Perry ignores a prime aspect on the current health care debate–which is the silence of the Insurers in Public. I would advance a very workable Solution, One that will somewhat define whether the Public Option is necessary to supply universal health care, or whether We can rest on Private options. It requires only the passage of a short federal law. You ask what simple law could solve such a complex problem? This gets me back into the law-writing mode, which Everyone detests because I come up with disturbing details; but here it is anyway.
All Health Care Providers must answer the following Questions in order that the American Public can understand the Problems. All Answers must be listed and published upon a Government-run Website accessible to the Public at all times. These Answer must be updated every Six months, until the Government decision to close the Website; an element which can only effected after the passage of legislation deemed as proper solution to the health care problem. Failure to Answer these Questions periodically will withdraw health care providers from license to sell health insurance until compliance with the law, where they are criminally liable if they sell Insurance or do not turn over their Accounts to a licensed health care provider within One year. The Questions will be very simple but direct, and are listed here:

1) What health care provision will you Underwrite for a $60 per month premium?
2) What health care provision will you Underwrite for a $100 per month premium?
3) What health care provision will you Underwrite for a $150 per month premium?
4) What health care provision will you Underwrite for a $200 per month premium?
5) What health care provision will you Underwrite for a $300 per month premium?
6) What health care provision will you Underwrite for a $500 per month premium?
7) What is the health care provision you will Underwrite for a family of 5 under the above premium limits?

The law should stipulate that the Answers are specific for the purpose of writing general policies which Government mandate might regulate; that all Questions must list the registration of financial limit for the services offered to the Insured; and the Policy structure must be outlined without small Print additions; the Whole without any previous health conditions provisions–meaning it is an Open offering to All without restriction. The law will also state that, to ensure honesty of Statement, health care providers will be held to each fulfillment of the Questionnaire for the following 3 years potentially. The law also stipulates that the Government can ask for the same Answers up to a $3000 per month level in increments of $500 per month if deemed necessary. All information derived must be presented at the Government-run Website, completely Open to the Public.

I am quite sure this is not what was desired of a Market-based solution, but I am quite sure that it will provide the information to both the Public and the Legislator to determine what is necessary. It might even help to reduce the amount of GDP which American devote to health care. I just know I will be loved by all Participants in the discussion. lgl

The Mother of all Debts!

Menzie Chinn expends some energy in defending the value numbers of the Stimulus package, which I do not doubt are as accurate as can be. The problem I have with those numbers lies in the construct of the models utilized. My Point states that these economic models make two assumptions which I find appalling: the first being the Concept that the American economy works in a vacuum where the US Dollar does not lose Value and new technology is considered mute; the Second ignores the factual reality that the Government itself must be Downsized in the face of insufficient taxation and rising debt. No economic model I know of considers a Government labor force which is 30% smaller, a position which I envision as highly likely. New technology must be introduced, as another Generation of School Graduates will find Us with insufficient land to supply Housing of the current quality, to say nothing of furnishing such Households with Power and Consumer Goods. Someone somewhere has failed to notice this Outfitting of the newest Generation will be much harder with the decline in the value of the Dollar. The final note I would outline is the fact that the economy would have produced a high increase in Employment even without the Stimulus in all later years, to the point that Stimulus has become nothing but Inflation.

Daniel Gross would not agree with my analysis. He still has to present some statistical data which should raise Warning Signs. He has to mention that the Treasury is looking for more debt raised in 2009Q4 than all of 2006, a difference of three years–Recession on Not. The Apologists for the Debt never mention the over 400% increase in debt in three years, when the Government has never repaid any Debt at a faster rate than about 1% per year since the 19th Century. I am not great at Math, but know that 1% of the current Debt is much higher in total amount than when We last achieved such payment. There remains the question of what We are going to do for Stimulus in the next Recession, and even possibly what We are going to do for Government revenue at that time; Suggestion: turn the White House into a Bed and Breakfast.

