Trump SAVES 1000 Carrier Jobs!....

[Dr.No.]

Ah, but it is not a theory. It is a simple truth. If private investors invest in government bonds they are not investing that money elsewhere.

1) Crowding out theory specifically holds that interest rates will rise as government debt rises, due to the crowding out of funds. That hasn't happened at all.

2) How do the private investors get the money? At the end of the day, when purchases are made from the government, real savings have to be transferred to the government (ie, reserves have to be transferred). Real savings are only created when the federal government runs a deficit, or when the private sector runs a surplus with respect to the global sector

3) If private investors invested elsewhere, wouldn't the recipient of those funds just invest in the government? Even if the private investors invested in the international markets, the end-users would buy government bonds, provided they were available.

An interesting theory though, I think: the individuals at the top of the food chain are happy with their lifestyle. By investing in government bonds rather than expanding operations it provides two profit sources, the government bonds, and the goods or services they sell to the government (or its employees) which is financed by their investing in government bonds. And at the same time it limits risk. A safety circle jerk of sorts.

So all the numerous individuals (at the top) are all together acting in this matter? Is there a smoke-filled room somewhere?

Not to be rude or harsh, but you simply don't understand sectoral balances and the way debt works.

I'm glad you bring this up because it highlights what I'm saying well. The way it currently works is when a country runs a trade deficit with another, the another country is left holding a surplus of the other country's currency. And so this money is returned by purchasing assets and financing investments in the debtor country. Generally an investor would be investing in a productive enterprise that would bring them a return on their money. And so more productive capacity and jobs would be created in the debtor country.

Then you wouldn't have a trade deficit. The moment money is returned to the debtor's country, the trade deficit shrinks.

Moreover, what you would often see is individuals with the trade surplus using that surplus as a base with which to improve their own economy.

Instead, with implications similar to my theory above, currently this money is returned to the country by purchasing US bonds funding the government deficit.

The government doesn't need funding. It controls the printing press; it cannot run out of money. Individuals, corporations, and banks buy US bonds because instead of holding dollars, a liquid, non-interest-bearing asset, they'd like to hold bonds, a fairly liquid, interest-bearing asset.

In terms of investment, the private sector uses those savings to finance their own debt spending. The private sector has about 66 trillion in credit...if investments need to be made, they can make it, especially with low interest rates. Financial savings are merely assets the private sector uses to hedge against their obligations.

Which leads us back to where we began. The only way a government running deficits can help the economy is if they invest the funds in a more productive way than the private market participants who funded the government's ability to run those deficits. And that does not happen.

Just to drill the point home, without the deficit, those funds do not exist. They wouldn't be able to invest those funds without the government providing them.

[P3ter_Griffin]

The government doesn't need funding. It controls the printing press; it cannot run out of money. Individuals, corporations, and banks buy US bonds because instead of holding dollars, a liquid, non-interest-bearing asset, they'd like to hold bonds, a fairly liquid, interest-bearing asset.

Then the conversation is completely moot, is it not? Why run a deficit at all or even consider taxing individuals when they can just print all the money they need. Surely it would be less troublesome to just open a state bank and pay interest on deposits than it is to make individuals, corporations, and banks convert their money into bonds to accomplish the same. Why add the extra step? Talking about smoke filled rooms.....

[Occam's Banana]

State taxes decrease your federal taxes as they are deductible. So Floridian pay more, not less to the Feds.

In that case, Missourians are the ones being "subsidized," which is "unfair" to Floridians, and exactly the same "logic" applies.

Arguing for the "fairest" way of robbing people (so that "winners and losers" are not "picked," for example) makes my head hurt ...

[Danke]

...

[nikcers]

In that case, Missourians are the ones being "subsidized," which is "unfair" to Floridians, and exactly the same "logic" applies.

Arguing for the "fairest" way of robbing people (so that "winners and losers" are not "picked," for example) makes my head hurt ...

Anyone watch Ron Pauls video that is for this type of government yet and want to comment on how wrong he is about the role of government? I got more neg reps to hand out. Tod evans says he has no time to watch Ron Paul, but he spent a long time arguing on here.

[nikcers]

The government doesn't need funding. It controls the printing press; it cannot run out of money. Individuals, corporations, and banks buy US bonds because instead of holding dollars, a liquid, non-interest-bearing asset, they'd like to hold bonds, a fairly liquid, interest-bearing asset.

Why does anyone pay taxes if the government can print its own? If the government collects tax for other reasons then what are they? Are they to pick winners and losers?

[tod evans]

Anyone watch Ron Pauls video that is for this type of government yet and want to comment on how wrong he is about the role of government? I got more neg reps to hand out. Tod evans says he has no time to watch Ron Paul, but he spent a long time arguing on here.

