How much do you want?

[patches70]

I am implying that "involuntary exchanges" are necessary for the existence of a government, and that were government to be thrown out all together we would before long be pining for the days in which one of our biggest complaints was that we had to pay taxes. What model would you suggest as superior to one in which "involuntary exchanges" occur?

Ummm, how about voluntary exchanges? Why can't that work?

I'm not sure where involuntary exchanges are ever necessary nor are they ever moral or ethical.

The part of it that isn't literally hoarded is likely being spent outside of the country. Considering very little is actually produced in this country any more any true investments would likely occur overseas.

The fact that the US is the only nation that can legally print US dollars, and virtually every trade done is in dollars, one can start to see why so much money gets shipped out of country. It is a consequence of being the only nation in the world that can legally print US dollars, the world's reserve currency.
Since it is the reserve currency, and every nation must have a measure of it to function, then dollars must flow out of the US. Because, well, the other nations need those dollars.

If you don't want dollars flowing out of the US then lobby to have the US dollar removed as the reserve currency of the world.
I wouldn't worry too much about that though, soon enough the US dollar will lose it's reserve currency status and trust me, all them dollars outside the US will come flowing back.
Of course, no one else in the world will want those dollars, but that's means manufacturing and everything else will return to the US. Because it'll be much cheaper to do such work in the US then. We'll become the new China to whomever has control of that new reserve currency. Laboring to build junk to ship to the nation (or conglomerate of nations) that has the legal ability to print such notes.

All that removing the monetary requirement

To remove the monetary requirement for higher education, would that means the professors would work for free?

I mean, someone has to pay for the teachers, the equipment, the buildings and everything else that goes with college. Why shouldn't the person who goes to college expect to pay for it?

The student loan bubble is already getting bigger and bigger. From all that government cash, some $1 trillion of it pumped in. The government says "Hey! We got a trillion dollars to be spent in colleges!" The colleges all begin raising rates because each and every one of them wants a piece of all that money.
That's what happens when you flood a ton of money into a market. The prices of everything in that market increase. The more money pumped in, the greater the increases in cost. Inflation.

What you want done would cause immediate prices spikes that would not end until the whole damn thing collapsed.
You are not really taking into account or are completely disregarding economic reality.

Either way, having a safety net at all necessitates the use of "involuntary exchanges".

Why can't you provide your own safety net? I mean, it's common knowledge, common wisdom that an individual should create emergency funds. One should not live paycheck to paycheck. That means a person might have to live on beans and rice for a year or whatever, save money.

What incentive would people have if the government promised "Don't worry, if you don't have any money later we'll take care of you by taking other people's money and giving it to you because you couldn't be bothered to save for yourself."

Once again, the failures of individual governments/politicians does not suggest that all government action is flawed. I haven't claimed to have the solution to the problem of corrupt politicians.

There is a way to deal with corrupt politicians. Don't let them have any power to enact involuntary exchanges for one. One could also prosecute corrupt politicians as well, but that seems to be a bit difficult when those politicians in power are the ones charged with prosecuting corrupt politicians.

Since we'll never find the "right man" for the job, wouldn't it be better to alter the job to "Even a scum bag can't mess things up because he doesn't have the authority to mess things up"?

Increasing levels of wealth/income disparity are bad for the general population because the general population has less and less average wealth and influence as time goes on. For instance, in 1980 the average executive pay was 42 times the average worker's pay, and now it's 380 times. That is bad for workers. This seems fairly straight forward to me, although I'd be open to hearing opposing arguments.

What do you think hurts average workers more, some fat cat CEO getting a ton of money, or the decreasing value of the currency itself?

Seems to me, if the currency itself is protected, the buying power of the money the worker makes increases instead of decreases, he'd be much better off much quicker than messing around with involuntary exchanges to even things out and the consequences of that action.

Everything is trade offs, there are no solutions. If you want the rich guys taxed to hell and give that money to everyone else, a whole new host of things happen.

The government should be concentrating on protecting the value of our money. The true inflation rate is exponential in nature. It ain't no 2% inflation, it's a lot higher than that. Even at 2% inflation that means prices double every 35 years. What's sick is that this exponential growth in cost doesn't affect things like gold.
Consider, 35 years ago (1977, a dollar could buy you almost three loaves of bread (bread was about 36 cents), an ounce of gold in 1977 (around $147) would have bought you some 408 loaves of bread.
Today, a dollar will by you exactly 1/2 a loaf of bread. But an ounce of gold would buy you some 800 loaves of bread.

Now that's protecting the currency, or not. The currency is getting demolished relentlessly, but the price in a sound currency things are getting cheaper.

Wouldn't it be better if we had an actual sound money? Shouldn't we be working on that before we try forcing people to do what others want them to do?

[patches70]

OH, and just as an aside, August 15 is the anniversary of the end of Bretton Woods. It was August 15, 1971 when Nixon ended the promise to exchange dollars for gold. Since then, dollar debasement has been the one true bipartisan issue. Just about all the problems we face can be traced back to that day, the day when the words "We're all Keynesians now".

The debasement of our currency has had the most impact on our lives and too few understand that. Because our currency can be manipulated at whim by the issuer, it is not grounded in any objective standard. Those manipulations are why Americans have to work harder and harder to make ends meet.



"Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.

They have created paper reserves in the form of government bonds which -- through a complex series of steps -- the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of society lose value in terms of goods.

[patrickaa317]

patrickaa317 - You bring up good points. I really am uneducated in the subject of government and economics, but there are a few ideologies that I seem to subscribe to. Just putting that out there.

So if you have 50% that is using whatever you may desire; and I have 50% left for whatever I may desire; but you want the other 50% of myself to benefit everyman such as you; wouldn't it make more sense to let you keep say 80% so then you wouldn't need to utilize my 50%?

I'll be honest - Particular percentages are meaningless without complete information. Such a scenario (complete information) no one can give because everything depends on everything else.
I'd put it in the perspective of I get a 50% choice of what I want to do with my money. The other 50% going towards everyone.
I'd be perfectly at peace with this as long as the other conditions are met as I had previously stated.

