The ONE & ONLY 2012 Politics/Election Thread

[jds215]

Does someone demand a product BECAUSE it was produced, or does someone produce a product BECAUSE there is demand for it?

If demand were infinite, anything anyone could ever produce would be purchased. If demand were infinite, there would be 0 unemployment regardless of the minimum wage.

some one consumes a product because someone saved, invested, and produced the product that they want.

In order to demand something and turn that demand into consumption, you/i/we have to produce.

[cockerpunk]

since they took it all? who are these big bad guys taking all this money?

what are these companies doing with this money? stockpiling it under their mattress? No, they are at a minimum placing the money at a bank. This bank is using this money to loan out to small businesses and individuals, hopefully spurring investment and not just consumption.

If they aren't placing it in a bank, they may be investing it into other businesses, thereby helping those other businesses to grow.

From another view, they are probably stockpiling a bunch of cash because they over so overleveraged from the easy credit policy from the Fed over the last decade that if rates rise, half of these businesses won't be able to afford their interest payments on their debt.

If you want to blame anyone one for the financial crisis, look first at the fed and governmental policies/subsidies. They are responsible for creating the moral hazard that we have seen over the past decade most specifically.

i do think the government is to blame, with the republicans demanding the repeal of glass-steigle. that single handy doomed us to economic destruction, and now the US tax payer in on the hook for bank losses, while the banks have no reason to curtail risk in the pursuit of profit. of course the banks and republicans are hell bent on preventing any type of regulation that would remove this moral hazard. this is why they support romney in droves.

they arnt investing in other businesses, because again, middle class purchasing power has not increased! the middle class can barrily keep afloat, so expanding more supply of things they can buy, doesn't help! they are stockpiling the money, because they have nothing else to do with it.

[westsideseal]

some one consumes a product because someone saved, invested, and produced the product that they want.

In order to demand something and turn that demand into consumption, you/i/we have to produce.

Would you save, invest and produce something that you don't reasonably think there's enough demand for? You did say demand was infinite, so you must think there is always demand for anything anyone could ever produce. The economic transaction is not complete until the producer produces, but it also isn't complete until the demander demands and purchases. I think your tendency to attribute more noble features (saved, invested, produced) to the supply side of the equation shows your fondness for supply side economics. I suppose we could say that while the supplier saved, invested and produced, the demander worked, saved, and purchased. Without either side you don't have a transaction, but the demand exists whether or not there is a supplier. The supplier doesn't exist if there isn't a demand.

[cockerpunk]

some one consumes a product because someone saved, invested, and produced the product that they want.

In order to demand something and turn that demand into consumption, you/i/we have to produce.

demand is innate, the human body must consume to remain alive.

production/supply is not. it is based off of surplus and specialization.

[Carter N]

lol is this seriously a 'chicken or the egg' debate?

Clearly, production is the response to an unanswered want/need (demand).

[cockerpunk]

lol is this seriously a 'chicken or the egg' debate?

Clearly, production is the response to an unanswered want/need (demand).

but the issue is that we have rewarded one side at the expense to the other so much that we can no longer get the economy going. this is what happens when supply is taxed at roughly half the percent that demand is.

we have to establish a balance again.

[Carter N]

Any tax on supply is passed to demand.

[jds215]

i do think the government is to blame, with the republicans demanding the repeal of glass-steigle. that single handy doomed us to economic destruction, and now the US tax payer in on the hook for bank losses, while the banks have no reason to curtail risk in the pursuit of profit. of course the banks and republicans are hell bent on preventing any type of regulation that would remove this moral hazard. this is why they support romney in droves.

they arnt investing in other businesses, because again, middle class purchasing power has not increased! the middle class can barrily keep afloat, so expanding more supply of things they can buy, doesn't help! they are stockpiling the money, because they have nothing else to do with it.

why don't the banks have a reason to curtail risk? Do they have any sort of implicit gaurantee from any government agencies? Imagine if the FDIC didn't exist and there was a private market for deposit insurance.

People don't care right now what their bank does with their money for the most part, because the government has told them that if the bank fails, you will get paid through the FDIC. Does this not create any moral hazard? What if you knew that your money wasn't protected? You would probably be a little bit more careful where you put it. An intelligent person may actually want to take a peak at their books to see how the company is run before investing/depositing their money.

The banks would now have more incentive to be more conservative with their investments in order to attract risk adverse customers. Suddenly advertisements would be about how well they manage their money instead of the neat technology they now have.

