The rich are getting richer much, much faster.

[Ben Kenobi]

Wrong as always. Capital is part of the equation

And you have to be rich to accumulate capital. Ergo, more rich people = more capital.

an equal part is demand created by consumers.

Which is why aborting 30 percent of future consumers is biting us in the ass. Yes, demand is important, and there are solid reasons why we are trying to stave off a deflationary depression by inflating our way out of it futilely. Decisions that were made 40 years ago are impacting us now.

When you impoverish the middle class you decrease demand greatly which decreases job creation.

Which is why housing prices have to come down to the point where they are about 3x household income. Which means letting them come to the market rather then trying to hold back the tide and keep housing prices up. Of course, when you try to inflate your debt away - holding the line also hurts you.

capitalists only hire as a measure of last resort when demand REQUIRES them to do so.

Umm, what? Hiring's the first step of expanding a business. Capitalists expand when they have money to spend towards it. Take away their money through confiscatory taxation, and they don't expand and more people are out of work.

[Ben Kenobi]

A lot of members here are tools for the one percent.

Can I get a t-shirt that says it? "I work for the one percent!" Apparently choosing to be poor and sticking your finger at the man is 'cool' and 'righteous'. Working hard to get ahead is 'unrighteous' and 'wicked'.

How's that attitude working out for ya, Mr. Fun?

Edit: FFS - having a degree on Poly is the norm, and that right away puts you in the top quarter in America. We have a disproportionate number of men, as well as those in technical fields.

We are the man!

[Ben Kenobi]

If you wanted to tax people for their food stamps, you could simply decrease the amount of food stamps they get and achieve the same result. I don't know why, when presented with two different policies with identical effects, you would choose the more complicated one.

Which is why foodstamps shouldn't be considered income! Thanks for playing!

[Kuciwalker]

Btw, properly measured the people who were the top 0.1% or maybe even 1% in income in 2007 should have had negative income in 2008.

[Jon Miller]

Including transfers, I think that some of the poor make ~40k?

JM

[Jon Miller]

Btw, properly measured the people who were the top 0.1% or maybe even 1% in income in 2007 should have had negative income in 2008.

For one (two) year, yes. And obviously for that year they would pay no taxes (if we decide to tax based on income, as I said, I think it makes more sense to tax based on consumption/wealth due to difficulty in accounting).

But if we go on the ~30 year average it is very high.

JM

[Ben Kenobi]

Including transfers, I think that some of the poor make ~40k?

The average is around 33k. And that's not including income off the books, that's just verified benefits.

[gribbler]

Which is why foodstamps shouldn't be considered income! Thanks for playing!

What is the matter with you. If you are measuring the income people have after taxes and transfers have taken place, yes, food stamps, social security checks, and other such entitlements do add to the amount of income they have. If you are measuring the income before taxes and transfers, no, they don't count as income.

[gribbler]

And you have to be rich to accumulate capital. Ergo, more rich people = more capital.



Which is why aborting 30 percent of future consumers is biting us in the ass. Yes, demand is important, and there are solid reasons why we are trying to stave off a deflationary depression by inflating our way out of it futilely. Decisions that were made 40 years ago are impacting us now.



Which is why housing prices have to come down to the point where they are about 3x household income. Which means letting them come to the market rather then trying to hold back the tide and keep housing prices up. Of course, when you try to inflate your debt away - holding the line also hurts you.



Umm, what? Hiring's the first step of expanding a business. Capitalists expand when they have money to spend towards it. Take away their money through confiscatory taxation, and they don't expand and more people are out of work.

Housing prices are as a matter of fact coming down. When the government "inflates" it changes nominal prices, it doesn't change the price of houses relative to everything else.

[MrFun]

Working hard to get ahead is 'unrighteous' and 'wicked'.

No, that's not true.

[Ben Kenobi]

If you are measuring the income people have after taxes and transfers have taken place, yes, food stamps, social security checks, and other such entitlements do add to the amount of income they have. If you are measuring the income before taxes and transfers, no, they don't count as income.

But it's not income because it cannot and should not be taxed in the same way. Income has to be earned - transfers from the state don't count because you 'tax' them, by lowering the benefits given.

[Ben Kenobi]

Housing prices are as a matter of fact coming down. When the government "inflates" it changes nominal prices, it doesn't change the price of houses relative to everything else.

It does if the government inflates and provides benefits to those who are selling houses, ensuring that they keep prices up. Oh wait - look at what they did with Fanny and Freddy.

Gosh Obama - thanks for keeping houses expensive, AND jacking up prices on the stuff that I have to buy at the same time. Appreciate it Obama. I want the prices of houses to fall, and the prices of everything else to fall - but they don't because they owe money and that means that they have to pay more rather than less.

