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The Economy Got Off to a Historically Bad Start in 2014

fivethirtyeight.com

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Re: The Economy Got Off to a Historically Bad Start in 2014

#41

Post by tinco »

kaonashi wrote: post #31
Retric wrote: post #13

Earlier quoted context omitted.

The US has huge structural problems and the Fed is just a useful band-aid. It's value is stabilizing the banking system not the economy. Systemic Corruption, Terrible primary education system, Ridiculous Military Spending, Unsustainable Debt Levels, Minimal Infrastructure Spending, Huge undocumented Immigrant population, Ridicules Sentencing Laws, Anti Middle Class / Start-up Tax Code, Legislation Requiring Middle Me…

> Unsustainable Debt Levels There's no such thing as unsustainable debt levels in the thing you are the monopoly issuer of.

Sure there is if those debt levels devalue the thing that you use to trade for the goods and resources your country depends on.

Re: The Economy Got Off to a Historically Bad Start in 2014

#42

Post by mikeyouse »

AnimalMuppet wrote: post #36
mikeyouse wrote: post #24

Earlier quoted context omitted.

Shadow stats isn't credible in any way. They can't even be bothered to take the raw data and apply the 'old' weights to them, so they just arbitrarily add a few percentage points to the CPI. The BLS has dedicated far too much effort into showing why they are an asinine source for 'data': http://www.bls.gov/opub/mlr/2008/08/art1full.pdf Consider this: If "real" inflation was 7%/year, in 10 years, the price of everythi…

Food? Gas? I don't have hard numbers, but it sure feels like they're twice as expensive.

Both are driven largely by Supply & Demand rather than inflationary pressures -- hence why economists rely on Core CPI to make decisions -- but there is good data for both;

Gas is ~90% more expensive (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=E...).

Food is ~30% more expensive (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=E...).

Think about the rest of your life though, especially if you're outside the SFBay area. Are rents twice as expensive? Did an equivalent Camry cost $11k in 2004 vs. the $22k it costs today?

Re: The Economy Got Off to a Historically Bad Start in 2014

#43

Post by kaonashi »

tinco wrote: post #41
kaonashi wrote: post #31

Earlier quoted context omitted.

> Unsustainable Debt Levels There's no such thing as unsustainable debt levels in the thing you are the monopoly issuer of.

Sure there is if those debt levels devalue the thing that you use to trade for the goods and resources your country depends on.

_Deficit_ levels can reduce the exchange rate; but that's not something the U.S. is having problems with at the moment.

Re: The Economy Got Off to a Historically Bad Start in 2014

#44

Post by jqm »

mullingitover wrote: post #21
jacobolus wrote: post #3

Earlier quoted context omitted.

Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. But to answer your question: yes, we’d increase liquidity, reduce unemployment and dramatically…

> Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. I seem to recall a round of stimulus checks that were sent out in 2008, before things went to…

"The idea of taxing the socially beneficial act of working and hiring workers is pretty repugnant anyway."

HEAR! HEAR!

Payroll taxes are essentially a form of slavery. Every week you work X number of hours for the government. Almost like you were hauling pyramind blocks under a whip.

And, on this point, conservatives (who are often wrong) are exactly right. Taxing innovation and labor are hardly incentives to provide more of it. Tax something else. Tax emissions. Tax fuel. Tax aluminum. Tax land. This would encourage efficiency and conservation anyway. Encourage innovation and productivity. Discourage waste and trashing of common resources. It's more fair and would lead to much better outcomes.

Re: The Economy Got Off to a Historically Bad Start in 2014

#45

Post by mikeyouse »

ChuckMcM wrote: post #37
mikeyouse wrote: post #24

Earlier quoted context omitted.

Shadow stats isn't credible in any way. They can't even be bothered to take the raw data and apply the 'old' weights to them, so they just arbitrarily add a few percentage points to the CPI. The BLS has dedicated far too much effort into showing why they are an asinine source for 'data': http://www.bls.gov/opub/mlr/2008/08/art1full.pdf Consider this: If "real" inflation was 7%/year, in 10 years, the price of everythi…

Apropos of nothing, and since you mentioned it, a surprising number of things are at least twice as expensive now as they were in 2004. Nearly all produce products, gas, houses, rents, cars, and clothes. Beer, wine, and soda seem a bit less impacted. If you want you can play this game yourself by looking at archived newspapers in Google's newspaper archive ( http://news.google.com/newspapers ) from 2004 and them comp…

Houses / rents are twice as expensive from 2009? Maybe in the Bay Area, but the rest of the country strongly disagrees;

The 20-City Case Shiller is up 4.5% total since June 2004 (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=E...).

Clothing is up 5% total since June 2004 (http://research.stlouisfed.org/fred2/graph/fredgraph.png?g=E...).

We don't need Google's newspapers since this stuff is meticulously tracked and organized by the BEA and BLS.

Re: The Economy Got Off to a Historically Bad Start in 2014

#46

Post by tinco »

kaonashi wrote: post #43
tinco wrote: post #41

Earlier quoted context omitted.

Sure there is if those debt levels devalue the thing that you use to trade for the goods and resources your country depends on.

_Deficit_ levels can reduce the exchange rate; but that's not something the U.S. is having problems with at the moment.

