Tuesday, January 1, 2013

New Year Links

  • Egypt at risk of a currency crisis?
  • Senate passes a bipartisan short term fix to the fiscal cliff.
  • Doesn't sound like house republicans are going for it.  I had a feeling they wouldn't. It seems like we are in for a long series of eleventh hour crises (or thirteenth hour crises) as Republicans and Democrats war over whose ox is going to get gored to gradually bring the deficit under control.  Is it going to be the welfare state spending on the poor and middle class that Democrats achieved mainly in the mid twentieth century?  Or the very low taxes for the upper class that Republicans have achieved since the 1960s?  We can't have both over the long haul.
Update: well the house did pass it!  So I was wrong.  However, it was with a minority of Republicans voting for it - the majority of the house repubs were against it but Boehner put it to a vote anyway and it passed mainly on democratic votes.  I wonder if he'll survive as speaker after that?  No clue. 

5 comments:

rjs said...

re: "We can't have both (welfare state, low taxes) over the long haul.

why not? a fiat currency is not a limited resource; a government that prints its own currency is not constrained by revenues...
we are not so poor as a nation that we cant provide a safety net for those among us who've experienced misfortune; the thinking that we have to tax someone to do is a throwback to the economics imposed by a gold standard...

Stuart Staniford said...

rjs: so your opinion is that the government could just stop tax collection altogether, but continue spending as much as desired, grow the debt however much needed, and rely on the Fed to monetize it? And nothing bad will ever happen as a result?

rjs said...

well, i didnt say stop tax collection altogether, stuart, but economist karl smith showed that with interest rates as low as they have been, we could eliminate all federal taxes today & borrow 30 years out, & make a profit on that borrowing if the economy grows just 1.1% annually or more over that 30 year stretch...

what i'm saying is that we have a fifth of our people mostly unemployed and another fifth working at tasks below their capability, and that roughly 20% of our industrial base is idle at any given time; we clearly have the human and other physical resources to insure that all of our citizens have their basic needs met, and that to abandon those less fortunate because of the belief that your spending in a fiat currency is limited by the amount of that fiat currency that the government collects from it citizens is a fallacy...debt is a barbaric relic..

if we could print trillions to keep the banks from failing during the crisis, we can print a tenth of that to insure that we all have our basic needs met...

dr2chase said...

On the print-money front, I've wondered for a while if our exports (and hence, people who might be employed to produce those exports) were penalized by the artificial strength the dollar gets for being a reserve currency. A "strong dollar" is of no use to someone without dollars. One solution to this problem is to print money and weaken the dollar. Another is to redistribute wealth through taxes and spending in a way that compensates those hurt by a strong dollar. The exact balance to take between these two remedies is determined by how much we need new and repaired bridges (etc), together with some caution about beggar-thy-neighbor devaluing competitions with other countries.

Boehner could stay speaker if the Democrats voted for him, right? Cantor and the crazies are a lot of the Republican caucus, but not all of it. This serves Boehner's short-term interests, so it passes the first political plausability hurdle.

sunbeam said...

I don't feel qualified to comment on the low taxes/welfare state issue.

But sooner or later the freakish amount of money the government spends on the military has to be addressed. It's really unprecedented for a country to do so much military spending in peacetime.

For dubious returns I might add. It's crazy how much we spend compared to the rest of the world. And if you include all the myriad forms of military spending we do that isn't directly attributed to it, it's even worse.