Fed broke financial markets; will stimulate the economy at any sign of trouble ...

[SC Maintenance]

Now come on are we really gonna get in an argument over this?

There are hundreds of welfare type programs And handouts for the”poor” Which are paid for by deficit spending.

The wealthy and big business are subsidized via interest rate manipulations, and bailouts whenever they get too far over their skis, which is paid for by constant devaluation of the currency.

The suckers in the system are those of us who work for a living. Same as it’s always been.

 

[Marrk]

There are any number of federally sponsored programs to benefit low income folks. Medicaid, earned income credits, child tax credits, 0% federal tax rates, SNAP (food stamps), etc. Of course many of these are paid for with deficit spending, another whole subject.

Paying with tax dollars ≠ Printing money

Running deficits at interest ≠ Printing money

I'm not an economics whiz. I'm genuinely trying to follow your argument. We could talk about oil if you prefer. (I also don't know anything about oil.)

 

[Hermann]

Paying with tax dollars ≠ Printing money

Running deficits at interest ≠ Printing money

I'm not an economics whiz. I'm genuinely trying to follow your argument. We could talk about oil if you prefer. (I also don't know anything about oil.)

oil is boring

 

[alarmguy]

I get that. I lost a lot of money in the market, but that was prior to 2008, and the to big to fail environment we have today.

I put away money in certificates of deposit, and own no stocks because of the losses I suffered years ago in the stock market. The problem is, the fed devaluing the USD means my savings have less buying power.

A admin on BITOG posted a strategy to buy no load S&P 500 funds. I believe his strategy, under the current fed policy, is a strategy that I would recommend for my family and friends.

Agree, if one wants diversification in stocks. S&P and Nasdaq index funds are a very sane way to invest in the stock market in a completely thoughtless way. Which is good and safe, your diversified and will go up (or down) with the averages.
Actually that is the most sane and safe way to recommend the stock market.

 

[wpod]

Now come on are we really gonna get in an argument over this?

There are hundreds of welfare type programs And handouts for the”poor” Which are paid for by deficit spending.

The wealthy and big business are subsidized via interest rate manipulations, and bailouts whenever they get too far over their skis, which is paid for by constant devaluation of the currency.

The suckers in the system are those of us who work for a living. Same as it’s always been.

Foreign aid and military costs and hand outs are the killer. Despite what people say year over year the numbers add up

 

[eljefino]

The gov't prints money, there are a few steps involving the Fed and swapping bonds, but, close enough. They spend it on stuff the government buys, and on pensions etc.

They then tax most but not all of that money back. The difference is the deficit. The compounding of deficits is the national debt.

They could tax all of that money back, but it's politically unpopular, and would probably disservice the economy, comparatively speaking to the "most" plan. So instead they inflate at a rate that slowly chips away at money saved.

If they don't tax enough back, we get inflation beyond the 2-3% "target". We slipped a little after the pandemic, with stimuli working "too well" and money changing hands "too quickly" before finding its traditional home in the hands of rich folk, who hoard, not spending it. That money gets long term storage in stocks and real estate. But on the flipside the US economy had a stunning recovery of the jobs market and incomes to go along with it.

People who want zero debt and/or zero inflation, are generally sitting on a pile of cash they don't want to see devalued and are lobbying in their own self-interests. They think they're "winning" at the musical chairs that are financial life.

 

[thastinger]

Are they not printing $1T every 80-90 days now already? I thought they did.

And that becomes 10T in the fractional banking system

 

[thastinger]

One narrative is often the need for additional tax. Below is a link to the very first 1040 form from 1913 when the personal income tax was first established. Note the rate was 1% for 20K or less (that is 636K today).

Now just a short 110 years later and we pay more than 50% (once you add up the hidden consumer taxes the companies pass along) but are in worse financial condition than back then.

 

[SC Maintenance]

Foreign aid and military costs and hand outs are the killer. Despite what people say year over year the numbers add up

Yes, but arguing over which government largess is worst is exactly what the system wants. I have my pet projects. You have yours. We argue over which should get cut, meaning none ever do.

 

[Marrk]

There's always a lot of aggression in these discussions. One side wants to stigmatize social welfare programs as "hand outs." I don't even know what the other side wants.

The government ought to help the people. Just like you would help your neighbor if you lived in Asheville, North Carolina, right now. Let's remember our humanity. Syrians and Palestinians and Ukrainians are people, too. If the situation were reversed, and you had someone kidnapping your children, raping your wife and dropping bombs on your mom and dad, you would wonder why the Ukrainians-Palestinians-Syrians weren't helping you.

Probably all of us agree that government efficiency needs to be improved, which is different from cuts. And I, for one, don't want unelected operators like Musk and Ramaswamy doing it. I have named them, and those like them, the "Shallow State."

If this post is too political, call me out. I'm not here to piss people off. I'm here for the oil.

 

[tbm5690]

One narrative is often the need for additional tax. Below is a link to the very first 1040 form from 1913 when the personal income tax was first established. Note the rate was 1% for 20K or less (that is 636K today).

Now just a short 110 years later and we pay more than 50% (once you add up the hidden consumer taxes the companies pass along) but are in worse financial condition than back then.

This. History in the US proves that tax rate cuts have resulted in tax revenue increases when they were implemented, and vice versa. It is easy to assume that a tax rate increase of 5% = a 5% increase in government revenue, but it doesn't work that way.

