Economics for idiots

[Kevin D]

I'm not bright enough to understand the intricacies of Friedman economics, so I'm biased as fuck about other Neo-Liberal things.

[Jairzinho]

I'm not bright enough to understand the intricacies of Friedman economics

 

Yes, you are.

 

 

 

 so I'm biased as fuck about other Neo-Liberal things.

 

Good.

[Kevin D]

They have tenure and taught their methods up and down Premier universities in the U.S.

 

It's the only analogue I can think of, that matches Damien Commolli successfully suing us for unfair dismissal.

[Jairzinho]

It's a cunt world.

[SasaS]

The problem with doom and gloom merchants is that they have to be proven right occasionally in a boom and bust cycle, like a stopped clock. I remember I used to have a subscription to Roubini's newsletter and alerts, they were full of various warnings many of which proved out to be wrong. It's extremely difficult to predict much with any certainty.

 

Rajan, who is a Chicago school economist, wrote a very interesting book with Luigi Zingales, Saving Capitalism from the Capitalists which came out before the financial crisis and in which the (Chicago) boys extolled the virtues of financial deregulation and inventiveness (among other things, it was a pretty interesting read), which is going to set us all free (the value of human capital versus financial capital etc). Unfortunately it was the very inventiveness of financial market in diversifying and offsetting risks from risky loans which plunged us into crisis.
 

So as I get older, the bigger is my grano salis with which I take all predictions, especially long term. One problem with the economy seems to be that it is impossible to include all the variables, the other is that every economist seems to analyze data from some preset position.

[AngryOfTuebrook]

Here's an article which I read last year.  I can't recall the details (or whether I fully understood them at the time) but the gist is "we're fucked and we're staying fucked".

 

http://isj.org.uk/the-global-crawl-continues/

[stringvest]

You can always invest your way out of your troubles...

 

http://rf-heathrow.localspecific.com/?vsid=47455537-7a2d-e611-93f9-a0369f1303c6

[Jairzinho]

https://www.youtube.com/watch?v=fNvivEKPmpc

 

Some of this was interesting, if you're into that sort of thing.

[Spy Bee]

Right so the worlds markets have lossed confidence over fears about the US sub-prime markets and potential bad debts? Why would this effect businesses that can repossess houses and give even more profits to shareholders?

 

Even weirder, how come in the last couple of weeks while this has been going on the dollar has strengthened significantly against the pound?

 

Yours confusedly (and also somewhat apathetically)

 

AdamS

Really Adam, really?

[KopOut]

It's very straight forward.

All banks are bankrupt. However they are only allowed to be 'so much' bankrupt.

 

When those sub-primers default on their mortgages, and walk, the banks become TOO bankrupt and they have no money to lend ANYBODY.

 

Bailouts ensue.

[Spy Bee]

It's just mad that the world is in debt to a few people, and has no chance of ever getting out of debt.

[Guest Pistonbroke]

It's just mad that the world is in debt to a few people, and has no chance of ever getting out of debt.

 

And thus has it always been. 

 

Obviously before the World was so easily accessible it was restricted to countries or indeed counties/areas of said country. Whoever happened to be King at the time just kept the wealth mainly with himself and distributed just enough to keep those helping him stay in power happy, the rest of his subjects had to bend the knee and be grateful he wasn't lobbing their heads off. When the people revolted they were either dealt with, or if victorious they would put one of their own in charge who would just turn out to be the same as the cunt they had disposed, rinse and repeat.

 

Then you had the religions who just stirred up shit amongst each other but made sure the people had hope, because if you give people hope they will pay money on the off chance they themselves can benefit from the false lies of made up Gods. 

[SasaS]

It's just mad that the world is in debt to a few people, and has no chance of ever getting out of debt.

 

You mean Japan, China and a couple of their mates?

 

http://www.businessinsider.com/heres-who-holds-the-worlds-60-trillion-in-sovereign-debt-2016-9

[Spy Bee]

You mean Japan, China and a couple of their mates?

 

http://www.businessinsider.com/heres-who-holds-the-worlds-60-trillion-in-sovereign-debt-2016-9

So who owns China's debt?

 

The balance between the world's countries should be zero, but it's about £100,000,000. Because everyone owes the Rothschilds et al.

[SasaS]

Let's just take it away from them then and problem solved.

[Guest Pistonbroke]

National debts have been gathered over centuries, they just juggle them about as time goes by. Personal wealth is no different, it just passes hands. It can be taken away, but this normally is the result of a War. 

[Spy Bee]

National debts have been gathered over centuries, they just juggle them about as time goes by. Personal wealth is no different, it just passes hands. It can be taken away, but this normally is the result of a War. 

But the Federal Reserve and institutions of that ilk can print money. They create it, then charge interest on it, so there is never enough money to service the debt, so then they lend you some more.