No you $#@!ing idiot, here's what I said;

Okay so all the arguments about this 'deal' affecting others in the industry just evaporated.........

Or am I wrong?

I still haven't had time to watch RP's video, gotta fix dinner for the kid then maybe I'll have a few...

Regarding imposing regulations..........I'm all for eliminating all their regulations at a federal level...

I have watched it since I posted that and Phil covered the salient point quite well, there was no need for me to ad to his verbatim quote.

You seem to have some real issues misquoting me and applying your own ideas to me, why is that?

Maybe you'd care to address the previous misquotes that I pointed out...

[Occam's Banana]

Anyone watch Ron Pauls video that is for this type of government yet and want to comment on how wrong he is about the role of government?

You need to learn to express your thoughts intelligibly. As stated, this sentence makes no sense.

Where, for example, is "Ron Paul[']s video that is for this type of government?" (After going to the trouble of trying to parse out what you might possibly have meant by this strangely worded clause, I can only assume that you actually meant to say something like "Has anyone who is for this type of government watched Ron Paul's video ..." rather than "Anyone watch Ron Pauls video that is for this type of government ...")

I got more neg reps to hand out.

Is this supposed to be some kind of threat?

My neg-rep hammer is a lot bigger than yours ...

Tod evans says he has no time to watch Ron Paul, but he spent a long time arguing on here.

Why are you directing this remark at me? I am not tod evans.

In fact, why are you directing any of your remarks at me?

None of them are at all responsive to anything I have said.

[nikcers]

See what Trump has done to us, I agree more with Sarah Palin then members of RPF.

"Foundational to our exceptional nation’s sacred private property rights, a business must have freedom to locate where it wishes," Palin said. "In a free market, if a business makes a mistake (including a marketing mistake that perhaps Carrier executives made), threatening to move elsewhere claiming efficiency’s sake, then the market’s invisible hand punishes."

"When government steps in arbitrarily with individual subsidies, favoring one business over others, it sets inconsistent, unfair, illogical precedent," Palin wrote in a 'Young Conservatives' op-ed. "Republicans oppose this, remember? Instead, we support competition on a level playing field, remember? Because we know special interest crony capitalism is one big fail." "However well meaning, burdensome federal government imposition is never the solution. Never. Not in our homes, not in our schools, not in churches, not in businesses," she added.

"Gotta’ have faith the Trump team knows all this."

[Occam's Banana]

See what Trump has done to us, I agree more with Sarah Palin then members of RPF.

[...] When government steps in arbitrarily with individual subsidies [...]," Palin wrote [...]

Apparently, you also agree more with Sarah Palin than [not then] you do with Ron Paul.

Furthermore, Palin simply reiterates the "subsidies" canard.

Stealing less of what already rightfully belongs to others is NOT a "subsidy" ...

[Sola_Fide]

See what Trump has done to us, I agree more with Sarah Palin then members of RPF.

Great statement by Sarah Palin! She's right (I can't believe I'm saying this).

[Philmanoman]

Then the auto and bank bailouts were right...all the jobs they saved...

Too big to fail?

[Suzanimal]

Apparently, you also agree more with Sarah Palin than [not then] you do with Ron Paul.

Furthermore, Palin simply reiterates the "subsidies" canard.

Stealing less of what already rightfully belongs to others is NOT a "subsidy" ...

You must spread some Reputation around before giving it to Occam's Banana again.

[robert68]

Carrier said they would save $65 million per year by moving to Mexico. $7 million in tax credits spread over 10 years far from makes up for that. It was promises of (or threats to lose) federal subsidies, the details of which haven’t been revealed, that changed their mind about leaving. Their parent company United Technologies, the US’s 8th largest federal contractor, received $6.7 billion in 2015.

[JK/SEA]

Then the auto and bank bailouts were right...all the jobs they saved...

Too big to fail?

in the case of Carrier, its my understanding they were given tax breaks. I see nothing wrong with this.

[jonhowe]

Nope. We want the corporate tax rate slashed and a reversal of the corporate inversion exodus. All in good time.

You are not a typical supporter, as shown by your presence here. All the supporters I see are raving about this. They think the executive branch actually carries some kind of "big stick" when it comes to "jobs".

[JK/SEA]

You are not a typical supporter, as shown by your presence here. All the supporters I see are raving about this. They think the executive branch actually carries some kind of "big stick" when it comes to "jobs".

actually it does, and always has.

[Suzanimal]

Why does anyone pay taxes if the government can print its own? If the government collects tax for other reasons then what are they? Are they to pick winners and losers?

He also says @ 11:27.

I don't have a problem with tax breaks. If a subsidy is involved, that's a different story but that's not what I've seen so far. If it comes out a subsidy was involved, my opinion will change.

