How is austerity doing in Europe

[Oldstyle]

Our monetary system in the US is one in which the the FED issues most public sector supplied money in the form of FRNs and bank reserves. This is money originating outside of the domestic private sector, commonly referred to as HPM (High Powered Money) or Base Money.

Secondly, there's no such thing as the government having to borrow or receive tax receipts to spend under our fiat system. Government spending/money creation is nothing more than a balance sheet operation whereby the government spends and lends by changing numbers in a bank account.

Here's another critical concept to understand: the federal government doesn't have or not have dollars. Think about it as a football stadium. The Giants score a touchdown and conversion to throw seven points on the board. After the conversion, it's an additional one point on the scoreboard. Does anyone wonder where the stadium got that extra point? What about if they score a field goal? Do we scratch our heads and wonder where the stadium go those extra three points? Do you think stadiums should keep 'reserve points' or have a point lock box? Of course not, that's silly. The federal government is like the stadium, which doesn't have or not have points to give out. When it comes to the US Dollar, the federal government, working through the Treasury and FED, is the score keeper. They also get to make the rules. There's a huge difference between spending the currency you create and spending the currency someone else creates.

Lastly, contrary to what we learned in college, banks don't lend out or multiply their reserve balances, although they do lend out money for profit over the cost of reserves. Loans effectively create new deposits ex-nihilo. Also, since the majority of money in the US monetary system tends to be credit based, the changing nature of this spread can have a tremendous impact on the supply and demand of credit and the economy as a whole.

The US Government is a football stadium and gives out points? Dude, that's one of the dumbest analogies I've ever heard. I hope for your sake you smoked a fattie before coming up with that nonsense because if that's you operating normally then all I can say is that you have my sympathy.

Yes, to point out that the federal government doesn't have or not have dollars. I'm also trying to help you understand monetary operations through some basic examples. You clearly have been spoon fed misinformation and outright lies about our monetary system. Who told you these things? I'm not being a douche, I'm genuinely curious as to who told you this. I expect this from our political class, such as the Pauls, Paul Ryan or even Obama, because they're ideologues and are have an agenda.

You're trying to help me understand monetary operations by giving me one of the most non-sensical analogies I've ever heard? What does a football stadium and points on a scoreboard have to do with how our Federal Government creates the money it uses to operate? The person who is trying to feed me "misinformation" about our monetary system is you! You're the one who seems to believe that the Federal Government has the ability to simply print whatever money it wants in order to pay it's debts. I'm sorry but THAT is misinformation if not an outright lie. How much money is created is the domain of the Federal Reserve Bank...not the Federal Government. As to who I learned about economics from? One person was Thomas Sowell, whom I had as a professor at Amherst College. Between you and me? I'm quite certain that Doctor Sowell would get a laugh out of your football stadium and points analogy.

 

[EdwardBaiamonte]

This no longer applies because we now use fiat as opposed to convertible currencies.

As I said, when asked by Ron Paul, Bernanke said he operated the Fed as if it was on a gold standard!! A fiat system is not a libturd free lunch system. The liberal government can print and spend trillions and trillions and it won't help to invent one new product or improve our standard of living one tiny bit. Is that really over your head?? What it will do is create mal investment bubbles that will distort the economy and slow growth or cause recessions or depressions. Once again dear there is no free lunch!! Why not write that 100 times
and see if it sinks in???

Ron Paul doesn't understand the monetary system.

too stupid!! you debate by changing the subject!! I didn't say Ron Paul understood the monetary system. I said Bernanke said he managed the Fed as if it was on a gold standard system!!!

Okie dokie. He may have said that, but the reality is quite different. When the financial crisis struck, the federal government created one trillion dollars in one day out of thin air. How would you do that on a gold standard? < ------- trick question or is it?

Also, the FED has engaged in large scale asset purchases since 2008. How would you do that on a gold standard? <-------trick question or is it?

