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  #21  
Old August 28th, 2011, 08:59 AM
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Originally Posted by blackjack avenger View Post
Obama stepped up attacks in Yemen, Pakistan & went into Libya.
Got bin laden so easy to declare victory & come home from Afghanistan.

Obama was president & gave the Democratic controlled house reign over stimulus spending. He did not know our infrastructure was failing? He is a combination of ignorant & inept.

He has put the clamps on energy in this country. Ignorant & inept. Our armies are stomping all over the world because of energy while we dont drill here. Russia is once again becoming a super power because of oil & Iran is making the bomb.

Wow, everything is so simple when you're a dictator.
  #22  
Old August 28th, 2011, 12:44 PM
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What up with that? Can you explain? I am not challenging; I just want to understand what you are saying.
The foundation of stimulus spending is a theory called the "balanced budget multiplier". Keynesians believe that when the government spends money, it creates an increase in GDP of 1/the marginal tax rate. So, if the tax rate is 20%, the assumption is that if the government spends $1, the private sector will be stimulated to spend $4, and GDP will grow by $5.

The problem is that whenever this has been studied, the balanced budget multiplier has been found to be far less than expected, usually less than zero. So the whole assumption underlying economic "stimulus", namely that each dollar spent by the government will stimulate the economy several times, is false.

Furthermore, in order to "stimulate" the economy, we have to take money out of the economy. This of course harms the economy, a phenomenon called "deadweight loss". For example, if the government added a $10,000 tax on all cars, the car market would collapse. Now, we can borrow the money for stimulus, but this only postpones the cost of the stimulus.

So, we harm the economy by paying for stimulus, and the stimulus doesn't help the economy as it is claimed. Therefore, we should stop government stimulus programs.
  #23  
Old August 28th, 2011, 12:49 PM
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And where are you copying this nonsense from?
  #24  
Old August 28th, 2011, 01:37 PM
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Originally Posted by blackjack avenger View Post
Obama stepped up attacks in Yemen, Pakistan & went into Libya.
Got bin laden so easy to declare victory & come home from Afghanistan.

Obama was president & gave the Democratic controlled house reign over stimulus spending. He did not know our infrastructure was failing? He is a combination of ignorant & inept.

He has put the clamps on energy in this country. Ignorant & inept. Our armies are stomping all over the world because of energy while we dont drill here. Russia is once again becoming a super power because of oil & Iran is making the bomb.
Under a Republican President in 2012 you can look forward to more adventures in the middle east, including a continuing presence in Afghanistan and Iraq, possibly some spending on deteriorating infrastructure, more home drilling initiatives but perhaps not enough push into cleaner fuels such as natural gas, wood, solar, et al, and continued forays in all parts of the world regarding oil over the bodies of American soldiers, as if it were our right to the oil of other countries.

If I were to rank the issues, I would put dependence on foreign oil highest, because maintaining that external source is costing so many American lives and even more lives in the other nations of the world. I also put it first because it can be done quickly, and because the bringing of a large number of our troops back from foreign wars/actions would save huge amounts of military spending.

Quickly behind this priority, I would put facilitating the creation of new jobs, by repealing the current healthcare plan; initiating the development of a new, more consensus healthcare plan centered mainly in the private sector; eliminating those regulations that demonstrably do more harm than good; eliminating the revolving door between government and business thereby ensuring that regulators have the best interests of citizens at hand; lowering of business tax rates to give the private sector a shot in the arm; and directing funds toward the rebuilding of America's deteriorating infrastructure.

Next, I would put serious cuts in spending. The cessation of the US wartime military machine would be helpful in this; also, the cutting back of all government programs that do demonstrate their value in terms of results, not rhetoric-- nothing would be sacred. All of this would be rolled up in the implementation of a plan to reduce the national debt and to balance the budget.

While investing in energy sources at home, I would make the clean burning of necessary dirty fuels a priority, as well as, providing serious incentives to move toward cleaner fuels, one of them, natural gas of which we have an abundant supply, but not to exclude advancements in non-fossil fuels. Since these steps would be costly, the cuts in other programs would be all the more necessary. We cannot have everything; we must instead prioritize.

My plan is probably full of holes, errors and difficulties, but I think it is good to try to flesh these things out, providing a straw man to encourage discussion and hopefully to arrive at greater insight.
  #25  
Old August 28th, 2011, 01:50 PM
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Originally Posted by moo321 View Post
The foundation of stimulus spending is a theory called the "balanced budget multiplier". Keynesians believe that when the government spends money, it creates an increase in GDP of 1/the marginal tax rate. So, if the tax rate is 20%, the assumption is that if the government spends $1, the private sector will be stimulated to spend $4, and GDP will grow by $5.