The MAOA Gene is alive and well, and mostly resides in our Politicians, read the article and understand the incomprehensible. I wonder when they will find the Gene which makes it easier to spend other peoples’ money, rather than your own–it might only be held by Criminals and Politicians; if those two terms are not the same. I do not like the rise of Consumer Debt, but know that it can never reach the level of economic threat to the stability of the system. Government debt, on the other hand, is an animal which destroys the health of everything it touches. It is like health care–which should be Public and universal–or totally left to the Consumer. Anything else leads to lack of care and inflationary pricing in the sector. I watched a comparison of different health care systems in the World on PBS, and realize that these halfway measures covering only part of the problem is what led to the highest percentage of GDP expended on health care. It is time for Change, but there are so many elements which must be worked on, One cannot say any of it will make a difference. lgl

The little Recession that Couldn't!

I will provide this link to give some history to my Readers, but it is relatively unimportant in the face of Congressional reluctance to actually impose realistic regulation upon a economic sector who fills the role of Paymaster within the scope of political campaign contributions. Here is a more detailed survey without being too Wonkish, though it only approaches a specific area of intent. My major problem with central bank policy may be the destruction of Consumption Demand in the time of Recession. Low Interest rates seem like an obvious solution to an economic downturn, but it carries hazard as well. People who have little experience and generally possess lower annual Incomes put their extra funds in Banks on Interest. This is a pattern which will not change very much, no matter what invective sounds from the investment bankers. The Problem lies in the fact that such Investors curtail their Consumption patterns far more rigorously than do normal Investors; highly expectant that they cannot recoup any funds removed from their accounts. This means they enter a strained Consumption pattern exactly when Business will curtail operations if Consumer Demand does not reappear. I have no numbers, and do not intend to look for them, but estimate that the lost Interest for these Individuals equal about 20-30% of the potential Consumption Cash (remember this is not Credit) which is available in the economy. Business and Bank will not admit it, but what We need today is Cash Customers, who do not extend the Credit bubble We are in.

James Hamilton researched the subject of Oil price. The truly important point is that the percentage of Household Income which must be distributed to energy has been growing, and in a Period when Consumption in physical terms has been shrinking. The price of Oil is now about $80/barrel. A lot of economists believe it must rise above $100/barrel to have an impact on the economy–Wrong! Food Distribution stands as a very energy intensive industry–with both heavy Transport and Refrigeration Costs. Moms have been both filling the SUV, and checking out at the supermarket counter. They are beginning to notice that they are paying about 20% more at both places. Business and Economist both hope they will forget this fact in Christmas-Buying season, but the Moms are unlikely to do so. Understand that they make up a good Half of the Trade. I think that We are in far more trouble than Retail would wish.

We find Bank and Business totally devoted to their success again, though it almost guarantees that a good Christmas Buying season will be the most expensive in history over the repayment cycle, and almost a physical impossibility under the aura of rising Household Expenses. I do not understand How this Country’s economic leadership fails to grasp the need to open the flow of Cash to Consumers. Governments–Local, State, and federal–continue to raise tax rates and approve expensive programs which require further funding. My problem is that I cannot keep my Poker face on, when telling the less-Enlightened that Times are getting better. lgl

If Only the Taxman were unemployed!

There are Those who would claim that children are not direct participants in the economy, but then there is always a Study like the one here. Even if the effects of the Student disassociation remains only temporary, and doesn’t maintain a one-year loss of labor per lifetime; it still cost the Educational system an added year of Cost per Student involved. I have not estimate of the number of children retaking a Class year, but can evaluate a per-Student Cost of anywhere from $11-18k for local School systems. I am in a School District where it is estimated that expansion of the new middle school will add $40 to the bill of the average Taxpayer in the district. It is a minor charge within a Property tax which is raising about 8% per year, yet it is exactly the way in which We are getting the rise in Taxes. This is the arena on which Congress should be working, not an immense increase in taxation due to health care. We are rapidly working to a position where our tax structure will become unviable, though We cannot get Politicians to recognize the fact.