[tod evans]

He also says @ 11:27.

I don't have a problem with tax breaks. If a subsidy is involved, that's a different story but that's not what I've seen so far. If it comes out a subsidy was involved, my opinion will change.

You're not supposed to focus on honest use of language and proper terminology, let alone the ideas expressed clearly and succinctly......

[nikcers]

You're not supposed to focus on honest use of language and proper terminology, let alone the ideas expressed clearly and succinctly......

Its implied in the 60 million deficit of capitol that the business is already budgeting on the up coming fiscal year and whatever Trump promised them for creating this headline for them, they will get. I Like you said though this is geopolitics as usual, it's nothing out of the ordinary.

[tod evans]

Its implied in the 60 million deficit of capitol that the business is already budgeting on the up coming fiscal year and whatever Trump promised them for creating this headline for them, they will get. I Like you said though this is geopolitics as usual, it's nothing out of the ordinary.

Hugh?

Whachu say Willis?

[Suzanimal]

You're not supposed to focus on honest use of language and proper terminology, let alone the ideas expressed clearly and succinctly......

Its implied in the 60 million deficit of capitol that the business is already budgeting on the up coming fiscal year and whatever Trump promised them for creating this headline for them, they will get. I Like you said though this is geopolitics as usual, it's nothing out of the ordinary.

Hugh?

Whachu say Willis?

[Dr.No.]

Then the conversation is completely moot, is it not? Why run a deficit at all or even consider taxing individuals when they can just print all the money they need. Surely it would be less troublesome to just open a state bank and pay interest on deposits than it is to make individuals, corporations, and banks convert their money into bonds to accomplish the same. Why add the extra step? Talking about smoke filled rooms.....

Why does anyone pay taxes if the government can print its own? If the government collects tax for other reasons then what are they? Are they to pick winners and losers?

1) If the government runs deficits that are too large, it will result in inflation. For example, let us say there was full employment. If the government then put in an order for 100 billion in military equipment, the economy would have to "find" labor in order to make that equipment. This would ultimately lead to them "poaching" employment from someone else. That would mean that one segment of the economy would show a loss of productivity while the military side would go up. Production stays the same, but money (demand) goes up. Hence, inflation.

2) So, the government taxes so that it can spend more on essential services. For example, the government may be able to run a trillion dollar deficit without inflation. But they need to spend much more than 1 trillion to fund their projects. They can get that extra spending power and not cause inflation via taxation. Which is why we should want to generally reduce what government does, and let the private sector handle what it can.

3) Private banks are needed so that private banks can expand the money supply in an endogenous, logical, and careful way. We don't want government to be involved in deciding who is creditworthy or not. At the same time, the government likes to put upward pressure on the interest rate. When the government runs deficits, it net adds financial assets to the private sector. These primarily show up on the books of the member banks of the Fed, in the form of assets in their accounts at the Fed...or, as reserves. Reserves are the currency of the banking system...they can use them to fill reserve requirements (which are paltry), meet cash demand, and as a liquidity hold against their obligations. So when banks increase their obligations (ie, make loans), they like to have a certain amount of reserves to stay "liquid". But, as the government continues to run deficits, the reserves stockpiles get bigger and bigger. At some point, the banks have enough liquidity...and interest rates head toward zero. Knowing that they will always be able to meet their liquidity obligations with no penalties, the cost of money heads towards zero. So, the Federal Government offers debt to the public. When individuals, corporations, and banks buy this debt, they are essentially writing checks to the federal government. To fulfill those checks, the banks have to transfer the reserves back to the government. This drains reserves from the system, and makes the cost of money go upwards. Now, when banks make loans, they have to figure that they'll need to hold more reserves as a liquidity reservoir, and give up on any money they could have gotten from sticking those reserves in a bond.

If it helps you understand this, this is why the Federal Reserve started paying interest on reserve balances. With QE, the banks's reserve balances swelled; the short-term interest rate headed towards zero. The Fed started paying interest on reserves to keep a lower cap on the interest rate.

[nikcers]

Hugh?

Whachu say Willis?

Companies budget their spending for the next fiscal year in November when he made that deal with Trump they signaled a bigger deal with their parent company. Trump wants to rebuild our military advantage over China. China's rebuke to Trump was not for talking to Taiwan, it was signaling Trump to back off. My guess this was his plan all along, Russia isn't at all glad that China helped us tank fossil fuel prices by selling solar panels for pennies on the dollar.

[Krugminator2]

1) Crowding out theory specifically holds that interest rates will rise as government debt rises, due to the crowding out of funds. That hasn't happened at all.

Actually that isn't true. Bonds have plunged since Trump was elected in anticipation of crowding out from increased government spending.