[gribbler]

But it's not income because it cannot and should not be taxed in the same way. Income has to be earned - transfers from the state don't count because you 'tax' them, by lowering the benefits given.

No, any money someone receives is income.
http://en.wikipedia.org/wiki/Income

Welfare lets someone consume more -> welfare is income

[Ben Kenobi]

No, any money someone receives is income.

So if someone leaves me a gift I'm required to report it? Income is earned - state benefits don't count as income because they are unearned.

Welfare lets someone consume more -> welfare is income

That's a terrible definition. Does this mean I can get money off my taxes for each dollar I invest?

Investment lets someone consume less -> Investments are not income.

[gribbler]

It does if the government inflates and provides benefits to those who are selling houses, ensuring that they keep prices up. Oh wait - look at what they did with Fanny and Freddy.

Gosh Obama - thanks for keeping houses expensive, AND jacking up prices on the stuff that I have to buy at the same time. Appreciate it Obama. I want the prices of houses to fall, and the prices of everything else to fall - but they don't because they owe money and that means that they have to pay more rather than less.

Expected inflation is priced into interest rates, so inflation does not help the government reduce its debt burden unless it is unusually high inflation. Also, it's silly to assume inflation will make the things you buy more expensive relative to the value of your labor. I have no idea why you think "providing benefits to those who are selling houses" would drive up housing prices- subsidies lead to lower prices.

[Ben Kenobi]

so inflation does not help the government reduce its debt burden unless it is unusually high inflation.

Completely wrong. The government borrows at zero, and with inflation running at far higher than this, they save a huge amount of money. There's a reason why they lowered the rate to zero percent interest, and why that will never go up, especially not with the government continuing to borrow at an unprecedented rate in an effort to stave off the deflationary collapse.

They can keep kicking the can down the road - but it won't last much longer. The money simply won't be there.

Also, it's silly to assume inflation will make the things you buy more expensive relative to the value of your labor. I have no idea why you think "providing benefits to those who are selling houses" would drive up housing prices

Yeah, it would. Same way that education costs have jumped up. Give people 'free loans' for school, and suddenly school starts charging more. Imagine that. It's almost like that was designed.

[gribbler]

So if someone leaves me a gift I'm required to report it? Income is earned - state benefits don't count as income because they are unearned.



That's a terrible definition. Does this mean I can get money off my taxes for each dollar I invest?

Investment lets someone consume less -> Investments are not income.

Investments let people consume more in the future (assuming it is a good investment.) Gifts do get taxed. There is more than one way to define income (income before or after taxes and transfers) and in terms of someone's ability to consume goods and services (the whole point in receiving income) the latter is more useful.

[gribbler]

Completely wrong. The government borrows at zero, and with inflation running at far higher than this, they save a huge amount of money. There's a reason why they lowered the rate to zero percent interest, and why that will never go up, especially not with the government continuing to borrow at an unprecedented rate in an effort to stave off the deflationary collapse.

They can keep kicking the can down the road - but it won't last much longer. The money simply won't be there.



Yeah, it would. Same way that education costs have jumped up. Give people 'free loans' for school, and suddenly school starts charging more. Imagine that. It's almost like that was designed.

I'm not sure what you are saying- are you claiming the entire yield curve for treasuries is at 0% interest or are you claiming that if short-term treasuries are near zero the government can stop paying interest on its debt. Either way you're wrong. If you believe interest rates "will never go up" then you are in for a surprise in the next several years.

Also, you claimed that people selling houses were getting a subsidy. Your student loan example would be equivalent to a subsidy for people who buy houses. Either way, if the government subsidizes something it becomes more affordable at the expense of everything else being less affordable.

[Ben Kenobi]

Gifts that are not more than the annual exclusion for the calendar year

No, most gifts are not taxed in any way shape or form.

Investments let people consume more in the future (assuming it is a good investment.)

There's no such guarantee that they will be good investments. Defining income as 'stuff that lets you consume more', fails the taxation test and the fact that investments are taxed despite the fact that they demonstrably lower consumption in the short term.

There is more than one way to define income (income before or after taxes and transfers) and in terms of someone's ability to consume goods and services (the whole point in receiving income) the latter is more useful.

It's far easier to do transfers where they are purchased. This catches all forms of income that the government doesn't track.

[Kuciwalker]

Expected inflation is priced into interest rates, so inflation does not help the government reduce its debt burden unless it is unusually high inflation.

This is not really true. The Treasury issues a large amount of long-term debt that would be eroded by inflation. In addition, higher inflation will generally imply that the Federal Reserve is purchasing a large proportion of the Treasury's short-term debt, effectively money-financing a portion of the deficit.

[Ben Kenobi]

I'm not sure what you are saying- are you claiming the entire yield curve for treasuries is at 0% interest or are you claiming that if short-term treasuries are near zero the government can stop paying interest on its debt. Either way you're wrong. If you believe interest rates "will never go up" then you are in for a surprise in the next several years.

