Warren Buffet speaks common sense; alarms most Republicans

[Kuciwalker]

the pie is not reducing for WB, but for everyone else it is... in principle if you give those who do not have enough $$$ to spend on consumer goods... you are increasing the consumption overall... while WB consumption stays the same and the overall income from US gov perspective stays the same, this is just an electron transfer from the one who will invest it into US treasuries/China/whatever, to many who will invest it in local tangible goods, like bread, fixing his house etc... thus increasing the total quantity of goods that the US produces.

The government can achieve precisely the same end by just printing dollars and then giving them to people. The "tax Warren Buffet" step is completely unnecessary and irrelevant.

[OneFootInTheGrave]

Giving people more money doesn't make bread appear. There's still the same amount of bread in the country as there was before you taxed Warren Buffett.

well if there is increased demand... someone may think that opening a bakery is a good idea, so the bread appears.

[OneFootInTheGrave]

The government can achieve precisely the same end by just printing dollars and then giving them to people. The "tax Warren Buffet" step is completely unnecessary and irrelevant.

and where does "balancing the books" come into the equation?

[Kuciwalker]

What becomes unbalanced when the government prints more dollar bills?

protip: it does this all the time. The total quantity of dollar bills in circulation (+ bank reserves blah blah blah) has been increasing pretty much constantly since the US dollar was established. Necessarily so, because we have more people and more exchanges so we need more dollars to facilitate those exchanges.

[Ben Kenobi]

The total quantity of dollar bills in circulation (+ bank reserves blah blah blah) has been increasing pretty much constantly since the US dollar was established

Uh, after Bretton Woods, sure. Prior, not really.

[Jaguar]

well if there is increased demand... someone may think that opening a bakery is a good idea, so the bread appears.

Now we're getting somewhere.

There are two components to this happening. You need someone to pay for the bread, and someone to pay for the bakery. Warren Buffett mostly pays for bakeries, and we need that part to happen. Other people need to pay for the bread, and we need to happen too.

In the long run, our society becomes more productive by creating the bakeries. In the short run, printing money is the way to get more people to buy the bread.

[Ben Kenobi]

Jag:

There's also Ag demand. Long and short of it, they can add value to the sale of bread (through bakeries), or they can add to the overall harvest of wheat. The former is more likely to happen than the latter, because of the wheat oversupply at present. It would take a long time before we'd expect to see wheat harvests go up in response to demand.

[OneFootInTheGrave]

What becomes unbalanced when the government prints more dollar bills?

protip: it does this all the time. The total quantity of dollar bills in circulation (+ bank reserves blah blah blah) has been increasing pretty much constantly since the US dollar was established. Necessarily so, because we have more people and more exchanges so we need more dollars to facilitate those exchanges.

this issue is off course when the gov prints too much money... as has been happening, skewing the investments made... too much easy money makes you invest poorly... what is the "correct" amount of extra "printing" is open to interpretation, but it is pretty clear that the US gov is on "too high" side of it, at the moment, and has been for at least past 10 years... with that printing it was supporting lots of frivolous investment, which did not result in net job gains for the US economy, and relevant growth... so we are where we are, but that has nothing to do with transfer of tax receipts from the poor/middle to the upper classes...

[OneFootInTheGrave]

Now we're getting somewhere.

There are two components to this happening. You need someone to pay for the bread, and someone to pay for the bakery. Warren Buffett mostly pays for bakeries, and we need that part to happen. Other people need to pay for the bread, and we need to happen too.

In the long run, our society becomes more productive by creating the bakeries. In the short run, printing money is the way to get more people to buy the bread.

the US gov can also pay for the bakery, be behind the loan... and we can get to the whole topic who and what... but in the short run if we transfer the taxation from the poor/middle to the upper class there will be more $$$ in the pockets of consumers who spend it locally, and net positive impact on the US economy... anyhow this is academic, as it will never happen, the only possible point that may happen is to get the upper to pay into the bottomless US gov coffers to increase the gov income, which on it's own will not help anything... but that in principle is also better than what is the case right now.

[Ben Kenobi]

OFITG:

Who do you think has the capital to start and operate the bakery?

[Kuciwalker]

this issue is off course when the gov prints too much money... as has been happening, skewing the investments made... too much easy money makes you invest poorly... what is the "correct" amount of extra "printing" is open to interpretation, but it is pretty clear that the US gov is on "too high" side of it, at the moment, and has been for at least past 10 years... with that printing it was supporting lots of frivolous investment, which did not result in net job gains for the US economy, and relevant growth... so we are where we are, but that has nothing to do with transfer of tax receipts from the poor/middle to the upper classes...

This is an unfortunate and widely held misapprehension. Starting in mid-2008, the Federal Reserve has had a policy of printing too few dollars, not too many. That is the primary cause of the current recession.

When the government prints too many dollars the result is too much inflation. Inflation, however, has been substantially below average since 2008, and inflation expectations (as measured by the difference in the rate of return on normal US bonds, and the US bonds whose returns are indexed to inflation) are also below average.

I can provide a more thorough justification of this claim later (after work), as well as provide links to economists much smarter and more knowledgeable than I who can explain it even better.

edit: important, key point: Inflation is popularly considered to be a rise in the prices people pay at retail. However, properly speaking inflation is a rise in all prices, including wages. Thus if you cause inflation to rise you actually make it easier for people to pay off their mortgages and credit cards, and if you cause inflation to fall you make it harder. The fall in the rate of inflation since 2008 has exacerbated the problems in the housing market by making the real burden of people's debt larger.

[Felch]

Uh, after Bretton Woods, sure. Prior, not really.

So during the gold standard, nobody was mining gold?

[MrFun]

The reason why a lot of money is 'sitting around' right now is because money is mostly in the hands of the capitalists and not the poor/middle class consumers.

JM

Wow, you are like, so smart for pointing out the obvious.

[MrFun]

Equal enforcement of already existing tax laws and rates in US is a joke.

I wonder how much of our debt could be taken care of, if the IRS actually compelled all the wealthy to pay not more taxes, but taxes at even the lower rates they are legally required to pay now?

[Ben Kenobi]

The ratio was kept pretty much fixed. In fact if you look at the ratio wrt population of the US, that stayed fixed too, up until the early 80s. It's only been since 82 that the presses really ran ahead and started devaluing the dollar.