How Money Works

[Schneibster]

This excellent example of how money works has been around since the late 1970s, and it makes many things clear. Among them, why I keep saying Libertardians don't understand economics.

Read it and comprehend. Many things that are now opaque and seem complicated will suddenly attain clarity and obviousness and simplicity.

http://www.slate.com/articles/business/ ... onomy.html

[Drewish]

Read it. Overly simplistic. You're not actually making an argument with it (and Krugman wasn't making much of an argument either.) Please continue your mental masterbation though, it's amusing.

[Schneibster]

Overly simplistic.

Do tell us how.

ETA: That's what I thought.

You don't know how. You just know it's wrong because it's not truthy.

[Tero]

Yes.

Explain how governments never can save up for coming financial disasters. Everything is always spent.

[Schneibster]

We've forgotten what we already knew.

Actually, it's been covered up by greedy rich people who didn't want to admit what we already knew. They started a propaganda campaign in 1964 that eventually resulted in the Libertardians. Like most people, rich people have an average IQ of 100, and unlike most people, nearly half of all rich people are sociopaths. So what the most extreme of them have done is not only brutal to most of us, but stupid and not in the interests of the people who are doing it. Sociopaths are just as likely to be stupid as everyone else is. But they can afford to pay for their ideas to be promulgated by propaganda. See how that works?

You can read about the start of that here.

[Schneibster]

Yes.

Explain how governments never can save up for coming financial disasters. Everything is always spent.

Tell me about it. My government had a huge trust fund with trillions of dollars in it to help old people have enough to live. We'd been saving it up for fifty years. The greedy sociopath party got in there and spent it all on tax breaks for themselves and their pals and an unnecessary war and a fake scheme supposed to reduce drug costs that actually funneled money to more of their cronies. It's not crony capitalism, it's crony thievery.

Now we're "out of money." That's so they can keep wages down by scaring everybody who's not rich that they'll die indigent.

[Seth]

Read it. Overly simplistic. You're not actually making an argument with it (and Krugman wasn't making much of an argument either.) Please continue your mental masterbation though, it's amusing.

Much more than overly simplistic, it's outright mendacious and deceptive, as I'd expect from leftist Krugman.

First, it assumes a closed-loop system in which the only babysitting resources are other co-op members when in fact in reality there would be plenty of teen-age entrepreneurs out there willing to discount their babysitting services to undercut the scrip rate in return for scrip that can be used for other purposes besides babysitting, like buying iTunes music and cell phones.

Second, it falsely presumes that the purpose of an economy is to be "fair" to everyone and give everyone the opportunity to maximize their return on labor investment. It's not. Krugman doesn't want to accept that fact, which is unsurprising, since he's a closet socialist to begin with.

The truth is that if people in Japan don't want to spend their money, they don't have to spend their money, and the economy will just have to suck it up and find another way to induce them to spend it other than by deliberately devaluing it to coerce them into spending it before the government inflates it out of existence, which is what Bernanke and the Fed are trying to do right now, and what FDR tried to do with his "undistributed profits tax" of 1935.

When people don't spend their money, it's either because they fear the economic uncertainty caused by government meddling with the free markets that makes capital investment risk impossible to calculate and so they want to conserve their capital in case they have to live off their principal, or the marketplace isn't providing them with options for goods and services they need and want.

Right now, it's the former. By creating regulatory and tax uncertainty, Obama has managed to make not just private investors, but businesses themselves hoard cash rather than spending it on consumption or business expansion. That's a perfectly appropriate response to unpredictable capital investment risks and a volatile stock market caused by tax and regulatory overreach and uncertainty. Most people are unwilling to risk their nest-eggs in such an unstable economy and I don't blame them a bit. I certainly won't, and all my money is sitting under my mattress waiting for Obama to exit stage left.

And contrary to what that ass-hat Krugman thinks, you can't regulate people into spending. FDR tried it, it didn't work and the law was repealed in 1938. Obama and Bernanke are trying it through currency manipulation by the Fed, and it's not working either. Nor will it, because business has sufficient capital hoarded away to outlast the Obama administration, and that's exactly what it's going to do.

And that's the way that the markets deal with regulatory uncertainty like this. They contract and hoard cash so as to deprive the cancer at the center (the Obama administration in this case) of nourishment and support (tax revenues and political support), and wait things out until the cancer has eaten itself into oblivion and has been replaced with healthy tissue (a new administration that provides regulatory and tax certainty and supports the efforts of markets to advance freely), at which point the body politic flourishes, just as it did under Reagan when he lowered taxes and reduced regulatory burdens and provided economic predictability to the markets.

[Seth]

The greedy sociopath party got in there and spent it all on tax breaks for themselves and their pals and an unnecessary war and a fake scheme supposed to reduce drug costs that actually funneled money to more of their cronies. It's not crony capitalism, it's crony thievery.

This, of course, is crystal-clear revisionist idiocy.