This short Piece highlights the previous Statement. The outflow of Taxpayers from New York is probably unavoidable as is mentioned, but new entrants into New York are 3.4 times as likely to be initially unemployed, with around 6 times the likelihood to add to the Welfare Costs of the system. New York may be able to handle the higher unemployment while the average Tax paid per Hour worked has gone down, but what is upper level of Welfare Costs which can be paid? We have to estimate that the proposed reductions in Medicare is only the tip of the Iceberg, and that a uniformity of Welfare benefits must be the first element on the political agenda. I would call for a convocation of State representatives in D.C. to discuss the regulation of Taxes, but it will not happen as Politicians fear it could too easily turn into a Constitutional Convention.

People still dance as Nero fiddles! This Post outlines the confusion at the Fed. Beware of any institutional leadership which will not talk about the real problems being confronted. The most noteworthy problem for the Treasury is the growth of federal debt–nothing else; but where is the policy position to oppose this Problem. Everyone has Lobbyists in Congress, except the Treasury and Federal Reserve. We live in a Time where all Applicants for the Oval Office must come from the most bloated Spending organization in the World. I might love to see a constitutional amendment stating that all Candidates for President, Vice-President, and/or positions like Fed Chairman and Secretary of the Treasury must have successfully completed some term of Office as State Governor or Head of a federal agency; all simply to be deemed qualified for running a much larger organization. The Constitution already has too many attachments, though, and both Populace and Court ignore any part of the document which is out of favor. I don’t know if anything will save Us from Ourselves. lgl

Baby, the Rain must fall!

This Opinion from Paul Krugman may tell Us more than We wish to Know. Politics today reminds me far more of the Times under the old Roman republic than ever before. The Oratory becomes more theatrical with every Speech, with Speakers more concerned with ratings than the effect of their words. The Crowds want Entertainment and Food, with little concentration on Content. Fox Channel outright advances Lies, but all other News outlets do is try to compete in the misinterpretations. What is killing the Newspapers in this Country is their disinclination to follow the Pack. Slander has become the common fare which no one can do without, and any viability of an Opponent’s position must be denied. All Sides of any Issue associate their Opposition with the Atrocities and Mass Murderers of the Past, never granting the other Side of any growth of Thought or Consideration. The end-result will probably bring Us the same society as those societies which produced the horrors which We use as Conversational allegations. Why do We do this to Ourselves?

You can find the other major aspect of disaster for American society, the Food rather than the Circuses, which afflict our nation. This Piece outlines the provision of Health Care, and would lay full blame on the initial practice; but this is not the real deviant, with the progress of legislation being hidden. Provision of the original Plans would never have cost the huge Expenses which We see today. The first thing which should be recognized is that it is rarely the covered Patients who demand the expanded provision of health care. Special Interests drive the expansion of Coverage for Patients, this expansion always in the direction of expandable rising Costs, which assure healthy Profits to the health care Providers. Corporate entities are covered by health care; rarely is Anyone else! Mark would condemn Democrats for creation of this vast system; I would charge the Ones truly responsible, those who make the Profits from the system as it is.

The most improbable element of Our society rests on a very regressive taxation. Business Interests, who make the real Money, are lightly taxed; the rationale is that they create economic opportunity for Others. I would like to see what Jobs could be found which were created by Business getting a Pass on taxation. Business and economist say they are out there, but I find none which do not make the Business personnel more Money than the Labor elements. Clearing the way for Business leadership to make more Money may be of value to the economy, but Why does their advantage have to be so much larger than the amounts devoted to expansion of the economy? I am not being a Socialist here, but Why give any segment of Society a tax advantage, especially those which benefit the Recipients far more than Anyone else? Forbes proposed a flat tax at one time; I propose a progressive tax system without any tax advantages, Taxpayers paying the rate listed unless Income loss can be proven. What is Right, What is Wrong, and Why should We care in the first place? Booms only become Bubbles, Recessions always follow Bubbles, and Labor always has to pay the Price. lgl