The problem is that whenever this has been studied, the balanced budget multiplier has been found to be far less than expected, usually less than zero. So the whole assumption underlying economic "stimulus", namely that each dollar spent by the government will stimulate the economy several times, is false.

Furthermore, in order to "stimulate" the economy, we have to take money out of the economy. This of course harms the economy, a phenomenon called "deadweight loss". For example, if the government added a $10,000 tax on all cars, the car market would collapse. Now, we can borrow the money for stimulus, but this only postpones the cost of the stimulus.

So, we harm the economy by paying for stimulus, and the stimulus doesn't help the economy as it is claimed. Therefore, we should stop government stimulus programs.
I remember studying the multiplier effect centuries ago when I was in school. At that time they had not as yet dis-proven the theory. Thanks.
  #26  
Old August 28th, 2011, 08:23 PM
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I remember studying the multiplier effect centuries ago when I was in school. At that time they had not as yet dis-proven the theory. Thanks.
And still haven't. For some reason, Nobel laureates still believe it.
  #27  
Old August 28th, 2011, 09:24 PM
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Pity the Congress refuses to allow the economy to be stimulated. Kind of like someone demanding that CPR is bad for a heart attack victim. Actual economists know what to do, although they obviously disagree on exact details. Tea Party candidates say we should actually reduce the flow of money, and pray.
Stimulated with what, the printing of worthless paper? Turning the US dollar into the monetary equivalent of a junk bond?

Keynesian economics has been a dismal, utter failure. Mere "flow of money" produces nothing; the money only benefits a society (as opposed to a few individuals within that society) when it is an effect of the production of wealth, something we have given up on in the US. There are only two ways to produce wealth- manufacturing and harvesting of resources, and the current administration is waging war on both of them.
  #28  
Old August 28th, 2011, 09:47 PM
Xenophon Xenophon is offline
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The debate between classical "Laissez-faire" or, "let it be" economics and Keynesian economics is far from over.

There are still staunch proponents of both schools of thought, and also of course moderate economists that believe that depending on the situation a combination of both or either individually could be warranted.

Neither theory has been proven nor disproven. This is mainly because no set of circumstances is exactly the same when policy is set. For example, during the financial crises there were proponents and opponents for the bank bailouts.

We cannot have a controlled study of "what happens without a bailout," and what has happened due to the bailouts. Therefor we can't really compare the two decisions fairly.

There was heated debate over if we should have a stimulus (Keynesian) and how big it should be, during the last recession.

All you need to know about classical (similarly Austrian economics) and Keynesian is completely covered in the music video via the link below.

http://econstories.tv/2011/04/28/fig...y-music-video/
  #29  
Old August 28th, 2011, 09:58 PM
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I remember studying the multiplier effect centuries ago when I was in school. At that time they had not as yet dis-proven the theory. Thanks.
The fallacy behind it is that the government needs to take it from the private sector, preventing the private sector from spending the money, in order to spend it themselves.

This is a problem because when the private sector spends money, we want maximum value for it based on our own perceptions and desire to increase our wealth in the future. E.g. when construction worker buys a new truck, he wants a truck that is reliable, powerful, and as efficient as can be and still do the job because he doesn't want to pay out all his money for fuel. He also wants to pay as little as possible for it. So this guy is putting pressure on the truck manufacturers to design and build a high quality and affordable product, he hands the dealer a check for the purchase price and drives away.

When the government buys trucks, the first thing they do is pay for some studies. And now they need it to be a "green" truck that won't hurt the fishies and the birdies. And then there are diversity considerations- does the dealer hire enough Biafran midget lesbians in wheelchairs? Finally there's the big one- everybody in government has their political patrons and that's who is going to get the business. Note none of this has anything to do with the quality or the price of a truck. What does the congressman care about that? He rides in a limo, not a truck. This is why money spent by the government is not multiplied- money spent by people and companies who have to live with the consequences of their spending decisions is.
  #30  
Old August 28th, 2011, 10:16 PM
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Originally Posted by Automatic Monkey View Post
Stimulated with what, the printing of worthless paper? Turning the US dollar into the monetary equivalent of a junk bond?

Keynesian economics has been a dismal, utter failure. Mere "flow of money" produces nothing; the money only benefits a society (as opposed to a few individuals within that society) when it is an effect of the production of wealth, something we have given up on in the US. There are only two ways to produce wealth- manufacturing and harvesting of resources, and the current administration is waging war on both of them.
Careful AM!!!!!! Qfit will pull the "ignore" cord on ya, just like me and Tthree....
Tread lightly.

Machinist
 

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