The point is, the FED isn't managed like it's on a gold standard, nor can it be on the monetary side at this point, given the fact we're no longer on a convertible currency.

too stupid an dperfeclty liberal!!!
"The gold standard rule is also a contingent one: in the event of a well-understood emergency, such as a war, the authorities can temporarily suspend convertibility, issue fiat money to finance their expenditures, and sell debt. They understand that the debt will eventually be paid off in gold or in undepreciated paper. The public also understands that the suspension lasts only for the duration of the wartime emergency, plus some period of adjustment. Afterwards the government will adopt the deflationary policies necessary to resume convertibility at the original parity."

The gold standard contingent rule worked successfully for the core countries of the classical gold standard: the United Kingdom, France, and the United States. This was also true for the smaller countries of Western Europe and the British Dominions,

 

[EdwardBaiamonte]

deficits create net financial assets under a fiat system. :

and does this improve our standard of living??????????????????

Isn't thinking fun?? Are you going to try to change the subject again or are you going to answer the question????

I've only explained it ten times, Ed, including the Canada thread. Do you want me to explain it an eleventh time? I can only articulate a concept so many times before it becomes a waste of time.

You argue by evading or changing the subject!!

and does this[debt] improve our standard of living??????

does more and more debt improve our standard of living more and more????

Yes or no??????????????????

 

[EdwardBaiamonte]

The FED simply created bank reserves to accomplish these LSAPs, so I don't see a problem going forward.

You don't but Bernanke and the world do. Who saw a problem going forward in 2006??? Is that little bit of pure ignorance ancient history. Now we are in a perfectly new spot but you're sure central banking is now a simple science that any child or Fed Chairman can manage. That's too stupid!!

"No country has ever had a comparable increase in the size of its portfolio and unwound it “in the precisely analogous way,” Bernanke said in response to questions from members of the House Financial Services Committee. Japan was the only nation to use asset purchases, or quantitative easing, before the U.S. and is “still in that situation,” he said

 

[Truthmatters]

I saw the problem building in 2006 and spoke about it

 

[EdwardBaiamonte]

You're the one who seems to believe that the Federal Government has the ability to simply print whatever money it wants in order to pay it's debts. I'm sorry but THAT is misinformation if not an outright lie.

not only that but he also seems to think that debt is a good thing and the more of it we have the better our standard of lilving!!!

 

[EdwardBaiamonte]

I saw the problem building in 2006 and spoke about it

oh shut up, do you think its not perfectly obvious that you don't know word one about economics???

 

[Oldstyle]

I saw the problem building in 2006 and spoke about it

Now THAT is amusing, TM! At this point it's common knowledge that you know little to nothing about economics...which means the chances of your speaking out about any looming problems are slim and none with slim having just left town.

 

[EdwardBaiamonte]

I saw the problem building in 2006 and spoke about it

Now THAT is amusing, TM! At this point it's common knowledge that you know little to nothing about economics...which means the chances of your speaking out about any looming problems are slim and none with slim having just left town.

And if he had spoken out it would have been just a wild guess anyway!

It seems the liberal imagines he can just will education into existence.

 

[Truthmatters]

go check the site I was on then.

justplainpolitics

Im evince over there.

Its all there

 

[Truthmatters]

BTW the austrian school is the short bus school of economics you silly gits

 

[boedicca]

I love this thread.

Austerity in Europe means cutting the pensions of people who are already retired while increasing taxes on the underemployed.

What we are talking about in the U.S. is slowing down the rate of growth of government.

Even under the Ryan plan (about which the moonbats have the vapors), federal spending is planned to grow at 3.4% a year, with entitlements modified for those 55 and below.

These are hardly equivalent scenarios...and the sooner we enact the latter, we'll be able to avoid the former.

 

[Oldstyle]

go check the site I was on then.

justplainpolitics

Im evince over there.

Its all there

Jesus H. Christ...70,000 plus posts HERE and you post elsewhere as well! Might be time to take off the progressive blinders and get a life...just saying...

 

[Kimura]

The US Government is a football stadium and gives out points? Dude, that's one of the dumbest analogies I've ever heard. I hope for your sake you smoked a fattie before coming up with that nonsense because if that's you operating normally then all I can say is that you have my sympathy.