I try Again

I myself dislike the concept of a Transaction tax, simply in and of itself. The idea of a gradualist tax does titillate, though, due to my belief that most of the growth in Consumer Credit originally comes from the need to aggregate funds for the disastrous Personal Income Tax. It is the Tax which insists that Taxpayers periodically find overlarge amounts of Cash to satisfy a Debt which they did not incur in the first place. I think it is Time to again break out my old idea of a Bank Transaction tax of 2% per transaction of the total amount. First, it will tax all economic activities–even the Cash markets–as Retailers have to turn to other services not provided by Cash markets; a real Critique of the program which I have heard before. Second, it will raise a huge amount of tax revenues, so much so that it can eliminate the Personal Income Tax, and possibly Property taxes with a justifiable split of Tax receipts. Third, such a Tax would be cheaper for the average American, especially with the removal of Accounting Costs, and automatic notation by the Bank of the funds removed; this allowing Americans to keep track of their Tax Costs while the Government can clear the amounts of Tax owed.

I could make the Argument that such a Bank Transaction Tax would actually tax higher volatility Trading naturally, because of the frequency of the applied Tax. I could fill in the blanks with the Concept that retaining Business taxes at the same time not only suppresses bad economic production, but acts as a Suppressant of inflationary Consumer pricing. I could bring forth the idea that such a Tax would contain low Profit trading, while not affecting low-Gain trading because of natural growth factors. I could apply the belief that such a Tax will cancel excess Consumer Credit extension as the Tax would fall on such extensions; leading both Lender and Consumer to reevaluate their positions carefully, in light of the fact that each has paid a 2% tax on the Transaction. The creation of financial instruments will shrink with greater stability in those elements, as Everyone realizes they must take a 2% loss up-front. The final Concept is the realization that the Tax is immutable, and has no relationship to the viability of the transaction, literally making all Participants study their potential Profit margins with great care.

There is, of course, the hazard that organized Lobbyists will immediately push for elimination of Business taxes in the presence of this new Tax. It is an idea which should be solidly resisted. Business taxes possess many advantages: they hold down Consumer price increases, they lessen the resistance to Wage increases for employees, they impact paid Stock dividends little if any, and (my belief) actually induce better business performance with control of Production Costs with active control of Management. It is far greater security of economic performance, when Business managers do not see immense wealth in individual deals; the Tax insisting on long-term, continuous performance for construction of wealth for managers. Critics of my program will call for precise data to prove the Above, but there is little material which can be found; all because no one has tried to alter the Tax structure in this way. I think it is Time that We tried. lgl

Real Aid--Is that like Farm Aid?

Ever wonder if you and your collaborator were on the same page? It is not an unusual occurrence. There is the old Saying that British and Americans were separated by a common language. You will here find another one of those used terms which no one can define. Can anything be accomplished if there is profound misinterpretation? The later concept is also open for definition. How far off the mark does a phrase have to be to fulfill the term? The World is filled with ethereal elements, almost all composed of language difficulties. Academics should attempt precision, but how can it be done without a syllabus? I don’t want to harp on this topic, but the Reader will be confronted by this difficulty as he entered into the real world of productive activity.

Unemployment is another term which has serious need of definition. David Leonhardt explores the differences in Unemployment in this Recession from earlier Times. The real Culprit this time consists of the lack of Re-Hires. Average Hourly Wage still advances at the same approximate rate as nominal Inflation–another term very much in need of definition. Those with Jobs possess a relative high degree of Job security, at least until their specific Job projects come to an end. There is much discussion of chronic unemployment in the article, though there is a obvious hole in lack of discussion of specific sector losses; it is my belief that Raw Materials employment, Construction, and Middleman clerical positions has made up the bulk of chronic Unemployment. This does not bode well for Recovery, as here much employment depends upon previous relationship between Supervisor and Worker traveling together to the new Project. A discontinuance of this relationship over a sustained Period leads to new formed relationships based upon the Workers being new entrants into the labor force, with high capacity for Training. Employment here will probably require retraining into new positions, with competition with younger, hardier Labor–always a Strike against Labor when experience is discounted.

