Why is the only solution proposed by the left soaking the rich.

What work would that be?

 

GDP currently is $15 trillion.

But that's an interesting question. I haven't studied it, but my guess would be that based on the flow of money, most of what is received in payment for goods and services gets cycled back in the form of salaries, wages, incomes, dividends and other forms of income.

This Wiki article discusses the relationship between production and income:

http://en.wikipedia.org/wiki/Gross_domestic_product

This the breakout of income reported by the BEA:

http://bea.gov/national/nipaweb/TableView.asp?SelectedTable=58&Freq=Qtr&FirstYear=2009&LastYear=2011

Or http://bea.gov/national/nipaweb/SelectTable.asp?Selected=N Table 2.1 if that link doesn't work.

 

No, that is actually how it turns out. I was pretty surprised the first time I learned that fact.

One easy way to validate it is to work backwards from Medicare receipts. The government took in $196B in medicare receipts in 2010. Since medicare equals 2.9% of gross income, that equates to $6.7T in regular personal income.

Since medicare comes only from ordinary income, not from capital gains, dividends, interest, retirement, social security or any other such income, it is easy to believe that just as much income comes from those sources as from standard income.

 

I don't need to, because your perspective has been expressed here repeatedly. It is atypical of wealth, and other corporate "business" traits.

 

False. Put a 1% tax on financial transactions and see the deficit drop in half overnight.

The point is not closing the deficit. The point is improving the economy. Anything that takes money out of the paper economy and moves it into the real economy is good for the GDP. Taxing the rich does that. Which is why we should do it.

False. Government spending is part of the GDP. Cutting spending cuts the GDP directly. In the current economy, cutting government spending is the worst possible policy.

Because it's a bad idea.

Budget problems are trivial compared to economic problems. Keep your eye on the ball.

 

this 1% will be reflected in the yields of the bods the government sells, or do you feel that bond buyers will be willing to accept a greater real negative yield ?

 

GDP includes governmental spending. Since Obama is spending like a drunken sailor on shore leave to the tune of >$3Trillion/year, the GDP is inflated by that amount. That puts your wage vs GDP stat even further out of whack.

 

Our deficit for the Fiscal Year ending tomorrow is over $1,301 TRILLION. The economy is producing $289 billion less revenue than the BEST YEAR the US ever had, FY 2007. That year we took in $2,568 trillion and spent $2,729 trillion, for a deficit of $161 billion. Now we are taking in $289 billion less revenue but spending $836 billion more.

Revenue is not the problem, SPENDING IS!

 

Buyers of IPOs, initial stock offerings, and initial bond offerings are exempt, because we want those things to happen. If you buy from any other source as an "investment", you're dinged. And if you buy and sell short term for short term gains, you're dinged over and over.

With this change, maybe corporations will start thinking about the long term instead of this quarter.

 

Anyone that mistakenly believes that corporations aren't ALWAYS thinking about this quarter, next quarter, next year, 5 years, 10 years, and 25 years doesn't know anything about corporations.

It is precisely long term planning that has corporations on the sidelines with this present government idiocy. They can't plan for next week with this ideologically insane administration.

 

All the more reason to raise taxes on the rich.

When was the last time a government deficit cost you a job? Never. It doesn't work that way. Government spending is part of GDP. All spending is part of GDP. In fact, GPD is spending, for real things in the real economy. That's how it's defined: GDP = consumer spending + government spending + business spending on real plant and equipment (plus an import/export adjustment, which is also real things).

So when government spending goes down, GDP must also go down unless it's offset somewhere else. (In the current economy, that ain't happening.) Lack of spending means lack of demand, and lack of demand means factories and businesses close and people lose jobs.

So if we want the economy to improve -- and I assume you do -- we must increase spending. If you're worried about the deficit impact of that, it means that the spending should be paid for by tax increases rather than borrowing. And if you're worried about the economic impact of taxation, that means we should tax the rich, which moves money out of the paper economy and into the real economy, where it's needed.

 

Wandering through the convoluted wonderland that is the liberal "mind" is a curious trip indeed.

How is it that just 4 years ago, with a trillion less deficit spending that no one starved?

 

Why isn't it happening in the current economy? What is keeping the economy from spending?

Well all this spending and no demand...Gee, wonder why.

When people try to quantify a country’s "need" for this or that product or service, they are ignoring the fact that there is no fixed of objective "need." Spending only creates a fixed quantity demand. If there is real demand the market will know, not the Government. Government spending will never fix the problem. It's the equivalent of putting out a fire by pouring gasoline on it.

 

Curious but unrefuted, I see.

The same reason nobody's starving now: Food stamps. In other words, government spending.

 

As in all recessions, it's fear. Consumers fear losing their job, so they spend less. Banks fear businesses will go under, so they loan less. Loans provide a great shot in the arm for the economy, because they move a big chunk of money from the paper economy into the real economy. That's why the Fed typically lowers interest rates to end a recession: lower interest means more loans, which pumps money into the real economy.

But right now the interest rates are already virtually zero, so the Fed can't lower rates. Which means we're screwed unless we can gin up spending some other way.

Current US deficit is less than 5% of GDP. During WWII it was over 20%, and that's what pulled us out of the Great Depression.

So when a factory gets a government order, it "knows" not to expand, and when it gets a private order, it "knows" expansion is needed? What nonsense. Demand is demand, regardless of the source. Dozens of businesses expand when they get government contracts. It happens all the time.

And sometimes when a businesses lose government contracts, factories close and people lose jobs. That happens all the time too.

Government spending pulled us out of the Great Depression, and it could pull us out of this too -- if only the deficit hawks would get a clue.

 

So then why did we run up deficits over $4.5 trillion in the last 4 years?

 

Government spending on a colossal scale pulled us out of the Great Depression in a MERE 15 YEARS. That's the liberal plan?