Truly, this all just boils down to philosophical questions.
What should a man have and how much is too much? - The first part is somewhat easily defined, the second less so. ("To each his own.")
Should there be a balance of power? - I personally believe there should be. Wealth, in this time and age, is power. Should a man have access to all of the wealth? No. The truth deduced from that question is this: There must be a limit.

So you feel that I really don't need that much money but does anyone really need anything say over 30k a year? I mean that'll get you an apartment, food on your table, and some entertainment, if we are talking about what someone needs. Should we all strive for just what we need and be good with that? I mean does anyone really need anything over 75k a year? Those typically are just the people that drive around in Lexus or BMW's; they could definitely get by with a Focus or Cavalier, right? That's if we are talking about what someone needs.

And by a 50% tax rate, do you really mean that 4-5 hours every day at my job, Uncle Sam is getting paid, not me?

You forget that Uncle Sam pays for your roads, your schools, your mail, etc. etc. Would you get by without it? You partake in the system, are you taking it for granted and then some?
I agree that one should be able to spend his wealth on things he/she desires but to a certain extent.

On the flipside, does the government really need to take over 450,000 from a person that makes a million per year? Does the government really need that kind of money?

This is a really good point. Obviously, there needs to be some sort of balance. None of us can really say what's appropriate, we can only speculate.

And do you feel it is the governments responsibility to make sure that more than 1% have a share of 40% of the wealth? What is an acceptable number there? What if 3% owned 40% of the wealth? Would that be better? 5%? 10%? 25%? What is a non-obscene number in your view?

I'm not really sure just what would be appropriate, but again, there should most definitely be a wealth ceiling.

Banks should be required to keep 100% of depositors money on hand.

Economy is dead if this were enacted. There would be no money to make personal and business loans, no person would gain interest on their accounts, and it would be impossible for banks to be open since they couldn't make money (unless they charge a large fee per account).

No. Banks should use their own money to make money? *GASP* HOW UTTERLY BLASPHEMOUS!

The government is in the business of doing what's best for the people. This level of wealth disparity is not in the people's best interest.

The government does NOT know what is best for me. I'd rather keep most of my money and make my own decisions as to what is best for me.

Now I wouldn't necessarily say what Frigidus said, however, the government is by the people for the people. It's intention is supposed to be what is best for you. Of course it doesn't know what's best. But then again, neither do you.

Free college tuition? If they are taking my money and allowing everyone under the sun to go to college, is it actually free?

Shouldn't everyone be given the chance to strive for greater education regardless of your upbringing?

As you may have noticed, i don't have the patience to make posts all pretty like some of you do. Sorry for that but you are going to have to deal.

In your example where you get 50% and everyone else gets the other 50%; you realize that you are doing 100% of the work and only getting 50% of the reward. More power to you if you want to take that money and donate it to a private organization that you feel helps those who need it; or whatever else you ambition is. But if you better knew how government worked, that 50% that you think goes to "everyone else" after the layers of bureaucracy, wasteful spending, throwing good money after bad, that 50% probably ends up being closer to 20%. Had you been able to control where it went in the private sector, it would be much closer to the true 50%. An example of this is that public workers on average get paid 3 times as much as those in the private sector (this includes benefits, retirement plans, etc); therefore your hard work in the private sector, enables the government to overpay someone that does the same thing in the public sector. One man once said "from each according to his ability; to each according to his needs". Would you agree with that statement?

Uncle Sam does pay for my schools, roads, mail, etc. Well the public schools do not hold poor teachers accountable and do not reward good teachers enough, private schools do this to some extent though great teachers are severely underpaid and it is unions and the poor teachers that are to blame for this. The roads in my area suck, unfortunately the gas tax I pay per gallon goes more towards bicycle paths that my vehicle is not allowed on. I can go without the mail, it is all flyers and junk. I get all my bills and do all my communication through the internet.

If there is a wealth ceiling, then I think you are putting a ceiling on productivity as well. The day you limit what a man can earn is the day you limit what a man can do and is the day that you limit what a man can say or believe.

I do know that individual citizens make better decisions on what is best for them than a group of politicians deciding what is best for those citizens while making themselves exempt from their own laws.

Everyone is given the chance to strive for greater education. Everyone in the US is given a free K-12 education. There are a lot of scholarship, grants, and financial aid programs to help people get a college education; sometimes it takes real determination through K-12 to earn a scholarship but it is possible if someone is willing to work for it. If you offer it as a "free" service, noone will take it serious and you also water down the value of it.

[BigBallinStalin]

Flat tax, 20% on net income--wherever you got it from, doesn't matter. First $15,000 of your income is exempt unless you make over X amount, where X is equal to "rich guy/gal amount."

That wont work, since youll get some inflection point where people take pay drops to avoid the tax cutoff.

Just make everyone exempt for the first 15k (in your suggestion).

Ideally I would tax only disposable income, but tax it at a VERY high level (ie 50%+). Problem with this is you get smart rich people employing even smarter tax men to exploit the enivitable loopholes and you get a situation similar to what we currently have.

I havent even remotely thought any of the following through so obviously will have some epic fails but here are some ideas I think are good:

- Single tax system: Sales tax. Sales tax that is graduated to be very high for luxary items, and very low for neccissity items. I.e. Your ipad will carry a 40% sales tax, but your veges at the supermarket will be tax free. Extreme luxary items will carry extreme taxes up to 80-90%.

- Higher version of what we have at the moment in NZ: Graduated from 5% (down from 10%) for the first 10-20k, up in 10% increaments until 45-55% at above 100-200k. Really dont know what to do about companies tax rate because on one hand you want it low to promote economic growth, but on the other you want it high to ensure the companies tax is not being used by the wealthy execs to avoid paying the higher income tax. As opposed to what BBS will say; I suggest anally retentive tax auditors

Make sure they have shiny black boots and carry cudgels for a dramatic effect. Did I go normative there? WHOOPS!


But seriously, I agree with your agreement on that first $15,000 exemption.