Obama will attempt to spur Employment with the traditional means of Business Tax credits and spending on federal infrastructure. I wonder when Someone will notice this has led to 3.5 million having lost their Jobs since he took Office, even after all the previous incentives to Hire labor. The Great Plan has lost Us 7 million Jobs since the Recession started. I propose instead the Pothole Law, which simply authorizes all City Maintenance Departments to hire Minimum Wage labor to resurface City Streets; all to be done with Shovel spread and Machine compaction. Top end of labor employed–a potential 7 million Employed working on every City street in the Country; all continued until We have a Boom again, or no more Potholes. Direct, forceful, and Cheap; the City Maintenance to act as Supervision and Timekeepers; and it is a open source of Income for the Unemployed. Everyone will be given ample opportunity to seek alternate Employment, and the state of life in America improves. Don’t overwrite the process, simply get Aid to the suffering Employment rolls. I estimate the Cost will be no more than a $100 billion per year with a guarantee that the Treasury will pay the Cities promptly without extensive paperwork, and all will surely be directly devoted to Consumption Dollars. It seems a lot better than some Corporation getting another Tax Credit. lgl

The Way We Were

I would ordinarily not utilize this Post, which hardly any of my Readers will understand (do not make the comment that it would include myself). What it says to me is that there has been much less variation in Exports over the Period graphed (Hint: always adopt the Graph with least Variation, as extension is not a good thing in economic Graphing unless proven). GDP studies often show extreme elements, or effectively hide those constituents, due to Price variations driven by uneven Inflation; all without any valid equalizing program. This lack of uniformity in activity is common to GDP series, and rarely evaluated. It becomes humorous that Inflation reduction tends to generate similarity, while Deflation reduction should exhibit greater variation; the later being only a Guess, as Few have actually witnessed a valid Deflationary economy.

Paul Krugman brings up a fundamental point here, in stating that neoconservatives have been rewriting history to great extent. We, out in the Heartland, remains starved for Cash for the first Two of the Reagan years, then lived with unrealized Job Expectations until Bill Clinton. This is the Period when the Rich started to become the Super Rich. There was a great Shift out of domestic Production capitalization, with massive funds sliding to Realty under unrealizable prospectuses, bringing on the S&L Bailout of the mid-1980s. Past that debacle, what followed was Ph.D. waiters. Menzie Chinn might have come up with his filters somewhere during this Period, where We truly needed them.

We might find some relationship to the later 1980s in this Job Report, which reminds of the activity of the previous Period. Economists then proclaimed success because the Job losses were decreasing month over month. The Workweek was also set artificially low at least in the Midwest; I am thinking it somewhere reached less than 30 hrs per Week in the great Reagan Period after the Tax upscale; before it was an absolute lack of Jobs in the early Reagan years. Remember that I have the most faulty Memory in the blogging community. The difference was the desire for additional Tax Credits, which Congress tacked to the Reagan Tax revision. This helped to assure that the new Taxes did not fall upon Business, but solely on the poor Working Class. I believe I am getting too bitter in my senility, and should not advance those unpleasant aspects of Our youth. lgl

Truth in Something

One of the most aggravating aspects of the different economic schools of thought lies in the fact your primary positions are sometimes challenged. Such is the content of this piece from David Beckworth. I cannot truly evaluate the first Graph without an overlay on Government Spending in the same Period (including federal, State, and Local); this to ascertain that the Spending came from the Private consumer, and not the Government. My thinking holds that Private Spending has actually moderated since 1970, except for the insanity of Home purchasing of the last Boom. The later destruction has caused sharp reduction of Spending by the Private consumer, all in order to return their equity to a firmer foundation. I would also enjoy having an overlay of central banking expansion of the Money Supply during the same interval, thinking that the central banks kept the Inflation rate constant, so that member banks remained profitable. I believe that it was Government policies which have caused this Inflation, and refuses to allow it to be vented. This refusal to allow the worth of the Dollar to rise brings most of the Problems We now face.