[KopOut]

But the Federal Reserve and institutions of that ilk can print money. They create it, then charge interest on it, so there is never enough money to service the debt, so then they lend you some more.

This is the crux of the problem.

 

Some seem to be hailing Bitcoin as a way to de-centralise the money creation issue, but I'm not holding my breath.

[Strontium]

Arthur Laffer is in the news again because he's being awarded the Presidential Medal of Freedom. Laffer himself is a nutcase, but the principle of his Laffer curve is essentially correct.

 

The curve is often misrepresented by both left-wing critics and right-wing supporters as "Cutting taxes on the rich will raise more money" but it's actually about optimising tax revenue.

 

In some instances, the optimal tax rate will mean that taxes should be increased, and what you won't hear Republicans admitting right now is that the curve for the United States shows just that - the optimal top marginal tax rate is considerably higher than the current top marginal tax rate.

 

 

 

[Boss]

Why would anyone want to live in a country where they pay three quarters of their income to the government?

[Jose Jones]

6 minutes ago, Boss said:

Why would anyone want to live in a country where they pay three quarters of their income to the government?

Because it creates better economic conditions in the country so that they (and the majority of people in the country) have a much better standard of living in the long run.

 

[Boss]

3 minutes ago, Jose Jones said:

Because it creates better economic conditions in the country so that they (and the majority of people in the country) have a much better standard of living in the long run.

 

What have the Tories done (since they came to power) with the billions earned from taxing the highest earners 45%? Where is this better standard of living that you speak of?

[s(k)aturation]

26 minutes ago, Boss said:

Where is this better standard of living that you speak of?

 

The theoretics of it is brilliant.  After all, it's the thought that counts.

[Bobby Hundreds]

Would it still be 3 quarters of their income if it's a marginal tax? not 3 quarters of their income after they have earnt a certain amount. 

 

I've no problem with people earning huge sums of money but the base line needs to be lifted. People with skills, talent, work ethic even luck should earn more for their endeavours, you put more in you get more back but low pay should be higher, high enough they dont need state top ups, a living wage. Time is the most important thing any of us have and a real living wage should be the minimum cost of someone's time. Just seems to me that the more people that have a disposable income the more money is spent. Millionaires don't buy all the Ford's, fiats, clothes, the everyday things for ordinary people. Where does an ever growing gap in inequality end, like Brazil with favellas and insane crime levels?  Even in Brazil the crime is now entering the wealthy areas it never used too and more and more of the rich are leaving Brazil, a failing society fails everyone eventually.

 

Say someone like jeff Bezos paid every single employee a living wage, treated staff like human beings, people having security and not being treated like disposable property of the company then I'd be happy for bezos to be mega rich without second thought. Stimulating the economy shouldn't just be about taxing the rich but about putting more money in more peoples pockets.

 

Greed works both ways though, I know plenty of people with great paying jobs with little skill but every year they demand more money, better holidays better hours at some point you have to realise it's a business it needs to make a profit or whats the point, you will price yourselves out of a job that your skills would never get close to earning that type of money again. People constantly shoot themselves in the foot.

 

I was looking on indeed and there's jobs on there in my area that where around when I left school in the 90s and the pay is almost the same! 20 years and the pay is almost the same. The last 3 years alone I've seen my disposable income shrink, the whole 1 percent inflation thing is bollocks, food bill alone must have took an extra 5 percent of my income the last couple of years, so how does that effect people who have had the same job for 20 years and their wages have barely moved.

 

Morning ramble.

 

[Jose Jones]

2 hours ago, Boss said:

What have the Tories done (since they came to power) with the billions earned from taxing the highest earners 45%? Where is this better standard of living that you speak of?

 

1 hour ago, skaro said:

 

The theoretics of it is brilliant.  After all, it's the thought that counts.

 

I have not done any reading of Laffer, and whilst having heard of the Laffer curve didn't really know what it was all about until Stronts' post.  So I will have to admit to not really commenting with a massive degree of knowledge of the topic at hand here.

 

However, there is an awful lot of economic proof - blooming loads of it from around the world and throughout history - that economies with a greater level of equality perform better.  They grow more, economic outcomes are better, education is better, social mobility is better, crime is lower.  Pretty much everything you would want.  Rampant loads of historical proof.  

 

Now, whether you think high tax rates on the highest earning individuals is the best way to achieve the lowering of inequality is a valid conversation.  Also the activities of the governments in question in what they decide to spend the tax monies on is also highly variable of course.

 

I'd imagine that old Laffer had put a fair amount of evidence behind his proposition around the top rate of tax in his curve, depending on the state of the economy under examination, as he does appear to be fairly renowned. 

But then again, Stronts does mention he is a nutcase, and not for nothing is economics called "the dismal science".