Single tax system sounds too complicated for it to be effective through bureaucratic means due to the vague definitions of "luxury" and "necessity." If an iPad (or computer) makes me more productive and reduce long-term costs which would be spent on paperbooks, then how it is a luxury item? And even if it is, why provide perverse incentives to people who increase their profits, productivity, and quality of life through iPads?

I recall the Canadian environmentalism debate in the 1970s, and the criticism against "necessity" v. "luxury" was great. Basically, any Canadian could live on necessity items at $400 per year (adjusting for inflation it's probably $2000 today). What kind of life would that be, and why use tax policy to incentivize it?

Besides, you make a good point about the trade-off between corporate taxes and wealth creation, but why not apply that to the single tax system? Significantly less iPads would be sold with an additional 40%...


I say, keep it simple and fair by closing off tax "loopholes*" while generating similar amounts of tax revenue... with the flat tax! Your friend in modern age of government coercion. Vote today, vote often, and vote in your sleep. The government needs you, and loves you. Good night.

[BigBallinStalin]

Banks should be required to keep 100% of depositors money on hand.

Really?

So like deposit banks basically can not lend money anymore.

OK... Well there goes the economy.

Say bye bye.

As much as I disagree with you a lot Jimbo, you're 100% correct.

Bedub: You honestly think that mum and dads savings collectively summed up is anywhere near what is required for the economy to function?

Investment economics is no small subject people.

Agreed. This is where I split from the 100% reserve free banking crowd.

[thegreekdog]

The government is in the business of doing what's best for the people.

HAHAHAHAHAHAHAHAHAHA

[thegreekdog]

Estate tax - 100% with a standard exemption of $500,000 and an exemption for land and businesses.

Why 100%? - Bear with me on this one. I believe that the United States it not a nation that puts an emphasis on "royalty" which to me includes, as Timminz indicates above, lazy ass cunts. When Mitt Romney's son can sit in his father's house after his father's death and live off of his father in this manner, we should be outraged by that. Now, the argument against this is obviously that Romney worked hard to take care of his children in life and after his death. And that's fine. My point in preparation is that he should prepare them to be able to work and live on their own, without his money. So that's why 100%.

What would stop someone from creating a bogus business to transfer assets to heirs? There would have to be some business purpose in the business. There's a lot of tax cases and other language on business purpose.

What about other personal property? There is a lot of value transferred to heirs in the items people collect.... Even more with ultra-rich.... Things like expensive paintings, car collections, etc. etc. would these be taxed? You could exempt certain of those things as well.

Why the arbitrary number of $500K.... Why not $10 million? It was arbitrary.

What about cash held by businesses that you exempt? Would the cash reserves of the business be taxed? If so... Many of the businesses would fail without those reserves. If not... This is a giant loop hole for people to create paper businesses to transfer assets to heirs. I would imagine cash in a business would be exempt. Most businesses don't have cash lying around (if my clients' tax returns are to be believed), but I understand the concern.

See above in red.

[Night Strike]

So you feel that I really don't need that much money but does anyone really need anything say over 30k a year? I mean that'll get you an apartment, food on your table, and some entertainment, if we are talking about what someone needs. Should we all strive for just what we need and be good with that? I mean does anyone really need anything over 75k a year? Those typically are just the people that drive around in Lexus or BMW's; they could definitely get by with a Focus or Cavalier, right? That's if we are talking about what someone needs.

And by a 50% tax rate, do you really mean that 4-5 hours every day at my job, Uncle Sam is getting paid, not me?

You forget that Uncle Sam pays for your roads, your schools, your mail, etc. etc. Would you get by without it? You partake in the system, are you taking it for granted and then some?
I agree that one should be able to spend his wealth on things he/she desires but to a certain extent.

The government doesn't need 50% of our income to do those things. The government can take 4-5 hours per week of our work, not per day. Maybe 8 hours in a week if you factor in state and local taxes.

I'm not really sure just what would be appropriate, but again, there should most definitely be a wealth ceiling.

Why? Why should the government dictate the maximum amount a person can ever earn or have? We don't all work for the government (yet), so it has no right to dictate how much money we earn.

Banks should be required to keep 100% of depositors money on hand.

Economy is dead if this were enacted. There would be no money to make personal and business loans, no person would gain interest on their accounts, and it would be impossible for banks to be open since they couldn't make money (unless they charge a large fee per account).

No. Banks should use their own money to make money? *GASP* HOW UTTERLY BLASPHEMOUS!

Banks don't have any money on their own. They exist specifically as a holding company for our money, which they then loan to those people and businesses who need money to fund projects or purchases.

The government is in the business of doing what's best for the people. This level of wealth disparity is not in the people's best interest.

The government does NOT know what is best for me. I'd rather keep most of my money and make my own decisions as to what is best for me.

Now I wouldn't necessarily say what Frigidus said, however, the government is by the people for the people. It's intention is supposed to be what is best for you. Of course it doesn't know what's best. But then again, neither do you.

Bullshit! Complete and utter bullshit! I sure as heck know what is best for me over the government knowing what is best. It is up to me to make decisions for my life, not the government's task. If I make a mistake, then I am responsible for the outcome. I shouldn't be forced to give all my money to the government for them to then pick what I'm allowed to have or do.

By the way, how can the government, even if it's by the people, decide what is best for me on a daily basis when we only get to choose the (federal) government every 2, 4, or 6 years (or just once in the case of confirmed appointments/judges or never in the case of czars) and even then frequently don't actually get the people in office who we choose? I'd much rather make my own decisions, thank you very much.

Free college tuition? If they are taking my money and allowing everyone under the sun to go to college, is it actually free?

Shouldn't everyone be given the chance to strive for greater education regardless of your upbringing?

They do: it's called K-12 schooling.

[jay_a2j]

I'm with Ron Paul...... abolish the IRS.




0%

[jimboston]

Banks should be required to keep 100% of depositors money on hand.

Really?

So like deposit banks basically can not lend money anymore.

OK... Well there goes the economy.

Say bye bye.

I think he's saying to end fractional reserve lending.

Yes... he is... Fractional Reserve Banking essentially enables banks to keep a percenatge of total deposits as cash... thereby enabling them to lend out the other fraction. In simple terms...