I do not think the Boehner amendment to H.R. 3962 will provide greater injury than aid, but the CBO makes a relatively good case for it. The basic trouble comes in that the amendment assists the piecemeal retention of private health insurers, where the health care Problem needs a universal application. One of the great elements which need be addressed is the complexity of health insurance, and its separate offerings; no individual Subscriber to such insurance has any notion of exactly what they are protected against. I would like to see federal law which dictates a simple base policy which has two guaranteed medical consultations paid per year, and with a $10,000 limit of payment liability per year. Premium rates would be set up for these policies, and individuals would be allowed to purchase any number of such policies; Employer polices would be allowed to purchase 5 of these polices per individual. Any individual would be granted access to such policies without restriction, and all medical procedures would be covered; with reduction of medical coverage allowed only for cosmetic surgeries. The entire structure of health care coverage would be amended to eliminate Government responsibility for health care to the point of Government-ordered minimum health care by garnishment of Wages, when and if individuals do not pay for Government-sponsored medical service like Emergency Room care. The primary element of my program would be throwing responsibility back upon the individual, but within a context that the individual can understand what is achieved.

I am getting somewhat tired of listening to the threats to Business caused by taxation. A short history study: All economic Booms are incited by Consumers (mostly Labor) feeling like they can afford to spend a bit more; all economic Recessions are caused by excessive Profits charged over the long-term by Business. Almost all economists would assert that is too rude a Statement, though true. I do not know exactly when Business taxes got such an evil onus in American society, nor why they receive such labeling as a Job killer. Business taxation might forestall new Job Hires, but reduces current Job Rolls at only about a twelfth of the speed as a economic downturn. There is even some thought that effective Business taxes could curb the excesses of the Booms, and cushion the effects of the Recessions; but what do I know? lgl

Where do We come from, and where do We go?

I would first tell the kids that economists really do try to get it right, a real effort is involved. Here is a Post which gives some indication of How well those aspirations are treated by the cruel, cruel world. I have ventured into the mythical land of forecasts often, mostly to the sound of laughter. I think it was Henny Youngman (I know you kids have never heard of him) who said it was better to be paid for the laughter generated when you were trying to be serious, than to be humorous at a funeral. I agree with Calculated Risk that We are a long way from normal, but do so with less expectation that normality will return. The only sustained growth We may expect is in the arena of Population, which I am even suspecting will decrease sharply within a decade. The Age of Affluence has ended, and we are headed back to the Age of Utility. I seriously expect that the next Step may be the revitalization of the decayed City centers, as industry comes to realize that they need those packed, dense neighborhoods to maintain competitive advantage against foreign Imports, which are doomed by their increasing Cost. My one real prediction on which I await the laughter is that inner cities will regain about 30% of their previous Populations within the decade; don’t ask for specific rationale which is hard to raise above vague dreams.

This Post will tell my younger Readers that economists are somewhat freaky people. It stands consistent with a group of individuals who try to build system out of chaos. Anyone who attempts to accumulate precise data to make generalist observations cannot be all there, but they do indeed work hard at it; I would not advise Youth that it is a profession where you have to do little, as the simple level of Reading required goes far beyond simple tired eyes. The one good thing about economics is its relationship to history: no one can call an economist absolutely wrong until at least a century has passed, and society has transformed to a totally different mode of production. The vindication of the economist comes only with examination of the Corpse. It does hold the benefit that you can be proven wrong almost constantly, and yet still command respect from some obscure college or university. This could possibly be utilized, though, from any system of Mentors.