It wasn't the Republicans who raided the SS trust fund, it was by and large the Democrats who raided it to pay for more and more entitlement programs and pork projects to garner votes.

Government doesn't "spend" anything on "tax breaks," and only a dunce would think so. This particular bit of liberal stupidity is based on the fallacious presumption that all profits in the economy belong to the government and when the government issues a "tax break" it's "giving back" something that it was entitled to take in the first place.

This is yet more socialist idiocy. A "tax break" is not "spending," it's a decision not to collect a tax. Only ass-hat Progressives and liberals consider taxes not collected as government income lost, based on the idiotic notion that people work for the benefit of the government and the government "allows" them to keep the fruits of their labor as it sees fit, and therefore can count whatever amount it proposes to collect as revenues collected already.

That's not how taxation works, however. The way it works is that people earn money, and the government collects a portion of that earned income as taxes, but ONLY IF THE INCOME IS ACTUALLY EARNED. It doesn't collect taxes on what it THINKS someone should be earning, just on what they actually DO earn, which means that a faulty forecast by Congress or the IRS as to how much money people in the country are going to make, when they don't actually make that much, is not "lost revenue" to the government, it's money that the government never had any rational expectation of collecting in the first place and should not have formed their budgetary expectations upon.

My first act as King would be to make deficit spending and tax revenue collection forecasting for future budgeting a felony. Government should only be allowed to spend what it actually HAS COLLECTED in taxes, not spend whatever it thinks it's going to collect and then bitch when people don't earn that much taxable income.

[Gallstones]

This excellent example of how money works has been around since the late 1970s, and it makes many things clear. Among them, why I keep saying Libertardians don't understand economics.

Read it and comprehend. Many things that are now opaque and seem complicated will suddenly attain clarity and obviousness and simplicity.

http://www.slate.com/articles/business/ ... onomy.html

Schneibster, I'm sorry I don't know, what kind of tardian are you?

[Atheist-Lite]

"Eventually, of course, the co-op issued too much scrip, leading to different problems ..."
- P. Kruggman.

Could someone please, ask him, or explain what he meant by the three little dots since we appear to be at that part of the story right now?

[Schneibster]

Read it. Overly simplistic. You're not actually making an argument with it (and Krugman wasn't making much of an argument either.) Please continue your mental masterbation though, it's amusing.

Much more than overly simplistic, it's outright mendacious and deceptive, as I'd expect from leftist Krugman.

First, it assumes a closed-loop system in which the only babysitting resources are other co-op members when in fact in reality there would be plenty of teen-age entrepreneurs out there willing to discount their babysitting services to undercut the scrip rate in return for scrip that can be used for other purposes besides babysitting, like buying iTunes music and cell phones.

It's a babysitting coop. The idea is you put some in to the coop and get some out of the coop. You can't "win" by taking all the scrip. It's not a zero-sum game.

Neither is the economy.

Duh.

[Schneibster]

The greedy sociopath party got in there and spent it all on tax breaks for themselves and their pals and an unnecessary war and a fake scheme supposed to reduce drug costs that actually funneled money to more of their cronies. It's not crony capitalism, it's crony thievery.

This, of course, is crystal-clear revisionist idiocy.

It wasn't the Republicans who raided the SS trust fund,

What are you blathering about? Where the money went is obvious. Iraq, the Medicare prescription drug program, and the Bush tax cuts. That was the Bush administration. Every one of those three things was Bush's choice.

Talk about revisionist history, Bush didn't do the Bush tax cuts? OK. Whatever.

[Schneibster]

This excellent example of how money works has been around since the late 1970s, and it makes many things clear. Among them, why I keep saying Libertardians don't understand economics.

Read it and comprehend. Many things that are now opaque and seem complicated will suddenly attain clarity and obviousness and simplicity.

http://www.slate.com/articles/business/ ... onomy.html

Schneibster, I'm sorry I don't know, what kind of tardian are you?

Anti-tardian. C'mon, this is first grade schoolyard stuff. Do you have anything to say that means anything, or are you just gonna hate on the librul 'cause he "wants to take your guns?"

[Schneibster]

"Eventually, of course, the co-op issued too much scrip, leading to different problems ..."
- P. Kruggman.

Could someone please, ask him, or explain what he meant by the three little dots since we appear to be at that part of the story right now?

No, we're not. You stopped reading too soon.

But to answer your question, if you issue too much scrip then there aren't enough babysitters. So you have to collect some, in dues usually, and burn it.

[Atheist-Lite]

"Eventually, of course, the co-op issued too much scrip, leading to different problems ..."
- P. Kruggman.

Could someone please, ask him, or explain what he meant by the three little dots since we appear to be at that part of the story right now?

No, we're not. You stopped reading too soon.

But to answer your question, if you issue too much scrip then there aren't enough babysitters. So you have to collect some, in dues usually, and burn it.

The article was written in 1998. I must have stopped half way through the second reading?