Yes, to point out that the federal government doesn't have or not have dollars. I'm also trying to help you understand monetary operations through some basic examples. You clearly have been spoon fed misinformation and outright lies about our monetary system. Who told you these things? I'm not being a douche, I'm genuinely curious as to who told you this. I expect this from our political class, such as the Pauls, Paul Ryan or even Obama, because they're ideologues and are have an agenda.

You're trying to help me understand monetary operations by giving me one of the most non-sensical analogies I've ever heard? What does a football stadium and points on a scoreboard have to do with how our Federal Government creates the money it uses to operate? The person who is trying to feed me "misinformation" about our monetary system is you! You're the one who seems to believe that the Federal Government has the ability to simply print whatever money it wants in order to pay it's debts. I'm sorry but THAT is misinformation if not an outright lie. How much money is created is the domain of the Federal Reserve Bank...not the Federal Government.

Spending starts with Congressional Appropriations, sorry. If I'm the federal government, and I take in one trillion in taxes, for example, but I need four trillion, where do I get the additional three trillion? It's done through deficit spending. Government spending creates reserves balances, while taxes and bond destroy them. If we apply some accounting logic to the FED's balance sheet, we see that any changes to the Treasury's balance sheet effect the quantity of reserve balances in circulation. The very act of government spending creates reserve balances under out fiat system.

The US is obligated to pay all debts as they come due. Period. Nevertheless, the national debt cannot be a burden for the federal goverment or its citizens. The US has an unlimited credit card which enables it obtain new debt at interest rates it sets. It can also create any amount of money it needs to pay off debt at whatever limit without increasing its debt, unless the government voluntarily does so by taxing more than it spends.

I'm not saying the federal government should always spend simply because it has the operational ability to do so, that would be insane. Basically, there's no such thing as the federal government not being able to afford to put some idle capacity to work. It's pretty obvious not all fiscal actions are equally efficient or the same.

As to who I learned about economics from? One person was Thomas Sowell, whom I had as a professor at Amherst College. Between you and me? I'm quite certain that Doctor Sowell would get a laugh out of your football stadium and points analogy.

Actually, I've kept my posts quite elementary, without delving into too much technical detail. However, print out my posts and show them to any economist. They'll tell you my explanations are correct from the monetary and operational side. Guaranteed.

So you had Thomas Sowell for some classes? So what? I received my undergraduate degree in Economics from Bocconi Univeristy, which probably has one of the best econ departments on the Continent. I also received my MBA from the Stern School of Business. My econ professors in Italy read like a Who Who's list of economists. What the does that mean? Nothing. Does that make me special? Not in the least.

 

[Kimura]

BTW the austrian school is the short bus school of economics you silly gits

That's not entirely true. Carl Menger and his work on marginal utility was very important for the field of economics. But yeah, guys like Murray Rothbard were clueless. I don't even think the guy understood basic macroeconomics. The von Mises Institute has turned into a den of libertarian ideologues parroting praxeology as some universal truth that we all missed out on.

 

[EdwardBaiamonte]

BTW the austrian school is the short bus school of economics you silly gits

That's not entirely true. Carl Menger and his work on marginal utility was very important for the field of economics. But yeah, guys like Murray Rothbard were clueless. I don't even think the guy understood basic macroeconomics. The von Mises Institute has turned into a den of libertarian ideologues parroting praxeology as some universal truth that we all missed out on.

two silly fools calling names. Why not tell us the most substantial error they made or admit you lack the IQ to do so.

 

[Kimura]

As I said, when asked by Ron Paul, Bernanke said he operated the Fed as if it was on a gold standard!! A fiat system is not a libturd free lunch system. The liberal government can print and spend trillions and trillions and it won't help to invent one new product or improve our standard of living one tiny bit. Is that really over your head?? What it will do is create mal investment bubbles that will distort the economy and slow growth or cause recessions or depressions. Once again dear there is no free lunch!! Why not write that 100 times
and see if it sinks in???



too stupid!! you debate by changing the subject!! I didn't say Ron Paul understood the monetary system. I said Bernanke said he managed the Fed as if it was on a gold standard system!!!