Rates haven't risen during Obama because 1) He really hasn't been a budget buster since the initial stimulus is passed. And gov't employment has been flat since 2010. 2) In a credit collapse people are paying down debt instead of investing and unemployment rises to unusually high levels. It takes more government spending to have a crowding out effect because you have more unemployed people.

[Dr.No.]

Actually that isn't true. Bonds have plunged since Trump was elected in anticipation of crowding out from increased government spending.

Rates haven't risen during Obama because 1) He really hasn't been a budget buster since the initial stimulus is passed. And gov't employment has been flat since 2010. 2) In a credit collapse people are paying down debt instead of investing and unemployment rises to unusually high levels. It takes more government spending to have a crowding out effect because you have more unemployed people.

Yeah, there's always an excuse. I suspect that bonds have "plunged" because people expect interest rates to go up. We'll see what happens when rubber meets the road.

Why didn't bonds go down during Obama's stimulus? If people are paying down debt, they still have less money to invest in government bonds, according to crowding out theory. So wouldn't bonds go down and yields go up? It would make sense to say that there were "fewer investment options" (hence more unemployed people), but it doesn't make sense to say that debt was being paid off yet there were still plenty funds available to go into government bonds.

[nikcers]

Yeah, there's always an excuse. I suspect that bonds have "plunged" because people expect interest rates to go up. We'll see what happens when rubber meets the road.

Why didn't bonds go down during Obama's stimulus? If people are paying down debt, they still have less money to invest in government bonds, according to crowding out theory. So wouldn't bonds go down and yields go up? It would make sense to say that there were "fewer investment options" (hence more unemployed people), but it doesn't make sense to say that debt was being paid off yet there were still plenty funds available to go into government bonds.

Look if you aren't willing to discuss the implications our foreign policy has on the dollar then we are having a dishonest discussion. You are essentially just having a fallacious argument with yourself.

[Krugminator2]

You're not supposed to focus on honest use of language and proper terminology, let alone the ideas expressed clearly and succinctly......

Except Ron is wrong. Setting aside the Carrier deal, finding loopholes in general to decrease taxes for any reason isn't a good idea for numerous reasons. Ron is of the belief that if you decrease taxes government will have less money to spend therefore government will shrink. That sounds goods. Milton Friedman believed that. Walter Block thinks like that. But it is clearly wrong.

Government doesn't need taxes to fund itself with a printing press. What happens in reality, decreased taxes paradoxically increase government spending. Decreased taxes means the pain of government spending isn't felt as acutely from taxpayers. Spending actually goes up because there are no direct consequences to the increased spending . A libertarian economist name Bill Niskanen who used to run the Cato Institute did a study on this. http://citeseerx.ist.psu.edu/viewdoc...=rep1&type=pdf

The other problem with loopholes is they don't change incentives in the same way an across the board cut does. The encourage rent seeking and lobbying. The don't change incentives across the board to produce more. As far as the tax credits that Ron endorsed in the video, Keynesians like them. Free market people should not.

[Krugminator2]

Yeah, there's always an excuse. I suspect that bonds have "plunged" because people expect interest rates to go up. We'll see what happens when rubber meets the road.

Why didn't bonds go down during Obama's stimulus? If people are paying down debt, they still have less money to invest in government bonds, according to crowding out theory. So wouldn't bonds go down and yields go up? It would make sense to say that there were "fewer investment options" (hence more unemployed people), but it doesn't make sense to say that debt was being paid off yet there were still plenty funds available to go into government bonds.

Not sure why you put plunged in scare quotes. Bonds have had a pretty large move (for bonds)since the election.

[Dr.No.]

Look if you aren't willing to discuss the implications our foreign policy has on the dollar then we are having a dishonest discussion. You are essentially just having a fallacious argument with yourself.

Do tell.

Not sure why you put plunged in scare quotes. Bonds have had a pretty large move (for bonds)since the election.

Maybe it is just precision of language. "Plunged" is a very strong word. But that is just a matter of language, and we can get beyond that. If you'd address my other points...

Government doesn't need taxes to fund itself with a printing press. What happens in reality, decreased taxes paradoxically increase government spending. Decreased taxes means the pain of government spending isn't felt as acutely from taxpayers. Spending actually goes up because there are no direct consequences to the increased spending . A libertarian economist name Bill Niskanen who used to run the Cato Institute did a study on this. http://citeseerx.ist.psu.edu/viewdoc...=rep1&type=pdf

Hmm, correlation does not equal causation. One could make the case that when receipts go down, unemployment is high, so those benefits kick in and government spending goes up. Or, when receipts go up, government is engaging in a policy of running smaller deficits or surpluses; hence it is a part of overall strategy.