Imagine if Fannie and Freddie weren't there with their gauranteed line of credit from the Federal Reserve enabling them to buy mortgages and MBS on the secondary market. Where is the risk for the bank in making bad loans if they know they are being purchased? There is none. They don't care, they have a gauranteed customer.

The answer to the moral hazard isn't more regulation. It is deregulation.

[Carter N]

why don't the banks have a reason to curtail risk? Do they have any sort of implicit gaurantee from any government agencies? Imagine if the FDIC didn't exist and there was a private market for deposit insurance.

People don't care right now what their bank does with their money for the most part, because the government has told them that if the bank fails, you will get paid through the FDIC. Does this not create any moral hazard? What if you knew that your money wasn't protected? You would probably be a little bit more careful where you put it. An intelligent person may actually want to take a peak at their books to see how the company is run before investing/depositing their money.

You know why the FDIC exists... right? You know what the stock market crash of 1929 was... right?

[jds215]

You know why the FDIC exists... right? You know what the stock market crash of 1929 was... right?

I do know why it exists. I disagree with the premise as i just explained my reasoning. It creates moral hazard for the banks.

Yes, the stock market crash was in many economists' opinion a result of the federal reserves inflationary policies. Their continued failed policies simply exacerbated the depression into what we know now as the great depression.

Also why the danger of fractional reserve banking needs to be examined.

[westsideseal]

I do know why it exists. I disagree with the premise as i just explained my reasoning. It creates moral hazard for the banks.

Yes, the stock market crash was in many economists' opinion a result of the federal reserves inflationary policies. Their continued failed policies simply exacerbated the depression into what we know now as the great depression.

Also why the danger of fractional reserve banking needs to be examined.

Does the FDIC create a moral hazard for banks, or just for depositors? So you're saying we should deregulate so that banks and consumers bear a greater risk, causing depositors to research further prior to trusting a bank. Without oversight, how do they know the bank is providing them with accurate information? And even if they are, does your average depositor actually know how to interpret that stuff?

[jds215]

Does the FDIC create a moral hazard for banks, or just for depositors? So you're saying we should deregulate so that banks and consumers bear a greater risk, causing depositors to research further prior to trusting a bank. Without oversight, how do they know the bank is providing them with accurate information? And even if they are, does your average depositor actually know how to interpret that stuff?

Both actually. The banks can use depositors' funds for whatever exotic investments they want to make knowing they will be bailed out. They can engage in over leveraging their assets while knowing their losses will be covered by the taxpayer.

Depositors don't really care where they put there money because they know they can get it back. They have "reduced" the percieved risk for both depositors and the banks. Whenever risk is artificially reduced or removed, market distortions occur and money flows into areas it normally would not, creating the booms and the busts cycles. The tech bubble and housing collapse being the most recent examples.

What would prevent a private market for depositors insurance from being created? We have insurance options for nearly everything else.

Wouldn't you want to take the time to find out what some bank is doing with your money or someone elses? Before you invest in a business, do you take a look at their financials or just jump in head first thinking you can't lose your money?

It certainly requires an educated populace and who has been in control of education for the past umpteen decades? People have been so conditioned to rely on government for protection from everything, that they have a hard time imagining life without it.

[lojasmo]

i find the often touted statistic, only 50% of the country pays taxes to not be an indictment of the poor taking advantage of us, but that 50% of this country is literally too poor to pay taxes ... no wonder we are a hurting as a country, half of our country is just trying to make ends meet every month. that should be scary.

IIRC the median family income in the USA is $46,000. that's terrifying.

It is also a lie. That 50% pays state, local, sales, and property tax.

[TIGninja]

It will be interesting when the first state decides that the federal government has too much power (I know NH is on the verge of this). Its about time a state kicks the federal government out of issues that should be state issues. I know that money has been the reason for the states allowing these things to happen, but what happens when money looses the value it has ATM?

[westsideseal]

Both actually. The banks can use depositors' funds for whatever exotic investments they want to make knowing they will be bailed out. They can engage in over leveraging their assets while knowing their losses will be covered by the taxpayer.

Depositors don't really care where they put there money because they know they can get it back. They have "reduced" the percieved risk for both depositors and the banks. Whenever risk is artificially reduced or removed, market distortions occur and money flows into areas it normally would not, creating the booms and the busts cycles. The tech bubble and housing collapse being the most recent examples.

What would prevent a private market for depositors insurance from being created? We have insurance options for nearly everything else.

Wouldn't you want to take the time to find out what some bank is doing with your money or someone elses? Before you invest in a business, do you take a look at their financials or just jump in head first thinking you can't lose your money?