Depositors put $1million in a bank.

The bank holds $100,000 in cash, and lends out the other $900,000.
This lending enables people to buy homes, cars, etc. Also allows us to have credit cards. Also allows the bank to lend money to businesses... so that these business can invest (in capital, labor, or property)... and grow.

Bedub & YOU are both suggesting this is bad.

You are both saying that the bank should not hold $100,000 in cash... but should instead hold the whole $1million in cash.

If the bank is required to hold in cash the entire $1million then the bank WILL NOT BE ABLE TO MAKE ANY LOANS EVER.

If the bank can't make loans... SAY BYE BYE TO THE ECONOMY.

It IS that simple.

Now... we could argue about the percentage a Deposit Bank should be required to hold in Reserve.
Is the appropriate amount 10%, $20%, 50%.

We could also argue about the types of loans a Deposit Bank should eb allowed ot make.
Perhaps laws and regulations should limit what types of loans Deposit Banks should make... and leave riskier loans to Investment Firms.

There are already laws and regulations in place that do these... and people smarter than all of us here debate these questions.

That said anyone who thinks Deposit Banks should hold 100% of deposits in Reserves in clueless.

oh... and btw the way... you use the Term "Fractional Reserve Lending"... then you go one to talk about the ratio of actual cash versus the amount of transactions that occur in the economy. These are TWO DIFFERENT THINGS. Bedub's comment is related to laons made by banks... that is Fractional Reserve Banking. The idea that we have more economic activity than atual cash is an entirely different phenomina.

[jimboston]

Estate tax - 100% with a standard exemption of $500,000 and an exemption for land and businesses.

Why 100%? - Bear with me on this one. I believe that the United States it not a nation that puts an emphasis on "royalty" which to me includes, as Timminz indicates above, lazy ass cunts. When Mitt Romney's son can sit in his father's house after his father's death and live off of his father in this manner, we should be outraged by that. Now, the argument against this is obviously that Romney worked hard to take care of his children in life and after his death. And that's fine. My point in preparation is that he should prepare them to be able to work and live on their own, without his money. So that's why 100%.

I understand your point... but I disagree.

What if my kid is disabled and CAN'T earn his own way? I have worked hard all my life... why can't I set up my mentally handicapped child to live a comfortable life? It's my money, I should be able to make my children comfortable. I understand a need to contribute to the common good... but I don't agree with the gov't EVER taking 100% of my money, even after I die.

I can also make another arguement against this... yes we don't believe in "royalty". That said, there is some value that the "ultra-rich" do provide to the common good. People who don't need to "earn" a living can do other things with their time. Many (perhaps most) are frivolous with thier time and contribute nothing. However many will take action and use thier time (and money) for things that contribute... things that they could not have done if they were busy "earning" a living. Some may start a charity and through said charity shine like on some cause that might otherwise never get public attention. Others may invest in risky technology... taking chances that might otherwise have not been taken, thereby advancing our common good. Still others may get involved in arts or science... low-paying or risky ventures that they could not otherwise do if they were not born into money. I am sure you could think of other examples.

What would stop someone from creating a bogus business to transfer assets to heirs? There would have to be some business purpose in the business. There's a lot of tax cases and other language on business purpose.


It's VERY EASY to create a bogus paper business. Also... if the ultra-rich knew they were going to be taxed so heavily they would use that money to create real businesses too... no necessarily a bad thing. Though end result being we would not collect the taxes initially calculated.

What about other personal property? There is a lot of value transferred to heirs in the items people collect.... Even more with ultra-rich.... Things like expensive paintings, car collections, etc. etc. would these be taxed? You could exempt certain of those things as well.


It opens another whole area for debate... what is made exmpt and what isn't would create/drive a whole new economy for said exemptions... soley as a means of transferring wealth to the next generation.

Why the arbitrary number of $500K.... Why not $10 million? It was arbitrary.

OK... I would (arbitrarily) argue the number should be higher.

What about cash held by businesses that you exempt? Would the cash reserves of the business be taxed? If so... Many of the businesses would fail without those reserves. If not... This is a giant loop hole for people to create paper businesses to transfer assets to heirs. I would imagine cash in a business would be exempt. Most businesses don't have cash lying around (if my clients' tax returns are to be believed), but I understand the concern.

I think it depends greatly on the type of business. The example often used is the "family farm". I suspect that cash reserves for a farm vary greatly from year to year based on the how good or bad a crop yield (and crop prices) were in a given year. I also suspect that many small businesses don't technically have the cash held by the "business" but instead it just might be held in the owner's personal bank account. So the person / small business owner who dies after a good year would be "penalized" more by paying more in taxes. Sounds like a great plan!

See above in red.

See above in blue my replies.

Ultimately I am good with some sort of Estate Tax... but I think it should be completely different than what you say.

I would like a higher exemption... somewhere around $10million. Then I would think it should be a flat tax of something like 50% after that. No other deductions... no business deduction... no other personal property deduction.

[puppydog85]

Total side note here, but taxing and printing money is not the only way a government makes money.

[thegreekdog]

(1) On the 100% tax rate - There can be exemptions input into the law to avoid the situations you're raising. Your other "ultra rich" arguments tend to focus on what they do when they are living. I'm not suggesting punishing the ultra rich. I'm suggesting punishing their children (who had the benefit of living an ultra rich lifestyle up until the death of their parents). There could also be an exemption for charitable giving.

(2) It's not very easy to create a bogus paper business. Not only have economic substance and business purpose been around for legal purposes for many years, I believe they are now included in the Internal Revenue Code. Since I'm talking about a tax, those concepts would apply. So, you could create your "comic book collection" business and it would all be above board; when you die and try to pass that business on to your children, the IRS comes in, says this is not a real business, and your comics go to the government.

(3) Yes, it would drive a whole economy for exemptions. I think that's a good thing.

(4) Should that number be $10 million? Why $10 million (unless it's just arbitrary)?

(5) It probably does depend on the type of business. I'll have to think about that some more when my proposal goes before Congress.