Okie dokie. He may have said that, but the reality is quite different. When the financial crisis struck, the federal government created one trillion dollars in one day out of thin air. How would you do that on a gold standard? < ------- trick question or is it?

Also, the FED has engaged in large scale asset purchases since 2008. How would you do that on a gold standard? <-------trick question or is it?

The point is, the FED isn't managed like it's on a gold standard, nor can it be on the monetary side at this point, given the fact we're no longer on a convertible currency.

too stupid an dperfeclty liberal!!!
"The gold standard rule is also a contingent one: in the event of a well-understood emergency, such as a war, the authorities can temporarily suspend convertibility, issue fiat money to finance their expenditures, and sell debt. They understand that the debt will eventually be paid off in gold or in undepreciated paper. The public also understands that the suspension lasts only for the duration of the wartime emergency, plus some period of adjustment. Afterwards the government will adopt the deflationary policies necessary to resume convertibility at the original parity."

The gold standard contingent rule worked successfully for the core countries of the classical gold standard: the United Kingdom, France, and the United States. This was also true for the smaller countries of Western Europe and the British Dominions,

Stop it.

The gold standard was a disaster. The gold standard gave us the the Panic of 1819, 1825, 1837, 1847, 1857, 1866, 1873, 1884, 1890, 1893, 1907, and the Great Depression. We're looking at a total of ten panics in the 19th century, of which five were followed by a deep recession and/or depression. Despite my issues with the FED, the US has done WAY better under a fiat system.

Also, the very nature of a gold standard requires a fixed quantity of money. In the case of France and the UK, the result was mercantilism because countries needed to obtain more sources of gold.

 

[Norman]

Yes, to point out that the federal government doesn't have or not have dollars. I'm also trying to help you understand monetary operations through some basic examples. You clearly have been spoon fed misinformation and outright lies about our monetary system. Who told you these things? I'm not being a douche, I'm genuinely curious as to who told you this. I expect this from our political class, such as the Pauls, Paul Ryan or even Obama, because they're ideologues and are have an agenda.

You're trying to help me understand monetary operations by giving me one of the most non-sensical analogies I've ever heard? What does a football stadium and points on a scoreboard have to do with how our Federal Government creates the money it uses to operate? The person who is trying to feed me "misinformation" about our monetary system is you! You're the one who seems to believe that the Federal Government has the ability to simply print whatever money it wants in order to pay it's debts. I'm sorry but THAT is misinformation if not an outright lie. How much money is created is the domain of the Federal Reserve Bank...not the Federal Government.

Spending starts with Congressional Appropriations, sorry. If I'm the federal government, and I take in one trillion in taxes, for example, but I need four trillion, where do I get the additional three trillion? It's done through deficit spending. Government spending creates reserves balances, while taxes and bond destroy them. If we apply some accounting logic to the FED's balance sheet, we see that any changes to the Treasury's balance sheet effect the quantity of reserve balances in circulation. The very act of government spending creates reserve balances under out fiat system.

The US is obligated to pay all debts as they come due. Period. Nevertheless, the national debt cannot be a burden for the federal goverment or its citizens. The US has an unlimited credit card which enables it obtain new debt at interest rates it sets. It can also create any amount of money it needs to pay off debt at whatever limit without increasing its debt, unless the government voluntarily does so by taxing more than it spends.

I'm not saying the federal government should always spend simply because it has the operational ability to do so, that would be insane. Basically, there's no such thing as the federal government not being able to afford to put some idle capacity to work. It's pretty obvious not all fiscal actions are equally efficient or the same.

As to who I learned about economics from? One person was Thomas Sowell, whom I had as a professor at Amherst College. Between you and me? I'm quite certain that Doctor Sowell would get a laugh out of your football stadium and points analogy.