 

[dubber09]

One narrative is often the need for additional tax. Below is a link to the very first 1040 form from 1913 when the personal income tax was first established. Note the rate was 1% for 20K or less (that is 636K today).

Now just a short 110 years later and we pay more than 50% (once you add up the hidden consumer taxes the companies pass along) but are in worse financial condition than back then.

Well, Fed Reserve isn't a US Gov entity but a few private banks, if US keeps borrowing from FR and has to pay interest on the loans - no wonder US debt is so high. But now the circle cannot be broken, it's a catch-22 now. US has to keep borrowing to afford paying interest on prev loans, FR cannot refuse lending as they would get nothing back if they stop. Since they don't have the money to loan they 'print' it.
The only option is to do away with dollar.

 

[Dave Hess]

Now come on are we really gonna get in an argument over this?

There are hundreds of welfare type programs And handouts for the”poor” Which are paid for by deficit spending.

The wealthy and big business are subsidized via interest rate manipulations, and bailouts whenever they get too far over their skis, which is paid for by constant devaluation of the currency.

The suckers in the system are those of us who work for a living. Same as it’s always been.

One year I had to pay over $200K in taxes….. $200K not $20K

Nothing I could do but pay the Big Man, keep my mouth shut, don’t complain and ignore all the malfeasance.

 

[Danh]

Well, Fed Reserve isn't a US Gov entity but a few private banks, if US keeps borrowing from FR and has to pay interest on the loans - no wonder US debt is so high. But now the circle cannot be broken, it's a catch-22 now. US has to keep borrowing to afford paying interest on prev loans, FR cannot refuse lending as they would get nothing back if they stop. Since they don't have the money to loan they 'print' it.
The only option is to do away with dollar.

No, option is to gradually reduce annual deficit so that it is less than rate of economic growth. Objective is to stabilize and then reduce total debt as a % of GDP. So make hard decisions about how and where we spend money and create a true pro-growth environment.

 

[TPK]

Doesn't this post break the rule of no politics?

 

[Astro14]

https://en.m.wikipedia.org/wiki/Argument_from_authority

Hardly accurate.

Those folks who have managed, through thrift and savings, to develop a net worth of a few million dollars are not arguing through authority, they are sharing the secrets of their success.

Listen, or don't, but when someone has made it to the top of the mountain, those who are still climbing would be wise to listen.

 

[javacontour]

Our government prints money and gives it to poor people ("stimulus") who spend it on each other, perking up the economy, until a rich guy gets it. He then stashes it in real estate or stocks. He's got no other ideas! The velocity of that dollar then slows waaaay down; it's not doing anything for the economy, but real estate or stock prices look better on paper, and upper middle class folk pat themselves on the back for being "so smart."

Maybe some day our fiat money will be a great way to get a cheeseburger, but for serious stuff we'll use shares of VOO or Blackstone, symbolic of owning one-trillionth of "the man."

But, is that money stashed away, or does someone else have it?
I.E. I pay someone for the house. What do they do with the money?
I buy stock, what does the seller do with the money? If the stock seller is selling shares of their 401(k) they are taking a distribution and living their life, meaning the money is still in the economy.

The way the money "leaves" is if it pays off debt. The idea that debt creates money and paying off debt removes money is what the system is largely based on.

That's why the Fed can reduce the money supply by raising interest rates. Old debt gets paid off, taking money out of the system, but because rates are high, less new money is created.

Maybe buying property with the money takes some out of the system if a cash buyer buys a property with a mortgage on it.

But, in most cases, the transactions you cite simply change who is using the money at a higher velocity.

 

[javacontour]

I'm trying to follow you here. What money does the government print and give to the poor? Since Reagan, our government has used tax cuts to give money to the rich . . . with the idea that the wealth will trickle down and "perk up" the economy. You seem to have invented a new theory: Trickle Up Economics. Or is your real name John Maynard Keynes? Come on, John. Be honest.

Taking less money from someone (letting someone keep more of what they earn) isn't giving money to the rich.

Besides, in our progressive tax system, lower income individuals already have tax cuts given the structure of progressive rates.

Letting higher income earners get tax cuts just levels the playing field. Letting someone keep more of what they earn isn't the same as handing them a check.

It's disingenuous to say tax cuts give money to the rich. It's taking less from them if we are going to be honest.

 

[javacontour]

Paying with tax dollars ≠ Printing money

Running deficits at interest ≠ Printing money

I'm not an economics whiz. I'm genuinely trying to follow your argument. We could talk about oil if you prefer. (I also don't know anything about oil.)

I'd suggest half right.

Borrowing creates money in our system. Therefore, if Uncle Sam is borrowing to pay bills, that's money created.

Paying with tax dollars doesn't take money out of the system, just out of the consumer's hands until it gets back to the consumer.

Paying with borrowed money is using money created by the Federal Reserve.


From where I sit, you got half of it right.

 

[tbm5690]

Taking less money from someone (letting someone keep more of what they earn) isn't giving money to the rich.

Besides, in our progressive tax system, lower income individuals already have tax cuts given the structure of progressive rates.

Letting higher income earners get tax cuts just levels the playing field. Letting someone keep more of what they earn isn't the same as handing them a check.

It's disingenuous to say tax cuts give money to the rich. It's taking less from them if we are going to be honest.

Unfortunately this fact gets twisted beyond belief and sold as something completely different by the mainstream.