The purpose of my 100% estate tax idea is that if we have this, we can do away with other taxes. The income generated from someone dying is something that I think is less honorable than the income generated by someone working or someone investing and receiving dividends. In other words, if we assume we need some type of government and that government needs to spend money and collect revenue in order to pay for those things, we need some sort of tax. I would rather the government tax estates than tax my income.

[patches70]

Yes... he is... Fractional Reserve Banking essentially enables banks to keep a percenatge of total deposits as cash... thereby enabling them to lend out the other fraction. In simple terms...

Depositors put $1million in a bank.

The bank holds $100,000 in cash, and lends out the other $900,000.
This lending enables people to buy homes, cars, etc. Also allows us to have credit cards. Also allows the bank to lend money to businesses... so that these business can invest (in capital, labor, or property)... and grow.

No. Depositor deposits $1million. Bank holds $1million, loans out $10 million.

That's fractional reserve lending. The other $9 million is created out of thin air.


Answer this- In 2010 there was $8853.4 billion in the broad money supply. But there was only $915.7 billion in physical money (currency and coin). A touch over 10% of actual money compared to the amount of money circulating. So, where did that other nearly $8 trillion dollars come from?
It wasn't printed. It doesn't exist in so far as you can hold it in your hands. How did it come about to exist in the broad money supply if banks are only lending a percentage of the deposits of actual money they receive?

Even more disturbing, the national debt at a bit over $16 trillion, (around $14 trillion in 2010), if only $915.7 billion of physical currency actually exists, how can we pay off $16 trillion?
I mean there isn't even enough actual money to pay even 1/15 of our debt.

It's the ultimate scam. All that newly created money by commercial banks (whose real purpose is to generate profit for it's shareholders) can be used to buy actual things, that people labored to create.

Someone else complained earlier about all the money that flows out of the US. It's a good thing it does. The #1 export of the United States is inflation. We export our inflation to China the most. If all that money was circulating in just the US, could you imagine how much things would cost? How bad the inflation would be?

The banks don't even need depositors anymore, not with The Fed and it's ZIRP. If at the end of the day a bank doesn't have it's required reserves, it just calls up the Bernanke and gets an instant credit of more newly created money out of thin air, at near zero interest as well. The Fed, intended to be the lender of last resort, is now the primary lender to everyone.

[Frigidus]

So the government should be the decider of what amount of money people "reasonably deserve".

Somebody has to. A culture of greed has taken hold in this country, and people no longer feel that a modest salary is acceptable. The upper crust are taking more and more of the pie while middle and lower class wages are barely keeping pace with inflation. The government's the closest thing we have to a referee in all this.

Slave to debt once you are out? Wouldn't it be fair to consider a 50% tax rate being comparable to being a slave to debt? And what about those individuals who don't go to college, they still pay for the rest of the individuals So they become slaves for something they don't even utilize.

To clarify, I don't agree with the idea of a 50% flat tax. I would have at least 50% taxation on all money made over a certain amount (I'm arbitrarily saying $1 million, although the exact number could vary). That said, would I feel that millionaires dealing with high tax rates is akin to paying student loan debt for the rest of your life? No. Nobody (that I'm aware of) complains about paying for public education through high school, regardless of whether or not they use the private system.

So since you agree that the US government is a fucking joke, then you surely don't want them raising taxes until they get their shit cleaned up, correct?

Just because our government is corrupt doesn't mean that I want to forgo the benefits of living in a first world country. One of the main reasons I don't have any faith in our government is that they are much more interested in taking care of corporate interests than they are in taking care of the country as a whole. If we actually had universal health care I wouldn't be quite as disgusted with our government as I am.

In the 50's, we also didn't have the welfare state we do now either.

Probably because back then it was plausible that you could buy a family home off of the salary of one person. Not to mention that the metric shitload of good manufacturing jobs that have been sent overseas. Things aren't so easy any more. How many people have to work two or three jobs and still need food stamps to get by?

Do you want to discuss about bringing things from today back to the 50's? Surely the tax rate isn't solely related to poverty rates, is it? Couldn't we look and see if there was a better work ethic among individuals then? Less government regulation in what businesses can and cannot do? Less giant contracts given to corporations in a back scratching fest?

I can't imagine what work ethic would have to do with an expanding gap between rich and poor. Surely you don't think that the rich got where they are because they work harder? This isn't a utopia where you can pick yourself up by your bootstraps. As for government regulation, things have only gotten less restrictive since then...at least for multinational companies (the guys that write the laws for the politicians). Hell, look at the bank bailouts. That all occurred because of the removal of Glass-Steagall and other restrictions put in place after the Great Depression.

If I was busting my ass and making 150k a year and you were being a slacker and only making 25k a year; if we were both to pay 33% in taxes, I would be paying $50,000 while you only pay $8,000; which means I would already be being taxed $42,000 more than you? I would pay more in taxes than you even MAKE! Should I really also pay a higher percentage just because you aren't motivated to do anything more that being a cashier at the local dollar store? Sure I have more money but I also sacrificed more blood, sweat and tears into getting where I am while you just have lumps on your ass from sitting around.

I really hope this isn't how you envision the world. It is incredibly disrespectful to the vast numbers of people who work hard with long hours at unrewarding jobs to take care of their families. The people I'm suggesting get heavily taxed are by and large not sacrificing any blood, sweat or tears.

[patches70]

while middle and lower class wages are barely keeping pace with inflation. The government's the closest thing we have to a referee in all this.

Inflation and people barely keeping up. You know, if we could keep the value of our currency from falling and being debased as badly as it has been since the 70's, the picture would be far different. Now, does the government spending more and more money that it borrows ultimately from The Federal Reserve (which is money created and expands the money supply), QE2 and such things help with the inflation problem?

The United States government, the Central Banks and Wall Street love inflation. Because they are all in debt. Massive debt. Deflation scares the living shit out of them.
But think about it, if you have zero debt and money saved in the bank, deflation would be a Godsend to you. You'd effectively make a dividend on your cash that is just sitting under your mattress.
Those who are hurt the most in deflationary times are those who are in debt.