As I said, wandering through the wasteland that is the liberal "mind." is interesting. Unsettling, and curious, but interesting.

 

More people out of work = more demand for government services. It happens every time there's a recession.

 

Oh really? We lowered interest rates back in 2003 and where did it get us? It got us 2008. We got all of this damage with 1 percent. Imagine all the damage we are going to get with just 0 percent.

Yeah we are screwed alright. We're pretty much starting a depression and most economist speculate another dip recession. Unlike other recessions, this one is starting with unemployment already at 9 percent. Starting with interest rates already at zero. Spending is not the problem nor is it the solution.

Spending for the sake of spending means absolutely nothing. What if you spent $1 million dollars and bought nothing but air? How will that benefit anyone, let alone the economy? You can sure bet that it'll benefit the person who sold you that air. Using modern methods of economic accounting (GDP) just makes it look like a legit activity and would be accounted as $1 million dollars in economic growth. But buying air does not improve the economy as a whole. Something has to be produced in order to give the spending any form of value.

Even adjusted for inflation that is an apples/oranges comparison.

Try again.

Because that's what the government needs and it tries to quantify needs for the economy. What the government needs is not what the private sector needs. Only individuals can know what their abject needs and demands are.

Prices are too high for any abject private sector demand. When prices come down, they will be demand and that's demand which doesn't cost the government a penny.

Spending out us out of the Great Depression, eventually. Most people don't want to have another wasted 11 year and people don't want to have another war on top of the 3 wars we are already a part of. Government spending got us 17 years of the Great Depression. Repeating history is not fun, if only the economic illiterates understood.

 

We didn't have a collapsed housing market, financial crisis, and relatively high unemployment.

 

Balanced-budget hawk Hoover was in office until 1933, so no "colossal scale" spending there. FDR came in in '33 and started large government spending programs. Result: economy improved dramatically, until 1937. That's because Republicans came back to Congress in large numbers in the election of '36 and insisted, in spite of all evidence to the contrary, that deficits were a bad bad thing. Result: deficit decreased, economy tanked again.

Things stayed pretty much that way until 1942, when we (finally!) got truly colossal scale government spending, for all of three years (not fifteen). Result: economy back on track.

 

The Fed first started lowering interest rates in 2001 because of the economic slowdown. The hit bottom in 2003 and started increasing again in 2004.

I'm not aware that is true. Do you have a source?

Why do you think we are in another recession?

The seller of air would have a million he'd spend.

How are prices going to come down?


Spending out us out of the Great Depression, eventually. Most people don't want to have another wasted 11 year and people don't want to have another war on top of the 3 wars we are already a part of. Government spending got us 17 years of the Great Depression. Repeating history is not fun, if only the economic illiterates understood.[/QUOTE]

 

Because they want to continue to spend and getting someone else to pay for it is easier than paying for it themselves. Talking about taking someone else's money is really easy. I needed to explain this to you?

 

oh well, thanks for the warning, I just cant help myself though

You mean the Bakken Shale deposit? They are tapping it. How big is it? In theory big enough to supply the USA for 6 months. Currently it provides about 1% of USA's consumption. It wasnt exploited much before due to enormous difficulties in getting the oil there.

look, America had proven oil reserves in 2009 equivalent to just 3 years use. Is that enough to get excited about?

Let's deal in numbers.

America uses 7 billion barrels of oil per year. The Bakken Shale contains 4,3 billion barrels of difficult to get out oil.

America uses 25% of global oil, despite having only 5% of the worlds people.

numbers and details please. The Chukchi Sea is in the Arctic ocean. It has 30 billion barrels, enough to keep the world in oil for a whole year. Whoopee!

The deep water in the Beaufort sea is not drilled because the technology does not exist.

Drilling in the Arctic is not easy by the way.

Yes, 21 billion, three years supply. Yes America is producing oil, about 5 million barrels per day, that's about 1.8 billion barrels a year.

Havent you? Go on, mention them. Ethiopia, tell me, how much oil does it have? Do you realise these countries are well down the list of proven reserves?

But we have, most of our proven reserves were discovered decades ago. There are no big new discoveries.



Yep, that's a nice graph and all but they were wrong in 1919 when they said that there was only 20 years remaining. They were wrong when the Federal Oil Conservation Board estimated 4.5 billion barrels remain in 1926. They were wrong when they in 1944 when Petroleum Administrator for War estimated 20 billion barrelsof oil remain. They were wrong in 1956 when M.King Hubbard predicted that we would have peak oil production by 1970. And finally they were wrong in 2008 when your "Geologist" said that we are approaching our peak when in fact we have 1.3 Trillion of oil reserves on earth "proven." Not to mention proven oil reserves are not the measure of the future supply of oil.[/quote]

We do have 1.4 trillion reserves. That's enough to last us 120-500 years. But only 30% of it is conventional oil. The easiest stuff has mostly been tapped and the dregs are harder to exploit. Plus, demand in China and India is gonna rocket. The International Energy Agency (IEA) says production of conventional crude oil peaked in 2006.

They werent wrong in 1919 etc, they presumably talked about known reserves. We were only just starting to use oil in 1919, although it was a factor in causing WW1 in my opinion.

I dunno what you mean about being wrong in 2008, what big new discoveries have been made since then?

Anyway, who cares? If we dig it all up and burn it we simply shag up the climate even more.

 

Did you ask Paul Krugman?

http://www.realclearpolitics.com/video/2011/09/14/paul_krugman_were_in_a_depression.html

I don't think we left the recession. I said economist speculate another dip.

Yes we will and whether or not he chooses to save it with low interests rates or spend it on someone valuable or worthless is up to him. Since everything produced will eventually be consumed, why does it matter?

Deflation.