It certainly requires an educated populace and who has been in control of education for the past umpteen decades? People have been so conditioned to rely on government for protection from everything, that they have a hard time imagining life without it.

Now how does the FDIC protect the banks again? If they go bust, the FDIC doesn't just give the bank a bunch of money, they pay out the depositors and liquidate the bank. They still bear risk, but the depositor doesn't have to. At the point of failure, the bank isn't saved by the FDIC, but the depositor is. When you open a checking account, you aren't investing in a bank. The bank is providing you the service of holding your money so you don't need to stash it under a mattress. If you switch to private deposit insurance, you're just paying that specifically instead of paying for it through taxes. How does that change the perceived risk face by depositors if they see deposit insurance as just a fee, and know that it's going to protect them if the bank fails?

And again, without regulatory oversight how does the insurance company or consumer know whether or not the information they're being provided is accurate and complete?

[zukiphile]

no, supply side economics is the argument that if you have a loose enough money supply, this will stimulate the economy because people can invest that money faster and easier, and get there profits, and then reinvest that easier and faster. and this is the way to keep the economy running. that free capital creates economic prosperity.

this is patently false, as the last 30 years of our country proves.

That is incorrect, but incorrect in a way that differs from the fist time you described it incorrectly.

This time you described it as a monetary policy. You don't have any duty to understand arguments for supply side stimulus, but there isn't any sense in your incorrect descriptions.

It is odd of you to describe the last three decades as a failure. 1983 to 2007 was a period of historic growth.

[lojasmo]

Olympics: discussion off-limit
Governor: discussion off-limit
Business Acumen: discussion off-limit
Family Man: discussion off-limit
Healthcare Plan: discussion off-limit
Religion: discussion off-limit
Personal Success Story: discussion off-limit


I mean, that means everything he’s willing to talk about (his name… and …) is proof that we can trust him. When he says “I’m Mitt Romney and you can trust me”, then you have no choice, he didn’t lie. He really is not Mitt Romney.

[TIGninja]

[TIGninja]

This is the type of **** that has been happening in the real world (not the news you fools watch) while you were arguing about gay marriage. This is our presidents response to the challenge of the NDAA. If we let this man be jailed we will never be able to speak our minds out of fear of this happening to us. This is the first test of our resolve as Americans.

http://www.change.org/petitions/the-...e-brandon-raub

[A.Wilder]

is this even a real event? it's ONLY showing up on Ron Paul forums and websites in my google search.

[TIGninja]

is this even a real event? it's ONLY showing up on Ron Paul forums and websites in my google search.

The Mainstream media refused to cover SOPA,PIPA, and the NDAAs indefinite detention in the first place, why would they tell you they are using it? There are many alarming things happening right now that you should be alarmed about. Every federal agency is becoming armed to the teeth with military gear, did they tell you that? Hell no.

[A.Wilder]

[TIGninja]

The social security administration is trying to buy 175,000 .357 Duty Carry Sig 125 grain bonded JHP hollow point bullets

The DHS just bought 750,000,000 rounds of ammo. Thats 750 million rounds.

Why do they need this?

More things you do not get in the news.

http://rt.com/usa/news/ndaa-injuncti...detention-376/

[pentaxshooter]

demand is not infinite..

Demand is infinite.

You can't have a consumption based economy without things to consume. Excellent piece on the topic.

[joness0154]

This is the type of **** that has been happening in the real world (not the news you fools watch) while you were arguing about gay marriage. This is our presidents response to the challenge of the NDAA. If we let this man be jailed we will never be able to speak our minds out of fear of this happening to us. This is the first test of our resolve as Americans.

http://www.change.org/petitions/the-...e-brandon-raub

Uh. The idiot was probably arrested because his Facebook posts alluded that he may have been planning something nefarious. With him being trained in use of weapons and with the recent mass shootings, I wouldn't be surprised if they brought him in for questioning.

It has nothin to do with the NDAA

[joness0154]

The social security administration is trying to buy 175,000 .357 Duty Carry Sig 125 grain bonded JHP hollow point bullets

The DHS just bought 750,000,000 rounds of ammo. Thats 750 million rounds.

Why do they need this?

More things you do not get in the news.

http://rt.com/usa/news/ndaa-injuncti...detention-376/

God, not this again.

The SSA has a law enforcement arm. 60+ officers if I remember correctly.

As for DHS, it consists of tens of thousands of armed individuals. CBP, ICE, USCG, USSS, FAMs, etc.