Bankers are a group of people who might find the economic profession more forgiving, and might invade the ranks of economists. Consider this article. The Witch Hunt is on! The Joke of it remains that State supervision of Banking practice may be the only reliable supervision of Banks, as federal regulation has little a priori supervision of Banking activities. There is no federal ombudsman system at the level where these instruments are made and sold, and federal regulators are functionally unreachable unless one possesses massive assets. Federal regulators talk only with Those who they regulate, and regulation is geared to promote the interests of the Regulated. States can break the chain of incestuous movement between Banking and Regulation, a process where Labor flows back and forth between Private and federal employment as the Labor market warrants; especially evil when the movement from regulation to Private employment in the industry is such a Pay boost. States often reflect the rage of its citizens, as the Politicians are not insulated from the Public. lgl

Formulation of the Problem

Jens Christensen may express the hubris of very talented people, who believe that Someone must be tuned into the economy. The analysis is high-quality and great in the context of its accounting, the missed sleight-of-hand being the evaluated relationship between Investors and real market forces. Remember these guys are the Ones who fell in love with Credit Default Swaps. The longer one studies the Street, the more one determines that Shamans must come from the Indian tribes, and only focus on Nature; everyone else must expect to lose Cash every once in a while. Inflation or Deflation will never be determined by prescient scholars, as it is a complex summation of widely disparate transactions absorbed in mass; I get mixed math results adding a finite set of Numbers usually, and sometimes have to accept the best in breed. Do not expect a great level of Insight from such Studies, though they are important for studying the history of events.

Here is a piece from John Quiggin which might further my earlier point. The relationship between human economic activity and climate change has not be actively rated, though everyone knows there is some relationship not particularly helpful. I would like to know the tonnage of Carbon particulate spewed into the air by humanity every year. I would like to know How this amount relates to recent volcanic activity and carbon production. What I am trying to get at here is the real potential damage humanity might be inflicting upon the environment, and How much of that Damage will be which We can curb. John simply critiques the approach of the Austrians and Libertarians to the scientific data, while I condemn the real collection process of that data accumulation. It is really sad, as John makes some real points in his argument, which are defeated by the undefined quality of the scientific data.

I present this debate for my Readers, so they can more clearly understand my logic this morning; now, if I only had such additional Crib-Notes. Four different eminent economists have four different takes on the economy, all basically utilizing the same data. We are all agreed about how much has been spent on Stimulus, but the evaluative content on that expenditure has multiple interpretations depending on one’s own emphasis. Here are a few ideas the Reader might want to explore: 1) Stimulus dependent upon active Business organization does not hire labor at the same rate as Start-Ups; 2) Start-Ups need financial backing which requires collateral, and the money is necessary to generate the legal Costs necessary to apply for Government contracts; 3) scaled-down existent Business organization cannot often acquire laid-off labor; 4) only Government can afford and sustain the formation Costs of creating a new labor pool for any endeavor under Recessionary conditions. What I am trying to get at is the fact that without Government’s willingness to organize their own Manpower needs, Government must endure quite slow Stimulation of the economy. One has to ask if Government Stimulus activity is faster or slower than Private recovery efforts; or, if Government Stimulus is always too much too late, and fails to solve any problem; though it does incite high levels of Inflation. lgl

Life as We know it

There are really some people who have the wrong idea about the public option. The fact remains that if We are talking about universal health care, with no one can be denied Coverage. Study that comment for a moment, and One can decide that refusal of Coverage should be limited only to Cosmetic Care; and then only if it is truly not debilitating. I have a Suggestion which no one will like: Refuse the Public Option to All, except Those who have previously been turned down by a private health provider, while the Public Option must determine that the medical procedures denied were not Cosmetic in nature. Now We have a straight out Public welfare, with a huge bill attached to it. We can now set a Dunning process where individuals have to pay a post-procedure premium of set size for a set length of time, even with possible garnishment of Wages. There will still be huge Costs with the program, and eventually the Public Option will grow; yet, the initial fight over health care provision is basically avoided, and the system will be set up to transfer to a clearer program as the Costs mount.