Actually, I've kept my posts quite elementary, without delving into too much technical detail. However, print out my posts and show them to any economist. They'll tell you my explanations are correct from the monetary and operational side. Guaranteed.

So you had Thomas Sowell for some classes? So what? I received my undergraduate degree in Economics from Bocconi Univeristy, which probably has one of the best econ departments on the Continent. I also received my MBA from the Stern School of Business. My econ professors in Italy read like a Who Who's list of economists. What the does that mean? Nothing. Does that make me special? Not in the least.

Damn, You don't seriously believe this do you?

Sounds like economic school of "free stuff".

It's pretty alarming that you have a PHD, and think debt can't be a burden cause you can just print money. As if that's no problem at all...


I can continue your line of thinking with government without a printing press. Instead of printing money they can just default, their debt account goes to zero, and people's govt debt assets account go to zero as well. NO PROBLEMO. It's this simple! WHAA! All we need to do is alter some accounts and that will cure cancer as well!

Thing is, the debt needs to be paid, and you need taxes to pay it. So people will have to pay more taxes either through inflation, or just normal taxes. No way around it. Even if you print the debt, then you can't print to spend then so you lose that, so you WILL have to pay for the debt. There is no free lunch I am afraid.

 

[Oldstyle]

Yes, to point out that the federal government doesn't have or not have dollars. I'm also trying to help you understand monetary operations through some basic examples. You clearly have been spoon fed misinformation and outright lies about our monetary system. Who told you these things? I'm not being a douche, I'm genuinely curious as to who told you this. I expect this from our political class, such as the Pauls, Paul Ryan or even Obama, because they're ideologues and are have an agenda.

You're trying to help me understand monetary operations by giving me one of the most non-sensical analogies I've ever heard? What does a football stadium and points on a scoreboard have to do with how our Federal Government creates the money it uses to operate? The person who is trying to feed me "misinformation" about our monetary system is you! You're the one who seems to believe that the Federal Government has the ability to simply print whatever money it wants in order to pay it's debts. I'm sorry but THAT is misinformation if not an outright lie. How much money is created is the domain of the Federal Reserve Bank...not the Federal Government.

Spending starts with Congressional Appropriations, sorry. If I'm the federal government, and I take in one trillion in taxes, for example, but I need four trillion, where do I get the additional three trillion? It's done through deficit spending. Government spending creates reserves balances, while taxes and bond destroy them. If we apply some accounting logic to the FED's balance sheet, we see that any changes to the Treasury's balance sheet effect the quantity of reserve balances in circulation. The very act of government spending creates reserve balances under out fiat system.

The US is obligated to pay all debts as they come due. Period. Nevertheless, the national debt cannot be a burden for the federal goverment or its citizens. The US has an unlimited credit card which enables it obtain new debt at interest rates it sets. It can also create any amount of money it needs to pay off debt at whatever limit without increasing its debt, unless the government voluntarily does so by taxing more than it spends.

I'm not saying the federal government should always spend simply because it has the operational ability to do so, that would be insane. Basically, there's no such thing as the federal government not being able to afford to put some idle capacity to work. It's pretty obvious not all fiscal actions are equally efficient or the same.

As to who I learned about economics from? One person was Thomas Sowell, whom I had as a professor at Amherst College. Between you and me? I'm quite certain that Doctor Sowell would get a laugh out of your football stadium and points analogy.

Actually, I've kept my posts quite elementary, without delving into too much technical detail. However, print out my posts and show them to any economist. They'll tell you my explanations are correct from the monetary and operational side. Guaranteed.

So you had Thomas Sowell for some classes? So what? I received my undergraduate degree in Economics from Bocconi Univeristy, which probably has one of the best econ departments on the Continent. I also received my MBA from the Stern School of Business. My econ professors in Italy read like a Who Who's list of economists. What the does that mean? Nothing. Does that make me special? Not in the least.

Italian economists? Since Italy's economy has been in the shitter for so long Mr. Whipple should be running things, I'm not sure I'd be using THAT as a testimonial for your economic chops, Kimura! If Italy has such great economists then why is the country perpetually facing bankruptcy?