Grow up

[A.Wilder]

God, not this again.

The SSA has a law enforcement arm. 60+ officers if I remember correctly.

As for DHS, it consists of tens of thousands of armed individuals. CBP, ICE, USCG, USSS, FAMs, etc.

Grow up

Your facts can't penetrate the tinfoil.

[Carter N]

The elder wars, they're comin'

[dubraycer36]

Seriously TiG.
The only reason that the SSA bought the ammo, instead of another agency, was for the senior citizen discount.
That's actually smart thinking on the govt's part.

[cockerpunk]

Demand is infinite.

You can't have a consumption based economy without things to consume. Excellent piece on the topic.

no, demand is not infinite because demand is the desire and the money to buy something. since no one has money to buy things right now, demand is very scarce.

literally the first sentence:

http://en.wikipedia.org/wiki/Demand_%28economics%29

In economics, demand is the desire to own anything, the ability to pay for it, and the willingness to pay during a specific period.

please know something about a topic and the terms used to discuss that topic before posting!

[cockerpunk]

why don't the banks have a reason to curtail risk? Do they have any sort of implicit gaurantee from any government agencies? Imagine if the FDIC didn't exist and there was a private market for deposit insurance.

People don't care right now what their bank does with their money for the most part, because the government has told them that if the bank fails, you will get paid through the FDIC. Does this not create any moral hazard? What if you knew that your money wasn't protected? You would probably be a little bit more careful where you put it. An intelligent person may actually want to take a peak at their books to see how the company is run before investing/depositing their money.

The banks would now have more incentive to be more conservative with their investments in order to attract risk adverse customers. Suddenly advertisements would be about how well they manage their money instead of the neat technology they now have.

Imagine if Fannie and Freddie weren't there with their gauranteed line of credit from the Federal Reserve enabling them to buy mortgages and MBS on the secondary market. Where is the risk for the bank in making bad loans if they know they are being purchased? There is none. They don't care, they have a gauranteed customer.

The answer to the moral hazard isn't more regulation. It is deregulation.

yes, another method to solve the moral hazard would be to get rid of FDIC, which i am 100% fine with.

oddly enough the flag of deregulation being flown today makes NO mention of getting rid of this moral hazard ... because they are making too much money at our expense, and paying off the politicians who will keep things nicely the same as they are today ....

also, a deregulation solution would require that you break up the big banks. because even without FDIC, too big to fail would still exist. and the solution that adam smith had for too big to fail was that in NO marketplace should there be too few so that if any one failed, it would cause a systemic failure. so we'd have to go on and break up the big banks. which, i also 100% support.

[cockerpunk]

It is odd of you to describe the last three decades as a failure. 1983 to 2007 was a period of historic growth.

not for the middle class. the middle class actually lost ground, wages went down. nearly all the GDP growth went to the top of the top. supply side economic failure ....

[zukiphile]

not for the middle class. the middle class actually lost ground, wages went down. nearly all the GDP growth went to the top of the top. supply side economic failure ....

That is incorrect in two ways.

First, it is conceptually incorrect to cite an expansion of income in the most productive sector of the population as a failure of supply side stimulus.

Second, it is factually incorrect to complain that the middle class had falling wages and that nearly all the GDP growth went to the "top of the top".

[cockerpunk]

That is incorrect in two ways.

First, it is conceptually incorrect to cite an expansion of income in the most productive sector of the population as a failure of supply side stimulus.

Second, it is factually incorrect to complain that the middle class had falling wages and that nearly all the GDP growth went to the "top of the top".

actually its not, on both counts:

http://teachingwithdata.blogspot.com...and-upper.html

http://www.motherjones.com/files/ima...ne_percent.png

the rise in the income gap is almost exclusively the outcome of supply side economic polices, and the middle class, inflation adjusted, has not improved (ie gone down) since the early 1980s (right when we started on the supply side model).

what happened to trickle down?

[zukiphile]

what happened to trickle down?

It became a linguistic signal for people who misconstrued a supply stimulus as a demand side stimulus.

the rise in the income gap is almost exclusively the outcome of supply side economic polices, and the middle class, inflation adjusted, has not improved (ie gone down) since the early 1980s (right when we started on the supply side model).

Economics has always had a supply side.

actually its not, on both counts:

http://teachingwithdata.blogspot.com...and-upper.html

http://www.motherjones.com/files/ima...ne_percent.png

It can't be a failure of stimulus (or reduced suppression) of the supply side of the economic equation that the sector of the population involved in financing and producing supply sees a growth in income.