Here is one of those places where I tend to disagree with Menzie Chinn. We were a great distance from a serious drop in GDP, and the Fed intervention was hasty and overlarge to my thinking. There is a real problem with Employment, and perhaps an even greater hazard from Inflation. We are being distracted by a fall in Housing prices, while most of the rest of Product Pricing is going up. I would like to acquire some numbers on the actual real Cost of Housing as a percentage of real Income; remember the Housing Price reductions occurred only after the mortgages were taken out set for higher Rent Cost. One has to remember that Inflation can occur precisely where Property value falls in the face of Maintenance Costs increasing. No one talks about that Basket of Goods anymore, but I think there should be some concentration upon them. It could tell Us much about what Consumers are actually paying Today.

One can ask whether We have too many people, and I tend to believe there are too many. This Soccer Mom with an economist’s degree may be a shade off the mark, but if she wants four kids, that is her business. I tend to think in terms of provisional support for the little brats, only a percentage of which will go on to have a usable utility. There are still people who like a crowded theater or concert, rather than the ability to stretch out and hear over the breathing and snorting. I think it humorous that the greatest benefit of Education for Children is to convince them to stop breeding when they lack the material resources to support a family. This is one of the rare reasons to fear a rise in the Standard of Living–We are back at the Soccer Mom. Such is Life. lgl

May the hatred engulf me!

Greg Mankiw attempts to invoke Ronald Reagan’s name to counter the implicit Tax hike coming from a universal health care plan; the Reality being no one can establish a huge program without higher taxation somewhere. There remains some doubt to the great conservative ideation that higher marginal tax rates cause Taxpayers to work less. There is even further suggestion that any inhibition of effort by the higher taxation would induce more labor assets to enter into replacement effort, because of the economic advantage presented; Labor always filling unwedded opportunity. There stands even some indication that Business organizations utilize the unpaid added Wages to finance Training Costs, with consequent easier replacement of labor. I do not doubt Greg’s numbers, but I also have great doubts of the real economic losses entailed from such higher taxation. Greg also has a bias against forced extension of health insurance, though there is even greater doubt that Insurance companies could inflict the higher premiums in the face of individual ability to delay purchase of health insurance. Greg does encapsulate the entirety of the Insurance company argument for leaving the decayed health insurance coverage as it is, though this will force a huge debt upon States, as they must fulfil Medicaid requirements.

You can find efforts to curtail the Deficit, which are basically stymied by partisan politics. The idea of a Commission is futile, especially if one has to gain final acceptance of Congress to achieve implementation of any program. I have a more radical solution: a simple Constitutional amendment insisting that every Tax and Tax benefit must be repassed every 5 years or Sunset. Congress would have to radically reform their processes, and the effectiveness of the Tax alignment must be continually examined. Tax rates would assume the necessary proportion with much less Tax advantage for privileged interests. The long-term privileges of Special Interests must be focused on maintaining a beneficial Tax rate, and would not think to invest in devious designs in other arenas than Taxation. A similar amendment which would limit Government funding to an equal Time frame would insist that all Government expenditures would be adequately supervised. A combined Constitutional amendment including both elements, plus a Statement that previous receipt of federal support does not guarantee future federal support (that federal programs cannot be considered as a Property right), would bring honest evaluation of Government needs.

Here is one of my own personal flipfops, as I do not like to witness greater Congressional power over the Fed and central banking, though I would really like to see much of the Fed bureaucracy replaced. I, like the Congress, feel that the Fed is mal-directed; I simply do not believe that any attempt to politicize the process of Fed selection would be in any way beneficial. The decision becomes: Which is worse? I cannot really tell the Reader, as I dislike either choice, and would advise keeping the Devil which We know; though God knows Why! I differ from Economists in believing that the current Overnight rate should be around 7% currently, which would gratify member banks and loosen Credit; Congress would be outraged, though, as they would have to come up with a program to balance the Budget. Business has already shaken out, and the higher Cost of Credit would not affect GDP that greatly, though all Retail prices would naturally rise; it is a fact that the national debt is driving Us all into bankruptcy, and the higher Overnight rates would force the correct budget measures. The Reader will never see it, but it is the correct Choice. lgl