Inflation discourages saving. Saving is really the only way to prepare for lean times that always come. The monetary policies are the biggest issues and are really at the root of all the problems. Until that's fixed, you'll only know disappointment.

How to fix it? There are lots of ways, but to be honest, those ways would be strange and alien to most people. Since this system we have is the only system pretty much all of us have ever known. And we are told our system has benefits that outweigh the problems. I'm not so sure that is the case anymore, as you seem to be understanding as well, though you aren't seeing it's root in the monetary policy.

The fixes have their own downsides as well, but that's the nature of life isn't it? Trade offs.

The government spending more money and providing everything is not the answer. It only makes things worse.

[Frigidus]

I am implying that "involuntary exchanges" are necessary for the existence of a government, and that were government to be thrown out all together we would before long be pining for the days in which one of our biggest complaints was that we had to pay taxes. What model would you suggest as superior to one in which "involuntary exchanges" occur?

Ummm, how about voluntary exchanges? Why can't that work?

I'm not sure where involuntary exchanges are ever necessary nor are they ever moral or ethical.

Well, I'm assuming here that "involuntary exchanges" is codeword for taxes. If taxes were voluntary the heavy majority of people wouldn't pay them, and at that point the government would be a borderline non-entity. They'd be lucky if they could afford an army and police force. Maybe I'm misinterpreting the term altogether, if so I apologize.

The part of it that isn't literally hoarded is likely being spent outside of the country. Considering very little is actually produced in this country any more any true investments would likely occur overseas.

The fact that the US is the only nation that can legally print US dollars, and virtually every trade done is in dollars, one can start to see why so much money gets shipped out of country. It is a consequence of being the only nation in the world that can legally print US dollars, the world's reserve currency.
Since it is the reserve currency, and every nation must have a measure of it to function, then dollars must flow out of the US. Because, well, the other nations need those dollars.

If you don't want dollars flowing out of the US then lobby to have the US dollar removed as the reserve currency of the world.
I wouldn't worry too much about that though, soon enough the US dollar will lose it's reserve currency status and trust me, all them dollars outside the US will come flowing back.
Of course, no one else in the world will want those dollars, but that's means manufacturing and everything else will return to the US. Because it'll be much cheaper to do such work in the US then. We'll become the new China to whomever has control of that new reserve currency. Laboring to build junk to ship to the nation (or conglomerate of nations) that has the legal ability to print such notes.

This isn't money being traded, this is money being stashed in private accounts. Over 50% of that money is estimated to belong to about 100,000 people. I feel that the argument regarding what to do with the U.S. dollar is something of a tangent, although I will say that our current attempts to devalue the currency to prop up the corpse of the housing market is immensely short sighted.

All that removing the monetary requirement

To remove the monetary requirement for higher education, would that means the professors would work for free?

I mean, someone has to pay for the teachers, the equipment, the buildings and everything else that goes with college. Why shouldn't the person who goes to college expect to pay for it?

The student loan bubble is already getting bigger and bigger. From all that government cash, some $1 trillion of it pumped in. The government says "Hey! We got a trillion dollars to be spent in colleges!" The colleges all begin raising rates because each and every one of them wants a piece of all that money.
That's what happens when you flood a ton of money into a market. The prices of everything in that market increase. The more money pumped in, the greater the increases in cost. Inflation.

What you want done would cause immediate prices spikes that would not end until the whole damn thing collapsed.
You are not really taking into account or are completely disregarding economic reality.

You're right, private institutions would raise the rates. That's why this should be done through public universities in which the government decides exactly what everything costs. There are a lot of areas in our country that we need to get the profit motive out of.

Either way, having a safety net at all necessitates the use of "involuntary exchanges".

Why can't you provide your own safety net? I mean, it's common knowledge, common wisdom that an individual should create emergency funds. One should not live paycheck to paycheck. That means a person might have to live on beans and rice for a year or whatever, save money.

What incentive would people have if the government promised "Don't worry, if you don't have any money later we'll take care of you by taking other people's money and giving it to you because you couldn't be bothered to save for yourself."

People don't have any money to save. They're already spending all of their money on bloated health insurance, house/student loan debts, and various costs of living. You're lucky if you're breaking even, and plenty of people just end up in debt. What's the solution for them, sell everything that isn't strictly required to get by? This is America, not China. There is a certain standard of living that should be expected, and right now a lot of that is paid for À la carte.

Once again, the failures of individual governments/politicians does not suggest that all government action is flawed. I haven't claimed to have the solution to the problem of corrupt politicians.

There is a way to deal with corrupt politicians. Don't let them have any power to enact involuntary exchanges for one. One could also prosecute corrupt politicians as well, but that seems to be a bit difficult when those politicians in power are the ones charged with prosecuting corrupt politicians.

Since we'll never find the "right man" for the job, wouldn't it be better to alter the job to "Even a scum bag can't mess things up because he doesn't have the authority to mess things up"?

That would be throwing out the baby with the bath water. Why is it that the rest of the first world seems to get by just fine with what I'm suggesting? Why does Canada whip our ass when it comes to this?

As for the corruption in our political system, I feel that the best way to deal with corrupt politicians in this country would be to break up the glorified one party system that controls the government right now. This is easier said than done, but it wouldn't be that much harder than entirely rewriting the Constitution to make the government powerless (and it wouldn't come with all sorts of adverse side effects).

Increasing levels of wealth/income disparity are bad for the general population because the general population has less and less average wealth and influence as time goes on. For instance, in 1980 the average executive pay was 42 times the average worker's pay, and now it's 380 times. That is bad for workers. This seems fairly straight forward to me, although I'd be open to hearing opposing arguments.

What do you think hurts average workers more, some fat cat CEO getting a ton of money, or the decreasing value of the currency itself?

Seems to me, if the currency itself is protected, the buying power of the money the worker makes increases instead of decreases, he'd be much better off much quicker than messing around with involuntary exchanges to even things out and the consequences of that action.

I agree that the devaluing of the currency is disastrous. I have opinions on what should be done to plug the hole the banks blew in our economy, but I don't want to get too far off topic.

The government is in the business of doing what's best for the people.

