Friday, September 12, 2008
Chuck Cooper comments to previous post
Excellent, and as expected, I totally agree with the policies implied in your questions. Also about income taxes. I would like to discuss a couple of points. I don’t believe we can foist any of our debt, i.e. excess consumption, onto the next generation. As you point out, we can only consume today’s resources. While it is inherent in your third point about how government “pays” for expenditures, in my view it matters not whether it is printed money or borrowed money. The result is inflation, the least equitable tax of all. As you say, there is no free lunch. You can’t even steal it. If we just “borrowed” from ourselves, the result is clear enough. When we borrow from foreign countries, it gets a bit more complicated. We send them dollars or debt (not sure there is any difference) and they send us goods. Then the trade deficit eats away the value of the dollar. If we can keep that going forever (ignoring the other problems that this creates) we have successfully stolen goods from the foreign countries. You would think that after a while it is going to dawn on them that all those “sales” that keep things humming in their factories are only beneficial if they are paid for. There are indications now that China is catching on.
The Bush tax cuts were irresponsible, and his only excuse is ignorance and demonstrated incompetence. So sad that McCain thinks he has to switch to match the irresponsibility to get elected. Like all the rest of his positions, which used to make him appear to be a valid alternative. However, as long as the voters can be distracted by the fun stuff like lipstick on a pig, I fear it all may work. All you have to do is fool some of the people some of the time. Too bad.
I think I have voted Republican most of the time, but what I don’t understand is these people that will vote Republican all of the time, no matter who is running. There is something bad wrong with them. Particularly this time.
Thanks for your insightful comments. You hit on a very cogent point. Printing money and and creating credit is all the same. I usually avoid this argument because nearly all economic theory claims that only money matters and credit can be ignored. If you look in the index of any of Milton Friedman's books, "credit" is not to be found. It is not even to be found in Bernanke's textbook which is used by more than 250 college Economic professors.
I think we underestimate the acuity of the Chinese. They have over $1 trillion of our debt which they have accumulated through balance of trade surpluses with us. They know, as we know, that they will not be paid back in equal value. On the other hand, look what they have accomplished. They have built an economic juggernaut while literally obliterating many of our industries, encouraged us to over-consume, thus reducing our investment, contributed greatly to our bloated financial system and have weakened the $US as a reserve currency. Let's say the lose 1/2 of the value. Compare this cost to what we get for the same amount in our middle-east wars. I think they may have made a pretty good investment. Further, they have solved a demographic problem. They had 90 million people added to their workforce in the last 15 years. It gave them something to do. As you noted, it is begining to change. They have their industries, they have our money, and they are going to lose 85 million workers over the next 15 years as their population ages. As a friend, who used to be in the import business told me this week, we had better get used to going barefoot because we have no shoe manufacturers left.
I think the Super Collider is absolutely fascinating. I think they are going to prove my theory about the creation of our universe. It was created by a highschool student as his science project in a universe in a different dimension. He slammed a couple of his or her atoms together and a tiny bit migrated to our 4 dimensional reality. That was the seed for the big bang. From then on its all history.
I haven't reconciled this theory with the NW Indian belief that a raven, picked up a stone, flew too close to the sun, dropped it and it became our earth. But, give me time. It seems to make as much sense as other explanations I have heard.