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Poverty reduces brainpower needed for navigating other areas of life (2013)

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Re: Poverty reduces brainpower needed for navigating other areas of life (2013)

#171

Post by dd36 »

crdoconnor wrote: post #169
dd36 wrote: post #155

Earlier quoted context omitted.

If it’s used to invest then whatever is purchased is the offsetting asset. Sadly, it’s being used to fund current operations which has no offsetting asset. The offset is retained earnings. That can and needs to be fixed. It’s how state governments run and they do a lot of investing.

There's nothing sad about using it to heal the sick, house or feed the poor. Moreover, there's not necessarily anything "good" about having taxes pay for operational costs if those operational costs are cluster bombs on yemeni children. There's not even necessarily anything intrinsically good about paying back those bonds in dollars that are of equal or greater value. Sometimes (e.g. in times of great wealth inequali…

Ummmm... you got a little sidetracked. We can do all of that without also going into debt. We shouldn't constrain future cash flow when we don't have to. And we don't have to. During a recession, we have to.

Re: Poverty reduces brainpower needed for navigating other areas of life (2013)

#172

Post by dd36 »

WalterBright wrote: post #162
dd36 wrote: post #133

Earlier quoted context omitted.

Yes it is like a credit card. You have to make payments and it reduces your cash flow. The Federal Reserve prints money not the government. And payments aren’t made with printed money.

In modern fiat money, the money isn't printed. It's created by issuing bonds and then counting those bonds as an asset. The money is created when the bank loans out money based on those bond assets. If you believe it needs to be ever paid back, it hasn't been paid back since 1914. It just grows ever larger. The initial 1914 version pegged the fiat money to gold. Like all pegging systems, they eventually collapse cata…

I disagree with the theory that we can grow our debt forever without consequence. I never advocated pegging to anything.

Private banks create money through lending, correct. Lending is constrained by the supply of creditworthy customers. Money is not issued by decree by the Federal Reserve or the government.

Re: Poverty reduces brainpower needed for navigating other areas of life (2013)

#173

Post by crdoconnor »

dd36 wrote: post #171
crdoconnor wrote: post #169

Earlier quoted context omitted.

There's nothing sad about using it to heal the sick, house or feed the poor. Moreover, there's not necessarily anything "good" about having taxes pay for operational costs if those operational costs are cluster bombs on yemeni children. There's not even necessarily anything intrinsically good about paying back those bonds in dollars that are of equal or greater value. Sometimes (e.g. in times of great wealth inequali…

Ummmm... you got a little sidetracked. We can do all of that without also going into debt. We shouldn't constrain future cash flow when we don't have to. And we don't have to. During a recession, we have to.

No, we don't. Constraining cash flow during a recession is the worst possible way to react to a recession in fact. That's when stimulus is required in order to make up the anemic demand coming from the private sector (e.g. how China reacted to 2008, where they fared better than the rest of us thanks to counter-cyclical fiscal spending).

Deficit spending only really needs to be constrained when inflation is around 9% (~11% is the point at which inflation has a negative impact on growth).

Re: Poverty reduces brainpower needed for navigating other areas of life (2013)

#174

Post by dd36 »

crdoconnor wrote: post #173
dd36 wrote: post #171

Earlier quoted context omitted.

Ummmm... you got a little sidetracked. We can do all of that without also going into debt. We shouldn't constrain future cash flow when we don't have to. And we don't have to. During a recession, we have to.

No, we don't. Constraining cash flow during a recession is the worst possible way to react to a recession in fact. That's when stimulus is required in order to make up the anemic demand coming from the private sector (e.g. how China reacted to 2008, where they fared better than the rest of us thanks to counter-cyclical fiscal spending). Deficit spending only really needs to be constrained when inflation is around 9%…

During a recession you borrow money, spend and that constrains future cash flow. During an expansion you repay what you borrowed - that's the constraint.

We're constraining future cash flow during an expansion. That is stupid.

I am not sure how you keep mis-reading me.

Re: Poverty reduces brainpower needed for navigating other areas of life (2013)

#175

Post by gaius »

dd36 wrote: post #171
crdoconnor wrote: post #169

Earlier quoted context omitted.

There's nothing sad about using it to heal the sick, house or feed the poor. Moreover, there's not necessarily anything "good" about having taxes pay for operational costs if those operational costs are cluster bombs on yemeni children. There's not even necessarily anything intrinsically good about paying back those bonds in dollars that are of equal or greater value. Sometimes (e.g. in times of great wealth inequali…

Ummmm... you got a little sidetracked. We can do all of that without also going into debt. We shouldn't constrain future cash flow when we don't have to. And we don't have to. During a recession, we have to.

Everyone’s a Keynesian in a downcycle...

Re: Poverty reduces brainpower needed for navigating other areas of life (2013)

#176

Post by crdoconnor »

dd36 wrote: post #174
crdoconnor wrote: post #173

Earlier quoted context omitted.

No, we don't. Constraining cash flow during a recession is the worst possible way to react to a recession in fact. That's when stimulus is required in order to make up the anemic demand coming from the private sector (e.g. how China reacted to 2008, where they fared better than the rest of us thanks to counter-cyclical fiscal spending). Deficit spending only really needs to be constrained when inflation is around 9%…

During a recession you borrow money, spend and that constrains future cash flow. During an expansion you repay what you borrowed - that's the constraint. We're constraining future cash flow during an expansion. That is stupid. I am not sure how you keep mis-reading me.

I'm not misreading you. You're saying that spending constrains future cash flow. This is simply false. The US won't run out of dollars, ever. Japan won't run out of ten, ever. They have a 0% risk that they won't be able to pay back their debts because they print the currency.

The only risk is inflation.

Re: Poverty reduces brainpower needed for navigating other areas of life (2013)

#177

Post by upvotinglurker »

JanisL wrote: post #70
saintPirelli wrote: post #66

Earlier quoted context omitted.

You can also be uncomfortably poor, win the lottery and find your life suddenly becoming amazing through no fault of your own. You shouldn't use edge cases to discuss a general rule.

I think the argument people are making is that it's a lot less of an edge case than people think.

Yes. It seems like never having a serious health problem in your life would be the "edge case," at least if you live to be elderly.

Re: Poverty reduces brainpower needed for navigating other areas of life (2013)

#178

Post by JanisL »

upvotinglurker wrote: post #177
JanisL wrote: post #70

Earlier quoted context omitted.

I think the argument people are making is that it's a lot less of an edge case than people think.

Yes. It seems like never having a serious health problem in your life would be the "edge case," at least if you live to be elderly.

With life expectancy getting longer and longer I think this is increasingly the case.
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