HAHAHAHAHAHAHAHAHAHA

Theoretically.

[Frigidus]

The government spending more money and providing everything is not the answer. It only makes things worse.

I agree with a lot of what you're saying, but I don't agree with this. The government has gone WAAAAAAY too far with making it rain on the banking industry, but that doesn't mean that any potential government spending is unacceptable.

[thegreekdog]

The government spending more money and providing everything is not the answer. It only makes things worse.

I agree with a lot of what you're saying, but I don't agree with this. The government has gone WAAAAAAY too far with making it rain on the banking industry, but that doesn't mean that any potential government spending is unacceptable.

I think we can all agree that the federal government spends too much. We disagree on where cuts should be made, but that's something for which a compromise can be reached (amongst ourselves).

Unfortunately, even when Congress makes "cuts" they are extremely minor because, in real life (not Tea Party theoretical world) all politicians want to take care of their constituents, donors, and potential employers. No one in Congress and no one running for Congress is going to be prepared to make the across-the-board cuts necessary to keep spending low.

[Frigidus]

The government spending more money and providing everything is not the answer. It only makes things worse.

I agree with a lot of what you're saying, but I don't agree with this. The government has gone WAAAAAAY too far with making it rain on the banking industry, but that doesn't mean that any potential government spending is unacceptable.

I think we can all agree that the federal government spends too much. We disagree on where cuts should be made, but that's something for which a compromise can be reached (amongst ourselves).

Unfortunately, even when Congress makes "cuts" they are extremely minor because, in real life (not Tea Party theoretical world) all politicians want to take care of their constituents, donors, and potential employers. No one in Congress and no one running for Congress is going to be prepared to make the across-the-board cuts necessary to keep spending low.

Yeah. In the end none of us are going to get what we want, and the status quo is going to remain the same. I guess I'm just arguing for the sport of it.

[patches70]

The government spending more money and providing everything is not the answer. It only makes things worse.

I agree with a lot of what you're saying, but I don't agree with this. The government has gone WAAAAAAY too far with making it rain on the banking industry, but that doesn't mean that any potential government spending is unacceptable.

Oh, yeah, of course there are acceptable forms of government spending. Spending more than they take in is unacceptable though. The US government takes in some 2.5 trillion dollars. If they can't make ends meet on that much then there is a serious problem. They shouldn't even need that much really.

This isn't money being traded, this is money being stashed in private accounts. Over 50% of that money is estimated to belong to about 100,000 people.

And the amount of money those 100K people hold (not sure where you got that number from but I'll accept it for the next point), is nothing compared to the amount of paper being held by foreign governments as reserves. Eventually, that money will come back and we (the US and her people) will have to exchange tangible goods for all that paper.

Our way out, of course, is through massive inflation. "Ok, you got hundreds of billions and you wanna buy wheat? Fine, $100K per bushel!"
This is why we debase our currency, to pay our way out of the $16+ trillion in debt we owe. It's pissing off those who take our paper because we are actively destroying the value.

I feel that the argument regarding what to do with the U.S. dollar is something of a tangent

That's where I somewhat part ways. On social issues we'll all never agree, no matter what the government tries to do. Not to mention to pay for those social fixes is a problem. Monetary policy has to be fixed first and foremost. After that, if we have a sound currency, we can actually make way on lots of other things.

As it stands now, we want everything, and we can have it. At a price. Of course, it always ends up destroying the value of our money. Sound money, things start falling back into place.

That's why this should be done through public universities in which the government decides exactly what everything costs.

Price controls cause all sorts of serious problems all their own. You merely trade one set of problems for another set.

People don't have any money to save.

Why should people save when the value of the money you put away just falls and falls? Better to get what you can now before the price jacks you later.
Inflation is the most evil, insidious hidden tax of them all. It destroys savings, destroys money and disincentives any type of conservation of resources. It leads only to ever greater and greater consumption and borrowing on future earnings.

They're already spending all of their money on bloated health insurance, house/student loan debts, and various costs of living.

Inflation, inflation, inflation. Many partly to blame on well intended attempts at social engineering. Consequences of increasing money supplies through endless spending.

There is a certain standard of living that should be expected

Ah yes, the dreaded expectations. Once said- "Expectations are nothing more than planned disappointments".

and right now a lot of that is paid for À la carte.

and those expectations for a certain standard of living have a cost, don't they? Shouldn't they? I'm not sure how to get around that economic reality or if it would even be a good idea to attempt to.

People have to save, through the excess of production can the standard of living be increased. By saving, not wasting. But as you know, the current monetary policies and the debt based system discourage saving. DUCY?

So again, it comes back to sound money and protecting the buying power of the very medium which we trade our labor, our time, our sweat for. A medium arbitrarily set by a small group of people who as it's primary goal is to provide profit for it's share holders.

The one thing, the most important thing that our government is tasked with doing, is protecting our money.
To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

Who regulates the value of money? Is it Congress?

Why is it that the rest of the first world seems to get by just fine with what I'm suggesting?

Who? Europe? Have you seen the state of the European Union lately?
China, the up and coming economic powerhouse? With no Bill of Rights, right to intellectual property and all the other totalitarian habits?
Japan? Who is actively dying as a nation and a people as we speak.
Those who are doing what you would wish we would do and are getting by "just fine", have traded certain things to get to where they are.

Why does Canada whip our ass when it comes to this?

That's because Canada has made trade offs as well. Now don't get me wrong, of all the nations in the world, I am quite fond of Canada, they are our very good friends. Something of a rarity in these times where no nation is really a friend with each other. Sure, nations act friendly and ally for a time, but at other times the same nations are at each other's throats.

Canada is quite a bit more business friendly than the US has been of late. And Canada cannot project her power all over the globe like the US can. (As an aside, have you seen the Canadian shale fields? I forget where they are but it's been described as hell on earth, an ecological nightmare and all the other things that would absolutely unacceptable in the US).

And hey, I'm down with that, actually. Pull all our troops from Europe, South Korea, everywhere. Let these nations protect themselves and shoulder the burden of the cost of their own defense.
Of course, that leads to consequences for all those people who rely on the money income from our multitude of military bases all over the world, but screw em, time they got by on their own.