On the contrary - the rise of interest rates is inevitable. Oh, and I don't consider 1.5 percent on ten years debt at all proximate to inflation at that time. I'm fully expecting them to rise and to crush the unwary governments that continue to spend as if they never will.

Also, you claimed that people selling houses were getting a subsidy.

Yeah, they got a massive bailout - especially the folks most responsible for making bad loans - Fanny and Freddy.

Your student loan example would be equivalent to a subsidy for people who buy houses.

Gosh, that doesn't sound like something that does exist does it? Does making housing loans freely available lower rather than increase the cost of said houses? That wouldn't make the demand for housing greater than it would otherwise? Yes to all of these. And it's well thought out - except for that little niggling deal of them having to be eventually paid back.

Either way, if the government subsidizes something it becomes more affordable at the expense of everything else being less affordable.

Not so. Government subsidy will increase the price of something relative to everything else, as the seller can afford to charge more for it. It's free money, Gribbler.

[gribbler]

This is not really true. The Treasury issues a large amount of long-term debt that would be eroded by inflation. In addition, higher inflation will generally imply that the Federal Reserve is purchasing a large proportion of the Treasury's short-term debt, effectively money-financing a portion of the deficit.

Wouldn't the inflation need to be higher than the inflation that was expected when the long-term debt was issued in order for inflation to actually erode that debt?

[gribbler]

On the contrary - the rise of interest rates is inevitable. Oh, and I don't consider 1.5 percent on ten years debt at all proximate to inflation at that time. I'm fully expecting them to rise and to crush the unwary governments that continue to spend as if they never will.



Yeah, they got a massive bailout - especially the folks most responsible for making bad loans - Fanny and Freddy.



Gosh, that doesn't sound like something that does exist does it? Does making housing loans freely available lower rather than increase the cost of said houses? That wouldn't make the demand for housing greater than it would otherwise? Yes to all of these. And it's well thought out - except for that little niggling deal of them having to be eventually paid back.



Not so. Government subsidy will increase the price of something relative to everything else, as the seller can afford to charge more for it. It's free money, Gribbler.

So you've changed your mind about interest rates. Apparently you no longer believe the government has infinite flexibility in controlling the interest rate. Does subsidizing people who buy houses cause house prices to go up- yes. But unless you think the supply of houses is completely inelastic, which is an absurd assumption, the price increase is not enough to fully offset the subsidy.

[Kuciwalker]

Wouldn't the inflation need to be higher than the inflation that was expected when the long-term debt was issued in order for inflation to actually erode that debt?

Yes, but inflation expectations have been extremely stable for the past quarter-century or so (barring the past few years where they've plummeted).

[gribbler]

No, most gifts are not taxed in any way shape or form.



There's no such guarantee that they will be good investments. Defining income as 'stuff that lets you consume more', fails the taxation test and the fact that investments are taxed despite the fact that they demonstrably lower consumption in the short term.



It's far easier to do transfers where they are purchased. This catches all forms of income that the government doesn't track.

The government is very much capable of tracking transfer payments because the government is the entity that makes the transfer payments. I have no idea why you seem to think there is something invalid about measuring the amount of income people have after the government taxes and makes transfer payments. Really, I think you just wanted to argue and didn't care if your arguments was completely stupid.

[gribbler]

Yes, but inflation expectations have been extremely stable for the past quarter-century or so (barring the past few years where they've plummeted).

Which wouldn't be true if, like Ben claimed, the government was deliberately trying to inflate debt away.

[DaShi]

Ben isn't worth arguing with. Argue with Kuci, he provides thoughtful responses that are mostly right.

[Kuciwalker]

Which wouldn't be true if, like Ben claimed, the government was deliberately trying to inflate debt away.

I haven't read any of his posts.

[Tupac Shakur]

That's generally the consensus among many on Apolyton. A lot of members here are tools for the one percent.

And some of us are the one percent.

[Ben Kenobi]

So you've changed your mind about interest rates. Apparently you no longer believe the government has infinite flexibility in controlling the interest rate.

They don't have infinite flexibility, but they are using what they do have to keep interest rates low, well below the inflation rate.

But unless you think the supply of houses is completely inelastic, which is an absurd assumption, the price increase is not enough to fully offset the subsidy.

True, but it does hurt the overall value of money, and negates a substantial proportion of the subsidy. It makes money itself less valuable. Not having the subsidy in the first place, keeps the money supply down, and keeps the housing price down. Looking at education - it used to cost about 3 months wages, each year for my father. Now it costs about a full year's salary for each year. So even taking into account for inflation - the subsidy itself gets eroded away. A subsidy is valuable if few people get it and worthless if everyone does.