 

[Rshermr]

You're trying to help me understand monetary operations by giving me one of the most non-sensical analogies I've ever heard? What does a football stadium and points on a scoreboard have to do with how our Federal Government creates the money it uses to operate? The person who is trying to feed me "misinformation" about our monetary system is you! You're the one who seems to believe that the Federal Government has the ability to simply print whatever money it wants in order to pay it's debts. I'm sorry but THAT is misinformation if not an outright lie. How much money is created is the domain of the Federal Reserve Bank...not the Federal Government.

Spending starts with Congressional Appropriations, sorry. If I'm the federal government, and I take in one trillion in taxes, for example, but I need four trillion, where do I get the additional three trillion? It's done through deficit spending. Government spending creates reserves balances, while taxes and bond destroy them. If we apply some accounting logic to the FED's balance sheet, we see that any changes to the Treasury's balance sheet effect the quantity of reserve balances in circulation. The very act of government spending creates reserve balances under out fiat system.

The US is obligated to pay all debts as they come due. Period. Nevertheless, the national debt cannot be a burden for the federal goverment or its citizens. The US has an unlimited credit card which enables it obtain new debt at interest rates it sets. It can also create any amount of money it needs to pay off debt at whatever limit without increasing its debt, unless the government voluntarily does so by taxing more than it spends.

I'm not saying the federal government should always spend simply because it has the operational ability to do so, that would be insane. Basically, there's no such thing as the federal government not being able to afford to put some idle capacity to work. It's pretty obvious not all fiscal actions are equally efficient or the same.

As to who I learned about economics from? One person was Thomas Sowell, whom I had as a professor at Amherst College. Between you and me? I'm quite certain that Doctor Sowell would get a laugh out of your football stadium and points analogy.

Actually, I've kept my posts quite elementary, without delving into too much technical detail. However, print out my posts and show them to any economist. They'll tell you my explanations are correct from the monetary and operational side. Guaranteed.

So you had Thomas Sowell for some classes? So what? I received my undergraduate degree in Economics from Bocconi Univeristy, which probably has one of the best econ departments on the Continent. I also received my MBA from the Stern School of Business. My econ professors in Italy read like a Who Who's list of economists. What the does that mean? Nothing. Does that make me special? Not in the least.

Italian economists? Since Italy's economy has been in the shitter for so long Mr. Whipple should be running things, I'm not sure I'd be using THAT as a testimonial for your economic chops, Kimura! If Italy has such great economists then why is the country perpetually facing bankruptcy?

Funny. Oldstyle, being a con tool, uses Sewell as his source over and over. Sewell is a libertarian, closely related to a number of conservative nut case web sites, among others. But mostly, Sewell is related to CATO, todays version of the John Birch Society. And the primary "think tank" for the libertarian point of view. Oddly enough, the source of payment to many willing to push their libertarian thinking. If you want to make big bucks, coming out of college with a grad degree in, say, economics, like oh, say, Sewell, then all you have to do is push their agenda. Which is, of course, the agenda of the Koch brothers, who FOUNDED and have RUN CATO.

So there you have it. Oldstyle's source for economic thought. An economist from the ragged edge of the far far far right wing. Who is unable, of course, to provide a single successful example of the economic agenda which he pushes, as there are no successful libertarian economies. Yet Oldstyle pushes this clown's economic theories. Funny. Sad, but funny.

But what is really sad is that Oldstyle has the complete ignorance needed to say that Italian economists must be stupid since the Italian economy, in his learned opinion, is not doing well. Apparently, he thinks that economists, not politicians, make the decesions that determine the economic wellbeing of a nation.

And, what is really, really funny is that Oldstyle, having had two whole classes in economics, can criticize the economic thoughts of anyone. Oldstyle, who claims to have a history degree, but has spent his years in the "food services" business. Never used his degree. Total waste of time. But has a job so important that he is allowed to post his conservative dogma all day on this board. Anyone else out there that was allowed to post on a political or economic site all day while he is on the clock??