And then there are the balances of power that our military keeps in check to consider as well. Considerations that Canada doesn't have to worry about, cause the US is doing. Now Canada is always there with us when it comes time to fight, and I love em for it, but without the US, Canada can't really force anyone to do a thing. We shouldn't be doing that stuff either. The implications of us ceasing such activities though, could well be bloody in certain parts of the world. But it's all blowback from our schizophrenic foreign policy over the decades.

We just can't have everything without serious consequences. Canada has decided not to be a superpower, God bless em for that. But at the same time, their ability to help with others in such terms that is required by a superpower is a trade off they have made.

Simply put, the Canadians do so well because the Canadians worry about themselves first. That is not a bad thing. Not at all.

I mean, would you be ok with the US having all those things you want but at the same time giving up on AIDS research and money for Africa? Or all the other things we spend our money on all over the world providing food, military assistance and other humanitarian endeavors? For us to have everything we want, there are other people who will end up being out of luck. It's all trade offs. What are you willing to trade for those things you want? Your freedom? Your security? How much is going to sleep at night and not having to worry about a foreign power bombing you or your family at night? For the US to give up her superpower status? There are many nations in the world who cannot say the same and they have all those social programs you'd want.

I have opinions on what should be done to plug the hole the banks blew in our economy

The government didn't have much choice, did they? Considering how the central bank and the government are partners. One without the other, in our current form, cannot survive. And that is very much on topic as to why it is that we can't seem to fix our social ills.

It all comes down to the money. Sad but true.....

But I understand how you feel, truly I do. I am just of the opinion that we must first fix the debt based monetary system before anything else ever has even the tiniest chance to get fixed. Our current system benefits only a tiny percentage, the bankers who create and decide the value of every individual's labors and sweat. To the detriment of everyone else. Our government willing conspires with them as a means to retain power.

Money was created for one purpose, a purpose we have long since lost sight of. The purpose of money is to merely facilitate trade so that each person can acquire the goods and services they require to lead a just, happy and righteous life.
Anything else, is a scam. The very scam that has lasted since the 1600's (even before!) in this modern incarnation.

Yeah. In the end none of us are going to get what we want, and the status quo is going to remain the same. I guess I'm just arguing for the sport of it.

There is nothing wrong with wanting a better future for yourself, your family and the world. Nothing at all. The problem is how to accomplish it. For the record, we are much better off than people 1,000 years ago, even a 100 years ago. Humanity is making strides. But will we stumble? That remains to be determined......

[QoH]

I would mind paying as much as the Swedes do, as long as we got the same benefits from their government they did.

[jimboston]

(1) On the 100% tax rate - There can be exemptions input into the law to avoid the situations you're raising. Your other "ultra rich" arguments tend to focus on what they do when they are living. I'm not suggesting punishing the ultra rich. I'm suggesting punishing their children (who had the benefit of living an ultra rich lifestyle up until the death of their parents). There could also be an exemption for charitable giving.

(2) It's not very easy to create a bogus paper business. Not only have economic substance and business purpose been around for legal purposes for many years, I believe they are now included in the Internal Revenue Code. Since I'm talking about a tax, those concepts would apply. So, you could create your "comic book collection" business and it would all be above board; when you die and try to pass that business on to your children, the IRS comes in, says this is not a real business, and your comics go to the government.

(3) Yes, it would drive a whole economy for exemptions. I think that's a good thing.

(4) Should that number be $10 million? Why $10 million (unless it's just arbitrary)?

(5) It probably does depend on the type of business. I'll have to think about that some more when my proposal goes before Congress.

The purpose of my 100% estate tax idea is that if we have this, we can do away with other taxes. The income generated from someone dying is something that I think is less honorable than the income generated by someone working or someone investing and receiving dividends. In other words, if we assume we need some type of government and that government needs to spend money and collect revenue in order to pay for those things, we need some sort of tax. I would rather the government tax estates than tax my income.

1) The arguments I am making are not based on the original "ultra rich" but on their children. First generation "ultra-rich" tend to be work-acholics. It's their children that are often able to do greta things with their free time.

2) I am sure you know the tax code better than I... but beating it is easy. How often is the IRS going to actually look at thee psuedo-businesses?

3) Possibly

4) Yes... arbitrary. Though the point is... I want the number to be high enough that a person (child/survivor) COULD live off that money for the rest of his/her life. Not in luxury... but not in squalor either. $500K is not enough to retire on... $10Million is.... but not enought to live like Paris Hilton.

5) Do that.

6) So kinda like... "don't tax me... but when I'm dead I don't care who the f**k you tax, even if it's my own kids"?

[jimboston]

Yes... he is... Fractional Reserve Banking essentially enables banks to keep a percenatge of total deposits as cash... thereby enabling them to lend out the other fraction. In simple terms...

Depositors put $1million in a bank.

The bank holds $100,000 in cash, and lends out the other $900,000.
This lending enables people to buy homes, cars, etc. Also allows us to have credit cards. Also allows the bank to lend money to businesses... so that these business can invest (in capital, labor, or property)... and grow.

No. Depositor deposits $1million. Bank holds $1million, loans out $10 million.

That's fractional reserve lending. The other $9 million is created out of thin air.

http://en.wikipedia.org/wiki/Fractional_reserve_banking

http://www.investopedia.com/terms/f/fra ... z23icQA7Te

That is NOT how the word is defined by Wiki or other sites... perhaps you should go edit the Wiki entry?

[jimboston]

Answer this- In 2010 there was $8853.4 billion in the broad money supply. But there was only $915.7 billion in physical money (currency and coin). A touch over 10% of actual money compared to the amount of money circulating. So, where did that other nearly $8 trillion dollars come from?
It wasn't printed. It doesn't exist in so far as you can hold it in your hands. How did it come about to exist in the broad money supply if banks are only lending a percentage of the deposits of actual money they receive?

That is different than Fractional Reserve Banking... a different phenomina.

This is not related to the original point I refuted... which is Bedub's comment about a Bank holding 100% of deposits.