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PeakTrader said...

If the electronics industry had over 130,000 pages of regulations, similar to health care, we'd be paying $3,000 for a TV and $1,000 for a microwave oven (and they'd be lower quality).

The government driving-up health care costs and then giving health care away is most harmful.

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PeakTrader said...

VangelV says: "Your country is broke and living beyond its means."

It's amazing how two or three years of poor economic policies can result in trillions of dollars of additional federal spending, trillions of dollars in lost output, $1 1/2 trillion federal budget deficits, many states on the verge of bankruptcy, health care reform driving-up prices even higher, an expensive energy policy, more costly regulations, etc..

This train wreck could've been avoided at many points, e.g. scaling-back the enormous unfunded social program of helping low income people buy houses, refunding the dollars flowing into government treasuries from trade deficits to consumers, implementing Reaganomics instead of Obamanomics, etc.

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PeakTrader said...

VangelV, U.S. purchasing power has increased, because real incomes increased. Per capita assets and goods both increased over time.

Also, you're blaming the Federal Reserve (or monetary policy) for problems created by the federal government (or fiscal policy). Moreover, you're mixing government debt and household debt.

Sustainable growth would've been maintained if the federal government "refunded" dollars to the private sector (i.e. the dollars that were drained from trade deficits) through tax cuts instead of spending or diverting those dollars.

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VangelV said...

"VangelV, U.S. purchasing power has increased, because real incomes increased. Per capita assets and goods both increased over time."

The USD has lost more than 90% of its purchasing power since the creation of the Federal Reserve with most of the decline coming after the 1971 bankruptcy.

"Also, you're blaming the Federal Reserve (or monetary policy) for problems created by the federal government (or fiscal policy). Moreover, you're mixing government debt and household debt."

The Fed makes the government's spending possible by its liquidity injections. The large booms and busts are rooted in massive credit expansion. Had the government been forced to finance its spending out of actual savings they would not have been possible.

"Sustainable growth would've been maintained if the federal government "refunded" dollars to the private sector (i.e. the dollars that were drained from trade deficits) through tax cuts instead of spending or diverting those dollars."

It would have been maintained if the Fed did not create purchasing power out of thin air and by doing so diluted the purchasing power of savers and investors. It is the Fed that is primarily responsible for the transformation to a casino economy. By resorting to printing over and over again it permitted government to grow from less than 10% of GDP before its formation to more than 40% of GDP today.

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PeakTrader said...

VangelV, you're laying blame at the wrong place. The Fed has generally done an excellent job smoothing-out business cycles, through the creation and destruction of money, to raise U.S. living standards at or near an optimal rate (and it doesn't micromanage the economy with its crude tools).

The federal government created an enormous unfunded social program to help low income people buy houses. The program spun out of control and caused the financial crisis and recession. The federal government decided to help lower income people without paying for it.

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VangelV said...

"VangelV, you're laying blame at the wrong place. The Fed has generally done an excellent job smoothing-out business cycles, through the creation and destruction of money, to raise U.S. living standards at or near an optimal rate (and it doesn't micromanage the economy with its crude tools)."

The Fed is the blower of serial bubbles, continual counterfeiter, and meddler. It does not smooth out bubbles but creates them. By preventing the corrections afterwards it only sets the economy up for an ever bigger crash after the next bubble.

"The federal government created an enormous unfunded social program to help low income people buy houses. The program spun out of control and caused the financial crisis and recession. The federal government decided to help lower income people without paying for it."

Yes, the federal government did all that. But the system could not work if the federal government had to pay for everything with real money, not new credit provided by the Fed. What the US, and the rest of the world needs, is a commodity based monetary system that forces everyone to live within their means.

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PeakTrader said...

VangelV, we've had this conversation before and it seems you continue to confuse "asset bubbles" with economic cycles (of goods and services).

Also, you seem to believe asset bubbles are the same, and caused by the same set of factors, or one factor, i.e. the Fed.

Over the economic expansion of the 2000s, the U.S. had up to $800 billion a year trade deficits. Those dollars went to foreigners, who bought mostly U.S. Treasury bonds.

Most of those dollars didn't go back to the people who spent them on foreign goods. Too many dollars were diverted into the housing market and into reducing federal budget deficits.

With the Fed tightening the money supply at the same time, a liquidity crisis took place.

The Fed was behind the curve easing the money supply and the federal government didn't fund, or refund, the economy sufficiently.

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