It's not? You mean to say debt is not growing any longer? (deficit is growth of debt is it not?) (genuinely curious, I'm only on page 30 of piketty :P)

Re: The Economy Got Off to a Historically Bad Start in 2014

#47

Post by pash »

nostromo wrote: post #2

I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…

> If the goal is to prime the economic pump with an influx of new money, put that money in the hands of people who will actually go out and buy something. ... [from nostromo's grandchild comment] My question is simply: why use asset buying as a vehicle for injecting money into the economy and not cash to citizens?

Because when the Fed buys bonds, it temporarily puts cash into the economy, but sending people checks would permanently increase the money supply.

If inflation gets too high, the Fed can sell off its bonds, destroying the money it created to buy them. And even if it doesn't sell its bonds before they mature, the income on those bonds—the payments of interest and principal—is a cash flow that represents a slow, steady destruction of the money the Fed created to buy them. In this passive way, the Fed is already gradually undoing its quantitative easing, and has been doing since it scaled back its bond purchases.

(The Fed's profits—i.e., money beyond what it created to buy the bonds—go to shareholders and the federal treasury, so exactly as much money is destroyed as is created by the time the bond reaches maturity, by the way.)

A permanent increase in the money supply, on the other hand, would almost certainly show up as inflation at some point.

Re: The Economy Got Off to a Historically Bad Start in 2014

#48

Post by TacticalCoder »

jacobolus wrote: post #3
nostromo wrote: post #2

I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…

Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. But to answer your question: yes, we’d increase liquidity, reduce unemployment and dramatically…

OK but France has crazy high taxes: capital gain taxes, income tax of more than 50% for not that well paying jobs and up to 75% income tax for rich people, a yearly tax on your belongings if you're "rich", 21% VAT, up to 70% inheritance taxes, etc.

The private sector is suffocating and closing SMEs left and right, leading to more and more unemployment.

So it is not working for France. Unemployment is as crazy high as their taxes are and the situation is overall very, very bad (it's a non-democratic party who won the recent european election in France).

I'm not saying I know which level of taxation is correct but once you start hammering people so much that they leave the country or that they simply decide to live of wellfare instead of trying to be entrepreneurs, then it's reasonably safe to ask the question as to whether or not you're too far right on the Laffer curve.

Now I'm not saying there aren't country which are socialists and which do better than France: what I'm saying it's that it's not as easy as "tax everything" (which is what you suggest: capital gain taxes, inheritance taxes, more income taxes, etc.).

On my own anecdoctical level: my brother left France to go work in Switzerland and I'm personally considering throwing the towel in and moving to a country which doesn't hate his entrepreneurs as much as the country I'm in...

Re: The Economy Got Off to a Historically Bad Start in 2014

#49

Post by aliston »

opendais wrote: post #34
nostromo wrote: post #2

I'm starting to wonder if the Federal Reserve is no longer an effective tool for job creation. After years of propping up the economy and expanding the supply of money, we have very little to show for it on "main street." We have booming real-estate prices in some cities, a growing stock market, and lots of cheap money flowing into the hands of the wealthy -- but most regular folks have been completely shut out of th…

The Fed is a tool for managing inflation and monetary supply and it does its best with that tool to sustain job creation and the economy in general. The real problem is the US's structural problems have become a systemic cancer that is choking off growth: 1) We have a tax code that incentives capital when capital isn't an economic constraint. We are demand constrained as far as I can tell, which means more people nee…

In principle, this is what the Fed should be. But, in 1977 the Fed became tasked with managing "maximum employment, stable prices and moderate long-term interest rates." This is one of the fundamental problems with the Fed's dual mandate -- its conceivable that those levers may be at odds with one-another.

Re: The Economy Got Off to a Historically Bad Start in 2014

#50

Post by opendais »

TacticalCoder wrote: post #48
jacobolus wrote: post #3

Earlier quoted context omitted.

Just sending checks to all citizens is politically difficult, because it starts conversations about “class warfare” and “socialism”, and implies that the federal government should have a policy of explicit wealth redistribution, rather than the current hodge-podge of means tested welfare programs and monetary policy tools. But to answer your question: yes, we’d increase liquidity, reduce unemployment and dramatically…

OK but France has crazy high taxes: capital gain taxes, income tax of more than 50% for not that well paying jobs and up to 75% income tax for rich people, a yearly tax on your belongings if you're "rich", 21% VAT, up to 70% inheritance taxes, etc. The private sector is suffocating and closing SMEs left and right, leading to more and more unemployment. So it is not working for France. Unemployment is as crazy high as…

> OK but France has crazy high taxes: capital gain taxes, income tax of more than 50% for not that well paying jobs and up to 75% income tax for rich people, a yearly tax on your belongings if you're "rich", 21% VAT, up to 70% inheritance taxes, etc.

Comparing France [44.6% of GDP in tax revenue] vs. US [26.9% of GDP in tax revenue] is a bit disingenuous.

The historic norm for the US [c. 1950] taxes he is talking is about 3 to 3.5% of our total GDP higher. France would still be a good 15% GDP ahead in taxes. Ideally, the US would shift burdens and lower destructive spending. France, on the other hand, should be lowering taxes and restructuring its spending.

http://www.outsidethebeltway.com/federal-taxes-at-lowest-rat...

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